REG - URU Metals Limited - Final Results
URU Metals Limited
("URU Metals" or "the Company")Final Results
URU Metals is pleased to announce its final results for the year ended 31 March 2019. The full Report & Accounts are available on the Company's website and are expected to be posted to shareholders today.
Chairman's Statement
For the Year Ended 31 March 2019I am pleased to present to our shareholders and stakeholders the consolidated financial statements of the Group for the year ended 31 March 2019.
Excellent progress has been made at our flagship Zebediela Project, and the technical team are confident in their ability to prove up the strike length of the recently discovered Ni-Cu-PGE mineralisation at Zebediela, and develop the project into a world class Ni-PGE project.
The past financial year has been a fruitful year for URU, with achievements in fulfilling investment strategies. We are now well positioned to take advantage of potential positive movements in the nickel market.
To view the Full Report & Accounts with the illustrative figures and tables please use the following link:http://www.rns-pdf.londonstockexchange.com/rns/2114O_1-2019-9-30.pdf
Jay Vieira
Non-executive Chairman
Chief Executive Officer's Report
For the Year Ended 31 March 2019Below are the major events in the year ended 31 March 2019 and major events after the reporting period.
Zebediela Nickel Project
Major advances have been made in the past twelve months in the understanding of the geology of the Zebediela Project in a regional context. The Zebediela Project is located on the Northern Limb of the Bushveld Complex, one of the most exciting and profitable nickel, copper and platinum group elements, (Ni-Cu-PGE) mining and exploration areas globally. The project shares similar geology to Anglo American Platinum's Mogalakwena Mine, the world's best PGE mine, as well as the adjacent Ivanhoe Mines' Platreef Project, where shaft sinking on two shafts is progressing to a depth of in excess of 980m.
A thorough review of all data was undertaken, which included the relogging of core from historical drillholes on the Zebediela Project, plus the interrogation of historical reports from the area around the Zebediela Project. This has led the technical team to conclude that there is potentially 5 km of strike length of Platreef related Ni-Cu-PGE mineralisation, hidden beneath a veneer of cover rocks on the project location. The Platreef is the same horizon that both Anglo American Platinum and Ivanhoe Mines exploit and are aiming to exploit at their respective mines.
A comparison of the grades and basket prices of recent drilling by URU with that of Anglo Platinum and Ivanplats, as well as that of the operational Nkomati Nickel Mine, also located in South Africa on the Bushveld Complex, indicates that the target Ni-Cu-PGE is of a higher Nickel grade than that being mined at both Mogalakwena and Nkomati mines, and, although it is lower than Ivanplat's Platreef Project grade, it is near surface as opposed to being in excess of 800 m deep at the Platreef Project.
The figure below shows the location of known drillholes that intersect Platreef (Critical Zone rocks), and from this image, it becomes clear that the potential exists for Platreef material to be found to the west of the historically mapped outcrop of the Platreef, shown by the red dashed line in the image below.
When these drill results listed in the table above are taken into a regional context, it is evident that the potential for over 5 km of strike length of Platreef on the Zebediela Project exists, at grades with a superior basket price to that being mined at Mogalakwena mine, as well as Nkomati Nickel mine.
The geophysical surveys conducted in 2018 assisted with detailed mapping of the geology of the area, and the target horizon, in close proximity to the shale - hornfels contact of the Transvaal Supergroup metasediments, has been identified.
The Department of Mineral Resources (now the Department of Minerals and Energy) (DMRE) in December 2018 issued the renewal for Prospecting Right LP148PR over Uitloop 3 KS, which forms the core license of the Zebediela Project. An application in terms of Section 102 of the Mineral and Petroleum Resources Development Act of 2002 (the MPRDA) has been made to append licenses LP1074PR and LP1787 to LP148PR.
An application to the DMRE for a mining right over the Zebediela Project was made and accepted in August 2019. The mining right application will secure the tenure of the project for 30 years once it is granted. The basis of the Mine Works Program which accompanies the application was made on the existing NI43-101 compliant resource, which contains an Indicated Resource of 485.4 million tonnes at 0.245% Ni and an Inferred Resource of 1,115.1 million tonnes at 0.248% Ni. The Company, however, has the right to amend the Mine Works Program via Section 102 of the MPRDA, to incorporate a mine plan to exploit any Ni-Cu-PGE resource that may be defined by further planned exploration drilling.
As part of the Mining Right application process, the Company has submitted an application for Environmental Authorisation for the Zebediela Project and commenced with environmental impact assessment studies and a public consultation process.
Based on recent discoveries in other geological terrains that host similar ultramafic rocks to those found on the Zebediela Project, the potential exists for the area to host massive sulphides nickel deposits.
The high nickel and palladium to platinum ratio in the Platreef mineralisation, found at shallow depths, coupled with the increase in nickel and palladium prices over the past 12 months, make the Zebediela Project an exciting Ni-PGE targets. The close proximity to existing road, rail, power and mining infrastructure bode well for the potential to develop the project into a world-class Ni-Cu-PGE mine and URU remains committed to the responsible development of the project.
Burgersfort Nickel Project
After a decision was taken to focus on the Zebediela Nickel Project, the Company wrote down its 50% interest in the Burgersfort nickel assets in South Africa.
Investment in Management Resource Solutions PLC (MRS)
On 1 March 2017 The Company acquired 7,550,000 shares of Management Resource Solutions Plc ("MRS") from Scopn Pty Ltd. ("Scopn") at a price of £0.05 per share. As consideration the Company issued to Scopn 25,166,666 new shares of the Company (each at an implied price of £0.045). On 10 April 2017 the Company subscribed for an additional 10,000,000 shares of MRS at a price of £0.05 per share for total cash consideration of £500,000 bringing the Company's aggregate interest in MRS to 17,550,000 shares (representing 9.59% of its current issued share capital). The Group believes operational efficiencies can be realised to restore MRS' profitability and the potential exists for significant revenue growth as a result of re-opening and/or expanding of mining operations in New South Wales, coupled with the continual demand for New South Wales coal from the Chinese, South Korean and Japanese markets. The Board believes the investment in MRS provides the Group with a liquid investment with potential near-term upside.
On 5 May 2017, trading in MRS shares resumed on the AIM market of the London Stock Exchange. The closing middle market share price was £0.075 per MRS share on 27 September 2018 representing an overall value of $1,726,780 based on 17,550,000 shares held.
On 19 September 2019, MRS announced that two of its main subsidiaries in Australia, Bachmann Plant Hire Pty Ltd ("BPH") and MRS Subzero Pty Ltd (trading as MRS Services Group, "MRSSG"), were put in voluntary administration. This announcement resulted in the suspension of the trading of MRS shares. Accordingly, the Group impaired the investment in MRS during the year ended 31 March 2019. Subsequently MRS announced that it's working on a finance solution to restart the trading of its shares.
Strategy for 2019/2020
Zebediela Nickel project
Based on the improved understanding of the geology of the Zebediela Project, the company will continue to focus its efforts on understanding and defining the Platreef Ni-Cu-PGE mineralisation, and apply modern sound geological principles to developing an exploration strategy to explore for massive sulphide nickel associated with the ultramafic rocks found on the project area.
The Group remains committed to its strategy of acquiring mineral assets, through:-
· direct investments in companies with prospects with medium to long term production potential;
· partnership with other industry participants to develop projects with production forecast in the near to medium term; and
· Investment of 100% equity in earlier stage projects with the potential to develop world class sized mineral resources that could be brought to market over the long term.
The Group would not rule out investing in longer term, 100% equity projects, or in other prospective junior companies should the right opportunity arise. However, this would be dependent on investor appetite at the time.
The Nickel Market
Nickel is used in numerous products including, industrial, consumer, military, transport/aerospace, marine, and stainless steel. 78% of the world's nickel is consumed by the stainless steel industry. Growing quite rapidly is the use of nickel in electric vehicle batteries, although at this stage it only accounts for about 3% of the nickel demand. With the growth in electric vehicles expected to continue, the demand for nickel will increase too. At this stage the main demand for nickel is still from the stainless-steel industry to meet specific industry requirements for heat resistance and corrosion. Nickel-containing materials are also needed to modernize infrastructure, for industry and to meet the material aspirations of their populations.
Overall positive trend - At the end of 2018, the average nickel price was approximately $10,791.00 per metric ton, with the highest nickel price recorded in 2018 at approximately $15635.00 per metric ton. The nickel price has increased by $ 7,347.50 per metric ton or 69.29 % since the beginning of 2019, with the nickel price currently at $ 17,952.00 per metric ton. The Group believe the nickel price has been lifted by sustained demand growth and decreasing supply.
Outlook - The Group has a positive outlook on the nickel market. The nickel price reached a maximum value of $18,153.00 per metric ton on 12 September 2019 in the World Bank Commodity Markets Outlook Report published in April 2018, forecast was that nickel would reach $18,000 a metric ton by 2030.
Your Management believes that our current projects have the potential to deliver shareholder value and look forward to updating shareholders on the development of its Nickel projects in South Africa.
John Zorbas
Chief Executive Officer
30 September 2019
Consolidated Statement of Comprehensive Income
For the Year Ended 31 March 2019
2019
2018
$'000
$'000
Administrative expenses
(737
)
(862
)
Exceptional items (note 18)
(1,554
)
-
Operating loss
(2,291
)
(862
)
Net loss for the year
(2,291
)
(862
)
Other comprehensive income
Items that will be reclassified subsequently to income
Unrealised loss on financial assets at fair value through OCI
(876
)
(334
)
Effect of translation of foreign operations
(350
)
159
Other comprehensive loss for the year
(1,226
)
(175
)
Total comprehensive loss for the year
(3,517
)
(1,037
)
Basic and diluted net loss per share (USD dollars) (note 8)
(2.94
)
(1.10
)
The loss per share calculation relates to both continuing and total operations.
The accompanying notes to the consolidated financial statements are an integral part of these statements.
Consolidated Statement of Financial Position
As at 31 March 2019
As at
As at
31 March
31 March
2019
2018
$'000
$'000
ASSETS
Non-current assets
Property, plant and equipment (note 10)
43
85
Intangible assets (note 11)
2,471
3,243
Long-term prepaid assets (note 9)
41
41
Total non-current assets
2,555
3,369
Current assets
Financial asset at fair value through OCI (note 12)
-
1,676
Trade and other receivables (note 13)
64
67
Cash and cash equivalents
475
1,317
Total current assets
539
3,060
Total assets
3,094
6,429
EQUITY AND LIABILITIES
Equity
Share capital (note 14)
7,806
7,806
Share premium (note 14)
46,938
46,938
Other reserves
1,030
1,380
Accumulated deficit
(53,839
)
(50,672
)
Total equity
1,935
5,452
Current liabilities
Trade and other payables (note 16)
1,159
977
Total liabilities
1,159
977
Total equity and liabilities
3,094
6,429
The accompanying notes to the consolidated financial statements are an integral part of these statements.
Consolidated Statement of Cash Flows
For the Year Ended 31 March 2019
2019
2018
$'000
$'000
Cash flows from operating activities
Net loss for the year
(2,291
)
(862
)
Adjustments for:
Share-based payments
-
203
Depreciation
40
33
Impairment of intangible asset
868
(145
)
Impairment of financial assets at fair value through OCI
686
-
Unrealised foreign exchange gain
114
-
Changes in non-cash working capital items:
Decrease/(increase) in receivables
3
3
(37)
Increase in trade and other payables
182
300
Net cash used in operating activities
(398
)
(508
)
Investing activities
Purchase of financial assets at fair value through OCI
-
(650)
Purchase of intangible assets
(401
)
(406
)
Net cash used in investing activities
(401
)
(1,056
)
Financing activities
Net proceeds from exercise of share options
-
203
Net cash generated by financing activities
-
203
Loss on exchange rate changes on cash and cash equivalents
(43)
-
Net decrease in cash and cash equivalents
(842
)
(1 ,361)
Cash and cash equivalents, beginning of year
1,317
2,678
Cash and cash equivalents, end of year
475
1,317
The accompanying notes to the consolidated financial statements are an integral part of these statements.
Consolidated Statement of Changes in Shareholders' Equity
For the Year Ended 31 March 2019
Equity attributable to shareholders
Share Option
Foreign Currency
Share
Share
Shares to be
and Warrants
Translation
Accumulated
Capital
Premium
Issued
Reserve
Reserve
Deficit
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
At 31 March 2017
7,726
46,723
-
2,307
(1,123
)
(49,476
)
6,157
Share-based compensation
-
-
-
129
-
-
129
Shares issued upon exercise of stock options
80
123
-
-
-
-
203
Reclassification of fair value of stock options exercised
-
92
-
(92
)
-
-
-
Net loss and comprehensive loss for the year
-
-
-
-
159
(1,196
)
(1,037
)
At 31 March 2018
7,806
46,938
-
2,344
(964
)
(50,672
)
5,452
Net loss and comprehensive loss for the year
-
-
-
-
(350)
(3,167
)
(3,517
)
At 31 March 2019
7,806
46,938
-
2,344
(1,314
)
(53,839
)
1,935
The accompanying notes to the consolidated financial statements are an integral part of these statements.
Notes to Consolidated Financial Statements
For the Year Ended 31 March 2019
1.
General information
URU Metals Limited (the "Company"), formerly known as Niger Uranium Limited, and before that, as UraMin Niger Limited, was incorporated in the British Virgin Islands ("BVI") on 21 May 2007. The Company's shares were admitted to trading on AIM, a market operated by the London Stock Exchange on 12 September 2007. The address of the Company's registered office is Intertrust, P.O. Box 92, Road Town, Tortola, British Virgin Islands, and its principal office is Suite 401, 4 King Street West, Toronto, Ontario, Canada, M5H 1A1.
On 21 November, 2018, the Company resolved to re‑organise the Company's share capital by combining all of the Existing Ordinary Shares on the basis of one new ordinary share of no par value ('New Ordinary Share') for every 1,000 Existing Ordinary Shares, such shares having the same rights and being subject to the same restrictions as the Existing Ordinary Shares as set out in the Articles of the Company ('Consolidation'). All references to common shares, stock options and warrants have been fully retrospectively restated to reflect the Consolidation.
The consolidated financial statements of the Group for the year ended 31 March 2019 comprise the Company and its subsidiaries.
2.
Nature of operations
During the year ended 31 March 2019, the Group's principal business activities were the exploration and development of mineral properties in South Africa.
The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that planned exploration and development programs will result in profitable mining operations. The Group has not yet established whether its mineral properties contain reserves that are economically recoverable. Changes in future conditions could require material write-downs of the carrying values of mineral properties.
The Group is in the exploration stage and is subject to the risks and challenges similar to other companies in a comparable stage of development. These risks include, but are not limited to:
•
Dependence on key individuals;
•
receipt and maintenance of all required exploration permits and property titles;
•
successful development; and
•
as noted above, the ability to secure adequate financing to meet the minimum capital required to successfully develop the Group's projects and continue as a going concern.
3.
Basis of preparation
The annual consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations. The Group has consistently applied the accounting policies detailed below throughout all periods presented.
The consolidated financial statements have been prepared on a historical cost basis convention, as modified by the revaluation of financial assets at fair value through other comprehensive income.
Items included in the consolidated financial statements for each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the "functional currency"). Similarly, the Group reports its results in a specified currency (the "presentation currency"). The functional currencies of the Company and its subsidiaries (with their abbreviation defined in note 4) are set out in the table below:
URU Metals Limited ("URU")
CAD
Niger Uranium Societe Anonyme ("NUSA")
CFA
8373825 Canada Inc. ("Nueltin")
CAD
Svenska Skifferoljeaktiebolaget ("SSOAB")
SEK
Southern Africa Nickel Ltd. ("SAN Ltd")
USD
Umnex Minerals Limpopo Pty ("UML")
USD
Lesogo Platinum Uitloop Pty ("LPU")
USD
All of the Company's subsidiaries were dormant in the year.
The Group's consolidated financial statements are presented in US Dollars, rounded to the nearest thousand.
In accordance with IAS 21, Effects of Changes in Foreign Exchange Rates ("IAS 21"), Group entities and operations whose functional currencies differ from the presentation currency are translated into US dollars.
•
Monetary assets and liabilities are translated at the closing rate as at the date of the statement of financial position;
•
Income and expenses are translated at the average rate of exchange for the reporting period;
•
Equity balances are initially translated at closing exchange rates and subsequent balances are translated at historical rates; and
•
Translation gains and losses are recognised in consolidated other comprehensive income and are reported as such in accumulated other comprehensive income.
4.
Summary of significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
(a) Going concern
These consolidated financial statements have been prepared based on accounting principles applicable to a going concern, which assume that the Group will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities in the normal course of business. As at 31 March 2019 the Group had net current liabilities of $620,000 (2018:$2,083,000 net current assets) and had not yet achieved profitable operation and expects to incur further losses in the development of business. The Group will therefore need further financing to operate over the next 12 months.
Management acknowledges that uncertainty remains over the ability of the Group to meet its funding requirements but believes that financing will be available and continues to explore debt and equity financing options that would provide the Group with sufficient cash to continue with its exploration activities. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. These circumstances indicate the existence of material uncertainties that may cast significant doubt as to the Group's ability to continue as a going concern.
There is, however, no assurance that the sources of funding described above will be available to the Group, or that they will be available on terms and a timely basis that are acceptable to the Group. Accordingly, these consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported expenses and the statement of financial position classifications used that would be necessary should the Group be unable to continue as a going concern. These adjustments could be material.
As part of their going concern review, the Directors have followed the guidelines published by the Financial Reporting Council entitled "Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risk" issued in April 2016.
The Directors have prepared detailed financial forecasts and cashflows for the twelve months from the date of signing these financial statements. In developing these forecasts, the Directors have made assumptions based upon their view of current and future economic conditions over the forecast period.
(b) Basis of consolidation
Subsidiaries
Subsidiaries are all entities that are controlled by the Group. The definition of control involves three elements; power over the investee, exposure or rights to variable returns and the ability to use power over the investee to affect the amount of the investors' returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or other comprehensive loss.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Associates
Associates are entities over which the Group exercises significant influence but does not exercise control. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost, which includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group's share of its associate's profits or losses after acquisition of its interest is recognised in profit or loss and cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Where the Group's share of losses of an associate equals or exceeds the carrying amount of the investment, the Group only recognises further losses where it has incurred obligations or made payments on behalf of the associate.
Financial asset at fair value through other comprehensive income
Financial assets consist of equity investments in other companies or limited partnerships where the Group does not exercise either control or significant influence.
Financial assets are shown at fair value at each reporting date with changes in fair value being shown in Other Comprehensive Income, or at cost less any necessary provision for impairment where a reliable estimate of fair value is not able to be determined.
Joint arrangements, joint operations and joint ventures
A joint arrangement is a contractual arrangement in which two or more parties have joint control. Joint control only exists when decisions require unanimous consent of the parties sharing that control. A joint arrangement is either a joint operation, where the parties have rights to the assets and obligations of the operation and thus recognise its share of the assets, liabilities, and operations, or a joint venture, where the parties have rights to the net assets or the obligation, and thus recognise their interest as an investment using the equity method.
Transactions eliminated on consolidation
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
(c) Foreign currency transactions
i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in consolidated statement of other comprehensive income.
ii) Foreign operations
The assets and liabilities of operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Group presentation currency (where different) at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the Group presentation currency at average exchange rates, unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions. Equity balances are translated to presentation currency at historical exchange rates.
Foreign currency differences are recognised directly in other comprehensive income and such differences have been recognised in the foreign currency translation reserve (FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in other comprehensive income in the FCTR.
(d) Property, plant and equipment
Items of property, plant and equipment are measured at historical cost less accumulated depreciation and accumulated impairment losses. The cost of property, plant and equipment was determined by reference to the cost at the date of acquisition.
Historical cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of plant and equipment are recognised in profit or loss as incurred.
Gains and losses on disposal of an item of plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of plant and equipment, and are recognised net within the statement of comprehensive income.
Depreciation is calculated over the depreciable amount, which is the cost of the asset, less its residual value. If the useful lives and depreciation methods are the same for significant parts of assets, these are not depreciated on a component basis. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of plant and equipment as follows:
Field equipment
3 years
(e) Exploration costs and intangible assets
Exploration and evaluation costs are capitalised on a project-by-project basis, pending determination of the technical feasibility and the commercial viability of the project. In accordance with IFRS 6, 'Exploration for and Evaluation of Mineral Resources', the Group allocates costs incurred to cash generating units (CGUs), which are projects, or groups of projects, which share a consistent profile and proximity. Exploration costs are presented in intangible assets in the Statement of Financial Position.
Capitalised costs include costs directly related to the exploration and evaluation activities in the CGU.
General and administrative costs are allocated to the exploration property to the extent that the costs are directly related to activities in the relevant areas of interest. Costs incurred before the legal rights are obtained to explore an area and costs relating to a relinquished or abandoned licence are recognised in profit or loss.
Exploration and evaluation assets shall be assessed for impairment at each reporting period in accordance with IFRS 6, and any impairment loss is recognised in profit or loss.
Once technical feasibility and commercial viability have been established, exploration assets attributable to those projects are tested for impairment and reclassified from exploration properties to development properties.
Mineral property acquisition costs, and exploration and development expenditures incurred subsequent to the determination of the feasibility of mining operations and approval of development by the Group, are capitalised until the property to which they relate is placed into production, sold, allowed to lapse or abandoned.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less from inception which are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
(g) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial assets and financial liabilities
Financial assets and financial liabilities are classified into one of three categories as summarised in the table below:
Derivative Initial Subsequent to initial URU's assets
Category status measurement recognition, held at: in the category
Amortised cost Non‑derivative Fair value Amortised cost using Trade and other receivables
The effective interest
method
Amortised cost Non‑derivative Fair value Same as above Cash and cash
equivalents
Other financial liabilities Non‑derivative Fair value Same as above Trade and other payables
Fair value through profit
Other financial liabilities Non‑derivative Fair value and loss Contingent consideration
Fair value through other
comprehensive income Non‑derivative Fair value Fair value through profit Marketable securities
and loss
The classification is determined at initial recognition and depends on the nature and the purpose of the financial asset. Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.
Fianncial assets at amortised cost
A financial asset shall be classified as amortised cost if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and (b) the contractual terms of the financial asset give rise on specified dates to cash cash flows that are solely payments of principal and interest on the principal amount outstanding.
Other financial liabilities
The Group initially recognises financial liabilities on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Financial assets at fair value
Fair value determination
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. The Company has no financial instruments carried at fair value as at 31 March 2019 other than the investment in Management Resource Solutions Plc (MRS) which is a Level 2 financial asset at fair value.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term, or if it is a derivative financial instrument. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise, they are classified as non‑current. Securities in privately held companies are initially recorded at cost, being the fair value at the time of acquisition. At the end of each financial reporting period, the Company's management estimates the fair value of investments based on the criteria below and reflects such valuation in the consolidated financial statements. These are included in Level 1 as disclosed in note 6.
A financial asset shall be measured at fair value through other comprehensive income if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Changes in fair values of financial assets through other comprehensive income are presented as fair value gain or loss on investment in the consolidated statement of comprehensive income, and within operating activities in the statement of cash flows.
(ii) Derecognition of financial assets and financial liabilities
A financial asset is derecognised when the contractual right to the asset's cash flows expire or if the Group transfers the financial asset and substantially all risks and rewards of ownership to another entity. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
(iii) Offset
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position only when the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
(h) Impairment of assets
(i) Financial assets
Financial assets are assessed for indicators of impairment at each reporting period end. Financial assets are impaired when there is objective evidence that the estimated future cash flows of the financial assets have been affected by one or more events that occurred after the initial recognition of the financial asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the assets original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairments loss to decrease, the decrease in impairment loss is reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. Fair value less cost of disposal is determined as the amount that would be obtained from the disposal of the assets in an arm's length transaction between knowledgeable and willing parties.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(i) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(j) Loss per share
The Group presents basic and diluted loss per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares in issue during the period. Diluted earnings or loss per share is similar to basic earnings or loss per share, except that the denominator is adjusted to include the dilutive potential ordinary shares that would have been outstanding assuming that options and warrants with an average market price for the year greater than their exercise price are exercised and the proceeds used to repurchase ordinary shares.
(k) Segmental reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by the Group's chief operating decision maker, the CEO, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
(l) Employee benefits
Pension obligations and other post-employment benefits
The Group does not offer any pension and/or post-employment benefits to employees.
Short-term employee benefits
Short-term employee benefits obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonuses if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.
Share-based compensation
The Group operates an equity-settled, share-based compensation plan, The Niger Uranium Limited Share Option Plan 2008. The grant date fair value of the employee services received in exchange for the grant of the options is recognised as an expense with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions, such as forfeiture rates, are included in assumptions about the number of options that are expected to vest. At each reporting date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(m) New accounting standards and interpretations
During the year ended 31 March 2019 the Group adopted the following IFRS standards:
IFRS 2 - Share‑based Payment ("IFRS 2")
IFRS 2 was amended by the IASB in June 2016 to clarify the accounting for cash‑settled share‑based payment transactions that include a performance condition, the classification of share‑based payment transactions with net settlement features and the accounting for modifications of share‑based payment transactions from cash‑settled to equity‑settled. On 1 April, 2018, the Group adopted this amendment and has determined that the adoption of this new amendment does not have a significant impact on its consolidated financial statements.
IFRS 15 ‑ Revenue From Contracts With Customers ("IFRS 15")
IFRS 15 replaces IAS 18 ‑ Revenue, IAS 11 ‑ Construction contracts, and some revenue‑related interpretations. The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract‑based five‑step analysis of transactions to determine whether, how much and when revenue is recognised. New estimates and judgmental thresholds have been introduced, which may affect the amount and/or timing of revenue recognised. On 1 April 2018, the Company adopted IFRS 15 and has determined that the adoption of this new standard does not have a significant impact on its consolidated financial statements.
IFRS 9 Financial Instruments ("IFRS 9")
On 24 July 2014 the IASB issued the completed IFRS 9, Financial Instruments, (IFRS 9) effective on 1 January 2018 with early adoption permitted.
IFRS 9 includes finalised guidance on the classification and measurement of financial assets. Under IFRS 9, financial assets are classified and measured either at amortised cost, fair value through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL") based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 largely retains the existing requirements in IAS 39 Financial Instruments: recognition and measurement, for the classification and measurement of financial liabilities.
The Group adopted IFRS 9 in its consolidated financial statements on 1 April 2018. Due to the nature of its financial instruments, the adoption of IFRS 9 had no impact on the opening accumulated deficit balance on 1 April 2018. The impact on the classification and measurement of its financial instruments is set out below.
All financial assets not classified at amortised cost or FVOCI are measured at FVTPL. On initial recognition, the Company can irrevocably designate a financial asset at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:
It is held within a business model whose objective is to hold the financial asset to collect the contractual cash flows associated with the financial asset instead of selling the financial asset for a profit or loss; Its contractual terms give rise to cash flows that are solely payments of principal and interest.
All financial instruments are initially recognised at fair value on the consolidated statement of financial position. Subsequent measurement of financial instruments is based on their classification. Financial assets and liabilities classified at FVTPL are measured at fair value with changes in those fair values recognised in the consolidated statement of loss and comprehensive loss for the year. Financial assets classified at amortised cost and financial liabilities are measured at amortised cost using the effective interest method.
The following table summarises the classification and measurement changes under IFRS 9 for each financial instrument:
Classification IAS 39 IFRS 9
Cash and cash equivalents Loans and receivables (amortised cost) Amortised cost
Trade and other receivables Loans and receivables (amortised cost) Amortised cost
Marketable securities Available for sale FVOCI
Accounts payable and accrued liabilities Other financial liabilities (amortised cost) Amortised cost
IFRS 9 Financial Instruments ("IFRS 9") (continued)
(i) The Company made an irrevocable election upon adoption of IFRS 9 to classify the marketable securities at FVOCI, with all subsequent changes in fair value being recognised in other comprehensive income. FVOCI is a new measurement category with which the cumulative changes in fair value will remain in OCI and is not reclassified to profit or loss upon disposal of the investment.
The original carrying value of the Company's financial instruments under IAS 39 has not changed under IFRS 9.
The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group in preparing these financial statements as they are not as yet effective and in some cases had not yet been adopted by the European Union.
The Group intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.
· IFRS 16, 'Leases"
· IFRS 10 and IAS 28 (amendments), 'Sale or Contribution of Assets between an Investor and its Associate or Joint Venture'
· Amendments to IFRS 2, 'Classification and Measurement of Share‑based Payment Transactions'
· Amendments to IAS 7, 'Disclosure Initiative'
· Amendments to IAS 12, 'Recognition of Deferred Tax Assets for Unrealised Losses'
The directors do not expect that the adoption of the Standards listed above will have a material impact on the Group in future periods.
IFRS 16 is a significant change to lessee accounting and all leases will require balance sheet recognition of a liability and a right‑of‑use asset except short term leases and leases of low value assets. The effect on the Group cannot be accurately quantified at this stage but is expected to be immaterial on the Group is currently not a party to any material operating leases as lessee or lessor.
A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Group's activities and which have not therefore been adopted in preparing these consolidated financial statements.
5. Critical Accounting Estimates and Judgements
The preparation of the consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement and make estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The Group makes estimations and assumptions concerning the future. The resulting accounting estimates may not equal the related actual results.
The estimates, assumptions and judgements which have a significant risk of causing material adjustment to the carrying amount of assets and liabilities are:
Determination of the Functional Currency
The Group comprises several entities in three different countries; Canada, South Africa and Sweden. The statutory financial statements of each entity, where required, are prepared using the functional currency of the country where it is registered to do business except where management have chosen a more appropriate currency as the functional currency. On preparation of the consolidated financial statements management chooses an appropriate exchange rate to translate each of the functional currencies to the presentational currency. The consolidated financial statements are presented in USD. These judgements may change if future events dictate that a more appropriate presentational currency should be adopted.
Impairment of exploration and evaluation expenditure (intangible assets)
At 31 March 2019 the carrying value of intangible assets of the Group were $2,471,000 (2018: $3,243,000). The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not yet reached a stage that permits a reasonable assessment of the existence of reserves. The directors have carried out an assessment of the carrying value of exploration and evaluation expenditure and any required impairment in accordance with the accounting policy in note 4.
Assessment of significant influence
The Group holds 7.85% of the issued share capital of Management Resource Solutions Plc ('MRS') which is below the 20% assumed threshold for significant influence. However as J. Zorbas was appointed as the Non-executive Chairman of MRS on 10 April 2017 management have reviewed the criteria detailed in IAS 28 'Investments in Associates' of potential indication of the existence of significant influence. Management judgement is therefore required to assess whether significant influence is exercised over MRS in the year and have concluded that the Group did not exercise significant influence over MRS in the year. J. Zorbas resigned as Non-executive Chairman of MRS on 30 August 2019.
Valuation of financial assets at fair value through other comprehensive income
The Group has adopted a policy of the revaluation of financial assets through other comprehensive income. Management therefore need to determine fair value and thus need to exercise judgement in their assessment of the fair value hierarchy.
In respect of the carrying value of the shares held in MRS management have assessed the current suspension of the company's shares on AIM, due to two of its principal subsidiaries being placed into administration, and the likelihood that the refinancing will be completed and that the company's shares will be re admitted to trading on AIM.
Share based payments
The Company has issued share options to Directors and advisors. The Black Scholes model is used to calculate the appropriate charge for these options. The use of this model to calculate a charge involves a number of estimates and judgements to establish the appropriate inputs to be entered into the model, including areas such as the use of appropriate interest and dividend rates, exercise restrictions and behavioural considerations. A significant element of judgement is therefore involved in the calculation of the charge.
Calculation and recognition of contingent consideration
The Group is exposed to potential contingent consideration from previous acquisitions as detailed in note 11. Management exercises judgement in assessing whether the contingent consideration should be recognised in the consolidated financial statements.
6.
Financial risk management
The Group's Board of Directors monitors and manages the financial risks relating to the operations of the Group. These include credit risk, liquidity risk and market risk which includes foreign currency and interest rate risks.
Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The Group's credit risk is primarily attributable to the Group's cash and cash equivalents and trade and other receivables. The Group has no allowance for impairment that might represent an estimate of incurred losses on other receivables. The Group has cash and cash equivalents of $475,000 (31 March 2018 ‑ $1,317,000), which represent the maximum credit exposure on these assets. As at 31 March 2019, the majority of the cash and cash equivalents were held with a major Canadian chartered bank from which management believes the risk of loss to be minimal.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
Typically the Group tries to ensure that it has sufficient cash on demand to meet expected operational expenses for a period of twelve months, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted. Management monitors the rolling forecasts of the Group's liquidity reserve on the basis of expected cash flows.
The following are the contractual maturities of financial liabilities:
6 months
Carrying
Contractual
6 months
to 5
amount
cash flows
or less
years
$'000
$'000
$'000
$'000
31 March 2018
Trade and other payables
1,159
1,159
1,159
-
31 March 2018
Trade and other payables
977
977
977
-
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's loss or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Foreign currency rate risk
The Group, operating internationally, is exposed to currency risk on purchases that are denominated in a currency other than the functional currency of the Group's entities, primarily Pound Sterling ("GBP"), the Canadian Dollar ("CAD"), the South African Rand ("ZAR"), Swedish Krona ("SEK") and the US Dollar ("USD").The Group does not hedge its exposure to currency risk.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group's policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term imbalances.
The Group's exposure to foreign currency risk, based on notional amounts, was as follows:
USD
GBP
SEK
CAD
Total
$'000
$'000
$'000
$'000
$'000
31 March 2019
Cash and cash equivalents
-
466
-
9
475
Trade and other receivables
-
-
-
6
4
64
Trade and other payables
-
(201
)
(53
)
(905
)
(1,159
)
31 March 2018
Cash and cash equivalents
-
1,294
-
23
1,317
Trade and other receivables
-
-
-
67
67
Trade and other payables
-
(217
)
(58
)
(702
)
(977
)
Interest rate risk
The financial assets and liabilities of the Group are subject to interest rate risk, based on changes in the prevailing interest rate. The Group does not enter into interest rate swap or derivative contracts. The primary goal of the Group's investment strategy is to make timely investments in listed or unlisted mining and mineral development properties to optimise shareholder value. Where appropriate, the Group will act as an active investor and will strive to advance corporate actions that deliver value adding outcomes. The Group will undertake joint ventures with companies that have the potential to realise value through mineral project development, and invest substantially in those joint ventures to advance asset development over the near term.
Market risks
Sensitivity analysis
A 10% strengthening of the USD against the following currencies at the year end would have increased/(decreased) equity and profit or loss by the amounts shown below. This was determined by recalculating the USD balances held using a 10% greater exchange rate to the USD. This analysis assumes that all other variables, in particular interest rates, remain constant.
31 March 2019
31 March 2018
Equity
Profit or loss
Equity
Profit or loss
$'000
$'000
$'000
$'000
GBP
-
(27
)
-
(108)
CAD
-
83
-
61
SEK
-
6
-
6
7.
Capital risk management
The Group includes its share capital, share premium, reserves and accumulated deficit as capital. The Group's objective is to maintain a flexible capital structure which optimises the costs of capital at an acceptable risk. In light of economic changes and with the risk characteristics of the underlying assets, the Group manages the capital structure and makes adjustments to it. As the Group has no cash flow from operations and in order to maintain or adjust the capital structure, the Group may issue new shares, issue debt and/or find a strategic partner. The Group is not subject to externally imposed capital requirements.
The Group prepares annual expenditure budgets to facilitate the management of its capital requirements and updates them as necessary depending on various factors such as capital deployment and general industry conditions. During the year ended 31 March 2019 there were no changes in the Group's approach to capital management.
8. Earnings per Share
The calculation of basic and diluted earnings per share is based on the result attributable to shareholders divided by the weighted average number of ordinary shares in issue in the year.
Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
The Company has potentially issuable shares which relate to share options issued to directors and third parties. In the years ended 31 March 2019 and 31 March 2018 none of the options had a dilutive effect on the loss in the two years.
As at
As at
31 March
31 March
2019
2018
$'000
$'000
Loss used in calculating basic and diluted earnings per share ($)
(2,291)
(862)
Number of shares
Weighted average number of shares for the purpose of basic earnings per share
779,944
779,944
Weighted average number of shares for the purpose of diluted earnings per share
779,944
779,944
Basic loss per share (US dollars)
(2.94)
(1.10)
Diluted loss per share (US dollars)
(2.94)
(1.10)
9.
Long-term prepaid assets
31 March
31 March
2019
2018
$'000
$'000
Long-term prepaid assets
41
41
On determination that an impairment charge was required for the Group's SSOAB Licences project, the Group identified a long-term prepaid asset for future drilling costs that may be applied to projects undertaken in other locations. Accordingly, the long-term prepaid asset was transferred out of intangible assets.
10. Property, plant and equipment
Field
equipment
COST
$'000
At 31 March 2017
119
Impact of foreign exchange
2
At 31 March 2018
121
Impact of foreign exchange
(3)
At 31 March 2019
118
Field
equipment
ACCUMULATED DEPRECIATON
$'000
At 31 March 2017
3
Depreciation for the year
33
At 31 March 2018
36
Depreciation for the year
40
Impact of foreign exchange
(1)
At 31 March 2019
75
Field
equipment
CARRYING VALUE
$'000
At 31 March 2018
85
At 31 March 2019
43
11.
Intangible assets
Exploration costs
COST
$'000
At 31 March 2017
4,557
Additions
406
Foreign exchange
98
At 31 March 2018
5,061
Additions
401
Foreign exchange
(369)
At 31 March 2019
5,093
ACCUMULATED AMORTISATION AND IMPAIRMENT
$'000
At 31 March 2017
1,761
Foreign exchange
57
At 31 March 2018
1,818
Impairment (note 18)
868
Foreign exchange
(64
)
At 31 March 2019
2,622
CARRYING VALUE
$'000
At 31 March 2018
3,243
At 31 March 2019
2,471
The Group has operated three distinct projects, SSOAB Licences, Nueltin Licence and the South African Projects as detailed below:
The exploration costs, amortisation and impairment detailed in the above table are in respect of the Group's South African Projects only. The Group's exploration costs in respect of its SSOAB Licences project of $1,145,000 were fully impaired at 31 March 2016 and the exploration costs in respect of its Nueltin Licence project of $153,000 were fully impaired at 31 March 2015. The Burgersfort South African project has been fully impaired in these consolidated financial statements. At 31 March 2019 the carrying value is solely in relation to the Zebediela Nickel Project described below.
SSOAB Licences
SSOAB (as defined in note 3) had 100% ownership of several exploration licences near the town of Örebro, Sweden. The Swedish licences are considered to be a single project, and thus to be one CGU. During the year ended 31 March 2016, due to the continued decline of the prices of oil and uranium, the Group decided not to pursue the development of SSOAB properties and therefore determined that the recoverable amount of the intangible assets under the SSOAB properties was estimated to be $nil. The Group fully impaired the intangible assets in the consolidated statement of financial position for the year ended 31 March 2016. The foreign currency reserve of SSOAB was reclassified from equity to the consolidated statement of comprehensive income in the year ended 31 March 2017.
Nueltin Licence
Nueltin (as defined in note 3) was party to an option agreement with Cameco Corporation ("Cameco"), the holder of a licence located in the Nunavut Territory of Canada. Under the agreement, Nueltin could earn 51% interest in the project from Cameco in return for exclusively funding CDN$2.5 million in exploration expenditure by 31 December 2016. The Cameco project was considered to be one CGU. The Group fully impaired the intangible assets in the consolidated statement of financial position in the year ended 31 March 2015 as the Group had no plans to pursue the project in Nunavut Territory and thus let the option expire.
South African Projects
In November 2013, the Group acquired (i) a 100% interest in Southern Africa Nickel Limited ("SAN Ltd.") which had been the Group's joint venture partner since 2010 on the Zebediela Nickel Project and (ii) a 50% interest in the Burgersfort Project. SAN Ltd in turn had a 74% interest in a joint operation (the "SAN-Umnex Joint Venture"). The remaining 26% was held by Umnex Mineral Holdings Pty ("UMH"), which had title to the Zebediela licences through its subsidiary, UML. With the Group's acquisition of SAN Ltd., the SAN-URU joint venture was dissolved and San Ltd. obtained ownership of the JV's 50% interest in the Burgersfort Project with BSC Resources as the other party to the agreement. On 10 April 2014, SAN Ltd. and UMH agreed that SAN Ltd. would purchase 100% of Umnex Minerals Limpopo Pty ("UML") from UMH for consideration of 33,194,181 new Group shares and 8,000,000 bonus shares issued to directors and officers for their services in the acquisition of UML.
The Burgersfort Project extends over two adjacent prospecting rights in Burgersfort North and Burgersfort South. The Group has no plans to pursue the project and as announced on 31 May 2019 has fully impaired the intangible assets related to Burgersfort Project in the amount of $868,000 in the consolidated statement of financial position as at 31 March 2019.
The Zebediela Nickel Project extends over three separate adjacent prospecting rights in the Limpopo Province of South Africa. All three rights are now held by Lesogo Platinum Uitloop Pty ("LPU"), which in turn is 100% owned by UML.
All three rights are currently compliant with minimum expenditure obligations, annual report submissions, annual prospecting fees, and submitted prospecting work programs.
Under the terms of the acquisition agreement, UMH is permitted to return the shares and take back the licences should the Group:
•
fail to maintain adequate cash funds to meet its general and project expenditure obligations, or
•
fail to meet the purchased rights' minimum statutory expenditure obligations
As at 31 March 2019, the "general and project expenditure obligations" and the "minimum statutory expenditure obligations" of the general and project expenditure obligations had not been determined.
Additionally, conditional consideration of 12,000,000 free-trading shares is payable if either 1) a transaction is consummated by the Group to sell, farm-out, or similarly dispose of any portion of a mineral project on some or all of the mining titles, or 2) a mining right is obtained from the South African Department of Mines and Resources in respect of some or all of the rights, or 3) an effective change of control of the Group occurs. As at 31 March 2019 none of the above conditions have occurred.
On 19 April 2017, the Group entered into a Corporate and Management Services Agreement (the "Agreement") with UMH. As per the Agreement, UMH shall provide to UML services including project management, coordination of mining rights application, mineral rights management, finance and accounting, technical, metallurgical, engineering and geological services and corporate finance and capital raising. In exchange of the services, UMH will earning the following fees:
1. Once the Bankable Feasibility Study commences a monthly retainer of ZAR150,000 until then a monthly retainer of ZAR75,000 will be paid;
2. First right of offer for technical, metallurgical, engineering and geological services at market related pricing;
3. Capital raising and corporate finance fees of 5% of the transaction value of capital raised through UMH sources;
4. UMH will be issued a 1.5% royalty on all revenue generated from the Zebediela project. 1% of the royalty can be purchased back by the Company or its successor for the amount of $2 million provided that the Company exercises this right within 24 months of the Mining Right being issued by the Department of Mineral Resources of South Africa.On 4 December 2018 the Company announced that the South African Department of Mineral Resources had formally approved and executed the renewal of the primary prospecting right. The right will expire on 2 December 2021.
12.
Financial assets at fair value through other comprehensive income
As at
As at
31 March
31 March
2019
2018
$'000
$'000
At 1 April
1,676
1,173
Additions
-
650
Fair value adjustment through other comprehensive income
(876)
(334)
Impairment (note 18)
(686)
-
Foreign exchange (loss)/gain
(114)
187
At 31 March
-
1,676
On 1 March 2017, the Group acquired 7,550,000 shares of Management Resource Solutions Plc ("MRS") for £0.15 per share by issuance of 25,166,666 ordinary shares of the Group. The fair value of the MRS shares was determined to be the value of the shares of the Group issued, as MRS was a public company whose shares were not trading at the time and the market price was not available. On 5 May 2017, the MRS shares resumed trading on the AIM market of the London Stock Exchange.
During the year ended 31 March 2018 the Group acquired an additional 10,000,000 ordinary shares of MRS at £0.05 per share. At 31 March 2019 and 31 March 2018 the Group held 17,550,000 ordinary shares representing 9.59% of the issued share capital of MRS. As at 31 March 2019 the investments in MRS shares were valued at $686,000 based on share price of £0.03 per share.
On 4 September 2019, London Stock Exchange temporarily suspended the trading of MRS shares as two of the company's principal subsidiaries were placed into administration. As a result, the Group recorded a full impairment of the MRS shares which has been included as an exceptional item in profit and loss.
Management have assessed whether the Group exercises significant influence over MRS in accordance with the accounting policy as per note 4. Management have taken into consideration the criteria as set out in IAS 28 'Investments in Associates' and have determined that the Group did not exercise significant influence over MRS during the year. J. Zorbas was a non-executive director of MRS until his resignation on 30 August 2019.
13.
Trade and other receivables
31 March
31 March
2019
2018
$'000
$'000
Other receivables
64
67
14.
Share capital and share premium
Number of
shares
Share capital
Share premium
Total
$'000
$'000
$'000
At 31 March 2017
772,571
7,726
46,723
54,449
Shares issued upon exercise of share options
8,000
80
123
203
Reclassification of fair value of share options exercised
-
-
92
92
At 31 March 2018 and 2019
780,571
7,806
46,938
54,744
Issued shares
All issued shares are fully paid up.
Authorised: unlimited number of common shares. There are no preferences or restrictions attached to any classes of common shares.
During the year ended 31 March 2018 8,000 shares were issued upon exercise of share options by J. Vieira (3,000 shares); J. Zorbas (3,000 shares) and D. Subotic (2,000 shares), all at an exercise price of £20 per share.
On 20 November 2018 the Company completed a share consolidation by combining all of the existing ordinary shares on the basis of one new ordinary share of no par value for 1,000 existing ordinary shares of no par value, such shares having the same rights as the existing ordinary shares.
Unissued shares
In terms of the BVI Business Companies Act, any unissued shares are under the control of the Directors.Dividends
Dividends declared and paid by the Group were $nil for the year ended 31 March 2019 (2018 - $nil).
15.
Reserves
(a) Share option and warrants reserve
The Share Option Plan is administered by the Board of Directors, which determines individual eligibility under the plan for optioning to each individual. Below is disclosure of the movement of the Group's share options as well as a reconciliation of the number and weighted average exercise price of the Group's share options outstanding on 31 March 2019 and 31 March 2018.
The assessed fair value at grant date is determined using the Black-Scholes Model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
During the year ended 31 March 2018 30,200 share options were granted. The options vested on grant and 15,050 options are exercisable at a price of £0.60 and 15,150 options are exercisable at £90.
The inputs into the option pricing model for the 15,050 options granted in April 2017 are as follows:
Weighted average exercise price £60
Expected volatility 92.88%
Expected life 5 years
Risk-free interest rate 0.91%
Expected dividends 0.0%
The inputs into the option pricing model for the 15,150 options granted in April 2017 are as follows:
Weighted average exercise price £90
Expected volatility 92.88%
Expected life 5 years
Risk-free interest rate 0.91%
Expected dividends 0.0%
(i) Reconciliation of share options outstanding as at 31 March 2019:
Weighted
Number of
average
options
Number
Exercise prices (£)
remaining life (years)
outstanding
exercisable
60
3.15
15,050
15,050
90
3.15
15,150
15,150
49
1.56
2,633
2,633
70
3.02
32,833
32,833
The share options detailed in the above table have been adjusted to reflect the share consolidation in the year.
(ii) Continuity and exercise price
The number and weighted average exercise prices of share options are as follows:
Weighted
average
Number
exercise price
of options
per share (£)
At 31 March 2017
11,133
30
Options exercised
(8,000
)
34
Options expired unexercised
(500
)
34
Options granted
30,200
80
At 31 March 2018 and 2019
32,833
70
The following is a summary of the Group's warrants granted under its Share Incentive Scheme. As at 31 March 2019 the following warrants, issued in respect of capital raising, had been granted but not exercised:
Number of
Exercise
Expiry
Fair value at
Name
Date granted
Date vested
warrants
price (£)
date
grant date (£)
Beaumont
9 October 2009
9 October 2009
100
345
9 October 2019
345
(b) Foreign Currency Translation Reserve
The Foreign Currency Translation Reserve represents foreign currency differences recognised directly in other comprehensive income when assets and liabilities of foreign operations are translated to the Group's presentational currency at exchange rates at the reporting date and income and expenses are translated to the Group's presentational currency at average exchange rates.
16.
Trade and other payables
As at
As at
31 March
31 March
2019
2018
$'000
$'000
Other payables
360
358
Accruals
799
619
1,159
977
17.
Related party transactions
(a) Transactions with key management personnel
During the year ended 31 March 2019, nil (2018 ‑ 30,200) share options were granted to key management personnel as defined by IAS 24 'Related party disclosures'. Key management personnel include J. Peng, a senior employee of Marrelli Support Services Inc. (MSSI), a company which provides financial accounting services to the Group. The share options granted in the year ended 31 March 2018 expire on 19 April 2022.
The following share options, granted to current and past directors and management, were outstanding as at 31 March 2019.
Number of
options
Expiry
Directors/officers
Exercise price (£)
outstanding
date
Directors
J. Zorbas
60
5,000
19 April 2022
J. Zorbas
90
5,000
19 April 2022
J. Vieira
60
2,600
19 April 2022
J. Vieira
90
2,600
19 April 2022
Management
J. Peng
60
1,000
19 April 2022
J. Peng
90
1,000
19 April 2022
Former directors
D. Subotic
60
2,600
19 April 2022
D. Subotic
60
2,600
19 April 2022
H. Kloepper
60
1,000
19 April 2022
H. Kloepper
90
1,000
19 April 2022
(b) Directors' remuneration
Year
Year
ended
ended
31 March
31 March
2019
2018
$'000
$'000
Fees for services as director
32
30
Basic salary
183
187
Share-based payments
-
74
Total
215
291
Included in trade and other payables in note 16 are amounts accrued in respect of fees and salary of directors' of the Company in the year totalling $761,000 being amounts due to J.Zorbas ($688,000,(31 March 2018:$527,000)); J Vieira ($44,000, (31 March 2018:$32,000)); K. Appleby $16,000 (31 March 2018: $nil) and H. Kloepper ($13,000,(31 March 2018:$13,000)).
18.
Loss before income tax
The following items have been charged in arriving at the loss before income tax for the year:
Year ended
Year ended
31 March
31 March
2019
2018
$'000
$'000
Auditors' remuneration
87
40
Directors' fees
32
31
Share-based payment charge
37
128
Operating lease charges
17
16
Depreciation
40
33
Exceptional items
1,554
-
Foreign exchange loss/(gain)
120
(220
)
The exceptional items in the year relate to the impairment of the shares in MRS of $686,000 (note 12) which have been fully impaired at the year end, and the impairment of the Group's 50% interest in the Burgersfort project of $868,000 which has also been fully impaired at the year end (note 11).
19.
Income tax expense and deferred taxation
The Group is incorporated in the British Virgin Islands (BVI). The BVI Business Companies Act imposes no corporate or capital gains taxes and the Group's losses will also not result in an income tax recovery in the BVI. However, the Group may be liable for taxes in the jurisdictions where it operates or develops mining properties.
Effective 13 July 2012, the Group became resident in Canada, and is subject to income taxes at a combined federal and provincial statutory tax rate of 26.5% (2018 - 26.5%).
Income tax expense from the amount that would be computed by applying the Canadian federal and provincial statutory income tax rates to the loss for the year is as follows:
2019
2018
$'000
$'000
Loss for the year before taxation
(2,291
)
(862
)
Expected income tax recovery
(607
)
(228
)
Benefit of losses not recognised
607
228
A deferred tax asset has not been recognised in respect of the losses because there is insufficient evidence of the timing of future taxable profits against which it can be recovered.
The significant components of the Group's unrecognised deductible temporary differences as at 31 March 2019 and 2018 are as follows:
2019
2018
$'000
$'000
Loss carry-forward
13,696
11,338
Share issuance costs
164
232
Other
982
982
20.
Segmental information
(a) Reportable segments
The Group has two reportable segments, as described below, which are the Group's strategic business units. Both are determined by the CEO, the Group's chief operating decision-maker, and have not changed in the year. The strategic business units offer different services, and are managed separately because they require different strategies.
The following summary describes the operations in each of the Group's reportable segments:
Exploration
Includes obtaining licences and exploring these licence areas.
Corporate Office
Includes all Group administration and procurement
There are no other operations that meet any of the quantitative thresholds for determining reportable segments during the years ended 31 March 2019 or 31 March 2018.
There are varying levels of integration between the Exploration and Corporate Office reportable segments. This integration includes shared administration and procurement services.
Information regarding the results of each reportable segment is included below. Performance is measured based on segmented results. Any inter‑segment transactions would be determined on an arm's length basis. Inter‑segment pricing for the periods ended 31 March 2019 and 2018 consisted of funding advanced from Corporate Office to Exploration.
(b) Operating segments
Exploration
Corporate office
Total
2019
2018
2019
2018
2019
2018
$'000
$'000
$'000
$'000
$'000
$'000
Depreciation
(40
)
(33
)
-
-
(40
)
(33
)
Reportable segment loss before tax
(908
)
(33
)
(1,383
)
(829
)
(2,291
)
(862
)
Exploration
Corporate office
Total
As at 31 March
2019
2018
2019
2018
2019
2018
$'000
$'000
$'000
$'000
$'000
$'000
Reportable segment assets
2,509
3,396
585
3,033
3,094
6,429
Reportable segment liabilities
(11
)
(10
)
(1,148
)
(967
)
(1,159
)
(977
)
(c) Geographical segments
During the years ended 31 March 2019 and 31 March 2018, business activities took place in Canada and South Africa. In presenting information based on the geographical segments, segment assets are based on the physical location of the assets.
The following table presents segmented information on the Group's operations and loss for the year ended 31 March 2019 and assets and liabilities as at 31 March 2019:
Canada
Sweden
South Africa
Total
$'000
$'000
$'000
$'000
Net loss
(1,383
)
-
(908
)
(2,291
)
Total assets
566
-
2,528
3,094
Non-current assets
43
-
2,512
2,555
Liabilities
(1,148
)
(11
)
-
(1,159
)
The following table presents segmented information on the Group's operations and loss for the year ended 31 March 2018 and assets and liabilities as at 31 March 2018:
Canada
Sweden
South Africa
Total
$'000
$'000
$'000
$'000
Net loss
(829
)
-
(33
)
(862
)
Total assets
3,033
-
3,396
6,429
Non-current assets
85
-
3,284
3,369
Liabilities
(967
)
(10
)
-
(977
)
21.
Contingent liabilities
The Group is subject to the conditional consideration in respect of the acquisition of UML as detailed in note 11.
22.
Subsequent event
On 4 September 2019 the London Stock Exchange temporarily suspended the trading of MRS shares as two of the company's principal subsidiaries were placed into administration. As a result, the Group recorded an impairment of MRS shares which has been included as an exceptional item in profit and loss.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
For further information, please contact:
URU Metals Limited
John Zorbas
(Chief Executive Officer)
+1 416 504 3978
SP Angel Corporate Finance LLP
(Nominated Adviser and Broker)
Ewan Leggat
+ 44 (0) 203 470 0470
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR CKKDDPBKDCCN
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