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 2018. The full Report & Accounts are available on the Company's website and are expected to be posted to shareholders shortly.
Trading in the ordinary shares of the Company will remain suspended pending a further announcement by the Company confirming that the Report and Accounts have been posted to shareholders.
Chairman's Statement
For the Year Ended 31 March 2018I am pleased to present to our shareholders and stakeholders the consolidated financial statements of the Group for the year ended 31 March 2018.
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, as well as positive trading at the Groups available-for-sale financial asset, Management Resource Solutions Plc ('MRS'), following a difficult 2017 financial period.
Jay Vieira
Non-executive Chairman
Chief Executive Officer's Report
For the Year Ended 31 March 2018Below are the major events in the year ended 31 March 2018.
Zebediela Nickel Project
The Zebediela Project now represents an exciting nickel - copper - platinum group metal (Ni-Cu-PGE) exploration project with the potential to become a shallow, low-cost, high-value mining project. Recent drilling by the Group has demonstrated that the project has the potential to host a nickel ore body with significant PGE and Cu credits at shallow depths.
Following the successful 2017 drilling campaign (drill holes Z017, Z018, and Z019), a follow up drill program was undertaken in November 2017. It consisted of three new drill holes being drilled on the Zebediela project (drill holes Z020, Z021, Z022) targeting further Ni-Cu- PGE intersections and to improve the understanding of the geology, geometry and mineralisation style of the ultramafic body hosting the Ni-Cu-PGE mineralisation. The drilling on Zebediela was completed in December 2017 and the results of these we released to the market on 16 March 2018. The table below presents a summary of the drill results from the two drill programmes targeting Ni-Cu-PGE mineralisation at Zebediela.
Drill hole ID
Depth From
Depth To
Sample Interval
Depth Below Surface
Cu
Ni*
Ni**
3PGE + Au***
meters
meters
meters
meters
%
%
%
g/t
Z019
133
142
9
78.9
0.15
0.43
0.34
1.97
Z019
169
170.8
1.8
100
0.1
0.44
0.34
1.60
Z020
55.0
65.0
10.0
43.2
0.18
0.52
0.43
2.39
Z020
174.0
176.1
2.1
137.0
0.15
0.59
0.42
2.00
Z021
194.0
198.8
4.8
176.0
0.12
0.48
0.34
2.15
Z022
38.1
41.7
3.6
28.9
0.09
0.35
0.33
0.89
Z022
95.0
95.5
0.5
70.0
0.13
0.39
0.37
6.37
*Total Ni assay by complete digestion, representing the Ni in both silicate and sulphide minerals
**Citric acid leach, representing mostly the Ni in sulphide minerals
*** 3PGE+Au equals platinum + palladium + rhodium + gold by fire assay with ICP-MS Finish
The relatively high base metal content with significant PGE grades means that the basket price in drill intersections for Zebediela is higher than that at Anglo American Platinum's Mogalakwena Mine, the world's largest open pit platinum mine, located approximately 20 km northwest of the Zebediela Project.
A comparison of grades and basket prices of metals from the results of the drilling compared with nearby operating PGE-Ni-Cu producers and projects is presented in the tables below.
Average grade relative to other PGE-Ni-Cu producers in South Africa
Company
Project/Reef
3PGE + Au*
g/tPt g/t
Pd g/t
Rh g/t
Au g/t
Ni %
Cu %
Anglo Platinum
Mogalakwena
2.73
1.14
1.35
0.09
0.15
0.18
0.10
PTM Waterberg Project
T-Zone
3.94
1.14
1.93
0.04
0.83
0.08
0.16
F-Zone
3.69
1.11
2.36
0.04
0.18
0.16
0.07
Ivanplats
Flatreef
4.40
1.95
2.01
0.14
0.30
0.34
0.17
URU**
Zebediela
1.98
0.62
1.20
0.11
0.06
0.47
0.14
Merensky Reef
Mine reserves
4.11
2.52
1.18
0.21
0.21
0.15
0.06
UG2 Reef
Mine reserves
4.80
2.54
1.64
0.46
0.16
0.04
0.02
* 3PGE+Au equals platinum + palladium + rhodium + gold
**From drill results only. This does not constitute a resource or reserve statement in any manner or format whatsoever. Grades for Zebediela are calculated on a weighted average on sample thickness and density.
Basket price comparison on a US Dollar per metric ton basis with other PGE-Ni-Cu producers in South Africa (as per RNS dated 18 July 2018)
Company
Project/Reef
Pt $/t
Pd $/t
Rh $/t
Au $/t
Ni $/t
Cu $/t
*Basket Price $/t
Anglo Platinum
Mogalakwena
30.24
40.50
6.08
5.98
25.52
6.18
114.50
PTM Waterberg Project
T-Zone
30.24
57.89
2.70
33.12
11.34
9.89
145.18
F-Zone
29.44
70.79
2.70
7.18
22.68
4.33
137.13
Ivanplats
Flatreef
51.72
60.29
9.45
11.97
48.20
10.51
192.15
URU
Zebediela
16.43
35.95
7.20
2.39
65.95
8.87
136.78
Merensky Reef
Mine reserves
66.84
35.40
14.18
8.38
21.27
3.71
149.77
UG2 Reef
Mine reserves
67.37
49.19
31.06
6.38
5.67
1.24
160.92
*Metal prices as of 12 July 2018.
A ground-based geophysics program consisting of a time domain induced polarisation (IP) and resistivity plus ground magnetometer survey was recently completed in order to assist with the accurate placement of further planned exploration drill holes and help gain a better understanding of the geology of the area. These results are expected to be released in October 2018.
The magnetite and acid leach test work were also completed in 2017 and the results were released to the market on the 3 November 2017. An oxidative acidic leach test work programme was conducted on fresh material from drill hole Z017 which was drilled in the nickel-bearing dunite portion of the project. This resulted in a dissolution of 80% nickel after 26 days at a pH of 1.8 and the acid consumption reached 447 kg/t. This test work program has been temporarily halted following the discovery of the higher value Ni-Cu-PGE mineralisation.
Burgersfort Nickel Project
Based on the similarity of the geology between the Burgersfort Nickel Project and the Zebediela Nickel Project, the geological model for the Burgersfort Nickel Project is currently being revised to incorporate learnings from the Ni-Cu-PGE discoveries at Zebediela.
Investment in Management Resource Solutions PLC
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.
MRS has two subsidiaries: Bachmann Plant Hire Pty Ltd ("BPH") and MRS Subzero Pty Ltd (trading as MRS Services Group, "MRSSG"). The markets which BPH and MRSSG service are the strongest they have been in years. BPH is currently working at fully capacity and has a strong pipeline of work to complete. MRSSG is experiencing strong demand, with revenues now exceeding $4.0m per month. The Hunter Valley thermal coal price has been strong and stable providing confidence for the coal mines to commit to repairs and maintenance and Yancoal / Glencore has recently completed the acquisition of the Rio Tinto assets in the Hunter Valley. Both BPH and MRSSG were run as separate operations with little interaction or utilisation of shared services and group purchasing during the financial years 2015-16 and 2016-17. During late 2016-17 and 2017-18 the Group prioritised significant cost cutting and restructuring, and has restructured the senior management. The cost cutting and restructuring programme is now substantially complete. Further progress is anticipated in 2018-19 as debt continues to be repaid from the strong operational cashflow generated by the major changes, which are now taking effect.
We are pleased in our investment in MRS and look forward to its future growth in value for our shareholders.
Strategy for 2018/2019
Advance Zebediela project
The Group's plans for 2018/2019 include further exploration targeting the Ni-Cu-PGE mineralisation identified in the successful 2017 drill campaigns. This includes further geological mapping, ground-based geophysics, soil sampling and exploration drilling. The main goal of this programme is to expand on the current understanding of the geology and the geometry of the ultramafic body hosting the Ni-Cu-PGE mineralisation and to ultimately define a JORC Compliant Mineral Resource estimate and conduct further feasibility studies on the Zebediela project. The mapping, ground-geophysics and soil geochemistry are currently underway and will be used to target drilling along strike and down-dip of the drilling conducted in the fourth quarter of 2017, which, if successful, will contribute towards the goal of defining a mineral resource statement related to the Ni-Cu-PGE mineralisation.
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
Overall positive trend - In March 2018, the average nickel price was approximately $13,400 per metric ton, reaching a three year high of $15,500 a metric ton in June 2018. 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 average nickel price for 2018, as noted in the World Bank Commodity Markets Outlook Report published in April 2018, is expected to be $13,500 a metric ton, with forecasts predicting it will reach $18,000 a metric ton by 2030.
Nickel is used in numerous products including, industrial, consumer, military, transport/aerospace, marine, and stainless steel. 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 is likely to 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.
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
Consolidated Statement of Comprehensive Income
For the Year Ended 31 March 2018
2018
2017
$'000
$'000
Administrative expenses
(862
)
(670
)
Operating loss
(862
)
(670
)
Reclassification from foreign currency translation reserve
-
25
Net loss for the year
(862
)
(645
)
Other comprehensive income
Items that will be reclassified subsequently to income
Unrealised loss on available-for-sale financial assets
(334
)
-
Effect of translation of foreign operations
159
(72
)
Other comprehensive loss for the year
(175)
(72
)
Total comprehensive loss for the year
(1,037
)
(717
)
Basic and diluted net loss per share (USD cents) (note 8)
(0.11
)
(0.15
)
The accompanying notes to the consolidated financial statements are an integral part of these statements.
Consolidated Statement of Financial Position
31 March 2018
As at
As at
31 March
31 March
2018
2017
$'000
$'000
ASSETS
Non-current assets
Property, plant and equipment (note 10)
85
116
Intangible assets (note 11)
3,243
2,796
Long-term prepaid assets (note 9)
41
41
Total non-current assets
3,369
2,953
Current assets
Available-for-sale financial assets (note 12)
1,676
1,173
Trade and other receivables (note 13)
67
30
Cash and cash equivalents
1,317
2,678
Total current assets
3,060
3,881
Total assets
6,429
6,834
EQUITY AND LIABILITIES
Equity
Share capital (note 14)
7,806
7,726
Share premium (note 14)
46,938
46,723
Reserves
1,380
1,184
Accumulated deficit
(50,672
)
(49,476
)
Total equity
5,452
6,157
Current liabilities
Trade and other payables (note 16)
977
677
Total liabilities
977
677
Total equity and liabilities
6,429
6,834
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 2018
2018
2017
$'000
$'000
Cash flows from operating activities
Net loss for the year
(862
)
(645
)
Adjustments for:
Share-based payments
203
-
Depreciation
33
3
Reclassification from foreign currency reserve
-
(25
)
Unrealised foreign exchange gain
(145)
(149
)
Changes in non-cash working capital items:
(Increase)/decrease in receivables
(37
)
141
Increase in trade and other payables
300
203
Net cash used in operating activities
(508
)
(472
)
Investing activities
Purchase of available for-sale financial assets
(650
)
-
Purchase of property, plant and equipment
-
(119
)
Purchase of intangible assets
(406
)
(8
)
Net cash used in investing activities
(1,056
)
(127
)
Financing activities
Net proceeds from exercise of share options
203
-
Proceeds from share issues, net of transaction costs
-
2,796
Net cash generated by financing activities
203
2,796
Gain on exchange rate changes on cash and cash equivalents
-
(3
)
Net (decrease)/ increase in cash and cash equivalents
(1,361
)
2,194
Cash and cash equivalents, beginning of year
2,678
484
Cash and cash equivalents, end of year
1,317
2,678
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 2018
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 2016
3,240
47,236
31
2,307
(1,026
)
(48,831
)
2,957
Shares issued in private placement
3,799
(1,141
)
(31
)
-
-
-
2,627
Shares issued for professional service
235
(93
)
-
-
-
-
142
Shares issued for acquisition of available-for-sale financial assets
252
898
-
-
-
-
1,150
Fair value of warrants issued
-
(57
)
-
57
-
-
-
Shares issued through exercise of warrants issued in private placement
200
103
-
(57
)
-
-
246
Transaction costs incurred for share issuance
-
(223
)
-
-
-
-
(223
)
Reclassification of foreign currency reserve in SSOAB
-
-
(25
)
-
(25
)
Net loss and comprehensive loss for the year
-
-
-
-
(72
)
(645
)
(717
)
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
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 2018
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.
The consolidated financial statements of the Group for the year ended 31 March 2018 comprise the Company and its subsidiaries.
2.
Nature of operations
During the year ended 31 March 2018, 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 available-for sale 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 5) 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
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. On the basis of the forecasts, the Directors are confident that the Group has sufficient working capital to meet its ongoing liabilities as they fall due. Accordingly, the Directors continue to adopt the going concern basis in the preparation of these consolidated financial statements.
(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.
Available-for-sale financial assets
Available for sale financial assets consist of equity investments in other companies or limited partnerships where the Group does not exercise either control or significant influence.
Available for sale 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
Loans and receivables
Non-derivative
Fair value
Amortised cost using the
effective interest methodTrade and other receivables
Loans and receivables
Non-derivative
Fair value
Amortised cost using the
effective interest methodCash and cash equivalents
Other financial liabilities
Non-derivative
Fair value
Amortised cost using the
effective interest methodTrade and other payables
Other financial liabilities
Non-derivative
Fair value
Fair value through
other comprehensive incomeContingent consideration
Financial assets at fair value
Non-derivative
Fair value
Fair value through
other comprehensive incomeAvailable-for-sale financial assets
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.
Loans and receivables
Loans and receivables are non-derivative financial assets that have fixed or determinable payments and that are not quoted in an active market. Loans and receivables are initially recognised at the fair value and subsequently carried at amortised cost less impairment losses. If collection of other receivables is expected in one year or less, they are classified as current assets. If not, they are classified as non-current assets.
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 Group has no financial instruments carried at fair value as at 31 March 2018 other than available-for-sale financial assets which is a Level 1 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 Group's management estimates the fair value of investments based on the criteria below and reflects such valuation in the consolidated financial statements which are included in Level 1.
Available-for-sale financial assets that are traded on a recognised securities exchange and for which no sales restrictions apply and for which an active market exists, are recorded at fair values based on quoted closing prices at the consolidated statement of financial position date or the closing price on the last day the security traded if there were no trades at the statement of financial position date. Available-for-sale financial assets which are traded on a recognised securities exchange but which are escrowed or otherwise restricted as to sale or transfer are determined based on other observable market inputs.
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 consolidated 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
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 9, 'Financial Instruments'
•
IFRS 15, 'Revenue from Contracts with Customers'
•
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 except that IFRS 9 will impact both the measurement and disclosure of financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures. Beyond this, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 until a detailed review has been completed.
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 is considered to be minimal.
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 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 2018 the carrying value of intangible assets of the Group were $3,243,000 (2017: $2,796,000). 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 9.59% 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.
Valuation of available-for-sale financial assets
The Group has adopted a policy of the revaluation of available-for-sale 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.
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 10. 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 $1,317,000 (2017 - $2,678,000), which represent the maximum credit exposure on these assets. As at 31 March 2018, 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
977
977
977
-
31 March 2017
Trade and other payables
677
677
677
-
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 2018
Cash and cash equivalents
-
1,294
-
23
1,317
Trade and other receivables
-
-
-
67
67
Trade and other payables
-
(217
)
(58
)
(702
)
(977
)
31 March 2017
Cash and cash equivalents
-
2,185
-
493
2,678
Trade and other receivables
-
-
-
30
30
Trade and other payables
-
(104
)
(74
)
(499
)
(677
)
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 2018
31 March 2017
Equity
Profit or loss
Equity
Profit or loss
$'000
$'000
$'000
$'000
GBP
-
(108
)
-
(350
)
CAD
-
61
-
(7
)
SEK
-
6
-
7
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 2018 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 2018 and 31 March 2017 none of the options had a dilutive effect on the loss in the two years.
As at
As at
31 March
31 March
2018
2017
$'000
$'000
Loss used in calculating basic and diluted earnings per share ($)
(862)
(645)
Number of shares
Weighted average number of shares for the purpose of basic earnings per share
779,944,091
443,928,720
Weighted average number of shares for the purpose of diluted earnings per share
779,944,091
443,928,720
Basic loss per share (US cents)
(0.11)
(0.15)
Diluted loss per share (US cents)
(0.11)
(0.15)
9.
Long-term prepaid assets
31 March
31 March
2018
2017
$'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 2016
-
Additions
120
Impact of foreign exchange
(1
)
At 31 March 2017
119
Impact of foreign exchange
2
At 31 March 2018
121
Field
equipment
ACCUMULATED DEPRECIATON
$'000
At 31 March 2016
-
Depreciation for the year
3
At 31 March 2017
3
Depreciation for the year
33
At 31 March 2018
36
Field
equipment
CARRYING VALUE
$'000
At 31 March 2017
116
At 31 March 2018
85
11.
Intangible assets
Exploration costs
COST
$'000
At 31 March 2016
4,662
Additions
8
Foreign exchange
(113
)
At 31 March 2017
4,557
Additions
406
Foreign exchange
98
At 31 March 2018
5,061
ACCUMULATED AMORTISATION AND IMPAIRMENT
$'000
At 31 March 2016
1,805
Foreign exchange
(44)
At 31 March 2017
1,761
Foreign exchange
57
At 31 March 2018
1,818
CARRYING VALUE
$'000
At 31 March 2017
2,796
At 31 March 2018
3,243
The Group operates 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 project 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.
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 continued 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 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
South African Projects (continued)
As at 31 March 2018, 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 2018 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.
12.
Available-for-sale financial assets
As at
As at
31 March
31 March
2018
2017
$'000
$'000
At 1 April
1,173
-
Additions
650
1,417
Fair value adjustment through other comprehensive income
(334)
-
Foreign exchange gain/(loss)
187
(244)
At 31 March
1,676
1,173
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 2018 the Group held 17,550,000 ordinary shares representing 9.59% of the issued share capital of MRS.As at 31 March 2018 the investments in MRS shares were valued at $1,676,000 based on share price of £0.068 per share.
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.
13.
Trade and other receivables
31 March
31 March
$'000
$'000
Other receivables
67
30
14.
Share capital and share premium
Number of
shares
Share capital
Share premium
Total
$'000
$'000
$'000
At 31 March 2016
328,960,380
3,240
47,236
50,476
Shares issued in private placements (i)(ii)(iii)
374,944,444
3,799
(1,141
)
2,658
Shares issued for professional fees (i)(iii)(iii)
23,499,999
235
(93
)
142
Fair value of warrants issued (ii)
-
-
(57
)
(57
)
Shares issued upon exercise of warrants (iv)
20,000,000
200
46
246
Reclassification of fair value of warrants upon exercise (iv)
-
-
57
57
Shares issued for acquisition of available-for-sale financial asset (v)
25,166,666
252
898
1,150
Transaction costs incurred for private placement
-
-
(223
)
(223
)
At 31 March 2017
772,571,489
7,726
46,723
54,449
Shares issued upon exercise of share options (vi)
8,000,000
80
123
203
Reclassification of fair value of share options exercised (vi)
-
-
92
92
At 31 March 2018
780,571,489
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.
(i) On 22 November 2016 the Group issued 185,000,000 shares at £0.004 for gross proceeds of $832,000 and settlement of director fees and consulting fees of $87,000. Officers and directors of the Group subscribed for 32,500,000 shares for $161,000. Transaction costs of $81,000 were incurred.
(ii) On 9 January 2017 the Group issued 200,000,000 shares at £0.0045 for gross proceeds of $1,063,000 and settlement of director fees and consulting fees of $30,000. Related parties including, Captor Capital Corp, a company with common management and directors of the Company, subscribed for 31,111,111 shares for $170,000. Transaction costs of $105,000 were incurred.
On 9 January 2017 the Group issued 20,000,000 warrants to Adam International Investments Limited ("Adam International") with each warrant exerciseable at £0.01 for a share of the Company. The fair value of the warrants was determined to be $57 using the Black Scholes model with the following assumptions: risk free rate of 0.73%, dividend yield of 0%, expected life of 1 year, expected volatility of 145.7%, exercise price of £0.01 and share price of £0.0059.
(iii) On 13 February 2017 the Group issued 13,444,443 shares at £0.045 for gross proceeds of $732,000 and settlement of director fees and consulting fees of $25,000. Related parties including Captor Capital Corp., which subscribed for 3,555,555 shares for $200,000. Transaction costs of $21,000 were incurred.
(iv) On 1 March 2017 the Group issued 20,000,000 shares for the exercise of the 20,000,000 warrants issued to Adam International above for gross proceeds of $246,000.
(v) On 1 March 2017 the Group issued 25,166,666 for the acquisition of 7,550,000 ordinary shares of Management Resource Solutions Plc ("MRS") from Scopn Pty Ltd. at a price of £0.15 per share. Transaction costs of $7,000 were incurred.
(vi) During the year ended 31 March 2018 8,000,000 shares were issued upon exercise of share options by J. Vieira (3,000,000 shares); J. Zorbas (3,000,000 shares) and D. Subotic (2,000,000 shares), all at an exercise price of £0.02 per share.
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 2018 (2017 - $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 2018 and 31 March 2017.
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 30,200,000 share options were granted. The options vested on grant and 15,050,000 options are exercisable at a price of £0.06 and 15,150,000 options are exercisable at £0.09.
The inputs into the option pricing model for the 15,050,000 options granted in April 2017 are as follows:
Weighted average exercise price £0.06
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 15,150,000 options granted in April 2017 are as follows:
Weighted average exercise price £0.09
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 2018:
Weighted
Number of
average
options
Number
Exercise prices (£)
remaining life (years)
outstanding
exercisable
0.06
4.15
15,050,000
15,050,000
0.09
4.15
15,150,000
15,150,000
0.049
2.56
32,833,334
2,633,334
0.07
4.02
63,033,334
32,833,334
(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
11,133,334
0.03
Options exercised
(8,000,000
)
0.03
Options expired unexercised
(500,000
)
0.03
Options granted
30,200,000
0.08
At 31 March 2018
32,833,334
0.07
The following is a summary of the Group's warrants granted under its Share Incentive Scheme. As at 31 March 2018 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
100,000
0.345
9 October 2019
0.345
Refer to note 14(iv) for the issuance and exercise of 20,000,000 warrants during the year ended 31 March 2017.
(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
2018
2017
$'000
$'000
Other payables
358
291
Accruals
619
386
977
677
17.
Related party transactions
(a) Transactions with key management personnel
During the year ended 31 March 2018 30,200,000 share options were granted of which 24,400,000 share options were granted to key management personnel, (2017 - nil), 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 expire on 19 April 2022.
The following share options, granted to current and past directors and management, were outstanding as at 31 March 2018.
Number of
options
Expiry
Directors/officers
Exercise price (£)
outstanding
date
Directors
J. Zorbas
0.06
5,000,000
19 April 2022
J. Zorbas
0.09
5,000,000
19 April 2022
J. Vieira
0.06
2,600,000
19 April 2022
J. Vieira
0.09
2,600,000
19 April 2022
Management
J. Peng
0.06
1,000,000
19 April 2022
J. Peng
0.09
1,000,000
19 April 2022
Former directors
D. Subotic
0.06
2,600,000
19 April 2022
D. Subotic
0.06
2,600,000
19 April 2022
H. Kloepper
0.06
1,000,000
19 April 2022
H. Kloepper
0.09
1,000,000
19 April 2022
(b) Directors' remuneration
Year
Year
ended
ended
31 March
31 March
2018
2017
$'000
$'000
Fees for services as director
30
18
Basic salary
187
159
Share-based payments
74
103
Total
291
280
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 $572,000 being amounts due to J.Zorbas ($527,000,(2017:$340,000)); J Vieira ($32,000, (2017:$15,000)) and H. Kloepper ($13,000,(2017:$Nil)).
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
2018
2017
$'000
$'000
Auditors' remuneration
40
63
Directors' fees
31
121
Share-based payment charge
128
-
Operating lease charges
16
32
Depreciation
33
3
Foreign exchange gain (unrealised)
(220
)
(86
)
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% (2017 - 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:
2018
2017
$'000
$'000
Loss for the year before taxation
(862
)
(645
)
Expected income tax recovery
(228
)
(171
)
Benefit of losses not recognised
228
171
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 2018 and 2017 are as follows:
2018
2017
$'000
$'000
Loss carry-forward
11,338
10,476
Share issuance costs
232
234
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 2018 or 31 March 2017.
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 years ended 31 March 2018 and 31 March 2017 consisted of funding advanced from Corporate Office to Exploration.
(b) Operating segments
Exploration
Corporate office
Total
2018
2017
2018
2017
2018
2017
$'000
$'000
$'000
$'000
$'000
$'000
Depreciation
(33
)
(3
)
-
-
(33
)
(3
)
Reportable segment loss before tax
(33
)
(3
)
(829
)
(642
)
(862
)
(645
)
Exploration
Corporate office
Total
As at 31 March
2018
2017
2018
2017
2018
2017
$'000
$'000
$'000
$'000
$'000
$'000
Reportable segment assets
3,396
2,878
3,033
3,956
6,429
6,834
Reportable segment liabilities
(10
)
(10
)
(967
)
(667
)
(977
)
(677
)
(c) Geographical segments
During the years ended 31 March 2018 and 31 March 2017, 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 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
)
The following table presents segmented information on the Group's operations and loss for the year ended 31 March 2017 and assets and liabilities as at 31 March 2017:
Canada
Sweden
South Africa
Total
$'000
$'000
$'000
$'000
Net loss
(642
)
-
(3
)
(645
)
Total assets
3,956
-
2,878
6,834
Non-current assets
113
-
2,840
2,953
Liabilities
(667
)
(10
)
-
(677
)
21.
Contingent liabilities
The Group is subject to the conditional consideration in respect of the acquisition of UML as detailed in note 11.
In the year the Group settled the lawsuit previously filed by the Group's former financial controller.
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
SVS Securities Plc
(Joint Broker)
Tom Curran
+44 (0) 203 700 0093
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 FSLESDFASEDS
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