REG - Xtract Resources plc - Annual Financial Report <Origin Href="QuoteRef">XTR.L</Origin> - Part 1

Xtract ResourcesAnnouncement

30/05/2017 07:07

RNS Number : 4379G
Xtract Resources plc
30 May 2017
For immediate release
30 May 2017
Xtract Resources Plc
("Xtract" or the "Company")
Audited results for the 12 months ended 31 December 2016
The Board of Xtract Resources Plc ("Xtract" or the "Company") announces its audited financial results for the 12 months ended 31 December 2016. The 2016 Audited Annual Report and Accounts have been posted to shareholders and is available from the Company's websitewww.xtractresources.com
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Enquiries:
Xtract Resources Plc
Colin Bird, Executive Chairman
+44 (0) 203 416 6471
Beaumont Cornish (Nominated Adviser)
Michael Cornish / Felicity Geidt
+44 (0) 207 628 3369

Email: corpfin@b-cornish.co.uk

Beaufort Securities (Broker)
Jon Belliss
+44 (0) 207 382 8300
Financial highlights
 Administrative and operating expenses of 1.65m (2015: 1.45m)
 Cash of 0.18m (2015: 3.76m)
 Net loss of 8.94m (2015: 4.58m)
 Net assets of 6.56m (2015: 7.55m)
Operational highlights
 Received final approval from Mozambican mining authority to complete the acquisition of 100% of
 Manica gold project in Mozambique from Auroch Minerals NL
 Conditional sale and purchase agreement, to sell the Manica gold project for a cash consideration of
 US$17.5m laspsed in September 2016
 Progressed Manica DFS
 Strategic review of the Chepica mine determined that the fundamentals and risks no longer supported continued investment
 Board elected not to proceed with the O'Kiep and Carolusberg copper tailings, concluding the recoveries were too low to produce a viable copper concentrate
Corporate highlights
 Appointment of Colin Bird as Executive Chairman
 Agreement reached with Auroch Minerals NL regarding US$2.5m deferred acquisition payment
 Reduction of corporate overheads and further reductions being implemented
 Raise of equity capital to advance development of projects
Chairman's Statement
"Dear Shareholder
TheyearunderreviewhaspresentedmanychallengesmostofwhichhavebeenmetwiththeCompanynowonaneven keel and moving with a clear direction and focus.
On26August2016theboardelectedtoreviewtheentireoperationandcompanyinvestmentandinsodoingrequested that I change my appointment from Non-Executive to Executive Chairman. My first task in managing the review was to investigate theChepicamineperformance,itshistoryanditspotential.Duringthedetailedreviewitbecameapparent thattheminehadmanyfundamentaloperatingissues,mainlyfocusedaroundvariablegoldgrades,adverseground conditionsandlimitedflexibility.Allofthisledtotheminebeingunabletoproduceasurplusofincomeonamonthly basis.Theoperationalteamhadplanstoopennewareas,re-equipandimproveaspectsoftheprocessingplantand increaseminethroughput.Ourexaminationclearlyacceptedthepotentialbenefitsofprocessplantimprovedperformance butwesawnoprospectsforimprovinggroundconditionsincreasingproductionormaintainingaviablegoldgrade.On thisbasistheboardtookthedecisiontoceasefurtherinvestmentsinthelocalcompanyMineraPolar.Theresultofthis decision was to eliminate what was a serious cash drain affecting all aspects of company performance.
FollowingthisdecisiontoeliminatefurtherinvestmentinChepica,theboardlookedinternallyatitsoverheadsandcurrent debt.Againitwasapparentthattheoverheadsandactivitieswerenotmatchedwhichwasmadeevenmoreobviousby the cessation of funding of Chepica.
On 13 September 2016 the Chief Executive Office Jan Nelson abruptly resigned his position for personal reasons. The Company overheads have been reduced from 2.2 million per annum to 0.63 million per annum and are still being reduced to reflect the size of the Company and its assets. The creditor list has been reduced considerably.
The next step was to focus on the real asset, the Manica gold mining asset in Mozambique. On examination this asset was considered to be robust providing many opportunities in the mid-term and thus became our strategic asset. The boardmadethedecisiontocompletethedefinitivefeasibilitystudyandgavetheinvestingmarketapromisetocomplete this bytheendofFebruary2017.Thiswascompletedontimeandonbudgetproducingasolidhighrateof return,mid- scale gold mining open pit project. The underlying fundamentals and details will be outlined later in this report.
InMay2016theCompanyhadannouncedanalluvialsminingjoint ventureandon26May2016announcedapotential disposaloftheManicaconcession foranofferofUSD$17.5million.Boththejoint ventureandtheManicadisposal were toa companyknownasMineralTechnologiesInternational("MTI")andNexusCapital.Duringthelastquarteroftheyear manydiscussions wereheldwithMTImanagementconcerningthecompletionofthepurchaseandtheimplementation of the alluvial agreement. It became apparent that the disposal was unlikely to occur and that the alluvial joint venture agreementinitscurrent formwasalsoflawedinpractice.Thepartiesthereforeagreedonanditwasannouncedonthe 13February2017thatMTIandtheCompany wouldworktogethertoformliaisonswithlocalcontractorsthus subcontracting the initial agreement. The decision was taken since there are many capable contractors in the area who had interest in working the Manica alluvials. We considered that his route would mitigate against financial, capital and operating risk and thus agreed to work towards appointing suitable qualified contractors.
Iam pleased to saythat the alluvials present on the concession have been offered for tender to anumber of local contractors and to alluvial mining experienced contractors not currently operating in the region. The evaluation process and contract award are imminent and execution ofthese contracts in the coming months and yearsshould provide significant cash flows to the Company.
AsstatedatthecommencementofthisreporttheyearhasnotbeeneasybutIampleasedtosaythatweissuethisreport in a stable, focused manner with a clear vision on how we will go forward with the company. The Manica project offers many opportunities and these will be exploited. We intend to bring the hard rock open pit into production as soon as is reasonable and are currently discussing various financing and contracting proposals.
Geopoliticaltensionsandfinancemarketuncertaintiesleadustobelievethatthecomingyearwillenjoyastrongbuoyant goldpricewhichthecompanyrevenueswillbenefitfrom.Wealsobelievethatmuchmergerandacquisitionactivitywill take place in the emerging mining company arena and the Board is committed to explore opportunities to restore shareholder value during the coming year.
Iwouldliketothanktheremainingmanagementteamfortheirhardworkinextremelytryingtimesandournewadvisors for their wise council and of course our shareholders for their patience and understanding whilst the company has mitigated all the key threats against initially its survival and secondly its prosperity.
Colin Bird
Executive Chairman
26 May 2017
Consolidated Income Statement
FOR THE YEAR ENDED 31 DECEMBER 2016
Registered number: 5267047

Note
Year ended 31 December 2016
Year ended 31 December 2015


'000
'000
Continuing operations
Administrative and operating expenses

(1,647)
(1,452)
Project expenses

(246)
(147)
Operating loss

(1,893)
(1,599)
Other gains and (losses)
6
-
436
Finance (cost)/income
11
(1,998)
(177)
Impairment of Intangible assets
14
-
(2,217)
Impairment of Financial asset available for sale

-
(86)
(Loss)/profit before tax
8
(3,891)
(3,289)
(Loss)/profit for the period from continuing operations
8
(3,891)
(3,289)
(Loss) for the year from discontinued operation
7
(5,048)
(1,286)
(Loss) for the period

(8,939)
(4,575)
Attributable to:
Equity holders of the parent

(8,939)
(4,575)
Net (loss)/profit per share
Continuing

(0.03)
(0.05)
Discontinuing

(0.05)
(0.02)
Basic (pence)
13
(0.08)
(0.07)
Continuing

(0.03)
(0.05)
Discontinuing

(0.05)
(0.02)
Diluted (pence)
13
(0.08)
(0.07)
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2016

Group

Year ended 31 December 2016
Year ended 31 December 2015

'000
'000
(Loss) for the year
Other comprehensive income:
(8,939)
(4,575)
Items that may be reclassified subsequently to profit and loss
Gains on revaluation of available-for-sale investment taken to equity
-
(483)
Exchange differences on translation of foreign operations
478
167
Other comprehensive income/(loss) for the year
478
(316)
Total comprehensive income/(loss) for the year
(8,461)
(4,891)
Attributable to:
Equity holders of the parent
(8,461)
(4,891)
The notes on pages 23-58 in the Report and Accounts form an integral part of these financial statements
Consolidated and Company Statements of Financial Position
AS AT 31 DECEMBER 2016


Group
Company

Note
As at
31 December
2016
'000
As at 31 December 2015
'000
As at
31 December
2016
'000
As at 31 December 2015
'000
Non-current assets
Intangible assets
14
10,148
4,992
-
-
Property, plant & equipment
15
-
1,309
-
-
Investment in subsidiary
16
-
-
10,341
1,808
Financial assets available for sale
17
-
-
-
-


10,148
6,301
10,341
1,808
Current assets
Trade and other receivables
18
194
1,744
286
1,630
Derivative financial instruments
20
352
-
352
-
Inventories
19
-
45
-
-
Cash and cash equivalents

181
3,763
172
3,693


727
5,552
810
5,323
Total assets

10,875
11,853
11,131
7,131
Current liabilities
Trade and other payables
22
1,427
3,555
2,667
536
Interest bearing
22
1,473
-
1,473
-
Other payables
22
1,417
-
1,417
-
Amounts due to subsidiaries
22
-
-
3,962
8,491


4,317
3,555
8,102
9,027
Net current assets/(liabilities)

(3,592)
1,997
(7,293)
(3,704)
Non-current liabilities
Other payables
23
-
312
-
-
Provisions
23
-
167
-
-
Reclamation and mine closure provision
23
-
266
-
-
Total liabilities

4,317
4,300
8,102
9,027
Net assets/(liabilities)

6,558
7,553
3,049
(1,896)
Equity
Share capital
24
3,355
2,253
3,355
2,253
Share premium account

54,439
48,688
54,439
48,688
Warrant reserve
27
613
500
613
500
Share-based payments reserve
27
539
440
539
440
Available-for-sale reserve
25
-
-
-
-
Foreign currency translation reserve
25
249
(229)
-
-
Accumulated losses

(52,637)
(44,099)
(55,897)
(53,777)
Equity attributable to equity





holders of the parent

6,558
7,553
3,049
(1,896)
Total equity

6,558
7,553
3,049
(1,896)
ThefinancialstatementsofXtractResourcesPLC,registerednumber5267047,wereapprovedbytheBoardofDirectors and authorised for issue. It was signed on behalf of the Company by:
Joel Silberstein
Director
26 May 2017
The notes on pages 23-58 of the Report and Accounts form an integral part of these financial statements
Consolidated Statement of Changes in Equity
Group
Note
Share Capital
'000
Share premium account
'000
Warrant reserve
'000
Share based payments reserve
'000
Available- for-sale reserve
'000
Foreign currency translation reserve '000
Accumulated losses '000
Total Equity
'000
As at 1 January 2015

1,776
38,742
205
591
483
(396)
(39,802)
1,599
Comprehensiveincome









Lossfortheyear

-
-
-
-
-
-
(4,575)
(4,575)
Forexcurrencytranslation









differences

-
-
-
-
-
167
-
167
Revaluationofavailable-









for-saleinvestments
17
-
-
-
-
(483)
-
-
(483)
Total comprehensive









income for the year

-
-
-
-
(483)
167
(4,575)
(4,891)
Issueofshares

454
10,264
-
-
-
-
-
10,718
Sharebasedpaymentexpense
27
-
-
-
127
-
-
-
127
Expiryofshareoptions

-
-
-
(278)
-
-
278
-
Exerciseofwarrants

23
138
(161)
-
-
-
-
-
Issueofwarrants
27
-
(456)
456
-
-
-
-
-
As at 31 December 2015

2,253
48,688
500
440
-
(229)
(44,099)
7,553
Comprehensiveincome









Lossfortheyear

-
-
-
-
-
-
(8,939)
(8,939)
Forexcurrency









translationdifference

-
-
-
-
-
478
-
478
Total comprehensive









income for the year

-
-
-
-
-
478
(8,939)
(8,461)
Issueofshares
24
1,102
5,751
-
-
-
-
-
6,853
Sharebasedpaymentexpense
27
-
-
-
99
-
-
-
99
Expiryofwarrants
27
-
-
(401)
-
-
-
401
-
Exerciseofwarrants

-
-
-
-
-
-
-
-
Issueofwarrants
27
-
-
514
-
-
-
-
514
As at 31 December 2016

3,355
54,439
613
539
-
249
(52,637)
6,558
The notes on pages 23-58 of the Report and Accounts form an integral part of these financial statements

Statement of Changes in Equity
Company
Note
Share Capital
'000
Share premium account
'000
Warrant reserve
'000
Share based payments reserve
'000
Available- for-sale reserve
'000
Foreign currency translation reserve '000
Accumulated losses '000
Total Equity
'000
As at 1 January 2015

1,776
38,742
205
591
483
-
(50,472)
(8,675)
Comprehensiveincome









Lossfortheyear

-
-
-
-
-
-
(3,583))
(3,583)
Forexcurrencytranslation









differences

-
-
-
-
-
-
-
-
Revaluationofavailable-









for-saleinvestments
17
-
-
-
-
(483)
-
-
(483)
Total comprehensive









income for the year

-
-
-
-
(483)
-
(3,583)
(4,891)
Issueofshares

454
10,264
-
-
-
-
-
10,718
Sharebasedpaymentexpense
27
-
-
-
127
-
-
-
127
Expiryofshareoptions

-
-
-
(278)
-
-
278
-
Exerciseofwarrants

23
138
(161)
-
-
-
-
-
Issueofwarrants
27
-
(456)
456
-
-
-
-
-
As at 31 December 2015

2,253
48,688
500
440
-
-
(53,777)
7,553
Comprehensiveincome









Lossfortheyear

-
-
-
-
-
-
(2,521)
(2,521)
Forexcurrency









translationdifference

-
-
-
-
-
-
-
-
Total comprehensive









income for the year

-
-
-
-
-
-
(2,521)
(2,521)
Issueofshares
24
1,102
5,751
-
-
-
-
-
6,853
Sharebasedpaymentexpense
27
-
-
-
99
-
-
-
99
Expiryofwarrants
27
-
-
(401)
-
-
-
401
-
Exerciseofwarrants

-
-
-
-
-
-
-
-
Issueofwarrants
27
-
-
514
-
-
-
-
514
As at 31 December 2016

3,355
54,439
613
539
-
-
(55,897)
3,049
The notes on pages 23-58 of the Report and Accounts form an integral part of these financial statements
Consolidated and Company Cash Flow Statement


Group
Company

Note
Year ended
31 December
2016
'000
Year ended
31 December
2015
'000
Year ended
31 December
2016
'000
Year ended
31 December
2015
'000
Net cash used in operating activities
26
(1,310)
(3,963)
(3,263)
(4,516)
Investing activities
Acquisition of subsidiary undertaking

(3,902)
-
(3,902)
-
Acquisition of intangible fixed assets
14
(2,465)
(945)
-
(368)
Acquisition of tangible fixed assets
15
(272)
(252)
-
-
Proceeds from disposal of intangible assets
Proceeds from disposal of available-for-sale investment
17
-
371
-
-
-
-
-
Net cash (used in)/from investing activities

(6,639)
(826)
(3,902)
(368)
Financing activities
SEDA backed loan

1,346
(356)
1,346
(356)
Proceeds on issue of shares

2,298
8,769
2,298
8,769
Land Option payments

(112)
8
-
-
Loans from directors

-
(5)
-
-
Net cash from financing activities

3,532
8,416
3,644
8,413
Net decrease in cash and cash equivalents

(4,417)
3,627
(3,521)
3,529
Cash and cash equivalents at beginning of year

3,763
163
3,693
164
Cash acquired during the year

85
-
-
-
Effect of foreign exchange rate changes

750
(27)
-
-
Cash and cash equivalents at end of year

181
3,763
172
3,693
Cash flows from discontinued operations
Net cash used operating activities

(1,101)
(534)
-
-
Net cash used in investing activities

(1,116)
(1,197)
-
-
Net Cash (used in)/from financing equivalents

(112)
8
-
-


(2,329)
(1,723)
-
-
Significant Non Cash movements





1.  TheassetsandliabilitiesofMistralResourceDevelopmentCorporationanditssubsidiary undertaking,Explorator Limitada, were acquired in March 2016 by the issue of new Ordinary Shares of 0.01p each, to a value of 2,843k, in addition to total cash consideration of 5,694k of which 1,792k is deferred.
2.  The mineral exploration rights in respect of the O'Kiep and Carolusberg project were acquired during 2015 by the issue of ordinary shares to the value of 1,849k.
3. During 2015 a total of 100k of the SEDA backed loan was settled through the issue of ordinary shares. The notes on pages 23-58 of the Report and Accounts form an integral part of these financial statements.
Notes to the Financial Statements
Selected notes from the financial statements are set out below without amendment to the note reference. The full notes are contained in the Audited Annual Report and Accounts
1. General information
XtractResourcesPLCisaCompanyincorporatedinEnglandandWalesundertheCompaniesAct2006.Theaddressofthe registered office is 7/8 Kendrick Mews, South Kensington, London, SW7 3HG. The nature of the Group's operations and its principal activities are set out in the Strategic Report.
ThesefinancialstatementsarepresentedinPoundSterling.Foreignoperationsareincludedinaccordancewiththepolicies set out in note 3.
The financial information set out in this announcement does not constitute the Group's statutory financial statements for the years ended 31 December 2016 or 2015 but is derived from those financial statements. Statutory financial statements for 2015 have been delivered to the Registrar of Companies, and those for 2016 will be delivered in due course. 
The auditors have reported on the financial statements for the year ended 31 December 2016; their report was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006 but did include an emphasis of matter in relation to going concern.
While the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as endorsed for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs. 
The principal accounting policies adopted in the preparation of the financial information in this announcement are set out in the Company's full financial statements for the year ended 31 December 2016 and are consistent with those adopted in the financial statements for the year ended 31 December 2015. 
Directors do not recommend the payment of a dividend (2015: nil). 
The Board approved this announcement on26th May 2017.
2. Adoption of new and revised Standards
New standards, amendments and interpretations adopted by the Company
NewandrevisedStandardsandInterpretationsthathavebeenrequiredtobeadopted,andareapplicableinthecurrent yeartotheCompany,asstandards,amendmentsandinterpretationswhichareeffectiveforthefinancialyearbeginning on 1 January 2016 do not have a material effect on the Company financial statements.
New standards, amendments and interpretations not yet adopted
Atthedateofauthorisationofthesefinancialstatements,thefollowingStandardsandInterpretationswhichhavenotbeen applied in these financial statements, were in issue but not yet effective for the year presented:
-  IFRS9inrespectofFinancialInstrumentswhichwillbeeffectivefortheaccountingperiodsbeginningonorafter 1 January 2018.
- IFRS15inrespectofRevenuefromContractswithCustomerswhichwillbeeffectiveforaccountingperiodsbeginning on or after 1 January 2018.
- IFRS 16 in respect of Leases which will be effective for accounting periods beginning on or after 1 January 2019. 
TherearenootherIFRSsorIFRICinterpretationsthatarenotyeteffectivethatwouldbeexpectedtohaveamaterialimpact on the Company.
3. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) adoptedbytheEuropeanUnion.Thefinancialstatementshavebeenpreparedunderthehistoricalcostconventionmodified for certain items carried at fair value, as stated in the accounting policies. The principal accounting policies adopted are set out below.
Basis of consolidation
TheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheCompanyandentitiescontrolledbythe
Company(itssubsidiaries).These consolidatedfinancialstatementsaremadeupfortheyearended31December2016.
ControlisachievedwheretheCompanyhasthepowertogovernthefinancialandoperatingpoliciesofaninvesteeentity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement fromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal,asappropriate.Wherenecessary,adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Going concern
The operations of the Group are currently financed through funds which the Company has raised from shareholders. An operatinglosshasbeenreportedastheGroup'sassetsarenotcurrentlygeneratingrevenuesandtheDirectorsanticipate net operating cash outflows for part of the next twelve months from the date of signing these financial statements.
Incommonwithjuniorminingcompanies,theCompanyraisesfinanceforitsactivitiesindiscretetranchestofinanceits activities for limited periods only and further funding will be required from time to time to finance those activities.
The Directors have assessed the working capital requirements for the forthcoming twelve months and have undertaken the following assessment.
As at 31 December 2016, the Group held cash balances of 181k. During February 2017, the Company raised 1,878k through an equity raising and has concluded settlement arrangements with a substantial part of its creditors.
Uponreviewingthosecashflowprojectionsfortheforthcomingtwelvemonths,thedirectorsconsiderthattheCompany may require additional financial resources in the twelve month period from the date of approval of these financial statements to enable the Company to fund its current operations and to meet its commitments. The Directors would then expect for any additional funds to be raised through equity fund raising.
On 13 February 2017, the Company signed a Collaboration Agreement with Nexus Capital for the exploitation of the alluvialgolddepositsatManica.Discussionsarecurrentlybeingheldwithanumberof3rdpartiestoconcludecommercial agreementsfortheexploitationofthealluvialswithintheconcession.Theaboveagreementsshouldresultinpositivecash flows which would assist in working capital requirements.
TheGroup'sabilitytocontinueitsoperationsisacriticalaccountingassumptionandasaresultthedirectorshaveconcluded a material uncertainty that casts significant doubt upon the company's ability to continue as a going concern and that, therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.
Nevertheless,aftermakingenquiriesand consideringtheuncertaintiesdescribedabove,thedirectorshaveareasonable expectationthatthecompanyhasadequateabilitytoraisefinancetocontinueinoperationalexistencefortheforeseeable future. The Directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the going concern basis of preparation of the financial statements is not appropriate.
Parent only income statement
XtractResourcesPLChasnotpresenteditsownincomestatementaspermittedbysection408oftheCompaniesAct2006. The loss for the year ended 31 December 2016 was 2,521k (2015: loss 3,583k).
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred orassumed,andequityinstrumentsissued bytheGroupinexchange forcontroloftheacquire.Acquisition-relatedcosts are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent considerationarrangement,measuredatitsacquisition-datefairvalue.Subsequentchangesinsuchfairvaluesareadjusted againstthecostofacquisitionwheretheyqualifyasmeasurementperiodadjustments(seebelow).Allothersubsequent changesinthefairvalueofcontingentconsiderationclassifiedasanassetorliabilityareaccountedforinaccordancewith relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.
Where a business combination is achieved in stages, the Group's previously-held interests in the acquired entity are re- measuredtofairvalueattheacquisitiondate(i.e.thedatetheGroupattainscontrol)andtheresultinggainorloss,ifany, isrecognised in profit or loss. Amounts arising from interests in the acquiree priorto the acquisition date that have previouslybeenrecognisedinothercomprehensiveincomearereclassifiedtoprofitorloss,wheresuchtreatmentwould be appropriate if that interest were disposed of.
Theacquiree'sidentifiableassets,liabilitiesandcontingentliabilitiesthatmeettheconditionsforrecognitionunderIFRS 3 (2008) are recognised at their fair value at the acquisition date.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisionalamountsareadjustedduringthemeasurementperiod(seebelow),oradditionalassetsorliabilitiesare recognised,toreflectnewinformationobtainedaboutfactsandcircumstancesthatexistedasoftheacquisitiondate that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.
Foreign currencies
The individual financial statementsofeach GroupCompany are maintained in thecurrency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group Company are expressed in Pounds Sterling, which is the functional currency of the Company, and the presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functionalcurrency(foreigncurrencies)arerecordedattheratesofexchangeprevailingonthedatesofthetransactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at therates prevailing on the balance sheet date. Non-monetary items carried atfair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Forthepurposeofpresentingconsolidatedfinancialstatements,theassetsandliabilitiesoftheGroup'sforeignoperations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the averageexchangeratesfortheperiod,unlessexchangeratesfluctuatesignificantlyduringthatperiod,inwhichcasethe exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.
On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entitythatincludesaforeignoperation,orlossofsignificantinfluenceoveranassociatethatincludesaforeignoperation), alloftheaccumulatedexchangedifferencesinrespectofthatoperationattributabletotheGrouparereclassifiedtoprofit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRSs as Sterling denominated assets and liabilities.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Deferred tax
Deferredtaxisthetaxexpectedtobepayableorrecoverableondifferencesbetweenthecarryingamountsofassetsand liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporarydifferencesanddeferredtaxassetsare recognised totheextentthatitisprobablethattaxableprofitswillbe availableagainstwhichdeductible temporarydifferencescanbeutilised.Suchassetsandliabilitiesarenot recognisedif the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferredtaxiscalculated atthetaxratesthatareexpectedtoapplyintheyearwhentheliabilityissettledortheasset is realised. Deferred tax is charged or credited in the income statement,except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceableright tosetoffcurrenttaxassetsagainst currenttaxliabilitiesandwhenthey relate toincometaxeslevied bythesametaxationauthorityandtheGroupintends to settle its current tax assets and liabilities on a net basis.
Intangible assets
Land acquisition rights and mine development costs
The costs of land acquisition rights in respect of mining projects and mine development are capitalised as intangible assets. These costs are amortised over the expected life of mine to their residual values using the units-of-production method using estimated proven and probable mineral reserves.
Intangibleexplorationandevaluationexpenditureassets
Thecostsofexplorationpropertiesandleases,whichincludethecostofacquiringprospectivepropertiesandexploration rights, are capitalised as intangible assets. Exploration and evaluation expenditure is capitalised within exploration and evaluationpropertiesuntilsuchtimethattheactivitieshave reachedastagewhichpermitsa reasonableassessmentof the existence of commercially exploitable reserves when they are transferred to tangible assets. Capitalised exploration and evaluationexpenditureis assessed for impairmentin accordancewith the indicatorsof impairmentas set out in IFRS6ExplorationforandEvaluationofMineralReserves.Incircumstanceswhereapropertyisabandoned,thecumulative capitalised costs relating to the property are written off in the year. Capitalised exploration costs are not amortised.
Property, plant and equipment
Tangible fixed assets represent mining plant and equipment, office and computer equipment and are recorded at cost, net of accumulated depreciation. Depreciation is provided on all tangible fixed assets at rates calculated to write off the costorvaluationofeachassetonastraight-linebasisoveritsexpectedusefullife,whichiscalculated oneitherafixed period or the expected life of mine using the unit of production method, as appropriate.
The average life in years is estimated as follows: 
Office and computer equipment
3-10
Plant and machinery
7-15
Untiltheyarebroughtintouse,fixedassetsandequipmenttobeinstalledareincludedwithinassetsunderconstruction and are not depreciated.
The cost of maintenance, repairs and replacement of minor items of tangible fixed assets are charged to the income statementasincurred.Renewalsandassetimprovementsarecapitalised.Uponsaleorretirementoftangiblefixedassets, thecostandrelatedaccumulateddepreciationareeliminatedfromthefinancialstatements.Anyresultinggainsorlosses are included in the income statement.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whetherthere is any indicationthat those assets have suffered an impairment loss. If any such indication exists, the recoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Wherethe assetdoesnotgeneratecashflowsthatareindependentfromotherassets,theGroupestimatestherecoverableamount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverableamountisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimates offuturecashflows have not been adjusted.
Iftherecoverableamount ofanassetis estimatedtobelessthanitscarryingamount,thecarryingamount oftheasset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased totherevisedestimateofitsrecoverableamount,butsothattheincreasedcarryingamountdoesnotexceedthecarrying amountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheassetinprioryears.Areversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalue amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financialassets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is underacontractwhosetermsrequiredelivery ofthefinancial assetwithinthetimeframeestablished bythemarket concerned,andareinitiallymeasuredatfairvalue,plustransactioncosts,exceptforthosefinancialassetsclassifiedasat fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classificationdependsonthenatureandpurposeofthefinancialassetsandisdeterminedatthetimeofinitialrecognition.
Available-for-sale financial assets ('AFS')
Listed and unlisted equity instruments held by the Group that are traded in an active market are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses that are recogniseddirectlyinprofitorloss.Wheretheinvestmentisdisposedoforisdeterminedtobeimpaired,thecumulative gain or loss previously recognised in the investment revaluation reserve is reclassified to profit or loss. The fair value of investments that are actively traded in organised financial markets is determined byreference to quoted market bid prices at the closure of business on the statement of financial position date. For investments where there is no active market, fairvalueisdeterminedusingvaluationtechniques. Suchtechniques includeusingrecentarm's lengthmarket transactions, reference to the current market value, discounted cash flow analysis and option pricing models.
Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is determined in the foreign currency and translated at the spot rate at the balance sheet date. Other foreign exchange gains and losses are recognised in other comprehensive income.
Financialassetsatfairvaluethroughprofitorloss
Afinancialassetisclassifiedinthiscategoryifacquiredprincipallyforthepurposeofsellingintheshortterm.Derivatives are also categorised as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets if expected to be settle within 12 months, otherwise, they are classified as non-current.
Loans and receivables
Tradereceivables,loans,andotherreceivablesthathavefixedordeterminablepaymentsthatarenotquotedinanactive marketareclassifiedas'loansandreceivables'.Loansandreceivablesaremeasuredatamortisedcostusingtheeffective interestmethod,lessanyimpairment.Interestincomeisrecognisedbyapplyingtheeffectiveinterestrate,exceptforshort- term receivables when the recognition of interest would be immaterial.
Impairment offinancialassets
Financialassets,otherthanthoseatFVTPL,areassessedforindicatorsofimpairmentateachbalancesheetdate.Financial assetsareimpairedwherethereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
ForlistedandunlistedequityinstrumentsclassifiedasAFS,a significantorprolongeddeclineinthe fairvalueofthe security below its cost is considered to be objective evidence of impairment.
For all other financial assets objective evidence of impairment could include:
  significant financial difficulty of the issuer or counterparty; or
  default or delinquency in interest or principal payments; or
  it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
Forcertaincategoriesoffinancialassets,suchastradereceivables,assetsthatareassessednottobeimpairedindividually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivablescould include the Group's past experienceof collecting payments, an increase in the numberof delayed paymentsintheportfoliopasttheaveragecreditperiodof60days,aswellasobservablechangesinthenationalorlocal economic conditions that correlate with default on receivables.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception oftradereceivables,wherethecarryingamountisreducedthroughtheuse ofanallowanceaccount.Whena trade receivable isconsidered uncollectible, it is writtenoff against the allowance account. Subsequent recoveriesof amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
When an AFS financial asset isconsidered to be impaired,cumulative gains or losses previously recognised inother comprehensive income are reclassified to profit or loss in the period.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognisedimpairmentlossisreversedthroughtheprofitorlosstotheextentthatthecarryingamountoftheinvestment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profitorloss.Anyincreaseinfairvaluesubsequent toanimpairmentlossis recognisedinothercomprehensiveincome.
De-recognition of financial assets
TheGroupde-recognisesafinancialassetonlywhenthecontractualrightstothecashflowsfromtheassetexpire,orwhen ittransfersthefinancialassetandsubstantiallyalltherisksor rewardsof ownershipoftheasset toanotherentity.Ifthe Group neither transfers norretains substantially all the risks and rewardsof ownership andcontinuesto control the transferred asset, the Group recognises its retained interest in the asset, and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Groupcontinuestorecognisethefinancialasset,andalsorecognisesacollateralisedborrowingfortheproceedsreceived.
Financial Liabilities
Initialrecognition
Financial liabilities are recognised initially at fair value and in the case of interest-bearing loans and borrowings, net of direct transactions costs.
Financial liabilities are classified at initial recognition, as financial liabilities at fair value through profit and loss. The group's financial liabilities include trade and other payables and interest-bearing loans and borrowings.
Financialliabilitiesatfairvaluethroughprofitorloss
Financial liabilities at Fair Value through Profit or Loss ("FVTPL") include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term.
Gainsandlossesonliabilitiesheldfortradingarerecognisedinthe statement ofprofitorlossand othercomprehensive income.
Loans and borrowings and trade and other payables
Interest-bearing loans and borrowings and trade and other payables are measured at amortised cost using the Effective InterestRate("EIR")method.Gainsandlossesarerecognisedinthestatementofprofitandlossandothercomprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium or costs that are integral part of EIR.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled.
Inventory
Inventories consist of gold concentrate (finished product) and ore stockpiles which represent the ore which has been extractedandavailableforfurtherprocessing.Allinventoriesarevaluedatthelowerofcostandnetrealisablevalue.Costs ofconcentrateincludematerial,directminingcosts,andcostrelatedtotheproductionprocesses.NetRealisablevalueis theestimatedfuturesalespriceoftheproducttheCompanyisexpectedtorealiseaftertheproductisprocessedandsold lesscosts tobringtheproducttosale. Whereinventories havebeenwrittendowntonetrealisable value,anew assessment is made in the following period. In instances where there has been change in circumstances which demonstrates an increase in the net realisable value, the amount written down will be reversed.
Share-based payments
Equity-settledshare-basedpaymentstocertainDirectors,employeesandothersprovidingsimilarservicesaremeasured at thefair value of the equity instruments at the grant date. Thefair value excludes theeffectof non-market based vestingconditions.Detailsregardingthedeterminationofthefairvalueofequity-settledshare-basedtransactionsareset out in note 27.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.
Finance Income
Financeincomecomprisesinterestincomeonfundsinvested(includingavailable-for-salefinancialassets).Interestincome is recognised as it accrues in profit or loss, using the effective interest method.
Operating Leases
Operatingleasepaymentsarerecognisedasanoperating expenseintheincomestatementonastraight-linebasisover the lease term.
FinanceLeases
Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership are classifiedasfinanceleases.Financeleasesarecapitalisedatthelease'scommencementatthelowerofthefairvalueof the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in the finance lease obligation. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Non-current assets under finance leases are depreciated over the useful life of the asset, underthe reasonableexpectationthatthegroupwillobtain ownershipoftheleasedassetattheendofthelease term.
Reclamation cost and mine closure provision
TheGrouprecordsaliabilityandcorrespondingassetforthepresentvalueoftheestimatedcostsoflegalandconstructive obligations for future site reclamation and closure where the liability is probable and reasonable estimate can be made oftheobligation.Theestimatedpresentvalueoftheobligationis reassessedonanannualbasisorwherenewmaterial informationbecomesavailable.Increasesordecreasestotheobligationusuallyariseduetochangeinlegalorregulatory requirements, the extent of environmental remediation required, methods of reclamation, cost estimates, or discount rates.Thepresentvalueisdeterminedbasedoncurrentmarketassessmentsofthetimevalueofmoneyusingdiscount ratesspecifictothe countryinwhichthereclamationsiteislocatedandisdeterminedastherisk-freerateofborrowing approximated by the yield on sovereign debt for that country, with a maturity approximating the end of mine life.
Revenue recognition
RevenueisrecognisedtotheextentitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecan be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts,rebatesandsalestaxorduty. Revenuefromsales ofconcentrate,isrecognisedwhenthesignificantrisksand rewardsofownershiphavebeentransferred,whichis consideredtooccurwhentitlepassestothecustomer.Thisoccurs whentheconcentrateisphysicallytransferredonthedateofshipment.Interestisrecognisedinprofitandloss,usingthe effective interest rate method.
Segment reporting
OperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtotheExecutiveChairman who is responsible for allocating resources and assessing performance of the operating segments.
Fair value estimation
Thetablebelowanalysesfinancialinstrumentscarriedat fair value,by valuationmethod.Thedifferentlevelshavebeen defined as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
  InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and
  Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(thatis,unobservableinputs)(Level3).
ThefollowingtablepresentstheGroup'sassetsthataremeasuredatfairvalue.TheGroupdoesnothaveanyliabilities measured at fair value.


2016


2015

Level 2
Level 3
Total
Level 2
Level 3
Total
000
000
000
000
000
000
Available-for-sale financial assets
-
-
-
-
-
-
Financial assets at fair value through






profit or loss
-
-
-
-
-
-
- Derivative financial instruments
352
-
352
-
-
-
Total assets
352
-
352
-
-
-
The Group does not hold any financial instruments in Level 1.
(i) Financial instruments in Level 2
Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarket(forexample,over-the-counterderivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available, and rely as little possible on entity-specific estimates. If all significant inputs required to fair value aninstrumentareobservable,theinstrumentisincludedinLevel2.Specificvaluationtechniquesusedtovaluefinancial instruments include:
 quoted market prices or dealer quotes for similar instruments; and
  thefairvalueofderivativefinancialinstrumentiscalculatedbasedontheCompany'squotedmarketpriceanda prescribed formula in accordance with the respective equity swap
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
(ii) FinancialinstrumentsinLevel3Specificcriteriausedtoestimatethevaluefinancialinstrumentsinclude:
  management's assessment of the applicable market and sector;
 financial reports and other information supplied the investee's management; and
  transactions in the investee's shares
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements,estimatesandassumptionsaboutthecarryingamountsofassetsandliabilitiesthatarenotreadilyapparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlyingassumptionsare reviewed on an on-going basis.Revisionsto accounting estimatesare recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
ThefollowingarethecriticaljudgementsthattheDirectorshavemadeintheprocessofapplyingtheGroup'saccounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Availableforsaleinvestments
The Group reviews the fair value of its unquoted equity instruments at each statement of financial position date. This requiresmanagementtomakeanestimateofthefairvalueoftheunquotedsecuritiesintheabsenceofanactivemarket, whichhasmainlybeenestablishedbyuseofrecentarm'slengthtransactions,asadjustedbyadiscount,whererequired. Uncertainty also exists due to the early stage of development of certain of the investments. The fair value of available for sale investments at 31 December 2016 is determined to be Nil (2015: Nil). Further details are given in note 17.
Impairment of intangible assets and investments
Theassessmentofintangibleassetsforanyindicationsinvolvesjudgement.Ifanindicationofimpairment,asdefinedin IFRS 6 or IAS 36 as appropriate, exists, a formal estimate of recoverable amount is performed and an impairment loss recognised to the extent that carrying amount exceeds recoverable amount. Recoverable amount is determined as the higher of fair value less costs to sell and value in use. The calculation of recoverable amount requires an estimation of the value in use of the cash-generating units to which the intangible assets are allocated. In assessing value in use, the estimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarket assessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimates offuturecashflows have not been adjusted.
Estimates in determining the life of the mines (LOM)
The LOM is determined from development plans based on mine management's estimates and includestotal mineral reserveandaportionofthemineralresource.Theseplansareupdatedfromtimetotimeandtakeintoconsiderationthe actual current cost of extraction, as well as certain forward projections. These projections are reviewed by the board.
Estimatesin determininginventoryvalue
Net realisable value tests are performedat the reporting date and represent the estimated future sales price of the product the entity expects to realise when the product is sold less costs to bring the product to sale. Ore stockpiles are measuredbyestimatingthenumberoftonnesaddedandremovedfromthestockpileandareassessedprimarilythrough surveys and assays.
Share-basedpayments
Theestimationofshare-basedpaymentcostsrequirestheselectionofanappropriatevaluationmodelandconsideration as to the inputs necessary for the valuation model chosen. The Group has made estimates as to the volatility of its own shares, the probable life of options granted and the time of exercise of those options. The model used by the Group is the Black-Scholes model.
Fair value of derivative financial instruments
Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarketisdeterminedbyusingvaluationtechniques. The fair value of the equity swaps is calculated using the prescribed formula in the equity swap agreement and the Company's prevailing market price at the year end.
Equity swaps have a carrying value of 352K (2015: Nil). The loss on re-measuring to fair value is recognised under finance costs in the Income Statement.
8. Loss before taxation
Profit / (loss)fromcontinuingoperationsanddiscontinuedoperationsfortheyearhasbeenarrivedatafterchargingthe following under administrative and operating expenses:


Year ended 31 December 2016
Year ended 31 December 2015

Note
'000
'000
Depreciation of property, plant and equipment
15
100
138
Amortisation of intangible fixed assets
14
180
185
Auditors remuneration
9
21
44
Directors remuneration
10
346
323
Share-based payments expense
27
99
127
13.(Loss) per share
The calculation of the basic and diluted earnings per share is based on the following data:

Year ended 31 December 2016 
'000
Year ended 31 December 2015 
'000
(Loss) for the purposes of basic and diluted earnings per share (EPS) being:


Net (loss) for the year from continuing operation attributable to equity
holders of the parent
(3,891)
(3,289)
Net (loss) for the year from discontinuing operation attributable to equity holders of the parent
(5,048)
(1,286)

(8,939)
(4,575)

Number of shares
Number of shares



Weighted average number of ordinary shares for purposes of basic EPS
11,864,152,652
6,474,957,673
Effect of dilutive potential ordinary shares-options and warrants 
-
-
Weighted average number of ordinary shares for purposes of diluted EPS
11,864,152,652
6,474,957,673



In accordance with IAS 33, the share options and warrants do not have a dilutive impact on earnings per share, which are set out in the consolidated income statement. Details of shares issued since the year end are shown in note 31 to the financial statements.
22. Trade and other payables

Group
Company

As at
As at
As at
As at

31 December 2016
31 December 2015
31 December 2016
31 December 2015

'000
'000
'000
'000
Trade creditors and accruals
1,427
1,107
1,250
536
Land option instalments
-
2,448
-
-
Amounts due to subsidiaries
-
-
3,962
8,491
Other payables
1,417
-
1,417
-
SEDA backed loan
1,473
-
1,473
-

4,317
3,555
8,102
9,027
Standby Equity Distribution (SEDA)
On 20 May 2015 the Company announced it had drawn down 0.47 million from its existing SEDA with YAGM and had primarilydeployedthese funds to repay the full outstanding balance of the Loan Agreement. In accordance with the termsoftheSEDA,thiswasextendedon18November2014to30November2016.TheCompanyissuedYAGMwith 149,253,731 new Ordinary Shares at a price of 0.312p per share.
On20July2016theCompanyannouncedithaddrawn0.67millionfromitsexistingSEDAwithYAGMandhadprimarily deployedthesefundstosettleapaymenttoAuroch.The Companyissued1,032,811,415newOrdinarySharesataprice of 0.065p per share.
On 21 September 2016 Company announced it had drawn 0.75 million from its existing SEDA with YAGM and had primarily deployed these funds for ongoing working capital requirements and repay 200K of the outstanding amounts on the loan note agreement. The Company issued 1,875,000,000 new Ordinary Shares at a price of 0.04p per share.
SEDA Backed Loan
On12December2013,theCompanyandYAGMenteredintoaloannoteagreementpursuant towhichYAGMagreed to issueanunsecuredloanofaprincipalamountofuptoUS$5milliontothe Company.Thenotecarriesaninterestof12% per annum and each tranche is repayable in 12 monthly instalments. The Company pays 8% of each drawn tranche as an implementation fee. An initial tranche of US$0.30 million was drawn down by the Company on 12 December 2013 and further tranches of US$0.25 million and US$0.50 million on the 18 November 2014 and 21 November 2014 respectively.
On10May2016and23May2016respectively,theCompanydrewfurthertranchesofUS$0.85million.On19July2016, theCompanydrewafurthertrancheofUS$0.4millionandthepartiesagreedtoreschedulethemonthlyinstalmentswith thefinalrepaymentdueon1August2017.As31December2016atotalof1,473k(US$1,774k)remainedoutstanding on the SEDA Backed Loan.
The Company and YAGM may mutually agree to draw down additional tranches and may redeem the loan note plus all interest at any time over the life of the note.
Auroch Minerals
On1March2016,theCompanyacquired100%ofthesharesofMistralResourceDevelopmentCorporationfromAuroch MineralsNL.AtotalofUS$2,500kofpurchase consideration wasdeferredandonthe20July2016,thepartiesagreedto scheduleofrepaymentswhichincludedpaymentsof$750kand$150kwhichwerepaidduringAugust2016.Asat 31December2016,atotal of1,417k(US$1,748k)(includinginterest)remainsoutstanding.Theloancarriesaninterest of 8% per annum.
LandOptionInstalments
The Land Option Instalments represents the staged payments amounts due. On 22 September 2016, the Company advised the Option Holder that it would no longer be making any further option payments. As a result, the Company in a net impairment charge which included a write back 2,763k in relation to the Land Option Instalments. 
31.Events after the balance sheet date
Issue of Equity
On6January2017,theCompanyannouncedthatithadissued335,484,611newOrdinaryShares0.01psharesat0.018p per Ordinary Share in settlement of outstanding invoices for services.
Settlement with Auroch Exploration Pty Ltd
On9February2017,theCompanyannouncedthatithadreachedanagreementwithAurochExplorationPtyLtd("Auroch") regardingtheoutstandingamountsowedbytheCompanytoAurochinrelationtotheacquisitionoftheManicaGoldProject.
The Company and Auroch agreed the terms for the settlement of this debt which, including further accrued but unpaid interestamountedtoUS$1.75million(the"ManicaDebt").Thesettlement oftheManicaDebthadbeen structuredasa convertiblenoteagreementforUS$0.75million("ConvertibleLoanNote"),aroyaltyagreementoverproductionatManica in Auroch's favour, a loan agreement for the balance of the Manica Debt equal to US$1 million ("Loan Agreement") and a warrant over 500,000,000 new Xtract ordinary shares. Further details are set out below:
1. Convertible Loan Note
TheCompanyagreedtoissueunsecuredConvertibleLoanNotestothetotalvalueofUS$0.75milliontoAuroch(the "Noteholder"). Interest of 10% per annum is payable quarterly in advance.
Any outstanding amount due under the Convertible Loan Note, together with accrued but unpaid interest thereon, is to berepaidonorbefore31December2017or,ifearlier,achangeofcontroloftheCompany,saleoftheManicaGoldProject or completionofajointventure.AmountsowedundertheConvertibleLoanNoteswillreduce"pound-for-pound"bythe amount of any royalty paid to Auroch under the Royalty Agreement described further below.
IntheeventofafundraisingbytheCompany,theNoteholdermayrequirethat15%ofthenetproceedsofthefundraising may be applied to redeem part of the Convertible Loan Notes.
TheNoteholdermay,atanytime,fromthedateofexecutionoftheConvertibleLoanNoteAgreementuntil31December 2017, convert all or any of the Convertible Loan Notes into new fully paid Xtract ordinary shares ("Conversion Shares") at aconversionpriceequaltoa15%discount("Conversion Discount")totheaverage volumeweightedaverage price ofXtractordinaryshares("VWAP")duringthe10businessdayspriortotheconversiondatesubjecttoafloorpriceof 0.012p per Ordinary Share. In the event of a material breach of the terms of Convertible Loan Note Agreement by the CompanywhichhasnotbeenremediedbytheCompanytotheNoteholder'ssatisfaction,actingreasonably,theConversion Discount will increase to 30%.
Following execution of the Convertible Loan Note agreement, a fee of US$0.05 million was payable to Auroch, to be satisfied by the issue of new Xtract ordinary shares (the "Fee Shares") at an issue price equal to a 15% discount to the VWAP during the 10 business days prior to the issue of the Convertible Loan Notes.
Conversion of Auroch Convertible Loan Notes
On16February2017,theCompanyannouncedthatithadissued1,589,623,629newordinarysharestoAurochatanissue price of 0.013282p (equal to a 15 per cent. discount to the VWAP during the 10 business days prior to the issue of the ConvertibleLoanNotes)followingreceiptofnoticefromAurochto convertUS$0.2millionoftheoutstandingConvertible LoanNotes,andinsettlementoftheConvertibleLoanNotearrangementfeedueofUS$0.05millionandinterestpayable in advance of US$0.01 million.
On10March2017,theCompanyannouncedthatithadreceivedanoticefromAurochtoconvertafurtherUS$0.2million of the outstanding Convertible Loan Notes. The Company issued 796,812,502 new ordinary shares to Auroch at an issue priceof0.020485p(equaltoa15%discounttotheVWAPduringthe10businessdayspriortotheissueofthisConversion Notice).
On 28 March 2017, the Company announced that it had received a notice from Auroch to convert a further US$0.03 million of the outstanding Convertible Loan Notes. The Company issued 134,835,331 new ordinary shares to Auroch at an issue price of 0.016492p (equal to a 15% discount to the VWAP during the 10 business days prior to the issue of this Conversion Notice).
The Company had also repaid the outstanding balance of Convertible Loan Notes amounting to US$0.3 million. 
Accordingly,followingtheconversionandaboverepayments,therewasnofurtheroutstandingamountontheConvertible Loan Notes.
2. Royalty Agreement relating to the Manica Gold Project
To provide security to Auroch, the Company further agreed to enter into the Royalty Agreement over the Manica Gold Project pursuant to which Auroch would be entitled to receive a royalty equal to 3% of gross revenue from commercial operations (including any alluvial gold production), payable by the Company to Auroch. The maximum royalty payment in aggregate is US$1,75 million (the "Maximum Royalty Payment"), being an amount equal to the Manica Debt. Any paymentsmadeundertheRoyaltyAgreementshallreducetheamountsduetoAurochundertheConvertibleLoanNote (describedabove)andtheLoanAgreement(describedbelow).TheRoyaltyAgreementwillterminateuponfullsettlement by the Company of the Manica Debt. The Company agreed not to create any security over or dispose of interest in the Manica Gold Project and, on or following any change of control of the Company, at Auroch's request the Company will buyoutthebalance ofanypaymentsdueunderthe RoyaltyAgreement atthethenmarketvalue(subjectalwaystothe Maximum RoyaltyPaymentandanypaymentsmadebyXtracttoAurochundertheConvertibleLoanNoteandtheLoan Agreement).
3. Loan Agreement
The Company entered into the unsecured Loan Agreement with Auroch for the balance of the Manica Debt amounting to US$1 million. Under the terms of the Loan Agreement, the Company will repay the Loan Agreement together with interest, which will accrue at a rate of 10% per annum, on or before 31 December 2017. In addition, it was agreed that the Company will endeavour to obtain relevant shareholder authorities on or before 30 June 2017 to authorise the CompanytoreplacetheLoanAgreementwithaconvertibleloannoteonsubstantiallythesametermsastheConvertible LoanNotes.IntheeventthattheCompanydoesnotobtainthenecessaryapprovalsby31December2017,anaccelerated interest rate of30% per annumwill accrue goingforward onany outstandingbalance ofthe LoanAgreement. The CompanyprovidedcustomaryrepresentationsandwarrantiestoAurochandtheLoanAgreementincludesstandardevents of default.
4. Warrants
TheCompanyagreedtoissue500,000,000warrantstoAurochatanexercisepriceof0.02ppernewXtractordinaryshare. The warrants will, unless otherwise exercised, expire on 21 December 2017.
Issue of Equity
On16February2017 theCompany announcedthat ithadraised upto1,878,933 (before expenses) followingthe conditional placement of 10,156,398,001 new Ordinary Shares of 0.01p each at 0.0185p ("Placing Price") per new Ordinary Share (the "Placing").
UnderthePlacing,theCompanyconditionallyagreedtoissueatotalof3,496,940,001newOrdinarySharesatthePlacing pricetoraisegrossproceedsof646,934,subjecttothetermsofaplacingagreementandAdmissionofthenewOrdinary Shares totradingonAIM("Tranche1PlacingShares").TheTranche1PlacingShares wereissuedundertheCompany's existing share authorities.
A further 6,659,458,000 new Ordinary Shares with gross proceeds of 1,232,000 were to be issued on the same terms ("Tranche2PlacingShares")butconditionalonshareholderapprovalofthenecessaryincreaseinauthoritytoissuethe Tranche2PlacingShares.AGeneralMeeting was convenedon13March2017andtheCompanyreceivedthenecessary approval to issue the Trance 2 Placing Shares.
The Company accelerated the settlement of all outstandingpaymentsdue to the Company under the existing equity swap agreement previously entered into with YA II EQ Ltd and received gross proceeds of approximately 0.24 million ("the"Swap Proceeds")whichwereusedtorepayanequalamountoutstandingtoYAundertheexistingLoanNote Facility. Following this acceleration, the Company terminated the equity swap agreement entered into with.
Definitive Feasibility Study
On28February2017,theCompanyannouncedtheDefinitiveFeasibilityStudy("DFS")fortheopenpitoperationofthe Company's Manica Fair Bride Project in Manica in Mozambique and which the results are summarised as follows:
 After-tax Internal Rate of Return of 41.1% at a gold price of US$ 1,262 per ounce
 Project life of 7 years with average gold grade of 2.62 g/t producing 215,293 recovered ounces
 Project payback within 2 years
 Direct cash cost ("C1") of US$556 per ounce
 All-in sustainable cost (including royalties and capital) of US$862 per ounce
 Total capital expenditure of US$43.68 million
 The Net Present Value of US$42 million at 8.4% discount rate
 Significant exploration potential in immediate vicinity
 A further 992,000 ounces in resource for additional evaluation and future exploitation
 Considerable exploration potential within the concession and nearby
Reorganisation of Loan Agreement
On4April2017,theCompanyannouncedthatithadenteredintoanagreement(the"SupplementalAgreement")with YAIIEQ,Ltd.(the"Investor")whichissupplementaltotheSEDA-backedloannoteagreementdated12December2013 ("Loan Agreement").
The Company and the Investor agreed to modify the Loan Agreement and the repayment schedules in respect of the amounts outstanding.
FollowingtheexecutionoftheSupplementalAgreement,theCompanymadeacashpaymenttotheInvestorintheamount ofUS$0.12million.TheCompanywasdischargedofitsobligationtorepayUS$0.35millionoftheamountoutstandingunder theLoanAgreementbytheissuanceandallotmenttotheInvestorof1,513,513,514newordinaryshares(the"Repayment Shares")asdeterminedbyconvertingUS$0.35millionintoGBPattherelevant exchange rateatasharepriceof0.0185p perordinaryshare,beingthesamesharepricetothelastplacingasannouncedinFebruary2017.
The outstanding balance owed under the Loan Agreement, after taking the above repayments into account, amounted to US$1.04 million (the "Balance").
InrespectofUS$0.52millionoftheBalance,theCompanyshallmake9monthlycashpaymentsofprincipalandinterest inaccordancewithnewrepaymentschedulebeginningon1July2017atarateUS$0.06millionpermonthfor2017,and on average US$0.06 million per month for 2018, and ending on 1 March 2018.
In respect of the remaining US$0.52 million of the Balance, the Company shall pay such amount on 1 April 2018, plus anyaccruedandunpaidinterestthereon,totheextentthatanysuchamounthasnotbeenpreviouslydischargedthrough conversion into new ordinary shares of the Company as described further below.
The Investor mayat any time from the dateofexecutionof the Supplemental Agreement until1 April 2018,convert all or any of the amount then outstanding under the Loan Agreement into new fully paid Xtract ordinary shares ("Conversion Shares") at a conversion price equal to a 15% discount to the average volume weighted average price of Xtract ordinary shares("VWAP")duringthe10businessdayspriortotheconversiondatesubjecttoafloorpriceof0.012pperordinaryshare.
Qualified Person
In accordance with AIM Note for Mining and Oil & Gas Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM, South African and UK Certified Mine Manager and Director of Xtract Resources plc, with more than 40 years experience mainly in hard rock mining, is the qualified person as defined in the Guidance Note of the London Stock Exchange, who has reviewed the technical information contained in this press release.
ENDS

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