TIDMNRRP
RNS Number : 9632Z
North River Resources Plc
02 June 2016
North River Resources plc / Ticker: NRRP / Index: AIM / Sector:
Mining
North River Resources plc
("North River" or the "Company")
Final Results for the year ended 31 December 2015
North River Resources plc is pleased to announce its results for
the year ended 31 December 2015 and that the Annual General Meeting
("AGM") will be held at the offices of Shakespeare Martineau LLP,
5th Floor, One America Square, Crosswall, London EC3N 2SG on
Tuesday 28 June 2016 at 11.00 am.
A notice convening the AGM, proxy form and Report and Accounts
for the year ended 31 December 2015 will be posted to shareholders
this Friday 3 June 2016 and will also be available to download from
the Company's website at www.northriverresources.com.
Highlights
-- Key milestones towards advancing the group's priority
brownfield Namib Lead-Zinc project in Namibia towards a
construction decision, have been:
-- North River received and accepted a Notice of Preparedness to
Grant the Mining Licence from the Namibian Ministry of Mines and
Energy ("Ministry") for the Namib Lead Zinc Project. The Notice set
out a process and timeline for the discussions with the Ministry to
agree upon the Supplementary Conditions. A formal proposal was
submitted to the Ministry on the Supplementary Conditions in late
April 2016.
-- A successful fund raising completed in September 2015 whereby
an additional US$4.0 million was secured through an open offer to
the market and placing of convertible loan notes with Greenstone
Resources L.P.
-- Completion of the drive on 5-level in the mine to open up
access underground for the next step in resource drilling. The
ongoing drilling programme has produced a number of highly positive
drill results and the Company remains confident that the mine life
initially estimated at 3.5 years, will be extended in due course
through an increased defined resource at the Namib Lead-Zinc
Project site.
-- New appointments to the Board of Directors in 2015 have
brought additional technical and commercial experience to the
Company, helping to support the next phase of development at the
Namib Lead-Zinc Project.
-- A decision was taken to fully impair the goodwill attached to
two early stage copper exploration concessions where recoverable
value was deemed to be marginal at current consensus long-term
copper prices. The exploration concessions, EPL 3257 and EPL 3258,
held within West Africa Gold Pty Ltd, had allocated goodwill of
GBP1,983,634 and GBP4,719,300 respectively.
-- A loss before taxation reported for the year of GBP9,797,691
(2014: loss of GBP3,320,477). The increase versus the prior year
reflects the one-off impairment of the two exploration licences EPL
3257 and EPL 3258. Excluding this charge, costs have fallen despite
an increase in site based project activities as the Group
benefitted from a weakening Namibian Dollar (2015 average GBP:NAD
1:19.47 versus a 2014 average GBP:NAD 1:17.84) and continued focus
on minimising overhead costs pending receipt of the Mining
Licence.
-- The Group's cash position as at 31 December 2015 was GBP1,376,740 (2014: GBP1,904,860)
For further information please visit www.northriverresources.com
or contact:
James Beams North River Resources Tel: +44 (0)
Plc 20 7025 7047
Andrew Emmott / Ritchie Strand Hanson Limited Tel: +44 (0)
Balmer 20 7409 3494
Jonathan Williams / RFC Ambrian Limited Tel: +44 (0)
Kim Eckhof 20 3440 6800
North River Resources plc
("North River" or the "Company")
Final Results for the year ended 31 December 2015
Chairman's Statement
North River continued during the year to focus on advancing its
flagship Namib Lead Zinc Project ("Namib Project" or "Namib") in
Namibia towards a construction decision. Project activities focused
on additional technical evaluation work required to define a mine
plan and processing plant design to a level of confidence to
support the project investment decision. The Company also engaged
regularly and proactively with Namibia's Ministry of Mines and
Energy (the "Ministry") to progress the Mining Licence application,
commenced a 3,800m resource expansion drilling campaign and
completed a US$4.0 million fundraising supported by strategic
shareholder, Greenstone Resources L.P.
I am very pleased that once again we recorded no lost time
injuries during 2015. Whilst this demonstrates the commitment of
our entire team to operate a zero harm working environment we must
remain focused to ensure this unblemished track record
continues.
While good progress was made on the project workstreams, the
mining licence for the Namib Project remains outstanding. The
uncertainty around timing and conditions to be attached to the
issue of the licence has been a source of frustration for the
Company and its shareholders and has led to repeated changes in the
pre-construction work programme and has made longer term planning
for taking the project forward to an investment decision very
difficult. In early 2016, we were issued with a Notice of
Preparedness to Grant the Mining Licence for the Namib Project (the
"Notice") subject to reaching agreement on various additional
conditions to the mining licence (the "Supplementary Conditions").
The Notice set out a process and timeline for discussions with the
Ministry to reach agreement on the Supplementary Conditions and in
accordance with this process, we submitted a formal proposal to the
Ministry on the Supplementary Conditions in late April 2016.
I am very encouraged by the receipt of the Notice in that it
confirms there are no technical issues with the application, but
remain cautious on the timeframe and extent to which agreement can
be reached on the issue of the licence. Separately, the Government
of the Republic of Namibia recently published a draft bill on
proposed broad based economic empowerment in the country (the
National Equitable Economic Empowerment Bill, the "Draft Bill").
The Draft Bill covers a number of obligations which would, if
enacted into law, be inconsistent with those laid down under the
Supplementary Conditions for the mining licence. Achieving further
clarity in this area will be critical to advancing the project to a
construction decision.
Outlook
We remain committed to bringing the Namib Project into
production. We believe it is an economically robust, technically
straightforward project with real potential to deliver benefits to
both its shareholders and wider stakeholders in Namibia. The
targeted increase in mineral resource, and consequent potential for
a longer life of the mine will further enhance the economics of
Namib and its funding options.
Whilst the average prices for zinc and lead in 2015 were lower
than for the prior period, recent market developments indicate that
the supply and demand balance is tightening which augurs well for
the price outlook.
In light of the uncertain timeframe for securing the mining
licence and gaining clarity on the implications of the proposed
broad based economic empowerment legislation, we are focusing our
immediate efforts in two areas: completing the resource expansion
drilling campaign and progressing the mining licence application.
Initial results from the resource drilling campaign have been
encouraging and have confirmed mineralization 80 metres below the
existing northern resource. Certain holes have achieved outstanding
intersections, such as NLDD067 (57.1m, true width of 8.5 metres, at
28.6% zinc) and NLDD069 (35.7 metres, true width of 9 metres, at
33.8% zinc), providing increasing confidence that an enlarged
resource supporting a longer life of mine will be delineated in due
course.
Pending clarity on the timing for receiving the mining licence
and taking the project forward, we are redoubling our efforts to
conserve cash and identify further cost savings. In light of this,
the Project Director has left the Company, and a number of project
work streams, including the Front End Engineering and Design work
("FEED") continue to be deferred. The Company will nonetheless need
to undertake a working capital fundraising in the short term, in
order to continue to fund the work programme over a longer period
than envisaged at the time of the placing and open offer completed
in October 2015, and we are in the process of evaluating funding
options and the structure under which funds may be raised.
This is my first Chairman's statement. As we all know this is a
very difficult period for commodity producers and project
developers. I joined the board because I am convinced of the
emerging physical deficit of zinc in world markets and was
attracted by the quality of the North River team. I remain so
convinced. We all expect to make substantial progress in
2016/2017.
Rod Beddows
Chairman
31 May 2016
Chief Executive Officer's Statement
The Namib Project
Overview
The Namib Project entails re-opening a previously producing mine
and the construction of a new plant to process 250,000 tonnes of
ore per annum. The currently defined JORC resource supports an
initial 3.5 year mine life although we are confident that this will
be extended through the ongoing resource drilling campaign. Located
20km inland from Swakopmund in Namibia, the project benefits from
being well located, with excellent surrounding infrastructure.
Namibia has a well established mining industry and good access to
local mining suppliers and support services.
Geology
Namib is hosted within the thinly interbedded clastics and
carbonates of the Arises Marble unit of the Karibib Formation of
the Swakop Group, which in the vicinity of the mine displays
complex folding and deformation. The mineralised massive "Mine
Marble" unit within the Karibib Formation is a weakly banded and
coarse grained marble.
Structurally, mineralisation occurs in NE-SW striking tabular
lodes that occur in the axial zone and limbs of a ductile
SW-plunging anticlinal fold closure. The lodes have similar
orientation around the fold closure and are therefore not folded.
They are stratabound within the host mine marble unit but are very
oblique to this enclosing envelope. As a result, the lodes
typically have short strike lengths but much greater down-plunge
continuity. Lodes do occur which are elongated along the mine
marble strike, but this is less common.
The lodes within the deposit are assigned to four zones relative
to their position in the fold closure, the North, South, N20 and
Junction.
Minerals Resource Estimate as at 29 August 2014
Reported at a lower cut-off grade of 1% Pb% + Zn%
Tonnes Density Zinc Lead Silver
t/m(3) % % g/t
----------- ------- ---------- -------- ----- ----- -------
Indicated North 730,000 3.65 6.2% 2.8% 45.1
South 147,000 3.61 5.3% 2.1% 40.5
Inferred North 121,000 3.63 9.3% 0.7% 29.6
South 251,000 3.69 6.6% 2.7% 48.2
------------------- ---------- -------- ----- ----- -------
Total 1,250,000 3.65 6.5% 2.5% 43.7
-------------------- ---------- -------- ----- ----- -------
Tonnages have been rounded to the nearest 1,000t to reflect that
this is an estimate. Apparent differences may occur due to
rounding.
Definitive Feasibility Study ('DFS')
A DFS was completed in November 2014 and the highlights
include:
-- Maiden Mineral Ore Reserve of 585,000 tonnes at 6.2% zinc, 2.9% lead, and 46ppm silver
-- Annual throughput of 250,000 tonnes at an average grade of 9%
(Pb+Zn) producing 19,100 tonnes of metal in concentrate
-- 280,000 ounces per annum silver by-product
-- Initial mine life of 3.5 years (including ramp up and ramp
down) and resources equivalent to five years of mine life
-- Capital cost of US$27.8 million
-- Robust project economics with a 12 month payback, post-tax
NPV10 of $24.7 million and post tax IRR of 52% at consensus metal
prices (assuming the resource base utilized)
Project optimisation and resource expansion
Following completion of the DFS in November 2014, a number of
areas were identified where additional technical evaluation work
was required to define a mine plan and processing plant design to a
level of confidence to support a project investment decision.
Metallurgical testwork
North River appointed ALS Laboratories ('ALS') to conduct a
detailed supplementary testwork programme supervised by Ken
Sangster. ALS was selected for their relevant experience and
knowledge of similar milling operations. The work was conducted to
address the inconsistent grade recoveries experienced via
processing routes proposed as part of the DFS which referred to a
'lack of agreement' on the performance of different samples.
The lack of a definitive processing solution in the DFS derives
from the fact that the mineralisation at Namib contains the iron
sulphide mineral, pyrrhotite, which responds to flotation in a
similar manner to the minerals, sphalerite and marmatite which are
the primary zinc ore minerals at Namib. This response can lead to a
build-up of pyrrhotite, and consequently iron, in the zinc cleaner
circuit. While iron is common in lead-zinc deposits, it is normally
present as pyrite, which can be more easily depressed during
flotation than pyrrhotite.
The implications of the presence of pyrrhotite were experienced
first-hand in the previous operation and, as a result, intermediate
products had to be dumped to tailings in order to maintain saleable
concentrate quality, but at the sacrifice of zinc recovery during
processing.
At the time of publication of the DFS, the locked cycle tests
which were underway had not yet been completed. The DFS postulated
that the use of magnetic separation as a means of removing some of
the pyrrhotite from the circuit, but the subsequent results did not
support this proposal as zinc recovery was compromised. Therefore
the focus of the work was to produce a robust operating
environment, taking into account the main variables in mineralogy
and flotation chemistry.
Metallurgical optimisation work
To properly liberate the generally finer zinc minerals, a
separate zinc regrind circuit is required to optimise the overall
zinc recovery and concentrate grade. Extensive mineralogy was
conducted as a precursor to flotation testwork to determine the
most effective grind size. A primary grind of around 80% passing
100 micron level has been selected and this is also a practically
achievable level within the proposed processing system.
Following this, the fundamental issue in improving the
differential flotation performance was the selection of an optimal
reagent regime. The use of zinc sulphate as a reagent, commonly
used in other lead/zinc operations, was identified as a major
contributor to slowing down the sphalerite recovery rate making
effective separation from the pyrrhotite more difficult.
Consequently, testwork was necessary to eliminate zinc sulphate
from the flowsheet and identify a more selective lead collector.
These newer collectors, replacing the more traditional xanthates
and zinc sulphate, have proved successful in the testwork.
Using the optimised grind and new reagent regime, the Company
has developed a robust processing methodology which can operate
with consistent results with a wide range of mineral composition
and particularly with the variable pyrite and pyrrhotite
content.
This different regime has given reproducible results using
locked cycle tests conducted to complete equilibrium. Overall the
reproducible results, from the five different composites tested,
gave the following results:
-- Lead: 62.2%Pb at 91.1% Pb recovery
-- Zinc: 52.4%Zn at 89.2% Zn recovery (optimum Zinc grades
limited by the zinc mineral Marmatite which has a high iron
content)
These are actual results with the top and bottom values
discarded from compatible locked cycle tests. This has obviated the
previous problem of using batch data when the concentrate grade and
associated recoveries can be mutually unsustainable.
Detailed minor element analyses of the above reported
concentrates show no impurities that could affect the marketing
acceptability.
These results are a significant development, removing any
residual concern over operational variability in the processing
plant and demonstrating robust controls of the final saleable
products. This greatly assists in overall project bankability as we
move forward with financing plans and, in particular, its
discussions with debt financiers.
Resource expansion
In addition to the project development activities, we view the
increase of the Mineral Resource at Namib as a key component to
unlocking project financing in a challenged commodity price
environment and delivering overall shareholder value.
Drilling campaign from August 2014 to November 2015
Following the last Mineral Resource Estimate of August 2014, the
Company completed 4,828 of drilling in 66 holes in the period to
November 2015. Of these, 52% (34 holes) had significant intercepts.
A summary of the intercepts can be found in Table 1.
The drilling campaign focussed primarily on targeting both new
extensions of known mineralised shoots, as well as infill drilling
to potentially convert Inferred Mineral Resources into the
Indicated Mineral Resource category. Drilling was undertaken mainly
in the top half of the North Orebody and also below the historic
South Mine, which is around 200m below surface. The majority of the
current Inferred Mineral Resources lie below the South Mine, which
is also referred to as the Southern orebody. In general, the
drilling results in both areas met management's expectations and
increased its confidence in the Mineral Resource.
Drilling below the Junction stope, and between the Junction and
the Central stopes of the Southern orebody targeting resource
expansion, has yielded encouragingly high grade results:
-- NLDDK070: 3.6m @ 15.6% Zn, 1.0% Pb
-- NLDDK071: 7.3 @ 14.9% Zn, 3.2% Pb & 4.5m @ 9.3% Zn, 13.6% Pb
-- NLDD062: 3.8m @ 10.9% Zn, 8.7% Pb
-- NLDD061: 5.7m @ 16.8% Zn, 6.9% Pb
-- NLDD056: 8.7m @ 9.6% Zn, 3.7% Pb
Ongoing resource expansion drilling campaign
Encouraged by these results, we embarked on a 3,800m expansion
drilling campaign below the current North resource in late 2015, to
test the extensions at depth of these ore envelopes. The drilling
campaign also envisages infill and extension drilling in the
existing Southern resource. The Company is confident that this
campaign will result in an enlarged resource supporting a longer
mine life.
To access sufficient underground drilling locations, a 300 metre
drive underneath the existing North resource has been developed
(the "5 Level Drive"). The 5 Level Drive was successfully completed
in March 2016. As the mine moves into an operational phase, the
development drive will be incorporated into the mine plan as an
access road.
As at 26 April 2016, 18 holes totalling 1,767 metres had been
drilled by the Company's own Kempe U3-9BQ together with a larger
Diamec 262 rig under contract. Eleven holes have been reported and
the summary results can be seen in Table 2 below with the remaining
holes awaiting sampling or assay results. The Kempe is being used
to search for shallower targets up to 80m below the modelled
envelopes while the more powerful Diamec rig is used for drill
holes up to 200m deep. The drilling campaign is targeted for
completion by end of June 2016.
Significant mineralisation has been intersected in six
holes:
-- NLDD067: 57.1m (true width of 8.5 metres) at 28.6% zinc and 33g/t silver*;
-- NLDDK074: 3.0m (true width of 1.5 metres) at 35.0% zinc and
11.9m (true width of 6.0 metres) at 20.8% zinc;
-- NLDDK075: 8.7m (true width of 4.0 metres) at 19.5% zinc and
3.0m (true width of 2.0 metres) at 12.2% zinc; and
-- NLDDK076: 3.6m (true width of 1.3 metres) at 9.8% zinc, 2.6%
lead and 42g/t silver, plus 8.1m (true width of 2.5 metres) at 6.7%
zinc, 7.6% lead and 101g/t silver
-- NLDD069: 35.7m (true width of 9 metres) at 33.8% zinc
-- NLDDK077: 3.8m (true width of 1.5 metres) at 10.6% zinc and
5.8m (true width of 2 metres) at 12.2% zinc and 10.9% lead
* Silver results are provisional, awaiting QAQC checks
The early results from the drilling campaign indicate the
continuation of mineralisation 80 metres below the existing
Northern part of the orebody, providing support for the Company's
confidence in delivering an increased resource estimate for the
Namib Project following completion of the drilling campaign. As
would be standard practice, all grade intercepts will be critically
evaluated as part of the update to the Mineral Resource Estimate in
due course, to ensure that lower angle drill intercepts returned
(those with very high intercept lengths relative to true widths) do
not bias the resulting grade estimation.
Significant intercepts table from drilling August 2014 to
November 2015
Hole_ID Interval True Zinc Lead Hole_ID Interval True Zinc Lead
Width Width % % Width Width % %
(m) (m) (m) (m)
----------- --------- ------- ------ ------ ----------- --------- ------- ----- -----
NLDD048* 4.83 3.00 2.24 2.48 NLRC110 4.00 3.10 1.61 0.06
NLDD048* 4.32 2.00 2.77 0.55 NLRC111 4.00 3.90 6.50 0.79
NLDD049* 3.40 3.40 9.20 9.74 NLRC112 3.00 2.85 3.04 0.03
NLDD049* 4.12 4.10 10.34 0.58 NLRC113 13.00 13.00 8.55 4.41
NLDD050* 3.15 2.00 3.96 0.04 NLRC114 10.00 9.90 9.22 0.43
NLDD050* 7.61 2.00 2.76 0.50 NLRC115 3.00 3.00 4.27 0.93
NLDD051* 5.33 2.00 18.60 0.59 NLRC120 7.00 7.00 2.09 4.57
NLDD051* 10.09 6.50 15.52 0.41 NLRC121 5.00 4.80 5.44 2.31
NLDD052* 3.46 2.10 3.82 1.08 NLDDK036** No Significant Intercepts
NLDD053* 3.06 2.15 7.33 3.79 NLDDK037** No Significant Intercepts
NLDD053* 31.62 6.85 12.37 0.35 NLDDK038 No Significant Intercepts
NLDD054 5.05 3.80 6.08 7.20 NLDDK039 No Significant Intercepts
NLDD054 9.35 5.50 12.85 2.96 NLDDK040 No Significant Intercepts
NLDD055 9.70 3.70 10.03 1.31 NLDDK041 No Significant Intercepts
NLDD055 3.17 2.15 1.90 2.95 NLDDK042 No Significant Intercepts
NLDD056 10.00 8.00 13.46 5.90 NLDDK044 No Significant Intercepts
NLDD056 6.12 5.00 3.40 0.82 NLDDK045 No Significant Intercepts
NLDD056 18.16 8.70 9.63 3.74 NLDDK046 No Significant Intercepts
NLDD057 5.00 2.00 11.18 0.04 NLDDK047 No Significant Intercepts
NLDD058 4.38 3.30 2.68 1.93 NLDDK048 No Significant Intercepts
NLDD058 9.33 6.50 7.78 0.75 NLDDK051 No Significant Intercepts
NLDD058 8.65 6.80 6.30 0.58 NLDDK052 No Significant Intercepts
NLDD059 5.06 2.20 4.98 0.14 NLDDK056 No Significant Intercepts
NLDD060 11.63 3.80 5.95 7.34 NLDDK057 No Significant Intercepts
NLDD061 13.96 5.70 16.79 6.93 NLDDK059 No Significant Intercepts
NLDD062 5.02 3.75 2.87 0.06 NLDDK060 No Significant Intercepts
NLDD062 11.24 3.80 10.90 8.69 NLDDK061 No Significant Intercepts
NLDD063 10.31 5.50 12.51 2.59 NLDDK062 No Significant Intercepts
NLDD063 6.87 2.90 5.78 0.48 NLDDK063 No Significant Intercepts
NLDDK034* 4.41 3.70 13.88 1.33 NLDDK064 No Significant Intercepts
NLDDK035* 4.65 4.10 8.98 5.86 NLDDK065 No Significant Intercepts
NLDDK043 4.69 3.45 17.28 0.00 NLDDK066 No Significant Intercepts
NLDDK053 4.77 4.30 32.85 0.09 NLDDK067 No Significant Intercepts
NLDDK054 4.56 4.55 1.83 0.27 NLDDK068 No Significant Intercepts
NLDDK055 4.98 3.85 19.83 0.03 NLDDK069 No Significant Intercepts
NLDDK058 8.00 3.75 9.59 3.01 NLRC116 No Significant Intercepts
NLDDK070 3.55 3.55 15.63 1.01 NLRC117 No Significant Intercepts
NLDDK071 12.46 7.30 14.91 3.18 NLRC118 No Significant Intercepts
NLDDK071 5.00 4.50 9.31 13.59 NLRC119 No Significant Intercepts
NLDDK072 4.66 4.60 2.33 3.87 NLRC122 No Significant Intercepts
NLDDK072 11.37 9.30 2.56 1.99
----------- --------- ------- ------ ------ ----------- --------- ------- ----- -----
* Holes reported in MRE update of 19 September 2014, but true
widths have been updated to reflect the current geological
interpretation
** Geotechnical holes drilled and not sampled.
Significant Intercepts are based on the following criteria:
-- Minimum intercept length: 3 m
-- Maximum internal waste: 1 m
-- Cutoff Pb/Zn combined: 1 %
-- True thickness lengths were obtained by measuring intercepts
manually from a perpendicular-to-dip sectional review. Lengths are
approximate due to the variable nature of the lodes.
Full details of the intercepts, QAQC and JORC Table 1 disclosure
can be found in the Company's press release "Drilling campaign
successfully delineated additional extensions of known lodes and
identified additional high grade targets" dated 12 February
2016.
Table 2: Significant intercepts table from drilling December
2015 to April 2016
Hole_ID Interval True Zinc Lead% Silver Iron
Width Width % ppm %
(m) (m)
---------- --------- ------- ----- ------ ------- -----
NLDD067 57.1 8.5 28.6 0.07 33(*) 24.0
NLDDK074 3.0 1.5 35.3 0.13 (**) 22.8
NLDDK074 11.9 6.0 20.8 0.04 (**) 18.4
NLDDK075 8.7 4.0 19.5 0.87 (**) 18.9
NLDDK075 3.0 2.0 12.2 0.10 (**) 39.1
NLDDK076 3.6 1.3 9.8 2.60 42 14.7
NLDDK076 8.1 2.5 6.7 7.59 100 33.9
NLDD069 35.7 9.0 33.8 0.1 46 20.3
NLDDK077 3.8 1.5 10.6 0.2 10 18.6
NLDDK077 5.8 2.0 12.2 10.9 157 28.3
NLDD068 No significant intercepts
NLDD064 No significant intercepts
NLDD065 No significant intercepts
NLDD066 No significant intercepts
NLDDK073 No significant intercepts
---------- -------------------------------------------------
* Provisional results for silver as being re-assayed due to
laboratory CRMs under reporting by approximately 5%
** Ag results not available (pending)
Significant Intercepts are based on the following criteria:
-- Minimum intercept length: 3 metres
-- Maximum internal waste: 1 metres
-- Cut-off lead/zinc combined: 1 %
-- True thickness lengths were obtained by measuring intercepts
manually from a perpendicular-to-dip sectional review. Lengths are
approximate due to the variable nature of the lodes.
Full details of the intercepts, QAQC and JORC Table 1 disclosure
can be found in the Company's press release "Drilling update" dated
21 March 2016 and 26 April 2016.
Mining licence
Receipt of the mining licence for Namib remains a key
outstanding permit. The mining licence application was filed in
April 2014 and the Company has since then been actively and
constructively engaged with the Ministry of Mines and Energy
("Ministry") in Namibia.
On 28 January 2016 the Company received from the Ministry a
Notice of Preparedness to Grant the mining licence ("Notice") for
the Namib Lead-Zinc Project. The Notice contained a number of
supplementary terms and conditions relating to matters including,
inter alia, the work programme, production, environment and
Namibian participation in the Project that will apply to the mining
licence (the "Supplementary Conditions").
North River sought clarification from the Ministry on certain
aspects of the Supplementary Conditions and its interpretation of
them, and pending this clarification, accepted the Notice on 26
February 2016. In accordance with the process set out in the
Notice, the Company then submitted a proposal to the Ministry on 25
April 2016, covering local ownership of the Namib Project,
participation by historically disadvantaged Namibians in management
of the Namib Project, and the Company's corporate social
responsibility strategy. The supplementary terms and conditions and
the proposal must be agreed between the Company and the Ministry
before the mining licence is issued. The Notice sets out a further
process and timeline through to mid-2016 for these discussions.
National Equitable Economic Empowerment Bill
In conjunction with assessing the Supplementary Conditions, the
Company has been examining the implications of the Government of
Namibia's proposed broad based empowerment legislation. A draft
bill (the National Equitable Economic Empowerment Bill, the "Draft
Bill") has been published and a period of public consultation is
open until 29 April 2016. If enacted, the Draft Bill will set out
obligations for companies, irrespective of sector, in respect of,
inter alia, ownership and management participation by previously
disadvantaged Namibians. Certain obligations under the Draft Bill
are inconsistent with those laid down under the Supplementary
Conditions to the Notice. The extent to which the Draft Bill would
place obligations on the Namib Project and the timeframe for
finalising and enacting the Draft Bill is not clear at this stage,
but will undoubtedly be an area on which the Company will need
further clarity in due course.
Corporate and financial review
Board of directors
During the year we strengthened the board of directors. The new
appointments bring extensive technical, commercial and funding
experience to support the next phase of development at Namib.
I joined the company in January 2015 replacing Martin French as
Chief Executive Officer and was appointed to the board in July
2015. A wealth of technical experience has been added by the
appointment of two new independent non-executive directors: Keith
Marshall, a mining engineer who has previously held senior mine
leadership roles with Rio Tinto PLC; and Ken Sangster, a
metallurgist with 49 years' experience in the mining industry.
This was followed by the appointment of new independent
non-executive Chairman, Dr Rod Beddows in December 2015. Dr Beddows
has over 35 years of experience as a strategy consultant and
corporate finance adviser, specialising in the metals sector. Dr
Beddows replaced Brett Richards who had been serving as interim
Chairman.
Ms Ding Chan (Tina) was appointed to the Board as a
non-executive Director representing the interests of China General
Nuclear Power Company (CGNPC), a 12.1 per cent shareholder in North
River, replacing non-executive Chairman Mr. Zuayuan.
Financial review
The Group is reporting a loss before taxation for the year of
GBP9,797,691 (2014: loss of GBP3,320,477).
This loss includes exploration and administrative expenditure of
GBP3,026,451 (2014: GBP3,326,325) with the exploration and
evaluation costs accounting for GBP1,142,851 (2014: GBP2,178,666).
The exploration and administrative expenditure costs were lower
than 2014 despite an increase in site based project activities as
we benefited from a weakening Namibian dollar (2015 average GBP:NAD
1:19.47; 2014 average GBP:NAD 1:17.84) and a continued focus on
minimising overheads leading to a series of cost saving
initiatives.
Given our continued primary focus on developing the Namib
zinc-lead project and a softening in long term copper prices, we
deemed it prudent to impair the goodwill related to our early stage
Namibian copper exploration licences. This has resulted in a
provision for impairment of GBP6,702,934 (EPL 3257 GBP1,983,634 and
EPL 3258 GBP4,719,300). No impairment has been recorded against our
flagship Namib project.
The Group's cash position as at 31 December 2015 was
GBP1,376,740 (2014: GBP1,904,860).
During the year, the Independent Directors concluded that a
number of project milestones required under the July 2014
Investment Agreement with Greenstone Resources L.P. were no longer
achievable before the long-stop date in that agreement of 4 October
2015. As a result, the Company and Greenstone agreed in July 2015
to terminate the July 2014 Investment Agreement. Greenstone remains
a committed shareholder and supportive of the Company's revised
plans for the Namib Project.
In September 2015 we completed a US$4.0 million fundraising
which we effected through an Open Offer and Placing. The Open Offer
and Placing were both priced at 0.2p per Ordinary Share and under
the Open Offer each shareholder was entitled to subscribe for 2 new
shares for every 3 existing Ordinary Shares. Greenstone committed
to follow its rights in the Open Offer and fully underwrote the
balance of the fundraising with funds provided via the underwriting
provided via convertible loan notes.
The Open Offer and Placing raised an aggregate GBP377,135
(approximately US$581,000) from non-Greenstone shareholders. This
figure includes GBP133,627 placed with certain directors of the
Company. The shortfall in the funds raised via the Open Offer and
Placing required the Company to utilize the underwriting facility
and Greenstone was issued with convertible loan notes with an
aggregate principal of $3,127,126.
-- Tranche one: $908,291 maturing 8 September 2018
-- Tranche two: $2,218,835 maturing 22 October 2018
Both tranches of convertible loan notes bear interest at 10% per
annum payable quarterly in arrears and are convertible at 0.2p per
share with a fixed exchange rate of 1:1.541 (GBP:USD). The loan
notes are subject to certain conditions including adherence to an
agreed work programme and budget for the Namib project. The
conditions are disclosed in the Open Offer circular.
Going concern
During the year ended 31 December 2015 the Group made a loss of
GBP9,797,691 (2014: a loss of GBP3,320,477) which includes a
goodwill impairment charge of GBP6,702,934. At the year end date
the Group had net assets of GBP882,155 (2014: net assets of
GBP10,083,685) of which GBP1,376,740 (2014: GBP1,904,860) was cash
at bank. The operations of the Group are currently being financed
from funds which the Parent Company raised from private and public
share placings.
The Group's capital management policy is to raise sufficient
funding to finance the Group's near term exploration and
development objectives. Upon completion of objectives, or
identification of new projects, the Directors will seek new funding
to finance the next stage of the development programme or the new
projects.
The Group had a cash balance of GBP330,578 at 31 May 2016.
As set out in Note 24, the Group has estimated possible
exploration expenditure of up to GBP0.6 million for its Namibian
licences through 2016. Total capital cost, that is still under
review, for the life of the mine, as announced on 26 November 2014
in the Definitive Feasibility Study on Namib, is estimated as $27.8
million (GBP17.9 million). The Group will therefore need to raise
or obtain additional cash funding to support both working capital
requirements and the next stage of its exploration and development
programme.
As set out in Note 6, applications for the Namib Lead Zinc
Mining Licence (submitted in April 2014) and the renewal of several
EPLs in the Licence Areas have been made and are awaiting
confirmation. If the Mining Licence is not received or the EPLs are
not renewed, the Directors would have to reconsider the position of
the Group and the resulting ability to continue operations as
planned. The Directors believe that all outstanding licence
confirmations will be received but the requirement to reach
agreement on additional conditions to be attached to licences,
means the timeframe is uncertain.
Subject to receiving the Namib Mining Licence, the Directors
believe that the Group will be able to raise as required,
sufficient cash to enable it to continue its operations, and
continue to meet, as and when they fall due, its planned and
committed exploration and development activities and liabilities
for at least the next twelve months from the date of approval of
these financial statements. The Company is currently evaluating
funding options and the structure under which such funds may be
raised. For this reason, the Directors continue to adopt the going
concern basis in preparing the accounts.
However, there can be no guarantee that the required funds will
be raised within the necessary timeframe or that the mining and EPL
licences will be renewed. Consequently, a material uncertainty
exists that may cast doubt on the Group's ability to continue to
operate as planned and to be able to meet its commitments and
discharge its liabilities in the normal course of business for a
period not less than twelve months from the date of this
report.
The financial statements do not include the adjustments that
would result if the Group was unable to continue in operation.
James Beams
Chief Executive Officer
31 May 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2015 2014
Notes GBP GBP
Continuing operations
Other operating income - 189
Exploration & evaluation expenditure (1,142,851) (2,178,666)
Administrative expenses (1,883,600) (1,147,659)
Impairment of goodwill (related
to copper exploration licences) 6 (6,702,934) -
GROUP OPERATING LOSS 3 (9,729,385) (3,326,136)
Finance charges 4 (82,777) (267)
Interest received on bank
deposits 14,471 5,926
LOSS BEFORE TAX (9,797,691) (3,320,477)
Taxation 14 - -
------------ ------------
LOSS FOR THE YEAR (9,797,691) (3,320,477)
OTHER COMPREHENSIVE LOSS:
Exchange difference on subsidiary
loans treated as net investments (2,847,677) (4,568,609)
Exchange differences on translating
foreign operations 2,761,529 4,525,039
------------ ------------
TOTAL COMPREHENSIVE LOSS FOR
THE YEAR (9,883,839) (3,364,047)
============ ============
Loss per share
Basic and diluted - pence
per share 5 (0.49p) (0.22p)
============ ============
The results for 2015 and 2014 relate entirely
to continuing operations. The loss for the current
and prior years and the total comprehensive loss
for the current and the prior years are wholly
attributable to equity holders of the parent
company.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Group Group
31 December 31 December
2015 2014
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Goodwill 6 1,036,052 7,738,986
Intangible assets 7 59,894 64,938
Plant and equipment 8 141,602 143,857
Investment in 15 - -
joint venture
Investment in
associated company 16 113,182 113,182
Investments in
subsidiaries and 17 - -
loans due from
subsidiaries
-------------- --------------
1,350,730 8,060,963
-------------- --------------
CURRENT ASSETS
Trade and other
receivables 9 81,925 444,817
Cash and cash
equivalents 10 1,376,740 1,904,860
-------------- --------------
1,458,665 2,349,677
-------------- --------------
TOTAL ASSETS 2,809,395 10,410,640
-------------- --------------
LIABILITIES
CURRENT LIABILITIES
Trade and other
payables 11 202,897 326,955
Convertible loan
notes 12 150,238 -
353,135 326,955
NON-CURRENT LIABILITIES
Convertible loan
notes 12 1,574,105 -
TOTAL LIABILITIES 1,927,240 326,955
-------------- --------------
NET ASSETS 882,155 10,083,685
============== ==============
EQUITY
Share capital 13 4,398,183 3,831,750
Share premium 13 21,258,590 21,258,590
Convertible loan
note reserve 12 115,876 -
Share-based payments
reserve - 115,645
Currency translation
reserve (232,651) (146,503)
Retained losses (24,657,843) (14,975,797)
-------------- --------------
TOTAL EQUITY 882,155 10,083,685
============== ==============
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share- Convertible
based Currency loan note
Share Share Retained payment translation reserve Total
capital premium losses reserve reserve equity
CONSOLIDATED GBP GBP GBP GBP GBP GBP GBP
At 1 January
2014 2,240,495 17,875,349 (15,984,120) 4,444,445 (102,933) - 8,473,236
Loss for 2014 - - (3,320,477) - - - (3,320,477)
Other
comprehensive
income:
Currency
translation
movement - - - - (43,570) - (43,570)
---------- ------------- ------------- ------------ ------------ ------------ ------------
Total
comprehensive
loss - - (3,320,477) - (43,570) - (3,364,047)
Transactions
with
shareholders:
Shares issued 1,591,255 3,458,832 - - - - 5,050,087
Share issue
expenses - (75,591) - - - - (75,591)
Transfer of
expired share
options - - 4,328,800 (4,328,800) - - -
---------- ------------- ------------- ------------ ------------ ------------ ------------
Balances at
31 December
2014 3,831,750 21,258,590 (14,975,797) 115,645 (146,503) - 10,083,685
---------- ------------- ------------- ------------ ------------ ------------ ------------
Loss for 2015 - - (9,797,691) - - - (9,797,691)
Other
comprehensive
income:
Currency
translation
movement - - - - (86,148) - 86,148
---------- ------------- ------------- ------------ ------------ ------------ ------------
Total
comprehensive
loss - - (9,797,691) - (86,148) - (9,883,839)
Transactions
with
shareholders:
Shares issued 566,433 - - - - - 566,433
Convertible
loan note
equity element - - - - - 115,876 115,876
Transfer of
expired share
options - - 115,645 (115,645) - - -
---------- ------------- ------------- ------------ ------------ ------------ ------------
At 31 December
2015 4,398,183 21,258,590 (24,657,843) - (232,651) 115,876 882,155
========== ============= ============= ============ ============ ============ ============
CONSOLIDATED STATEMENTS OF CASH FLOWS
Group Group
2015 2014
Notes GBP GBP
Cash flows from
operating activities
Group operating
loss (9,729,385) (3,326,136)
Adjustments for
non-cash items:
Depreciation and
amortisation charges 7&8 69,833 62,551
Goodwill impairment 6 6,702,934 -
Impairment of 17 -
subsidiary loans -
(2,956,618) (3,263,585)
Movements in working
capital:
Decrease/(increase)
in receivables 239,466 (287,284)
(Decrease)/increase
in payables (124,061) 13,675
------------ ------------
Net cash used
in operating activities (2,841,213) (3,537,194)
------------ ------------
Investing activities
Loans to subsidiaries 17 - -
Purchase of plant
and equipment 8 (82,340) (77,462)
------------ ------------
Net cash used
in investing activities (82,340) (77,462)
------------ ------------
Financing activities
Proceeds from
issue of share
capital 13 566,433 5,050,087
Share issue costs 13 - (75,591)
Proceeds of convertible
loan notes 12 2,218,583 -
Repayment of loan
notes via share
issue 12 (189,298) -
Convertible notes (171,266)
issue costs -
Interest paid (63,296) (267)
Interest received 14,471 5,926
------------ ------------
Net cash from
financing activities 2,375,627 4,980,155
------------ ------------
(Decrease)/increase
in cash and cash
equivalents (547,926) 1,365,499
Cash and cash
equivalents at
beginning of year 10 1,904,860 577,551
Exchange differences 19,806 (38,190)
------------ ------------
Cash and cash
equivalents
at end of year 10 1,376,740 1,904,860
============ ============
Cash and cash equivalents comprise cash on hand and bank
balances.
1. ACCOUNTING POLICIES
The Group has adopted the accounting policies set out below in
preparation of the financial statements. All of these policies have
been applied consistently throughout the period unless otherwise
stated.
1.1 Basis of preparation
The financial statements are prepared in accordance with the
historical cost convention and in accordance with the International
Financial Reporting Standards, as adopted by the European Union
("IFRS"), including IFRS 6 'Exploration for and Evaluation of
Mineral Resources', and in accordance with the provisions of the
Companies Act 2006. The parent Company's financial statements have
also been prepared in accordance with IFRS and Companies Act
2006.
The Group and Company financial statements are presented in UK
pounds sterling.
In accordance with the provisions of Section 408 of the
Companies Act 2006, the Parent Company has not presented a
Statement of Comprehensive Income. The Parent Company's loss for
the year ended 31 December 2015 was GBP10,059,939 (2014: restated
loss of GBP5,612,580).
1.2 Going concern
During the year ended 31 December 2015 the Group made a loss of
GBP9,797,691 (2014: a loss of GBP3,320,477). At the year end date
the Group had net assets of GBP882,155 (2014: net assets of
GBP10,083,685) of which GBP1,376,740 (2014: GBP1,904,860) was cash
at bank. The operations of the Group are currently being financed
from funds which the Parent Company raised from private and public
share placings.
The Group's capital management policy is to raise sufficient
funding to finance the Group's near term exploration and
development objectives. Upon completion of objectives, or
identification of new projects, the Directors will seek new funding
to finance the next stage of the development programme or the new
projects.
The Group had a cash balance of GBP330,578 at 31 May 2016.
As set out in Note 24, the Group has estimated possible
exploration expenditure of up to GBP0.6 million for its Namibian
licences through 2016. Total capital cost, that is still under
review, for the life of the mine, as announced on 26 November 2014
in the Definitive Feasibility Study on Namib, is estimated as $27.8
million (GBP19.4 million). The Group will therefore need to raise
or obtain additional cash funding to support both working capital
requirements and the next stage of its exploration and project
development programme.
As set out in Note 6, applications for the Namib Lead Mining
Licence (submitted in April 2014) and the renewal of several
exploration and prospective licences ("EPLs") in the Licence Areas
have been made and are awaiting confirmation. If the Mining Licence
is not received or the EPLs are not renewed then the Directors
would have to reconsider the position of the Group and the
resulting ability to continue operations as planned. The Directors
believe that all outstanding licence confirmations will be received
within the normal timeframe for these applications.
Subject to receiving the Mining Licence, the Directors believe
that the Group will be able to raise as required, sufficient cash
to enable it to continue its operations, and continue to meet, as
and when they fall due, its planned and committed exploration and
development activities and liabilities for at least the next twelve
months from the date of approval of these financial statements. The
Company is currently evaluating funding options and the structure
under which such funds may be raised. For this reason, the
Directors continue to adopt the going concern basis in preparing
the accounts.
However, there can be no guarantee that the required funds will
be raised within the necessary timeframe or that the mining and EPL
licences will be renewed. Consequently, a material uncertainty
exists that may cast doubt on the Group's ability to continue to
operate as planned and to be able to meet its commitments and
discharge its liabilities in the normal course of business for a
period not less than twelve months from the date of this
report.
The financial statements do not include the adjustments that
would result if the Group was unable to continue in operation.
1.3 Basis of consolidation
The consolidated financial statements incorporate the accounts
of the Company and its subsidiaries and have been prepared by using
the principles of acquisition accounting ("the purchase method")
which includes the results of the subsidiaries from their date of
acquisition. Intra-group sales, profits and balances are eliminated
fully on consolidation.
1.4 Goodwill
Goodwill is the difference between the amount paid on the
acquisition of the subsidiary undertakings and the aggregate fair
value of their separable identifiable assets acquired and
liabilities assumed. Goodwill is capitalised as an intangible asset
and in accordance with IAS 36 'Impairments of Assets' is not
amortised but tested for impairment annually and when there are any
indications that its carrying value is not recoverable. As such,
goodwill is stated at cost less any provision for impairment in
value. For impairment testing purposes goodwill is allocated to
cash-generating units (CGUs). If a subsidiary undertaking is
subsequently sold, goodwill arising on acquisition is taken into
account in determining the profit or loss on sale.
1.5 Impairment of assets
Where appropriate the Group reviews the carrying amounts of its
goodwill, plant and equipment, intangible assets and investments to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
The recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects the current market assessments
of the time value of money and the risks specific to the asset. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash generating unit) is reduced to its recoverable
amount. An impairment loss is recognised immediately in the
statement of comprehensive income, 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 to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years.
1.6 Plant and equipment
Plant and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation is
charged so as to write off the costs of assets, over their
estimated useful lives, using the straight line method, on the
following basis:
Plant and machinery 4 years
Motor vehicles 4 years
Fixtures, fittings and equipment 4 years
Computers and software 3 years
1.7 Exploration and evaluation expenditure
The Group capitalises the fair value of the consideration paid
for acquiring exploration and prospecting rights as intangible
assets. All other exploration and evaluation costs incurred are
expensed as they are incurred and included in the consolidated
statement of comprehensive income. The Group has taken into
consideration the degree to which expenditure can be associated
with finding specific mineral resources. The intangible assets,
comprising licence costs, will be amortised over the length of the
mining licence and the amortisation expense included within the
administration expenses in the statement of comprehensive
income.
1.8 Revenue recognition
Revenue is measured at the fair value of consideration received
or receivable from the sale of goods and services from the Group's
ordinary business activities. Revenue is stated net of discounts,
sales and other taxes. There was no revenue received in the current
or prior year.
1.9 Interest income and expense
Interest income and expense are reported on an accrual
basis.
1.10 Expenses
Operating expenses are recognised in the statement of
comprehensive income upon utilisation of the service or at the date
of their origin.
1.11 Investments in subsidiaries
The Parent Company's investments in subsidiary companies are
stated at cost less provision for impairment in the Parent
Company's Statement of Financial Position.
1.12 Associates
Where the Group has the power to participate in (but not
control) the financial and operating policy decisions of another
entity, it is classified as an associate. Associates are initially
recognised in the consolidated statement of financial position at
cost. The Group's share of post-acquisition profits and losses is
recognised in the consolidated statement of comprehensive income,
except that losses in excess of the Group's investment in the
associate are not recognised unless there is an obligation to make
good those losses. The Parent Company's investments in associated
companies are stated at cost less provision for impairment in the
Parent Company's Statement of Financial Position.
Profits and losses arising on transactions between the Group and
its associates are recognised only to the extent of unrelated
investors' interests in the associate. The investors' share in the
associate's profits and losses resulting from these transactions is
eliminated against the carrying value of the associate.
Any premium paid for an associate above the fair value of the
Group's share of the identifiable assets, liabilities and
contingent liabilities acquired is capitalised and included in the
carrying amount of the associate. Where there is objective evidence
that the investment in an associate has been impaired the carrying
amount of the investment is tested for impairment in the same way
as other non-financial assets.
1.13 Interests in joint ventures
The Group had an interest in a joint venture, which is a jointly
controlled entity, whereby the venturers have a contractual
arrangement that establishes joint control over the economic
activities of the entity. The arrangement requires unanimous
agreement for financial and operating decisions among the
venturers. The Group recognises its interest in the joint venture
company using the equity method.
Under the equity method, the investment in the venture is
initially recognised at cost. The carrying amount of the investment
is adjusted to recognise changes in the Group's share of net assets
of the joint venture since the acquisition date. Goodwill relating
to the venture is included in the carrying amount of the investment
and is neither amortised nor individually tested for
impairment.
After application of the equity method, the Group determines
whether it is necessary to recognise an impairment loss on its
investment in the joint venture company. At each reporting date,
the Group determines whether there is objective evidence that the
investment in the joint venture company is impaired. If there is
such evidence, the Group calculates the amount of impairment as the
difference between the recoverable amount of the venture and its
carrying value, then recognises the loss as 'Impairment of
investment in joint venture" in the income statement.
Upon loss of significant influence over the venture, the Group
measures and recognises any retained investment at its fair value.
Any difference between the carrying amount of the associate upon
loss of significant influence and the fair value of the retained
investment and proceeds from disposal is recognised in the
statement of comprehensive income.
1.14 Foreign currency translation
Items included in the Group's financial statements are measured
using the currency of the primary economic environment in which the
Group operates ("the functional currency"). The financial
statements are presented in pounds sterling ("GBP"), which is the
functional and presentational currency of the Parent Company and
the presentational currency of the Group.
Transactions in foreign currencies are recorded using the rate
of exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated
using the rate of exchange ruling at the Statement of Financial
Position date and the gains or losses on translation are included
in the Statement of Comprehensive Income, with the exception of
loans that are designated as part of the Group's net investment of
a foreign operation. These are recognised in other comprehensive
income until the net investment is disposed of, at which time, the
cumulative amount is reclassified to profit or loss. Non-monetary
items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of
the original transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined.
The assets and liabilities of foreign operations are translated
into sterling at the rate of exchange ruling at the Statement of
Financial Position date. Income and expenses are translated at
weighted average exchange rates for the period. The resulting
exchange differences are recognised in other comprehensive
income.
1.15 Deferred taxation
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Deferred tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the Statement of Financial
Position date and are expected to apply when the related deferred
tax is realised or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that the future taxable profit will be available against
which the temporary differences can be utilised.
No deferred tax assets are recognised in the financial
statements.
1.16 Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position
comprise cash at bank and in hand and short term deposits held at
call with banks and other short term highly liquid investments with
original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
1.17 Receivables
Receivables are carried at original invoice amount less
provision made for impairment of these receivables. A provision for
impairment of receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. The amount of
the provision is the difference between the assets' carrying amount
and the recoverable amount. Provisions for impairment of
receivables are included in the Statement of Comprehensive
Income.
1.18 Trade and other payables
Trade payables and other payables represent liabilities for
goods and services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these
goods and services. The amounts are unsecured and are usually paid
within 30 days of recognition.
1.19 Share capital
Ordinary shares are classified as equity. Costs directly
attributable to the increase of new shares are shown in equity as a
deduction from the proceeds.
1.20 Compound financial instruments
Compound financial instruments issued by the Group comprise
convertible notes that can be converted to share capital at the
option of the holder. The number of shares to be issued does not
vary with changes in fair value.
The liability component of a compound financial instrument is
recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to their initial recognition, the liability component
of a compound financial instrument is measured at amortised cost
using the effective interest method. The equity component of a
compound financial instrument is not remeasured subsequent to
initial recognition.
1.21 Share-based payments
The Parent Company has granted equity settled options in the
past. The cost of equity settled transactions with employees is
measured by reference to the fair value at the date on which they
were granted and is recognised as an expense over the vesting
period, which ends on the date the employee becomes fully entitled
to the award. Fair value is determined by using the Black-Scholes
option pricing model.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market or
non-vesting condition, which are vesting irrespective of whether or
not the market or non-vesting condition is satisfied, provided that
all other performance or service conditions are satisfied.
At each Statement of Financial Position before vesting, the
cumulative expense is calculated; representing the extent to which
the vesting period has expired and management's best estimate of
the number of equity instruments that will ultimately vest. The
movement in the cumulative expense since the previous Statement of
Financial Position date is recognised in the Statement of
Comprehensive Income, with a corresponding entry in equity.
When the exercise period for an option expires, the amount that
has been charged through the Statement of Comprehensive Income is
transferred from the share-based payments reserve to retained
losses.
1.22 Critical accounting judgements and estimates
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of income and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of current events and actions,
actual results ultimately may differ from those estimates. IFRSs
also require management to exercise its judgement in the process of
applying the Group's accounting policies.
The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the
financial statements are as follows:
Impairment of goodwill and investments in and loans to
subsidiaries
Management assess whether goodwill and investments in and loans
to subsidiaries after taking into account potential ore reserves,
and cash flows expected to be generated by estimated future
production, sales and costs. If the assumed factors vary from
actual occurrence, this will impact on the amount at which the
assets should be carried on the Statement of Financial
Position.
Factors which could impact the future recoverability of these
assets include the level of proved, probable and inferred mineral
resources, future technological changes which could impact the cost
of mining, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
Further detailed analysis of the critical judgements and
estimates relating to goodwill and investments in, and loans to,
subsidiaries is in notes 6 and 17 below.
Share-based payments
The Group records charges for share-based payments. For option
based share-based payments management estimate certain factors used
in the option pricing model, including volatility, exercise date of
options and number of options likely to be exercised. If these
estimates vary from actual occurrence, this will impact on the
value of the equity carried in the reserves.
Further detailed analysis of the critical judgements and
estimates relating to share-based payments is addressed in Note
18.
1.23 Financial instruments
IFRS 7 requires information to be disclosed about the impact of
financial instruments on the Group's risk profile, how the risks
arising from financial instruments might affect the entity's
performance, and how these risks are being managed.
Financial assets and financial liabilities are recognised on the
Statement of Financial Position when the Group becomes a party to
the contractual provisions of the instrument.
The Group's policies include that no trading in derivative
financial instruments shall be undertaken.
The required disclosures have been made in Note 20 to the
accounts.
1.24 Adoption of new and revised International Financial
Reporting Standards
The following relevant new IFRS standards, amendments to
standards and interpretations are mandatory for the first time for
the financial year beginning 1 January 2015, but had no significant
impact on the Company:
Standard Key requirements Effective
date as
adopted
by the
EU
Amendment The amendments address updates 1 February
to IAS 19, on employee contributions. 2015
'Employee
benefits'
IFRIC Interpretation The interpretation clarifies 17 June
21 Levies recognition a liability 2014
for a levy.
Standards issued but not yet effective
The following relevant new IFRS standards, amendments to
standards and interpretations have been issued, but are not
effective for the financial year beginning on 1 January 2015, and
have not been early adopted:
Standard Key requirements Effective
date as
adopted
by the EU
---------------------- ------------------------------------ -----------
Amendment to Amends IFRS 11 Joint Arrangements 1 January
IFRS 11, 'Accounting to require an acquirer of 2016
for Acquisitions an interest in a joint operation
of Interests in which the activity constitutes
in Joint Operations' a business (as defined in
IFRS 3 Business Combinations)
to:
-- apply all of the business
combinations accounting principles
in IFRS 3 and other IFRSs,
except for those principles
that conflict with the guidance
in IFRS 11
-- disclose the information
required by IFRS 3 and other
IFRSs for business combinations.
The amendments apply both
to the initial acquisition
of an interest in joint operation,
and the acquisition of an
additional interest in a
joint operation (in the latter
case, previously held interests
are not remeasured).
Amendments Clarifies of acceptable methods 1 January
to IAS 16 and of depreciation and amortisation. 2016
IAS 38
Amendments Update on Agriculture: Bearer 1 January
to IAS 16 and Plants. 2016
IAS 41
Amendments Amends IAS 27 Separate Financial 1 January
to IAS 27 Statements to permit investments 2016
in subsidiaries, joint ventures
and associates to be optionally
accounted for using the equity
method in separate financial
statements.
Amendments Disclosure amendments 1 January
to IAS 1 2016
---------------------- ------------------------------------ -----------
2. SEGMENTAL REPORTING
For the purposes of segmental reporting, the operations and
assets of the Group are focused in the United Kingdom, Namibia and
Mozambique and comprise one class of business: the exploration and
evaluation of mineral resources. The Parent Company acts as a
holding company. At the end of 31 December 2015, the Group had not
commenced commercial production from its exploration sites and
therefore had no revenue for the year.
Group United Namibia Mozambique Total
31 December 2015 Kingdom
GBP GBP GBP GBP
Exploration & evaluation
expenditure - (1,142,851) - (1,142,851)
Administration expenses (1,078,093) (805,507) - (1,883,600)
Interest paid (82,657) (120) - (82,777)
Interest received 718 13,753 - 14,471
Impairment of goodwill - (6,702,934) - (6,702,934)
------------ ------------ ----------- ------------
Loss before taxation (1,160,032) (8,637,659) - (9,797,691)
============ ============ =========== ============
Trade and other receivables 28,737 28,074 25,114 81,925
Cash and cash equivalents 1,194,994 169,465 12,281 1,376,740
Accrued expenditure
and provisions (158,732) (44,165) - (202,897)
Convertible loan notes (150,238) - - (150,238)
Non-current convertible
loan notes (1,574,105) - - (1,574,105)
Goodwill - 1,036,052 - 1,036,052
Investment in associate
company - - 113,182 113,182
Intangible assets 3,399 - 56,495 59,894
Plant and equipment 563 141,039 - 141,602
------------ ------------ ----------- ------------
Net assets (655,382) 1,330,465 207,072 882,155
============ ============ =========== ============
Group United Namibia Mozambique Total
31 December 2014 Kingdom
GBP GBP GBP GBP
Other income - 189 - 189
Exploration & evaluation
expenditure - (2,178,666) - (2,178,666)
Administration expenses (940,861) (206,798) - (1,147,659)
Interest paid - (267) - (267)
Interest received 1,623 4,303 - 5,926
Loss before taxation (939,238) (2,381,239) - (3,320,477)
========== ============ =========== ============
Trade and other receivables 217,988 201,715 25,114 444,817
Cash and cash equivalents 1,762,632 129,947 12,281 1,904,860
Accrued expenditure
and provisions (220,409) (106,546) - (326,955)
Goodwill - 7,738,986 - 7,738,986
Investment in associate
company - - 113,182 113,182
Intangible assets 7,755 688 56,495 64,938
Plant and equipment 2,755 141,102 - 143,857
---------- ------------ ----------- ------------
Net assets 1,770,721 8,105,892 207,072 10,083,685
========== ============ =========== ============
3. GROUP OPERATING LOSS
The Group's operating loss before tax is stated after
charging:
Year Year
ended ended
31 Dec 31 Dec
15 14
GBP GBP
Depreciation and amortisation
- owned assets 69,833 62,551
Parent Company auditor's remuneration 29,448 22,000
Subsidiary auditor's remuneration 7,448 8,000
Employee costs 902,488 605,528
Impairment of goodwill (note 6) 6,702,934 -
Exploration & evaluation costs
expensed 1,142,851 2,178,666
4. INTEREST PAYABLE
Year Year
ended ended
31 Dec 31 Dec
15 14
GBP GBP
Convertible loan notes interest 70,224 -
Withholding tax charges 12,433 -
Other interest payable 120 267
-------- --------
82,777 267
======== ========
5. LOSS PER SHARE
Loss Weighted Loss
for the average per share
period number Basic
from of shares (pence
continuing per share)
operations
GBP
Year ended 31 December (0.49)
2015 (9,797,691) 1,981,829,845 pence
============== ================ ============
Year ended 31 December (0.22)
2014 (3,320,477) 1,499,075,167 pence
============== ================ ============
The diluted loss per share has been calculated using a weighted
average number of shares in issue and to be issued and has been
kept the same as the conversion of share options decreases the
basic loss per share, thus being anti-dilutive.
6. GOODWILL AND IMPAIRMENT REVIEW
The Company acquired, on 20 November 2009, the entire issued
share capital in, and the shareholder loans to, West Africa Gold
Exploration (Namibia) (Pty) Ltd ("WAGE") and Namib Lead and Zinc
Mining (Pty) Ltd ("Namib Lead"). The consideration paid by the
Company for these two Namibian entities and the shareholder loans
was satisfied by the allotment of 266,666,667 Ordinary shares of
GBP0.002 each at 3 pence per share.
At the time of the acquisition of WAGE and Namib Lead, the
Licence Areas were subject to an external review by MSA Geosciences
of South Africa whose employee, Mike Venter, acted as a Competent
Person, as disclosed in the AIM re-admission document dated 28
November 2009.
Goodwill arising on the acquisitions was GBP7,738,986 and was
allocated to cash-generating units (CGUs) by reference to the
exploration areas as shown below.
Goodwill ascribed to CGUs:
WAGE GBP
Witvlei Copper (EPL 3258) 4,719,300
Dordabis Copper (EPL 3257) 1,983,634
----------
6,702,934
Namib Lead
Namib lead-zinc mine 1,036,052
1,036,052
Goodwill carrying values before
2015 impairment 7,738,986
==========
Goodwill impairment review
In accordance with the Group's accounting policies, and as
required by IAS36 'Impairment of Assets', the Directors test each
goodwill CGU for impairment annually, or sooner, where indications
exist or information comes to light that clarifies the size,
quality and economics of the licences and ore bodies held/owned by
WAGE and Namib Lead.
West Africa Gold Exploration (Namibia) (Pty) Ltd
In testing for goodwill impairment of WAGE, it is noted that
copper prices have been declining in recent years. The copper price
fell from approximately $2.50/lb in January 2015 to approximately
$2.10/lb by the end of December 2015.
The Directors believe that the licences held in WAGE have the
potential to contain economic mineral resources supporting a
development and that there is a market value for the licences. The
Directors' calculation of the net present value ("NPV") of these
early stage copper projects against which goodwill has been
allocated, is marginal using long-term consensus copper prices.
Further, the early stage nature of the WAGE projects and due to
current fund raising constraints, the Company's primary focus is on
the Namib Lead Project and the numerous renewals already granted
against these EPLs have resulted in the Directors deeming it
prudent to fully impair the goodwill for the WAGE CGU.
Consequently, an impairment charge of GBP6,702,934 has been made at
31 December 2015 (2014: nil).
Namib Lead and Zinc Mining (Pty) Ltd ("NLZ")
The Namib Lead-Zinc project held by NLZ is the Group's flagship
asset and is the primary focus of activity. To date, significant
project work has been completed resulting in the publication of a
definitive feasibility study in late 2014 showing an economically
robust project. The feasibility study and the impairment testing of
the goodwill has a calculated net present value of $24.7 million
and an IRR of 52%. To further enhance the value of the project, the
Group has undertaken project optimisation work and has embarked on
a 3,800 metre resource drilling campaign targeted at increasing the
resource base and mine life. As a result of the impairment tests
carried out and the resulting CGU's net present value estimated,
the Directors do not believe that the goodwill of NLZ's Namib Lead
of GBP1,036,052 should be impaired.
Goodwill balances at the year end
The goodwill balances at each year end were as follows:
Goodwill ascribed to CGUs: 2015 2014
WAGE GBP GBP
Witvlei Copper - 4,719,300
Dordabis Copper - 1,983,634
---------- ----------
- 6,702,934
Namib Lead
Namib Lead - mine 1,036,052 1,036,052
Goodwill carrying values 1,036,052 7,738,986
========== ==========
Exploration licences
It is further noted that the following EPLs in the Licence Areas
have been renewed, or are awaiting confirmation of renewal, since
acquisition thus providing additional security of tenure. As
discussed in note 1.2, the renewal of seven EPLs (2902, 5075, 3257,
3258, 3261, 4560 and 4561) and the application of the Mining
Licence (185) have not yet been confirmed which indicates an
uncertainty over their renewal. If the pending EPLs are not
renewed, or if the Mining Licence is not granted then the Directors
would have to reconsider the position of the Group and the
resulting ability to continue operations as planned. The Directors
believe that all outstanding licence renewals and applications will
be successful and therefore the current position of the licences
does not constitute an indication of further impairment of the
goodwill and associated assets.
Surface area Annual licence
Project Application name Type Number (km(2) ) fees (N$) Current status Expiry date
----------------- ----------------- ------ ------- --------------- --------------- --------------- ------------
Namib Lead Namib Lead EPL 2902 45.2340 2,000 Submitted 17/04/2016
Namib Lead Namib Lead ML 185 5.45 5,000 Submitted -
Namib Lead South Namib Lead South EPL 5075 123.9515 2,000 Submitted 06/05/2016
Dordabis Kupferberg EPL 3257 473.0690 7,000 Submitted 01/06/2016
Witvlei Christiadore EPL 3258 214.6016 4,000 Submitted 15/05/2016
Witvlei Okatjirute EPL 3261 266.2760 3,000 Submitted 25/07/2015
Outjo Ekotoweni EPL 4560 692.1918 7,000 Submitted 01/08/2015
Outjo Hopewell EPL 4561 197.9399 2,000 Submitted 01/08/2015
----------------- ----------------- ------ ------- --------------- --------------- --------------- ------------
7. INTANGIBLE ASSETS
Exploration
licences Software Total
GROUP GBP GBP GBP
COST
At 1 January 2015 134,464 37,151 171,615
Effects of foreign exchange (16,501) (4,568) (21,069)
-------------- --------- ---------
At 31 December 2015 117,963 32,583 150,546
-------------- --------- ---------
AMORTISATION
At 1 January 2015 77,969 28,708 106,677
Charge for the year - 5,043 5,043
Effects of foreign exchange (16,501) (4,567) (21,068)
-------------- --------- ---------
At 31 December 2015 61,468 29,184 90,652
-------------- --------- ---------
NET BOOK VALUES
At 31 December 2015 56,495 3,399 59,894
============== ========= =========
At 31 December 2014 56,495 8,443 64,938
============== ========= =========
Exploration
licences Software Total
GROUP GBP GBP GBP
COST
At 1 January 2014 137,605 38,021 175,626
Effects of foreign exchange (3,141) (870) (4,011)
-------------- --------- --------
At 31 December 2014 134,464 37,151 171,615
-------------- --------- --------
AMORTISATION
At 1 January 2014 81,110 22,094 103,204
Charge for the year - 7,366 7,366
Effects of foreign exchange (3,141) (752) (3,893)
-------------- --------- --------
At 31 December 2014 77,969 28,708 106,677
-------------- --------- --------
NET BOOK VALUES
At 31 December 2014 56,495 8,443 64,938
============== ========= ========
At 31 December 2013 56,495 15,927 72,422
============== ========= ========
8. PLANT AND EQUIPMENT
Plant Fixtures Motor
& machinery & fittings vehicles Total
GROUP GBP GBP GBP GBP
COST
At 1 January 2015 163,452 39,483 172,724 375,659
Additions in year 76,162 6,178 - 82,340
Effects of foreign
exchange (34,592) (4,580) (36,555) (75,727)
-------------- ------------- ---------- ---------
At 31 December
2015 205,022 41,081 136,169 382,272
-------------- ------------- ---------- ---------
DEPRECIATION
At 1 January 2015 73,045 33,302 125,455 231,802
Charge for the
year 42,977 5,330 16,483 64,790
Effects of foreign
exchange (22,101) (4,721) (29,100) (55,922)
-------------- ------------- ---------- ---------
At 31 December
2015 93,921 33,911 112,838 240,670
-------------- ------------- ---------- ---------
NET BOOK VALUE
At 31 December
2015 111,101 7,170 ` 23,331 141,602
============== ============= ========== =========
At 31 December
2014 90,407 6,181 47,269 143,857
============== ============= ========== =========
Plant Fixtures Motor
& machinery & fittings vehicles Total
GROUP GBP GBP GBP GBP
COST
At 1 January 2014 94,511 36,137 179,681 310,329
Additions in year 73,328 4,134 - 77,462
Effects of foreign
exchange (4,387) (788) (6,957) (12,132)
-------------- ------------- ----------- ---------
At 31 December
2014 163,452 39,483 172,724 375,659
-------------- ------------- ----------- ---------
DEPRECIATION
At 1 January 2014 50,565 24,830 108,093 183,488
Charge for the
year 24,683 9,076 21,426 55,185
Effects of foreign
exchange (2,203) (604) (4,064) (6,871)
-------------- ------------- ----------- ---------
At 31 December
2014 73,045 33,302 125,455 231,802
-------------- ------------- ----------- ---------
NET BOOK VALUE
At 31 December
2014 90,407 6,181 47,269 143,857
============== ============= =========== =========
At 31 December
2013 43,946 11,307 71,588 126,841
============== ============= =========== =========
9. TRADE AND OTHER RECEIVABLES
Group Group
31 December 31 December
2015 2014
GBP GBP
Amounts falling
due within one
year:
Prepayments 28,267 32,273
Other receivables 53,658 412,544
81,925 444,817
============= =============
10. CASH AND CASH EQUIVALENTS
Group Group
31 December 31 December
2015 2014
GBP GBP
Cash at bank
and in hand 1,376,740 1,904,860
============= =============
11. TRADE AND OTHER PAYABLES
Group Group
31 December 31 December
2015 2014
GBP GBP
Trade payables 59,419 148,537
Other payables 143,478 178,418
------------- -------------
202,897 326,955
============= =============
12. CONVERTIBLE LOAN NOTES
Group Group
31 December 31 December
2015 2014
GBP GBP
Amounts falling
due within one
year:
Convertible loan
notes 150,238 -
============= =============
Amounts falling
due after more
than one year:
Convertible loan
notes 1,574,105 -
============= =============
Greenstone Resources LP issued convertible loan notes to North
River Resources Plc as part of the contracted subscription
agreement in the Open Offer placed on the market in September
2015.
The US Dollars notes are convertible into new ordinary shares at
the Open Offer Price (0.02p per Ordinary Share). The Offer Price is
converted into US Dollars applying the Financial Times Exchange
rate on the date before the Open Offer (14 September 2015 $1:
GBP0.6489).
The notes are convertible into ordinary shares at the option of
the holder at the loan note completion date. Unconverted loan notes
must be re-paid in cash within 12 business days after the loan note
completion date.
Transaction costs directly associated with the issue of
Convertible loan notes have been allocated to the liability and
equity components in accordance with IAS 32 'Financial Instruments:
Presentation'. They are recognised against the outstanding loan
balance and included in the discounting calculation used to
calculate the fair value of the loan notes. The loan notes are
unwound over the loan period until maturity, at this point the loan
liability will be equal to the face value notes issued in October
2015 of $3,418,355.
Terms and debt repayment schedule
Terms and conditions of outstanding loan were as follows:
Face Carrying
Nominal Value Amount
interest Year 31 December 31 December
Currency rate of maturity 2015 2015
% GBP GBP
Convertible
loan notes USD 10 2018 2,029,285 1,724,343
=========== ============= ============= =============
Convertible loan note movements: GBP
Proceeds from the issue of USD convertible
loan notes ($3,418,355) 2,218,583
Share placement to Greenstone Resources
LP of 94,649,189 new ordinary shares (see
note 13) (189,298)
----------
Net convertible loan note proceeds 2,029,285
==========
Amount classified as equity (115,876)
Discounted amount (189,066)
----------
Carrying amount of the liability at 31
December 2015 1,724,343
----------
Split showing the maturity of the convertible
loan notes:
Liability due in <1 year at 31 December
2015 150,238
Liability due in >1 year at 31 December
2015 1,574,105
13. SHARE CAPITAL
Allotted, issued and fully paid:
Nominal 31 December 31 December
value 2015 2014
Number of Ordinary
shares 2,199,091,843 1,915,875,310
Ordinary share capital 0.2p GBP4,398,183 GBP3,831,750
============== ==============
Date of issue Detail of Number of Share Share
issue Ordinary capital premium
shares GBP GBP
At 1 January
2014 1,915,875,310 3,831,750 21,258,590
Open Offer
7 October 2015 and Placing 283,216,533 566,433 -
As at 31 December
2015 2,199,091,843 4,398,183 21,258,590
================ ============ =============
In the year ended 31 December 2015 the following Ordinary share
issues occurred:
On 7 October 2015 the Company raised gross proceeds of
GBP377,135 through a placing of 188,567,335 new Ordinary Shares in
the market. Additional proceeds of GBP189,298 were raised through a
placement of 94,649,198 new Ordinary Shares to Greenstone Resources
LP (note 12).
14. TAXATION
Group Group
31 December 31 December
2015 2014
GBP GBP
Tax charge for year - -
------------- -------------
Factors affecting the tax
charge for the year
Loss from continuing operations
before income tax expenses (9,797,691) (3,320,477)
Tax at 20.25% (2014: 21.50%) (1,984,032) (713,903)
Expenses not deductible 784,095 13,156
Overseas rate differences (271,398) (364,241)
Excess / (shortfall) of fiscal
depreciation over accounting
depreciation 21,922 20,250
Other timing differences
not recognised (exploration
costs, leave pay) 521,465 788,035
Losses carried forward not
recognised 927,949 256,702
------------- -------------
Income tax expense - -
============= =============
The Group has tax losses of GBP15.3m (2014 (restated): GBP11.0m)
and exploration costs of GBP11m (2014: GBP12.4m) which will be
available for offset against future income. No deferred tax has
been reflected on these assets as the timing of their utilisation
is uncertain at this stage.
The total amounts of deferred tax are:
Group Group
31 December 31 December
2015 2014
GBP GBP
Total provided for - -
============== ==============
Un-provided for
Accelerated capital allowances (70,246) (63,847)
Exploration costs (4,142,240) (4,655,584)
Unutilised losses (2,860,325) (1,382,246)
-------------- --------------
Total un-provided deferred
tax asset (7,072,811) (6,101,677)
============== ==============
15. INVESTMENT IN JOINT VENTURE
Brandberg Energy (Proprietary) Limited ('Brandberg'), a Namibian
company, was a 50:50 joint venture ("JV") with Extract Resources
Ltd ('Extract') and NRR Energy Minerals Limited ("NRR Energy"), a
100% owned subsidiary. In January 2012, NRR Energy transferred
US$800,000 (GBP509,635) to Brandberg to acquire 50% of its share
capital. The principal assets of Brandberg were exploration
licences, EPL 3327 and EPL 3328, pursuant to which, Brandberg had
the rights to explore for nuclear fuel minerals in western Namibia.
The Subscription Funds were used by Brandberg to explore for
uranium on these licences.
The joint venture had no contingent liabilities or capital
commitments as at 31 December 2015 and 31 December 2014.The
carrying value of the investment is nil at the year end (2014:
nil)
16. INVESTMENT IN ASSOCIATED COMPANY
The following entity meets the definition of an associate and
has been equity accounted in the consolidated financial
statements:
Country Group Group
Company of Incorporation interest interest
31 December 31 December
2015 2014
North River Resources
(Murrupula) Limitada Mozambique 40% 40%
North River Resources (Murrupula) Limitada ('Murrupula') is a
company that was registered in Mozambique on 27 January 2011. The
Group's interest in Murrupula is jointly held by North River
Resources plc and NRR Mozambique Limited. It is also the beneficial
owner of an exploration licence in Mozambique. The licence and
Murrupula are the subject of a Heads of Agreement between Baobab
Resources Limited ("Baobab") and North River Resources plc. Under
this agreement Baobab is entitled to a 60% participation interest
in Murrupula. Boabab have completed the agreed level of exploration
work. Legal control over Murrupula has not yet passed to Baobab,
however, effective control has passed.
Accordingly, these consolidated financial statements have been
prepared on the basis that control has passed and that Murrupula is
treated as an associate as from 1 October 2011.
Aggregated amounts relating to the associate are as follows:
31 December 31 December
2015 2014
GBP GBP
Total assets 138,678 138,678
Total liabilities (25,208) (25,208)
------------ ------------
Net assets 113,470 113,470
------------ ------------
Share of net assets 45,388 45,388
Goodwill on acquisition 67,794 67,794
------------ ------------
The group's share of net assets
representing the group's carrying
value of investments in associate 113,182 113,182
Revenues - -
Losses - -
------------ ------------
The Group's share of loss - -
------------ ------------
Carrying value of investment in associate
Group Group
31 December 31 December
2015 2014
GBP GBP
Cost and carrying
value of investment 113,182 113,182
============= =============
The financial statements as at 31 December 2011 were prepared on
the assumption that Murrupula incurred exploration expenditure
directly. Subsequent to the release of the 31 December 2011
financial statements, the JV partners agreed that they would
account for the respective costs individually. Accordingly,
Murrupula has no income or expense either at 31 December 2014 or 31
December 2015, and the disclosure above reflects this position.
17. SUBSIDIARY COMPANIES
The financial statements include the following subsidiary
companies:
Company Country Equity Nature
of Incorporation holding of business
NRR Energy Minerals Limited United 100% Exploration
Kingdom and mining
NRR Mozambique Limited United 100% Exploration
Kingdom and mining
West Africa Gold Exploration Namibia 100% Exploration
(Namibia) (Pty) Ltd and mining
Namib Lead and Zinc Mining Namibia 100% Exploration
(Pty) Ltd and mining
North River Resources Namibia 100% Administration
Namibia (Pty) Ltd
North River Resources Mozambique 100% Inactive
(Mavuzi) Limitada
NRR Energy Minerals Limited and NRR Mozambique Limited were
established in October and December 2010 respectively as wholly
owned subsidiaries of North River Resources plc. NRR Energy
Minerals Limited has not traded during the year. NRR Mozambique
Limited has not traded however, it has provided financial support
to its subsidiary, North River Resources (Mavuzi) Limitada and to
its associate North River Resources (Murrupula) Limitada (see note
16).
The acquisition of West Africa Gold Exploration (Namibia) (Pty)
Ltd ('WAGE') and Namib Lead is discussed in detail under Note 6
'Goodwill and Impairment Review'.
North River Resources Namibia (Pty) Limited was established in
December 2009 and acts as the administration company for the
Group's activities in Namibia leaving the other subsidiaries to
concentrate on exploration activity.
Carrying value of investments in subsidiaries
31 December 31 December
2015 2014
GBP GBP
At 1 January and 31 December 472,991 472,991
============ ============
During the year ended 31 December 2011 North River Resources plc
capitalised GBP472,749 of an outstanding loan due from WAGE into
share capital by obtaining a further 600,000 shares in WAGE. The
capitalisation was undertaken to improve the relative weighting
between the share capital and loan value invested by North River
Resources plc in its Namibian subsidiary to comply with exchange
control requirements in Namibia.
Carrying value of loans in subsidiaries
(Restated)
31 December 31 December
2015
2014
GBP GBP
Loans due from subsidiary
undertakings 4,110,251 11,061,779
============= =============
At the end of 2015 the Parent Company had receivables from
several Group companies, namely West Africa Gold Exploration
(Namibia) (Pty) Ltd ("WAGE"), Namibia Lead Zinc Mining (Pty) Ltd
("NLZ") and North River Resources Namibia (Pty) Ltd ("NRRN").
Since the acquisition of the subsidiaries the Company has
provided amounts to the subsidiaries to fund the Group's long term
exploration and development activities. These receivables are
interest free, unsecured and have no fixed repayment terms. These
loans are considered to be long term with no repayment expected in
the foreseeable future and have therefore been included in net
investments in the subsidiaries.
As disclosed in note 6, the Directors have made an impairment of
the goodwill associated with WAGE. As a consequence of this
goodwill impairment, a provision against the recoverability of the
loan to WAGE of GBP5,690,956 has also been made in the Company's
accounts (2014: nil). This subsidiary loan impairment does not
impact the consolidated income statement or net assets.
The Directors are of the opinion that no provision for
impairment is required with respect to the goodwill associated with
Namibia Lead Zinc Mining (Pty) Ltd (NLZ) and that the loans due
from NLZ and NRRN are fully recoverable.
2014 Prior Year Restatement
In 2015 the calculation of the loan balances due from Namibia
have been materially restated to more appropriately classify
exchange rate fluctuations and to align with the accounting
policies of the company. The original loan agreements dated in 2011
were with the following subsidiaries: West Africa Gold Exploration
(Namibia) (Pty) Ltd ("WAGE"), Namibia Lead Zinc Mining (Pty) Ltd,
North River Resources Namibia (Pty) Ltd.
The subsidiaries' loan balances are denominated in their local
currency (Namibian Dollars) per the original loan agreements.
However, in prior years the loans were accounted for as balances
denominated in the parent Company's functional currency (GBP).
In 2014 the foreign currency exchange variance between the
Namibian denominated loans and the GBP equivalent had not been
included as an expense in the Company's accounts. At 31 December
2014, the GBP values of the subsidiary loan balances were therefore
overstated and there was an accumulated foreign exchange difference
between the Namibian and Company balances of GBP4,568,609. This
arose due to the weakening of the Namibian Dollar currency against
GBP over several years. This is shown as a prior year adjustment in
the Company's accounts for 2014 as a write down of the subsidiary
loans recoverable and an increase in the retained losses of the
Company at 31 December 2014 by GBP4,568,609. As these loans are
part of the Company's net investment in the subsidiaries, the above
adjustment does not affect the Group's results, loss per share or
net assets.
18. SHARE-BASED PAYMENTS
Share options outstanding
31 December 31 December
2015 2014
Number Number
Opening balance 9,100,000 105,100,000
Expired/cancelled during
the year (Note 1) (9,100,000) (96,000,000)
------------ -------------
Closing balance - 9,100,000
============ =============
Note 1:
4,725,000 options granted on 3 March 2010 with an exercise price
of 10p expired on 01 February 2015.
4,375,000 options granted on 1 February 2011 with an exercise
price of 10p expired on 01 February 2015.
These options were fully expensed in prior periods. The prior
period cost of these options of GBP115,645 was transferred to
retained losses from the share-based payment reserve during the
year ended 31 December 2015.
19. FAIR VALUES OF FINANCIAL INSTRUMENTS
Set out below is a comparison by class of the carrying amounts
and fair value of the Group's financial instruments that are
carried in the Group's financial statements.
Book Values Fair Values
31 December 31 December 31 December 31 December
2015 2014 2015 2014
GBP GBP GBP GBP
Financial Assets
Trade and other
receivables 25,767 444,817 25,767 444,817
Cash and cash
equivalents 1,376,740 1,904,860 1,376,740 1,904,860
------------ ------------ ------------ ------------
Total 1,402,507 2,349,677 1,402,507 2,349,677
============ ============ ============ ============
Financial Liabilities
Trade and other
payables 202,897 326,955 202,897 326,955
Convertible
loan notes 2,305,680 - 1,724,344 -
Total 2,508,577 326,955 1,927,241 326,955
============ ============ ============ ============
The fair values of the financial assets and liabilities are
included at the amounts at which the instrument could be exchanged
in a current transaction between willing parties, other than in a
forced or liquidation sale.
The cash and cash equivalents, trade receivables, trade payables
and other current liabilities approximate their carrying value
amounts largely due to the short-term maturities of these
instruments.
20. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group's principal financial instruments comprise cash and
cash equivalents, trade and other receivables, trade and other
payables and a convertible loan.
The main purpose of cash and cash equivalents financial
instruments is to finance the Group's operations.
The Group's other financial assets and liabilities such as trade
receivables and trade payables, arise directly from its operations.
It is, and has been throughout the entire period, the Group's
policy that no trading in financial instruments shall be
undertaken.
Greenstone funding
On 10 August 2015 the Group entered a new Investment Agreement
with Greenstone Resources LP ("Greenstone").
Under the Investment Agreement a Placing and Open Offer ("Open
Offer") would be offered to the market for New Shares at the Offer
Price to raise a total amount of $4,000,000 before expenses.
Greenstone underwrote the Open Offer to subscribe for New Shares
and/or Notes under the terms and conditions of the Agreement, see
note 13 for the Open Offer details.
The Board reviews and agrees policies for managing key risks to
the business and these are summarised below.
Market risk
Market risk is the risk that changes in market prices, and
market factors such as foreign exchange rates and interest rates
will affect the entity's income 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. The Group does not use derivative products to hedge
foreign exchange risk and has exposure to foreign exchange rates
prevailing at the dates when funds are transferred into different
currencies.
Cash flow interest rate risk
The Group's exposure to the risks of changes in market interest
rates relates primarily to the Group's cash and cash equivalents
with a floating interest rate. These financial assets with variable
rates expose the Group to cash flow interest rate risk. The
convertible loan notes (details in note 12) bear a fixed annual
rate of interest until maturity. All other financial assets and
liabilities in the form of receivables and payables are
non-interest bearing. The Group does not engage in any hedging or
derivative transactions to manage interest rate risk.
In regard to its interest rate risk, the Group continuously
analyses its exposure. Within this analysis consideration is given
to potential renewals of existing positions, alternative
investments and the mix of fixed and variable interest rates. The
Group has no policy as to maximum or minimum level of fixed or
floating instruments.
Interest rate risk is measured as the value of assets and
liabilities at fixed rate compared to those at variable rate.
Weighted Floating Fixed Non-interest
average interest interest bearing
effective rate rate 2015
interest maturing Total
rate in 1
year
or less
Year ended 31 % GBP GBP GBP GBP
December 2015
Financial assets
Trade and other
receivables - - - 25,767 25,767
Cash on deposit 0.5 1,376,740 - - 1,376,740
------------ ------------ ------------- ------------
Total financial
assets 1,376,740 - 25,767 1,402,507
============ ============ ============= ============
Financial liabilities
Trade and other
payables - - - 202,897 202,897
Convertible
loan notes (fixed
interest rate) 10.00 - 1,724,343 - 1,724,343
Total financial
liabilities - 1,724,343 202,897 1,927,240
============ ============ ============= ============
Weighted Floating Fixed Non-interest
average interest interest bearing
effective rate rate 2014
interest maturing 2014 Total
rate in 1
year
or less
Year ended 31 % GBP GBP GBP GBP
December 2014
Financial assets
Trade and other
receivables - - - 444,817 444,817
Cash on deposit - 1,904,860 - - 1,904,860
Total financial
assets 1,904,860 - 444,817 2,349,677
============ ========== ============= ============
Financial liabilities
Trade and other
payables - - - 326,955 326,955
------------ ---------- ------------- ------------
Total financial
liabilities - - 326,955 326,955
============ ========== ============= ============
Net fair value
The net fair value of financial assets and financial liabilities
approximates to their carrying amount as disclosed in the Statement
of Financial Position and in the related notes.
Currency risk
The functional currency for the Group's operating activities is
the Pound Sterling and for exploration activities the Namibian
Dollar. The Group has not hedged against currency depreciation but
continues to keep the matter under review.
Financial risk management
The Directors recognise that this is an area in which they may
need to develop specific policies should the Group become exposed
to wider financial risks as the business develops.
Liquidity risk
Liquidity risk is the risk that the entity will not be able to
meet its financial obligations as they fall due.
The objective of managing liquidity risk is to ensure as far as
possible, that it will always have sufficient liquidity to meet its
liabilities when they fall due, under both normal and stressed
conditions.
The entity has established a number of policies and processes
for managing liquidity risk. These include:
-- Continuously monitoring actual and budgeted cash flows and
longer term forecasting cash flows;
-- Monitoring the maturity profiles of financial assets and
liabilities in order to match inflows and outflows; and
-- Monitoring liquidity ratios (working capital).
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group's main counterparties are the operators of the
respective projects. Funds are normally only remitted on a
prepayment basis a short period before the expected commencement of
exploration activities. The Group has adopted a policy of only
dealing with what it believes to be creditworthy counterparties and
would consider obtaining sufficient collateral where appropriate,
as a means of mitigating the risk of financial loss from defaults.
The Group's exposure and the credit ratings of its counterparties
are continuously monitored and the aggregate value of transactions
concluded is spread amongst approved counterparties.
Trade receivables at 31 December 2015 consist primarily of
prepayments and other sundry receivables. Ongoing credit evaluation
is performed on the financial condition of accounts receivable.
Capital management
The Group's objective when managing capital is to ensure that
adequate funding and resources are obtained to enable it to develop
its projects through to profitable production, while in the
meantime safeguarding the Group's ability to continue as a going
concern. This is aimed at enabling it, once the projects come to
fruition, to provide appropriate returns for shareholders and
benefits for other stakeholders. Capital will continue to be
sourced from equity and from borrowings as appropriate.
21. RELATED PARTY TRANSACTIONS
Full details of Directors' remuneration are included in the
Directors' Report.
Convertible loan notes
During the year the Group was issued convertible loan notes by
Greenstone Resources LP as part of the contracted subscription
agreement in the Open Offer to the market in September 2015. The
total value of the US Dollar loan notes issued at 31st December
2015 is GBP2,305,680 ($3,418,355). As part of the agreement
interest is due quarterly in arrears on the full balance of the
loan notes at an annualised rate of 10%. The total interest paid up
to the 31st December 2015 was GBP50,698.
As part of the contractual agreement a sum of GBP129,786
($200,000) was paid in consideration for underwriting the Open
Offer to Greenstone Resources LP. A further amount of GBP41,480
($63,120) was paid to Greenstone Resources LP for professional fees
incurred by the company in the set up costs of the Open Offer, see
note 12 for further details.
Directors' consulting fees
-- During the year several Directors provided consulting
services in addition to their directors' fees.
-- Martin French received GBP6,000 during for consulting
services during the handover period to James Beams.
-- Ken Sangster and Associates Limited, a Company of which Ken
Sangster is also a Director, were engaged for additional
consultancy work relating to metallurgical testwork during the year
and received a fee of GBP8,500.
-- James Beams received GBP7,661 of consulting fees prior to
becoming an employee and director.
22. EMPLOYEES' AND DIRECTORS' REMUNERATION
The employee costs of the Group (including Directors'
remuneration) are as follows:
Year ended Year ended
Group 31 December 31 December
2015 2014
GBP GBP
Employee, Directors and
Contractors remuneration 901,418 564,840
Employee, Directors and
Contractors social security
costs 51,605 40,688
------------- -------------
Total 953,023 605,528
============= =============
Average employee, directors Number Number
and contractor numbers
Exploration and expenditure 28 20
Non-executive Directors 6 4
Administration and management 6 5
------------- -------------
Total 40 29
============= =============
Directors' remuneration (excluding employer's National
Insurance) for the year was as follows:
Directors'
2015 Directors' Directors' Directors' consulting Total
salary bonus fees fees Year
Directors Year Year Year Year to
to to to to 31 Dec
31 Dec 31 Dec 31 Dec 31 Dec 15
15 15 15 15
GBP GBP GBP GBP
Martin
French 159,980 - - 6,000 165,980
Brett
Richards - - 24,000 - 24,000
Mark Thompson - - 24,000 - 24,000
James
Beams 142,692 22,500 - 7,661 172,853
Keith
Marshall - - 28,000 - 28,000
Ken Sangster - - 28,000 - 28,000
Rodney
Beddows - - 1,935 - 1,935
-------------
302,672 22,500 105,935 13,661 444,768
============= ============= ============= ============ ==========
Directors'
2014 Directors' Directors' Directors' consulting Total
salary bonus fees fees Year
Directors Year Year Year Year to
to to to to 31 Dec
31 Dec 31 Dec 31 Dec 31 Dec 14
14 14 14 14
GBP GBP GBP GBP GBP
Martin
French 150,000 150,000 (14,000) - 286,000
Zuyuan
He - - (8,000) - (8,000)
Zhiping
Yu - - (4,000) - (4,000)
Ms. Qi
Yu - - (4,000) - (4,000)
Brett
Richards - - 24,000 - 24,000
Mark Thompson - - 24,000 - 24,000
------------- ------------
150,000 150,000 18,000 - 318,000
============= ============= ============= ============ ==========
Full details of Directors' emoluments are disclosed in the
Directors' Report.
23. CONTROL
No one party is identified as controlling the Group.
24. EXPLORATION EXPENDITURE AND RESTORATION COMMITMENTS
Restoration commitments
The Group has no obligations at 31 December 2015 to undertake
any rehabilitation or restoration activity on the licences
currently held.
Existing Exploration Licences in Namibia
The Group has a number of exploration licences in Namibia (see
Note 6). The Group plans to carry out further exploration work on
the licences, the amount of work being dependant on success at each
stage. Estimated exploration expenditure, based on success, could
be up to GBP0.6 million on these licences through 2016. There is
scope in the Mines and Minerals Act for expenditure to be altered
by the Group and still keep the licences in good standing. It
should also be noted that if the project has negative results in
the first 6 months of the licence tenure - then the project can be
terminated without further expenditure.
Existing Exploration Licences in Mozambique
The Group has an effective 40% interest in a licence in
Mozambique, through its associated company North River Resources
(Murrupula) Limitada. The cost of maintaining this licence is not
significant to the Group and will be borne by North River Resources
plc (see Note 16).
25. SUBSEQUENT EVENTS
On 28 January 2016 the Company received from Ministry a Notice
of Preparedness to Grant the mining licence (the "Notice") for the
Namib Lead-Zinc Project. The Notice contained a number of
supplementary terms and conditions relating to matters including,
inter alia, the work programme, production, environment and
Namibian participation in the Project that will apply to the mining
licence. North River sought clarification from the Ministry on
certain aspects of the supplementary conditions and its
interpretation of them. Pending this clarification, the Company
accepted the Notice on 26 February 2016 based on its understanding
of the Supplementary Conditions.
In accordance with the process set out in the Notice, the
Company submitted a proposal to the Ministry on 25 April 2016,
covering local ownership of the Namib Project, participation by
historically disadvantaged Namibians in management of the Namib
Project, and the Company's corporate social responsibility
strategy. The supplementary terms and conditions and the proposal
must be agreed between the Company and the Ministry before the
mining licence is issued. The Notice sets out a further process and
timeline through to mid-2016 for these discussions.
On 12 February 2016, drill results were announced 4,828 metres
of drilling (66 holes) which had been completed subsequent to the
last Mineral Resource Estimate of August 2014. Of these, 52% (34
holes) had significant intercepts. Drilling was undertaken mainly
in the top half of the North Orebody and also below the historic
South Mine, which is around 200m below surface. In general, the
drilling results in both areas met management's expectations and
increased its confidence in the Mineral Resource.
On 21 March 2016, initial drilling results from the ongoing
3,800 metre resource expansion drilling campaign were announced. 14
holes totalling 1,472 metres had been drilled and the early results
indicate the continuation of mineralisation 80 metres below the
existing Northern part of the orebody. This provides support for
the Company's confidence in delivering an increased resource
estimate for the Namib project following completion of the drilling
campaign. Of the eight holes reported, significant mineralisation
was intersected in four holes:
-- NLDD067: 57.1m (true width of 8.5 metres) at 28.6% zinc and 33g/t silver*;
-- NLDDK074: 3.0m (true width of 1.5 metres) at 35.0% zinc and
11.9m (true width of 6.0 metres) at 20.8% zinc;
-- NLDDK075: 8.7m (true width of 4.0 metres) at 19.5% zinc and
3.0m (true width of 2.0 metres) at 12.2% zinc; and
-- NLDDK076: 3.6m (true width of 1.3 metres) at 9.8% zinc, 2.6%
lead and 42g/t silver, plus 8.1m (true width of 2.5 metres) at 6.7%
zinc, 7.6% lead and 101g/t silver
-- Silver results are provisional, awaiting QAQC checks
-- On 26 April 2016, further three drill hole results were
announced, with significant mineralisation intersected in two of
the holes:
-- NLDD069: 35.7m (true width of 9 metres) at 33.8% zinc, and
-- NLDDK077: 3.8m (true width of 1.5 metres) at 10.6% zinc and
5.8m (true width of 2 metres) at 12.2% zinc and 10.9% lead
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSUFWFFMSEEM
(END) Dow Jones Newswires
June 02, 2016 02:00 ET (06:00 GMT)
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