Horizonte Minerals Plc, (AIM: HZM, TSX: HZM)
(‘Horizonte’ or ‘the Company’), the nickel development company
focused in Brazil, is pleased to announce its unaudited financial
results for the three month period to 30 September 2018. These
results, as well as a Management Discussion & Analysis, have
been posted on the Company’s website www.horizonteminerals.com and
are also available on SEDAR at www.sedar.com.
For further information visit www.horizonteminerals.com or
contact:
|
|
Horizonte Minerals plc |
Jeremy
Martin (CEO) |
+44 (0) 203 356 2901 |
|
|
Numis Securities Ltd (NOMAD &
Broker) |
John Prior
Paul Gillam |
+44 (0) 207 260 1000 |
|
|
Shard Capital (Joint Broker) |
Damon Heath
Erik Woolgar |
+44 (0) 20 186 9952 |
|
|
Tavistock (Financial PR) |
Emily
FentonGareth Tredway |
+44 (0) 207 920 3150 |
About Horizonte Minerals:
Horizonte Minerals plc is an AIM and TSX-listed
nickel development company focused in Brazil. The Company is
developing the Araguaia project, as the next major ferronickel mine
in Brazil, and the Vermelho nickel-cobalt project, with the aim of
being able to supply nickel and cobalt to the EV battery
market. Both projects are 100% owned.
Horizonte Minerals plcCondensed
Consolidated Interim Financial Statements for the nine months ended
30 September 2018
Condensed consolidated statement of comprehensive
income
|
|
|
|
|
|
9 months ended30
September |
3 months ended30
September |
|
|
2018 |
2017 |
2018 |
2017 |
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
Notes |
£ |
£ |
£ |
£ |
Continuing
operations |
|
|
|
|
|
Revenue |
|
- |
- |
- |
- |
Cost of
sales |
|
- |
- |
- |
- |
|
|
|
|
|
|
Gross
profit |
|
- |
- |
- |
- |
|
|
|
|
|
|
Administrative
expenses |
|
(1,138,978) |
(959,250) |
(353,630) |
(304,702) |
Charge for share
options granted |
|
(633,222) |
(101,931) |
(338,516) |
(23,121) |
Change in value of
contingent consideration |
|
(265,378) |
255,342 |
(70,904) |
102,248 |
Gain/(Loss) on foreign
exchange |
|
117,313 |
(271,947) |
24,515 |
(26,395) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(1,920,265) |
(1,077,786) |
(738,535) |
(251,970) |
|
|
|
|
|
|
Finance income |
|
31,803 |
9,961 |
9,928 |
2,513 |
Finance
costs |
|
(215,283) |
(175,304) |
(74,961) |
(58,360) |
|
|
|
|
|
|
Loss before
taxation |
|
(2,103,745) |
(1,243,129) |
(803,568) |
(307,817) |
|
|
|
|
|
|
Taxation |
|
- |
- |
- |
- |
|
|
|
|
|
|
Loss for the year from continuing operations |
|
(2,103,745) |
(1,243,129) |
(803,568) |
(307,817) |
|
|
|
|
|
|
Other
comprehensive income |
|
|
|
|
|
Items that may
be reclassified subsequently to profit or lossChange in
value of available for sale financial assets |
|
- |
- |
- |
- |
Currency
translation differences on translating foreign operations |
|
(4,935,406) |
(1,796,142) |
(880,193) |
400,455 |
Other comprehensive income for the
period, net of tax |
|
(4,935,406) |
(1,796,142) |
(880,193) |
400,455 |
Total
comprehensive income for the period |
|
|
|
|
|
attributable to equity holders of the Company |
|
(7,039,151) |
(3,039,271) |
(1,683,762) |
92,638 |
|
|
|
|
|
|
Earnings per
share from continuing operations attributable to the equity holders
of the Company |
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted (pence per share) |
9 |
(0.147) |
(0.106) |
(0.056) |
(0.026) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed consolidated statement of financial
position
|
|
|
|
|
|
30 September2018 |
31 December2017 |
|
|
Unaudited |
Audited |
|
Notes |
£ |
£ |
Assets |
|
|
|
Non-current
assets |
|
|
|
Intangible assets |
6 |
32,567,204 |
34,308,278 |
Property, plant &
equipment |
|
1,271 |
2,051 |
|
|
32,568,475 |
34,310,329 |
Current
assets |
|
|
|
Trade and other
receivables |
|
127,948 |
153,105 |
Cash and
cash equivalents |
|
7,938,804 |
9,403,825 |
|
|
8,066,752 |
9,556,930 |
Total assets |
|
40,635,227 |
43,867,259 |
Equity and
liabilities |
|
|
|
Equity
attributable to owners of the parent |
|
|
|
Issued capital |
7 |
14,325,218 |
13,719,343 |
Share premium |
7 |
41,664,018 |
40,422,258 |
Other reserves |
|
(3,947,391) |
988,015 |
Accumulated losses |
|
(17,358,324) |
(15,887,801) |
Total equity |
|
34,683,521 |
39,241,815 |
Liabilities |
|
|
|
Non-current
liabilities |
|
|
|
Contingent
consideration |
|
5,261,237 |
3,635,955 |
Deferred
tax liabilities |
|
214,874 |
253,205 |
|
|
5,476,111 |
3,889,160 |
Current
liabilities |
|
|
|
Trade and
other payables |
|
475,595 |
736,284 |
|
|
|
|
Total liabilities |
|
5,951,706 |
4,625,444 |
Total equity and liabilities |
|
40,635,227 |
43,867,259 |
|
|
|
|
|
|
|
|
|
|
|
|
Condensed statement of changes in shareholders’
equity
|
|
|
Attributable to the owners of the parent |
|
Sharecapital£ |
Share premium£ |
Accumulatedlosses£ |
Otherreserves£ |
Total£ |
|
|
|
|
|
|
As at 1 January 2017 |
11,719,343 |
35,767,344 |
(14,899,297) |
4,467,064 |
37,054,454 |
Comprehensive
income |
|
|
|
|
|
Loss for the
period |
- |
- |
(1,243,129) |
- |
(1,243,129) |
Other
comprehensive income |
|
|
|
|
|
Impairment of available
for sale assets |
- |
- |
- |
- |
- |
Currency
translation differences |
- |
- |
- |
(1,796,142) |
(1,796,142) |
Total comprehensive income |
- |
- |
(1,243,129) |
(1,796,142) |
(3,039,271) |
Transactions with owners |
|
|
|
|
|
Share based
payments |
- |
(19,432) |
101,931 |
- |
82,499 |
Issue of shares |
- |
- |
- |
- |
- |
Share
issue costs |
- |
- |
- |
- |
- |
Total
transactions with owners |
- |
(19,432) |
101,931 |
- |
82,499 |
As at 30 September 2017 (unaudited) |
11,719,343 |
35,747,912 |
(16,040,495) |
2,670,922 |
34,097,682 |
|
|
|
|
|
|
|
Attributable to the owners of the parent |
|
Sharecapital£ |
Share premium£ |
Accumulatedlosses£ |
Otherreserves£ |
Total£ |
|
|
|
|
|
|
As at 1 January 2018 |
13,719,343 |
40,422,258 |
(15,887,801) |
988,015 |
39,241,815 |
Comprehensive
income |
|
|
|
|
|
Loss for the
period |
- |
- |
(2,103,745) |
- |
(2,103,745) |
Other
comprehensive income |
|
|
|
|
|
Impairment of available
for sale assets |
- |
- |
- |
|
- |
Currency
translation differences |
- |
- |
- |
(4,935,406 |
- |
Total comprehensive income |
- |
- |
(2,103,745) |
(4,935,406) |
(7,039,151) |
Transactions with owners |
|
|
|
|
|
Share based
payments |
- |
- |
633,222 |
- |
633,222 |
Issue of shares |
605,875 |
1,451,724 |
- |
- |
2,057,599 |
Share
issue costs |
- |
(209,964) |
- |
- |
(209,964) |
Total
transactions with owners |
605,875 |
1,241,760 |
633,222 |
|
2,480,857 |
As at 30 September 2018 (unaudited) |
14,325,218 |
41,664,018 |
(17,358,324) |
(3,947,391) |
34,683,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Cash
Flows
|
|
|
|
|
|
9 months ended30
September |
3 months ended30
September |
|
|
2018 |
2017 |
2018 |
2017 |
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
|
£ |
£ |
£ |
£ |
Cash flows from operating activities |
|
|
|
|
|
Loss before
taxation |
|
(2,103,745) |
(1,243,129) |
(803,568) |
(307,817) |
Interest income |
|
(31,803) |
(9,961) |
(9,928) |
(2,513) |
Finance costs |
|
215,283 |
175,304 |
74,961 |
58,360 |
Exchange
differences |
|
(117,313) |
271,947 |
(24,515) |
26,395 |
Employee share options
charge |
|
633,222 |
101,931 |
338,516 |
23,121 |
Change in fair value of
contingent consideration |
|
265,378 |
(255,342) |
70,904 |
(102,248) |
Depreciation |
|
- |
283 |
- |
50 |
Operating loss
before changes in working capital |
|
(1,138,978) |
(958,967) |
(353,630) |
(304,652) |
Decrease/(increase) in
trade and other receivables |
|
7,546 |
(38,274) |
50,345 |
(37,481) |
(Decrease)/increase in trade and other payables |
|
(298,911) |
(233,445) |
(1,841) |
18,704 |
Net cash outflow from operating activities |
|
(1,430,343) |
(1,230,686) |
(305,126) |
(323,429) |
Cash flows from
investing activities |
|
|
|
|
|
Purchase of intangible
assets |
|
(2,049,038) |
(3,780,932) |
(763,698) |
(1,283,008) |
Proceeds from sale of
property, plant and equipment |
|
- |
- |
- |
- |
Interest
received |
|
31,803 |
9,961 |
9,928 |
2,513 |
Net cash used in investing activities |
|
(2,017,235) |
(3,770,971) |
(753,770) |
(1,280,495) |
Cash flows from
financing activities |
|
|
|
|
|
Issue of shares |
|
2,057,599 |
- |
- |
- |
Share
issue costs |
|
(209,965) |
(19,432) |
- |
- |
Net cash used in financing activities |
|
1,847,634 |
(19,432) |
- |
- |
Net decrease in
cash and cash equivalents |
|
(1,599,944) |
(5,021,089) |
(1,058,896) |
(1,603,924) |
Cash and cash
equivalents at beginning of period |
|
9,403,825 |
9,317,781 |
8,969,672 |
5,655,064 |
Exchange
gain/(loss) on cash and cash equivalents |
|
134,923 |
(271,947) |
28,027 |
(26,395) |
Cash and cash equivalents at end of the
period |
|
7,938,804 |
4,024,745 |
7,938,804 |
4,024,745 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Financial Statements
1. General
information
The principal activity of the Company and its
subsidiaries (together ‘the Group’) is the exploration and
development of precious and base metals. There is no seasonality or
cyclicality of the Group’s operations.
The Company’s shares are listed on the
Alternative Investment Market of the London Stock Exchange (AIM)
and on the Toronto Stock Exchange (TSX). The Company is
incorporated and domiciled in the United Kingdom. The address of
its registered office is Rex House, 4-12 Regent Street, London SW1Y
4RG.
2. Basis of
preparation
The condensed consolidated interim financial
statements have been prepared using accounting policies consistent
with International Financial Reporting Standards and in accordance
with International Accounting Standard 34 Interim Financial
Reporting. The condensed interim financial statements should be
read in conjunction with the annual financial statements for the
year ended 31 December 2017, which have been prepared in accordance
with International Financial Reporting Standards (IFRS).
The condensed consolidated interim financial
statements set out above do not constitute statutory accounts
within the meaning of the Companies Act 2006. They have been
prepared on a going concern basis in accordance with the
recognition and measurement criteria of International Financial
Reporting Standards (IFRS). Statutory financial statements for the
year ended 31 December 2017 were approved by the Board of Directors
on 26 March 2018 and delivered to the Registrar of Companies. The
report of the auditors on those financial statements was
unqualified.
The condensed consolidated interim
financial statements of the Company have not been audited or
reviewed by the Company’s auditor, BDO LLP.
Going concern
The Directors, having made appropriate
enquiries, consider that adequate resources exist for the Group to
continue in operational existence for the foreseeable future and
that, therefore, it is appropriate to adopt the going concern basis
in preparing the condensed consolidated interim financial
statements for the period ended 30 September 2018.
Risks and uncertainties
The Board continuously assesses and monitors the
key risks of the business. The key risks that could affect the
Group’s medium term performance and the factors that mitigate those
risks have not substantially changed from those set out in the
Group’s 2017 Annual Report and Financial Statements, a copy of
which is available on the Group’s website:
www.horizonteminerals.com and on Sedar: www.sedar.com The key
financial risks are liquidity risk, foreign exchange risk, credit
risk, price risk and interest rate risk.
Critical accounting
estimates
The preparation of condensed consolidated
interim financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the end of the reporting period. Significant items subject to such
estimates are set out in note 4 of the Group’s 2017 Annual Report
and Financial Statements. The nature and amounts of such estimates
have not changed significantly during the interim period.
3. Significant accounting
policies
The condensed consolidated interim financial
statements have been prepared under the historical cost convention
as modified by the revaluation of certain of the subsidiaries’
assets and liabilities to fair value for consolidation
purposes.
The same accounting policies, presentation and
methods of computation have been followed in these condensed
consolidated interim financial statements as were applied in the
preparation of the Group’s Financial Statements for the year ended
31 December 2017.
4 Segmental reporting
The Group operates principally in the UK and
Brazil, with operations managed on a project by project basis
within each geographical area. Activities in the UK are mainly
administrative in nature whilst the activities in Brazil relate to
exploration and evaluation work. The reports used by the chief
operating decision maker are based on these geographical
segments.
|
|
|
|
2018 |
UK |
Brazil |
Total |
|
9 months ended30 September 2018£ |
9 months ended30 September 2018£ |
9 months ended30 September 2018£ |
Revenue |
- |
- |
- |
Administrative
expenses |
(855,593) |
(283,385) |
(1,138,978) |
Profit on foreign
exchange |
172,926 |
(55,613) |
117,313 |
(Loss) from operations per reportable segment |
(682,667) |
(338,998) |
(1,021,665) |
Inter segment revenues |
- |
- |
- |
Depreciation
charges |
- |
- |
- |
Additions and foreign
exchange movements to non-current assets |
- |
(1,703,069) |
(1,703,069) |
Reportable segment
assets |
7,132,617 |
33,502,609 |
40,635,227 |
Reportable segment
liabilities |
5,346,237 |
605,469 |
5,951,706 |
|
|
|
|
2017 |
UK |
Brazil |
Total |
|
9 months ended30 September 2017£ |
9 months ended30 September 2017£ |
9 months ended30 September 2017£ |
Revenue |
- |
- |
- |
Administrative
expenses |
(601,315) |
(357,935) |
(959,250) |
(Loss) on foreign
exchange |
(249,816) |
(22,131) |
(271,947) |
(Loss) from operations per reportable segment |
(851,132) |
(380,066) |
(1,231,197) |
Inter segment revenues |
|
|
|
Depreciation
charges |
(283) |
- |
(283) |
Additions and foreign
exchange movements to non-current assets |
- |
2,045,281 |
2,045,281 |
Reportable segment
assets |
4,021,401 |
34,124,786 |
38,146,187 |
Reportable segment
liabilities |
3,643,226 |
405,279 |
4,048,505 |
|
|
|
|
|
|
|
|
2018 |
UK |
Brazil |
Total |
|
3 months ended30 September 2018 |
3 months ended30 September 2018 |
3 months ended30 September 2018 |
|
£ |
£ |
£ |
Revenue |
- |
- |
- |
Administrative
expenses |
(260,493) |
(93,137) |
(353,630) |
Profit on foreign
exchange |
38,856 |
(14,341) |
24,515 |
(Loss) from operations per |
(221,637) |
(107,478) |
(329,115) |
reportable segment |
|
|
|
Inter segment
revenues |
- |
- |
- |
Depreciation
charges |
- |
- |
- |
Additions and foreign
exchange movements to non-current assets |
- |
(74,209) |
(74,209) |
|
|
|
|
|
|
|
|
2017 |
UK |
Brazil |
Total |
|
3 months ended30 September 2017 |
3 months ended30 September 2017 |
3 months ended30 September 2017 |
|
£ |
£ |
£ |
Revenue |
- |
- |
- |
Administrative
expenses |
(176,401) |
(128,300) |
(304,702) |
(Loss) on foreign
exchange |
(25,176) |
(1,219) |
(26,395) |
(Loss) from operations per |
(201,577) |
(129,520) |
(331,097) |
reportable segment |
|
|
|
Inter segment
revenues |
- |
- |
- |
Depreciation
charges |
(50) |
- |
(50) |
Additions and foreign
exchange movements to non-current assets |
- |
1,526,005 |
1,526,005 |
|
|
|
|
|
|
|
|
A reconciliation of adjusted loss from operations per reportable
segment to loss before tax is provided as follows:
|
|
|
|
|
|
|
|
|
|
9 months ended 30 September 2018 |
9 months ended 30 September 2017 |
3 months ended30 September 2018 |
3 months ended30 September 2017 |
|
|
|
£ |
£ |
£ |
£ |
Loss from operations
per reportable segment |
|
|
(1,021,665) |
(1,231,197) |
(329,115) |
(331,097) |
– Change in fair value
of contingent consideration |
|
|
(265,378) |
255,342 |
(70,904) |
102,248 |
– Charge for share
options granted |
|
|
(633,222) |
(101,931) |
(338,516) |
(23,121) |
– Impairment of
available for sale asset |
|
|
- |
- |
- |
- |
– Finance income |
|
|
31,803 |
9,961 |
9,928 |
2,513 |
– Finance costs |
|
|
(215,283) |
(175,304) |
(74,961) |
(58,360) |
Loss for the period from continuing operations |
|
|
(2,103,745) |
(1,243,129) |
(803,568) |
(307,817) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 Change in Fair Value of
Contingent Consideration
Contingent Consideration payable to Xstrata
Brasil Mineração Ltda.
The contingent consideration payable to Xstrata
Brasil Mineração Ltda has a carrying value of £3,950,609 at 30
September 2018 (2017: £3,423,333). It comprises two elements:
US$1,000,000 due after the date of issuance of a joint feasibility
study for the combined Enlarged Project areas and to be satisfied
by shares or cash, together with US$5,000,000 consideration in cash
as at the date of first commercial production from any of the
resource areas within the Enlarged Project area. The key
assumptions underlying the treatment of the contingent
consideration the US$5,000,000 are as per those applied to the
contingent consideration payable to the former owners of Teck
Cominco Brasil S.A.
As at 30 September 2018, there was a finance
expense of £150,967 (2017: £167,729) recognised in finance costs
within the Statement of Comprehensive Income in respect of this
contingent consideration arrangement, as the discount applied to
the contingent consideration at the date of acquisition was
unwound.
The change in the fair value of contingent
consideration payable to Xstrata Brasil Mineração Ltda generated a
charge to profit or loss of £166,203 for the nine months ended 30
September 2017 (2017: £239,914 credit) due to changes in the
functional currency in which the liability is payable.
6 Intangible assets
Intangible assets comprise exploration and
evaluation costs and goodwill. Exploration and evaluation costs
comprise internally generated and acquired assets.
|
|
|
|
|
Group |
|
|
Exploration and |
|
|
Goodwill |
Exploration licences |
evaluation costs |
Total |
|
£ |
£ |
£ |
£ |
Cost |
|
|
|
|
At 1 January 2018 |
251,063 |
5,165,529 |
28,891,686 |
34,308,278 |
Additions |
- |
1,144,621 |
2,087,756 |
3,232,377 |
Exchange rate
movements |
(38,006) |
(533,098) |
(4,402,347) |
(4,973,451) |
Net book amount at 30 September 2018 |
213,057 |
5,777,052 |
26,577,095 |
32,567,204 |
|
|
|
|
|
7 Share Capital and Share Premium
|
|
|
|
|
Issued and fully paid |
Number of shares |
Ordinary shares £ |
Share premium £ |
Total £ |
At 1
January 2018 |
1,371,934,300 |
13,719,343 |
40,422,258 |
54,141,601 |
Issued during period |
60,587,500 |
605,875 |
1,241,760 |
1,847,635 |
At 30 September 2018 |
1,432,521,800 |
14,325,218 |
41,664,018 |
55,989,236 |
|
|
|
|
|
8 Dividends
No dividend has been declared or paid by the
Company during the nine months ended 30 September 2018 (2017:
nil).
9 Earnings per share
The calculation of the basic loss per share of
0.147 pence for the 9 months ended 30 September 2018 (30 September
2017 loss per share: 0.106 pence) is based on the loss attributable
to the equity holders of the Company of £ (2,103,745) for the nine
month period ended 30 September 2018 (30 September 2017:
£(1,243,129)) divided by the weighted average number of shares in
issue during the period of 1,430,524,410 (weighted average number
of shares for the 9 months ended 30 Sept 2017: 1,171,934,300).
The calculation of the basic loss per share of
0.056 pence for the 3 months ended 30 September 2018 (30 September
2017 loss per share: 0.026 pence) is based on the loss attributable
to the equity holders of the Company of £ (803,568) for the three
month period ended 30 September 2018 (3 months ended 30 September
2017: £ 307,817) divided by the weighted average number of shares
in issue during the period of 1,432,521,800 (weighted average
number of shares for the 3 months ended 30 September 2017:
1,171,934,300).
The basic and diluted loss per share is the
same, as the effect of the exercise of share options would be to
decrease the loss per share.
Details of share options that could potentially
dilute earnings per share in future periods are disclosed in the
notes to the Group’s Annual Report and Financial Statements for the
year ended 31 December 2017 and in note 10 below.
10 Issue of Share
Options
On 30 May 2018, the Company awarded 38,150,000
share options to Directors and senior management. All of these
share options have an exercise price of 4.80 pence. One third of
the options are exercisable from 30 November 2018, one third from
31 May 2018 and one third from 30 November 2019.
On 30 May 2018, the Company awarded 1,500,000
share options to a consultant to the Company under the terms of the
prior year’s scheme. These options are exercisable immediately.
On 31 March 2017, the Company awarded 41,000,000
share options to Directors and senior management. All of the share
options have an exercise price of 3.20 pence. One third of the
options are exercisable from 30 September 2017, one third from 31
March 2018 and one third from 30 September 2018.
11 Ultimate controlling
party
The Directors believe there to be no ultimate
controlling party.
12 Related party
transactions
The nature of related party transactions of the
Group has not changed from those described in the Group’s Annual
Report and Financial Statements for the year ended 31 December
2017.
13 Events after the reporting
period
There are no events which have occurred after
the reporting period which would be material to the financial
statements.
Approval of interim financial
statements
These Condensed Consolidated Interim Financial
Statements were approved by the Board of Directors on 7 November
2018.
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