TIDMDCP
RNS Number : 1079X
Diamondcorp Plc
04 May 2016
04 May 2016
DiamondCorp plc
AIM share code: DCP & JSE share code: DMC
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp", "the Group" or "the Company")
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
Highlights
-- As underground development continued at the 74% owned Lace
Mine in South Africa, DiamondCorp`s net loss for 2015 was GBP2.41
million (2014: loss of GBP3.25m).
-- At 31(st) December 2015, total assets had risen to GBP34.99m
(2014: GBP32.41m) and cash on hand stood at GBP1.78m (2014:
GBP2.60m) while a further GBP2.06m gross was received from the
second tranche of a placing in January 2016.
-- During 2015, our consultants worked on a new Technical Report
and Resources Statement for the Lace Mine using actual mine data,
drilling and sampling results. The total Resource in the main Lace
pipe is now estimated at 38.69 million tonnes to the 920m level and
is open at depth.
-- Studies on diamond distribution together with financial
modelling have shown that the optimum lower screen size for the
processing plant is 1.25mm and at this cut-off, the Resource is
estimated to contain 9.39 million carats of diamonds.
-- Within the Resource, 2.21 million tonnes of kimberlite in the
UK4 Block has been classified as a Mineral Reserve between the
230-370m levels. This is currently being mined while development
continues to establish the first block cave on the 500m level.
-- In November 2015, the 400 tonne per hour underground conveyor
belt system from the first production level at Lace was
commissioned. This belt is capable of delivering ore at double the
current front end capacity of the 1.2 million tonne per year
processing plant.
-- There were no delays for industrial action at Lace during
2015 and last February, Lace Diamond Mines signed a four year wage
agreement with the Association of Mineworkers and Construction
Union (AMCU) based around 8% annual increases in basic salary for
most categories of workers.
-- In early April 2016, the Company closed the sale of a total
of 8,648 carats of diamonds (6,247cts from underground) marking the
first sale of diamonds from the Lace kimberlite since 1931. The
average price received for these kimberlite diamonds was US$175/ct
which compared to the estimate of $164/ct used in the new Resource
Statement.
-- Our joint venture cutting operation in Johannesburg continues
to illustrate the quality of Lace stones and the ability to add
value to specials while the recent tender included the first purple
diamond that sold for $6,363/ct.
-- Demand and prices for diamonds fell in 2015 in line with a
strong US$ and falls in other commodity prices while the industry
was impacted by financing issues and destocking through the
pipeline. In recent months, demand and prices for rough and
polished stones have been improving with signs that the cycle has
bottomed. We expect a further recovery in prices later in the
year.
A full version of the 2015 report and audited financial
statements will shortly be posted to shareholders and are available
on the Company Website www.diamondcorp.plc.uk
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 216 1300
Euan Worthington, Chairman
Tel: +44 7753 862 097
UK Broker & Nomad
Panmure Gordon (UK) Limited
Atholl Tweedie/Adam James
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker / Andrew Brady
Tel: +27 11 883 6358
Letter from the Chairman
Dear Shareholder
As I reported in my letter last year, it was hoped that 2015
would be the year that the Lace Mine (74%) resumed commercial
production for the first time since 1931. Unfortunately,
underground mining operations met a few unforeseen bumps in the
road
and it is only now, a year later, that we have completed our
first diamond tender and are finalising mine development prior
to
full commercial production of 30,000 tonnes per month of
kimberlite from July 2016.
A major advance during 2015 was the final installation and
commissioning of the underground conveyor at Lace which is now
bringing kimberlite and development waste to the surface without
the need for excessively long haul distances for the
Company's heavy dump trucks. Another positive event was the
completion of dams and water recovery systems on site, which
has alleviated concerns about water availability for processing
the kimberlite ore. This is important after low annual rainfall
in
recent years.
After a successful resolution to the strike by our workers who
are members of the Association of Mineworkers and Construction
Union (AMCU) at the end of 2014, we began wage negotiations
early in 2015. In February last year, a new four-year wage
agreement was signed based around 8% annual increases in the
basic salary for most worker categories, along with a
progressive lift in pay for the lowest paid workers. This was a
good result as two or three year agreements are more common in
the South African mining industry. Since that deal was signed,
labour relations at the mine have been very positive with no
further stoppages for industrial action.
Financing
In March 2015, we announced that Lace Diamond Mines (Pty) Ltd,
our 74% owned subsidiary and operator of the Lace Mine
had signed a term sheet with South African group Acrux Resources
to sell a 3% net revenue royalty for US$7 million (GBP4.5
million). This would have provided funding at the operating
level without the capital dilution for DiamondCorp plc
shareholders
of an equity issue. We were unable to agree final terms and
conditions for this royalty and after consultations with our
major
shareholders, we gained strong support to proceed with a Placing
and subscription of new shares, which raised GBP3.18 million
before expenses. The Board had also received encouragement from
a number of private individuals and felt it important to
allow all shareholders to participate in this financing. Through
an Open Offer at the same price as the Placing we raised a
further GBP2.09 million gross with excess demand for
over-allotments.
We believed that this financing, completed last July, would
cover the final capital development costs for underground
development to reach our target of the first diamond sale in Q3
2015. Unfortunately, mining through the K6 kimberlite on the
290m level then encountered unexpectedly very poor ground. This
required additional rock support to ensure the safety of our
workers and equipment. Also, around the same time the Department
of Mineral Resources informed us that anti-roll back idlers
had to be installed on the conveyor belt pursuant to new
governement regulations. As well as slowing progress at this
critical
time, these events added to costs.
We pursued other financing mechanisms to cover the revised
budget but nothing could be concluded quickly, so in mid-
November your Board regrettably opted to seek funding from a
further share placing. In an environment of weak diamond
prices and a depressed mining sector it was disappointing that
we had to price this issue at 6 pence per share to raise GBP4.0
million, when six months earlier there was strong demand at 10
pence per share.
In addition to raising this new working capital, we requested
the Investment Development Corporation (IDC) of South Africa to
reschedule interest and capital repayments on its ZAR 220
million loan to Lace Diamond Mines (Pty) Ltd. The first payment
was due in January 2016 but has now been deferred to 1st
February 2017 by which time, the loan and rolled up interest
will
total some ZAR 311 million (GBP15 million). DiamondCorp plc
Shareholders will gain some comfort from the fall in the South
African Rand which now exchanges at ZAR/GBP20.70 compared to
ZAR/GBP13.33 when we signed the IDC loan agreement in
September 2012.
The Company investigates all financing options as they arise and
is highly conscious of trying to limit shareholder dilution in
any fund raising. As we ramp up to full production, management
is focused on keeping all costs minimised and the budget
within existing cash resources, whilst cognisant of remaining
both on schedule and operating within very high safety levels.
Health and Safety
All through our operations from surface to underground, the
safety of our employees is of paramount importance. We strive
for
100% accident free working but in an underground mining
operation that is difficult to achieve. Luckily, the rock falls
which we
experienced at Lace last year did not seriously injure any
employees, although it did result in a number of lost time injuries
and
was a stark reminder of the unknown conditions we can sometimes
face in mining a kimberlite. Our compliance with a strict
safety code may delay operations and cause frustration to
investors, but a serious accident could lead to closure of the
mine
for weeks or months.
Letter from the Chairman (continued)
Corporate Governance
The Board considers that the best business practice is very
important and adopts the Corporate Code of the Quoted
Companies Alliance. This reflects many of the rules in UK
Corporate Governance Code (formerly known as the Combined
Code) but is more appropriate for a company of the size and in
the stage of growth of DiamondCorp plc. As the Company has
been developing in recent years, we have considered that the
Board has the necessary diversity of skills. In February this
year,
Mr. R N Allen who had served as an independent non-executive
director since March 2005 decided to retire. We must offer him
our sincere gratitude for sharing with your Company his great
knowledge and valuable connections in the downstream diamond
(MORE TO FOLLOW) Dow Jones Newswires
May 04, 2016 02:00 ET (06:00 GMT)
market. In his place, we have recruited Chris Ellis who has some
similar skills to Nick and adds a layer of knowledge in the
financial aspects of the diamond supply chain. We are pleased to
welcome him to the Board and as required by our Articles of
Association, he will be standing for election at the forthcoming
Annual General Meeting.
Diamond Market
The market for rough diamonds (the product we sell) has been
somewhat resiliant but not immune to the fall seen in other
commodities. Prices, which had started to weaken in the last
quarter of 2014, continued to decline during 2015 and on
average
ended some 15% lower. Until mid-year, it appeared that the
prices were relatively stable but then buying dried up and in
November, the Diamond Trading Company 'sight' at only US$70
million was the lowest anyone can remember. Everyone
breathed a sigh of relief when the last 'sight' of the year
bounced back to over $250 million while the first three sights of
2016 at
$540 million, $617 million and $660 million reflect
strengthening demand and stabilisation in the diamond pipeline.
Aside from generally weak commodity prices, the fall in rough
prices was not unexpected as for a few years now the trend of
rough prices has been out of kilter with prices for polished
stones. The downward correction was finally brought on by a
number
of factors including weaker jewellery demand, the withdrawal of
lending to the cutting and polishing industry by a couple of
major sector banks and the failure of producers to react to
slowing demand. Last year saw tumbling prices for many minerals
including oil which was down 33% (Brent spot), copper - 22% (LME
3 months), iron ore -37% (62% Fe fines), nickel - 42%
(LME 3 months) and platinum - 27%. Polished diamond prices
behaved more in line with the gold price (down 11%) as the
Rapport Diamond Index fell 9% and the IDEX Diamond Index was
unchanged.
Some producer cutbacks were noted in 2015 but overall, it is
estimated that global output of around 130 million carats (gem
quality diamonds) was little changed from the year before. We
believe that major producers including De Beers and Alrosa
were forced to build stockpiles as demand for rough fell.
Reviewing current mines and mines under development, it is
quite
likely that the peak of global gem diamond production of over
170 million carats reached in 2005 will never be reached again.
However, in the absence of producer cutbacks, output is expected
to increase in the next few years with new mines including
Grib, Gahcho Kue, Liqhobong, Renard, Korpinsky and Lace coming
on stream, together with higher production from the Petra
Diamonds mines in South Africa and Debswana's Jwaneng mine in
Botswana. Set against this will be declining output from
such mines as Ekati and Diavik in Canada, Argyle in Australia
and the Marange fields in Zimbabwe. Of known projects, it is
estimated that world production may reach 150 million carats per
year around 2021 before a steady and dramatic fall to some
100 million carats by 2030. In a recent Bain & Company
report, the authors say that the gap between supply and demand
of
rough diamonds is expected to widen from 2019 onwards.
The rough diamonds that we and other miners produce are the feed
for cutters and polishers to turn into gems for the jewellery
manufacturers. India is now the world's predominant volume
cutting centre and, together with tougher credit availability,
the
strength of the Rupee has impacted on Indian production costs,
which creates pressure elsewhere in the supply chain. The
slowdown in growth of Chinese economy which is widely reported
to have started in the second half of 2014 was a major factor
in pulling down the global demand for jewellery which may have
even decreased in 2015. An increase in demand of some 3%
from the US (still the world's largest market for diamonds) and
a firm market in India offset falls in demand in China, Europe
and Japan.
Early indications in 2016 are that there has been some
stabilization in prices for polished stones as inventories are
being drawn
down. This is feeding through to better prices for rough
diamonds and signs that the cycle has bottomed.
Letter from the Chairman (continued)
In Conclusion
While taking longer than ever hoped, your Company has now joined
the ranks of diamond miners with more than 38 million
tonnes of kimberlite having been identified for mining. Much
work was completed during 2015 in updating the confidence we
have in the Lace diamond resource which culminated in the
publication after year end of a new SAMREC compliant resource
and reserve statement. Details of the statements and their
accompanying technical report are discussed in the CEO's letter
and
are available on the Company's web site.
At the end of March this year, the first sale for 85 years of
mined diamonds from Lace was a major milestone for our Company.
We can now look forward to unlocking the full value of this
exciting long life mine.
Finally, I would like to thank all our employees for their
contribution to the successful transition of Lace from developer
to
producer, our partners, consultants and trade union for their
co-operation on the Company's progress and all of you for
strong
support when we needed it.
Mr. E A Worthington
Chairman
03 May 2016
Letter from the Chief Executive Officer
Dear Shareholder
Development work at the Lace mine continued through 2015, with
tunneling concentrating on the 290m doming level and 310m
production level in the Upper K4 (UK4) block.
Kimberlite is a composite volcanic rock with significant amounts
of fragmented bits of surrounding rocks that were incorporated
in the original volcanic eruption which can sometimes result in
a difficult and friable rock engineering environment. Ironically,
it
is this tendency to crumble which also makes it an ideal
candidate for the block caving mining method, the preferred
mining
method for most modern underground kimberlite mining operations
today.
However, getting the needed development tunnels through
kimberlite can be challenging, and such was the working
conditions
for our underground mining teams for most of 2015. It is with
considerable pride that we can say that our teams met this
challenge and completed the development work for the initial
mining ramp up at Lace without any serious injury or damage to
our equipment.
While the delay resulting from challenging ground conditions put
your Company under cash pressure, management and our
technical team will not cut corners or comprise on safety.
Thankfully shareholders and lenders also understood that
adherence
to safety standards over-rides all else, and were supportive of
the additional capital raising we required in the midst of
difficult
market conditions.
The game changer for Lace development during 2015 was the
commissioning of our 400 tonne per hour underground conveyor
belt system. This piece of "life-of-mine" infrastructure was
completed within budget, despite a South Africa wide change to
mandatory code of practice on underground conveyor belts half
way through the year which delayed its commissioning by five
months. The commissioning delay put upward pressures on overall
development costs as material needed to be trucked from
underground for five months longer than was planned. The
conveyor belt is now fully operational and key to achieving a
smooth ramp up to 30,000 tonnes per month from the UK4 Block by
July 2016.
The year under review was the third year in a row of below
average rainfall in South Africa. Mindful that water management
and
consumption is central to achieving planned future production
rates of 100,000 tonne per month, the Lace technical team
finalised its trade off studies on bottom cut off screen sizes
in the processing plant. The recommendation was to lift the
bottom
screen size in the plant from 1.00 mm to 1.25 mm. This change
results in a significant reduction in recovered diamond grades,
however, the diamonds no longer being recovered are the smallest
and lowest value diamond sizes. Studies showed that the
recovery and sale of these would be break even at best. While
the impact on economics was minimal, the biggest driver behind
the decision was water saving in the plant as this low value
small sand and slime fraction would be the biggest consumer of
water and reagents in the processing plant. As a result of the
decision, water consumption in the plant has been cut by 30%
from 1 cubic metre of water per tonne of kimberlite to 0.7 cubic
metres per tonne.
The second stage of the water management project has been trade
off studies on different x-ray and optical waste sorting
technologies. Because the internal waste with-in the kimberlite
cannot possibly contain a diamond, every tonne of waste
removed before it reaches the processing plant further reduces
water consumption and processing costs. Evidence is also
emerging that internal waste (which is predominantly basalt, a
harder rock than the rest of the kimberlite) is a major
contributor
to diamond damage and breakage in the secondary crushing
circuits of diamond processing plants, so removing it up front
is
also beneficial in this regard. During the year, the Lace team
completed 3-tonne bulk tests on waste sorting machines at
commercial run rates of 250 tonnes per hour. The tests
demonstrated that up to 65% of the waste could be ejected before
the
processing plant without losing any kimberlite. This technology
has the ability to cut plant water consumption by a further 33%
and deliver a high grade concentrate to the dense media
separation units. This technology will be introduced at Lace over
the
next few years ahead of underground tonnages from the first
block cave pushing the plant towards full production. Also,
because our conveyor belt capacity from underground is 400
tonnes per hour (double the plant capacity) and (when mature)
(MORE TO FOLLOW) Dow Jones Newswires
May 04, 2016 02:00 ET (06:00 GMT)
the planned block caves can be mined faster than is currently
proposed, the waste sorting technology will allow higher
diamond
production from Lace over a shorter time period.
During 2014 and 2015, almost 4,500m of underground core drilling
was completed by the Company's in-house drilling crews.
This program was designed and supervised by the Company's
independent geological consultants, MPH Consulting Ltd of
Toronto, and delineated increasing volumes of high-grade K4
kimberlite in the Upper K4 block and deeper levels of the pipe
for
future block cave mining. This drilling program will be on-going
with a further 6,600m of drilling planned over the next few
years
for rim definition and improved mining grade forecasting
purposes. In addition, almost 20,000 tonnes of K4 and K6
kimberlite
was extracted during development for the first UK4 mining block.
These development tunnels were treated as a controlled bulk
test by MPH Consulting Ltd, which also took a channel sample at
each bulk test site for microdiamond analysis.
Letter from the Chief Executive Officer (continued)
More than 3,500kg of drill core and channel sample material was
analysed and resulted in the recovery of 5,390
microdiamonds (diamonds less than 1.00 mm in two dimensions).
The microdiamond and macrodiamond recoveries were then
analysed by Dr Johan Ferreira, the former chief geostatistician
for De Beers and one of the world's leading microdiamond
experts. After year end, Dr Ferreira aligned his analysis to the
new 1.25 mm bottom screen size in the plant, which allowed for
very accurate grade and carat value estimates to be made
regarding future mine recoveries at Lace. In March 2016, Dr
Ferreira and MPH Consulting Ltd's work resulted in the
publication of a new technical report and updated Resource and
Reserve Statement for the Lace project. The report concludes
that the updated resource/reserve statement is a conservative
base case with compelling evidence that considerable grade and
value per carat upside is likely which will be defined with
additional production and evaluation data.
The total resource tonnage in the main Lace pipe has been
estimated at 38.49 million tonnes to the 920m level, an increase
of
16% from 33.12 million tonnes estimated in March 2012 to the
855m level. The resource remains open at depth. The
recoverable diamonds from this resource at the increased bottom
screen size of 1.25 mm is estimated at 9.39 million carats
(March 2012: 13.39 million carats, at 1.00 mm screen size). The
average value of the Lace diamonds from the stone size
frequency distribution achieved with the 1.25 mm bottom screen
size has been forecast to be $164 per carat in the current
market (March 2012: $160 per carat). Importantly, this price
does not include any values achieved from the recovery of
special
stones, for which Lace was known during its previous production
period pre-Great Depression, including diamonds up to 122
carats in size.
The K4 kimberlite, which comprises 60% of the Lace resource by
tonnage and 87% of the resource by diamond content has an
estimated average recoverable grade of 40 carats per hundred
tonnes (cpht) at 1.25 mm bottom screen size (58 cpht
previously at 1.00 mm bottom screen size). The base case average
recoverable grade from all tonnage is estimated at 24.4
cpht at 1.25 mm bottom screen size (40 cpht at 1.00 mm
previously), equating to an average of US$40 revenue per tonne.
At
an exchange rate of 15 South African Rands to the US dollar, the
average grade and carat value equate to gross revenue of
ZAR 600 per tonne compared with forecast mining and processing
costs of ZAR 238 per tonne for the UK4 Block and
ZAR 145 per tonne for block caving. This represents robust
operating margins of 60% and 76% respectively.
Within the 38.49 million tonnes of resources, 2.21 million
tonnes of the UK4 Block has been classified as a mineral
reserve
between the 230 and 370m levels. This reserve comprises 1.43
million tonnes of K4 in the probable category grading 36.2 cpht
and 0.78 million tonnes of low grade K6 kimberlite in the
probable category at a grade of 9.0 cpht. The whole block could
be
mined for 60 months at a rate of 35,000 tonnes per month and
generate a positive NPV of ZAR 133.3 million (US$8.9 million)
and a robust IRR of 59%. It is the Company's intention to
concentrate on mining the high-grade K4 kimberlite within this
reserve first while the first block cave is established on the
500m level (being outside of the current mineral reserve
estimate).
There may well be opportunities to optimise the mine plan as
more K4 is found to be present as the mine progresses. When
block caving progresses, any unmined portions of this reserve
would then be extracted in subsequent caves.
The small Satellite pipe which was incorporated into the
previous resource statement is not included in the new resource
statement as it is not considered a feasible mining proposition
at this stage. The grade model for the UK4 Block reserve has
been found to show high precision in predicting recovered
diluted grades achieved in the bulk sampling on -250m, -290m and
-
310m levels. Lace has been demonstrated as a reliable
microdiamond producer allowing for high-confidence grade
estimates,
and the valuation data from 4,982 carats recovered during bulk
sampling similarly gives confidence to the valuation model.
There is compelling geological evidence that K4 and K6 grade
will improve within the block cave mining depths (and Lift 2 of
the UK4 Mine), however more evaluation work is needed to verify
these trends. The CRB (country rock breccia) unit which
comprises 9% of the current resource model has been assigned
zero grade at this time, although it is known to be
significantly
diamondiferous. The CRB will be bulk and microdiamond sampled in
coming months and will be incorporated into updated
grade estimations as these data become available, such that the
carat content at Lace is highly likely to improve on the
current
estimates. Kimberlite volumes and tonnages will also change as
more delineation work is completed.
The full technical report and resource/reserve statement is
available on the Company's website at www.diamondcorp.plc.uk.
Resource Statement (Unaudited)
Mining Resource Kimberlite Volume Density Tonnes % of Total Recovered Carats USD/ct
Block
Classification Facies 3 Grade
(cpt)
(m x 1000)
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Upper
K4
mine
230-
370m
levels Indicated K4 1,065.486 2.585 2,754,281 36.9% 0.365 1,005,313 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Indicated K6 1,834.957 2.563 4,702,995 63.1% 0.090 422,329 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Total
Indicated 2,900.443 7,457,276 100.0% 0.191 1,427,642 $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K8 144.722 2.641 382,211 16.3% 0.160 61,154 $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred CRB 723.803 2.709 1,960,782 83.7% 0.000 - $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Total
Inferred 868.525 2,342,993 100.0% 0.026 61,154 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Block
Cave 1 Inferred K4 1,626.754 2.59 4,213,293 48.4% 0.400 1,685,317 $164.00
370m-
510m
levels
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K6 1,262.561 2.56 3,232,157 37.1% 0.100 323,216 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K8 13.713 2.64 36,203 0.4% 0.160 5,793 $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred CRB 451.786 2.71 1,224,339 14.1% 0.000 - $164.00
(MORE TO FOLLOW) Dow Jones Newswires
May 04, 2016 02:00 ET (06:00 GMT)
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Total 3,354.815 8,705,993 100.0% 0.231 2,014,326 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Block
Cave 2 Inferred K4 2,225.776 2.59 5,764,760 59.0% 0.400 2,305,904 $164.00
510m-
700m
levels
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K6 1,484.048 2.56 3,799,164 38.9% 0.100 379,916 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K8 0.000 2.64 - 0.0% 0.160 - $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred CRB 74.018 2.71 200,589 2.1% 0.000 - $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Total 3,783.842 9,764,513 100.0% 0.275 2,685,820 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Block
Cave 3 Inferred K4 2,800.965 2.59 7,254,499 71.0% 0.400 2,901,799 $164.00
700m-
920m
levels
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K6 1,153.812 2.56 2,953,759 28.9% 0.100 295,376 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred K8 0.000 2.64 - 0.0% 0.160 - $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred CRB 3.577 2.71 9,694 0.1% 0.000 - $164.00
--------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Total 3,958.354 10,217,952 100.0% 0.313 3,197,175 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Lace
Mine
Totals Indicated 2,900.443 2.57 7,457,276 19.4% 0.191 1,427,642 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Inferred 11,965.54 2.59 31,031,451 80.6% 0.256 7,958,475 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
Total 14,865.979 2.59 38,488,727 100.0% 0.244 9,386,117 $164.00
------- --------------- ---------- --------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
All figures are gross. DiamondCorp plc owns a 74% equity
interest in the project.
Based on a recoverable grade model for the current Lace plant
configuration (+1.25mm bottom cut-off screen size).
Diamond price based on bulk sample parcels and January 2016
price book.
Effective date 1 February 2016.
Reserve Statement (Unaudited)
The UK4 Mining block constitutes a portion of the above
Indicated Resource, with reserves estimated as per the
following
table:
Mining Resource Kimberlite Tonnes Recovered Carats USD/carat USD/tonne
Block Classification Facies Grade
(cpt)
--------- --------------- ----------- ------------------- ------------------- ------------------- ------------------- -------------------
Upper K4
mine
230-370m
levels Probable K4 1,427,841 0.362 516,575 $164.00 $59.33
--------- --------------- ----------- ------------------- ------------------- ------------------- ------------------- -------------------
Probable K6 782,244 0.090 70,296 $164.00 $14.74
--------------- --------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Total Probable 2,210,086 0.266 586,870 $164.00 $43.55
---------------------------- -------- ------------------- ------------------- ------------------- ------------------- -------------------
Plant recovery 100% of recoverable grade, mining recovery
100%.
Health and safety remains a priority for management. The Lost
Time Injury Frequency Rate (LTIFR) for 2015 was 2.34, up
considerably from 0.72 in 2014. Lace had eight lost time
injuries and 76,772 lost time injury free shifts during 2015.
Management aims for zero harm to its employees and targets a
LTIFR of less than 0.5. (LTIFR is an industry standard
calculation based on the number of lost time injuries multiplied
by 200,000, divided by the number of lost time injuries
multiplied
by 9). PricewaterhouseCoopers LLP in their 2014 SA Mine Review
show LTIFR in South African gold mines averaged 4.2,
platinum 2.1, coal 1.2 and other commodities, including
diamonds, 1.1. A concerted effort is underway to reduce the
LTIFR
during 2016.
Last month, the Company enlarged its underground mining fleet by
acquiring an additional four secondhand low mileage
Sandvik 20-tonne dump trucks, two Sandvik 7-tonne loaders and
two Sandvik single boom drill rigs for a quarter of the cost of
new equipment which will help Lace achieve its target of 30,000
tonnes per month of kimberlite throughput by July.
The Company looks forward to the rest of 2016 as the year we
restart commercial sales of diamonds from the Lace mine for
the first time since 1931. This will be a watershed year for the
Company as we finally make the long and difficult transition to
diamond producer.
Finally, I would like to thank all of our loyal employees for
their efforts in contributing to the successful transition of the
Lace
project from development to producer. In particular, I would
like to thank our outgoing Chief Operating Officer Steve West
who
has retired early due to personal health challenges. Without
Steve's unfaltering commitment the Company and the Lace
project, would not be in the solid position we are in today.
Mr. P R Loudon
Chief Executive Officer
03 May 2016
Consolidated and Separate Income Statement
Group Group Company Company
----------------- ----- ------------------ ------------------------ ----------------------- ------------------------
2015 2014 2015 2014
Note GBP GBP GBP GBP
----------------- ----- ------------------ ------------------------ ----------------------- ------------------------
Other income 23 311 39 097 2 700 3 500
Operating
expenses (1,879,990) (1,605,381) (816,015) (318,970)
------------------ ------------------------ ----------------------- ------------------------
Operating loss 20 (1,856,679) (1,566,284) (813,315) (315,470)
Finance income 16 909 49 110 49
Fair value
adjustments (570,257) (1,685,439) (217,699) (679,367)
Finance costs 22 - - (151,308) (253,466)
------------------ ------------------------ ----------------------- ------------------------
Loss before
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taxation (2,410,027) (3,251,674) (1,182,212) (1,248,254)
------------------ ------------------------ ----------------------- ------------------------
Taxation 23 - - - -
Loss for the
year (2,410,027) (3,251,674) (1,182,212) (1,248,254)
Loss
attributable to
:
Owners of the
parent (2,254,597) (3,141,615) (1,182,212) (1,248,254)
Non-controlling
interest (155,430) (110,059) - -
(2,410,027) (3,251,674) (1,182,212) (1,248,254)
------------------ ------------------------ ----------------------- ------------------------
Loss per share
Per share
information
Basic and
diluted loss
per
share (pence) 26 (0.64) (1.02) - -
------------------ ------------------------ ----------------------- ------------------------
Consolidated and Separate Statement of Comprehensive
Income
Group Group Company Company
--------------------------------------- ----- ------------- ------------- ------------- -------------
2015 2014 2015 2014
Restated
Note GBP GBP GBP GBP
--------------------------------------- ----- ------------- ------------- ------------- -------------
Loss for the year (2,410,027) (3,251,674) (1,182,212) (1,248,254)
Other comprehensive loss:
Items that may be reclassified to
profit or loss:
Exchange differences on translating
foreign operations (2,895,221) (369,402) - -
------------- ------------- ------------- -------------
Other comprehensive loss for the
year 25 (2,895,221) (369,402) - -
------------- ------------- ------------- -------------
Total comprehensive loss (5,305,248) (3,621,076) (1,182,212) (1,248,254)
------------- ------------- ------------- -------------
Total comprehensive loss attributable
to:
Owners of the parent (4,628,485) (3,420,581) (1,182,212) (1,248,254)
Non-controlling interest (676,763) (200,495) - -
(5,305,248) (3,621,076) (1,182,212) (1,248,254)
------------- ------------- ------------- -------------
Consolidated and Separate Statement of Financial Position as at
31 December 2015
Group Company
-------------------------- ------- ------------------------------------------------- ------------------------------
2015 2014 2013 2015 2014
Restated Restated
Note GBP GBP GBP GBP GBP
-------------------------- ------- ----------------- -------------- -------------- -------------- --------------
Assets
Non-Current Assets
Property, plant and
equipment 4 27,472,410 23,993,549 14,892,223 237,804 257,622
Goodwill 5 2,403,483 3,069,294 3,195,164 - -
Investments in
subsidiaries 6 - - - 4,672,501 4,672,501
Loans to group companies 7 - - - 20,804,406 14,307,300
Rehabilitation Deposit 9 128,113 101,199 43,632 - -
Restricted cash 12 60,913 70,232 73,108 - -
30,064,919 27,234,274 18,204,127 25,714,711 19,237,423
----------------- -------------- -------------- -------------- --------------
Current Assets
Inventories 10 627,535 455,684 557,085 - -
Current tax receivable 5,003 6,651 6,651 - -
Trade and other
receivables 11 371,120 648,810 880,990 - -
Cash and cash equivalents 12 1,722,486 2,531,420 2,220,130 1,618,259 1,054,175
2,726,144 3,642,565 3,664,856 1,618,259 1,054,175
----------------- -------------- -------------- -------------- --------------
Total Assets 32,791,063 30,876,839 21,868,983 27,332,970 20,291,598
----------------- -------------- -------------- -------------- --------------
Equity and Liabilities
Equity
Equity Attributable to Equity
Holders
of Parent
Share capital 13 44,626,346 37,161,667 35 190 544 44,626,346 37,161,667
Reserves (5,927,267) (3,503,973) (3,218,098) 561,818 611,222
Accumulated loss (28,303,519) (26,048,922) (22,907,307) (21,781,392) (20,599,180)
----------------- -------------- -------------- -------------- --------------
10,395,560 7,608,772 9,065,139 23,406,772 17,173,709
Non-controlling interest (2,824,126) (2,147,363) (1,946,868) - -
Total Equity 7,571,434 5,461,409 7,118,271 23,406,772 17,173,709
----------------- -------------- -------------- -------------- --------------
Liabilities
Non-Current Liabilities
Other financial
liabilities 17 16,974,515 17,972,843 9,239,447 455,000 455,000
Provisions 18 518,301 581,756 528,828 - -
17,492,816 18,554,599 9,768,275 455,000 455,000
----------------- -------------- -------------- -------------- --------------
Current Liabilities
Compound instruments -
debt component 16 2,684,835 2,811,742 2,532,981 1,363,050 1,234,488
Compound instruments -
derivative 16 3,596,870 3,730,434 2,107,849 1,480,203 1,409,446
component
Trade and other payables 19 1,445,108 318,655 341,607 627,945 18,955
----------------- -------------- -------------- -------------- --------------
7,726,813 6,860,831 4,982,437 3,471,198 2,662,889
----------------- -------------- -------------- -------------- --------------
Total Liabilities 25,219,629 25,415,430 14,750,712 3,926,198 3,117,889
Total Equity and
Liabilities 32,791,063 30,876,839 21,868,983 27,332,970 20,291,598
----------------- -------------- -------------- -------------- --------------
The financial statements on pages 27 to 76, of DiamondCorp plc, registered number 5400982,
were approved by the Board of Directors and authorised for
issue on 26 April 2016 and signed on behalf of the
Board of Directors. Mr. E A Worthington, Director
Consolidated and Separate Statement of
Changes in Equity
Share Share Total Foreign Share Warrant Total Total
capital premium share currency option reserve Reserves Accumulated attributable Non-controlling equity
to owner
capital translation reserve loss of the interest
reserve parent
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GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ----------- ------------ ------------ ------------- --------- ---------- ------------- -------------- ------------- ---------------- -------------
Group
Balance at 1
January 2014
as previously
stated 8,305,184 26,885,360 35,190,544 (2,425,367) 526,131 92,000 (1,807,236) (22,907,307) 10,476,001 (1,580,044) 8,895,957
Restatement of
goodwill
(Note 5) - - - (1,410,862) - - (1,410,862) - (1,410,862) (366,824) (1,777,686)
----------- ------------ ------------ ------------- --------- ---------- ------------- -------------- ------------- ---------------- -------------
Balance at 1
January 2014
restated 8,305,184 26,885,360 35,190,544 (3,836,229) 526,131 92,000 (3,218,098) (22,907,307) 9,065,139 (1,946,868) 7,118,271
Loss for the
year - - - - - - - (3,141,615) (3,141,615) (110,059) (3,251,674)
Other
comprehensive
loss - - - (278,966) - - (278,966) - (278,966) (90,436) (369,402)
----------- ------------ ------------ ------------- --------- ---------- ------------- -------------- ------------- ---------------- -------------
Total
comprehensive
loss
for the year - - - (278,966) - - (278,966) (3,141,615) (3,420,581) (200,495) (3,621,076)
Issue of
shares 41,526 1,929,597 1,971,123 - - - - - 1,971,123 - 1,971,123
Value
attributed
for equity
based shared
based
payments - - - - 5,899 - 5,899 - 5,899 - 5,899
Fair value
adjustment of
reserve - - - - - (12,808) (12,808) - (12,808) - (12,808)
----------- ------------ ------------ ------------- --------- ---------- ------------- -------------- ------------- ---------------- -------------
Total
contributions
by and
distribution
to owners 41,526 1,929,597 1,971,123 - 5,899 (12,808) (6,909) - 1,964,214 - 1,964,214
of company
recognised
directly
in equity
Balance at 01
January 2015 8,346,710 28,814,957 37,161,667 (4,115,195) 532,030 79,192 (3,503,973) (26,048,922) 7,608,772 (2,147,363) 5,461,409
----------- ------------ ------------ ------------- --------- ---------- ------------- -------------- ------------- ---------------- -------------
Loss for the
year - - - - - - - (2,254,597) (2,254,597) (155,430) (2,410,027)
Other
comprehensive
loss - - - (2,373,890) - - (2,373,890) - (2,373,890) (521,333) (2,895,223)
----------- ------------ ------------ ------------- --------- ---------- ------------- -------------- ------------- ---------------- -------------
Consolidated and Separate Statement of
Changes in Equity (continued)
Share Share Total Foreign Share Warrant Total Total
capital premium share currency option reserve Reserves Accumulated attributable Non-controlling equity
to owner
capital translation reserve loss of the interest
reserve parent
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------------- ----------------- ----------------- ------------- ------------ ----------- ------------- -------------- ------------- ---------------- -------------
Group
(continued)
Total
comprehensive
loss
for the year - - - (2,373,890) - - (2,373,890) (2,254,597) (4,628,487) (676,763) (5,305,250)
Issue of
shares 92,711 7,292,776 7,385,487 - - - - - 7,385,487 - 7,385,487
Value
attributed
for equity
based shared
based
payments - - - - 29,788 - 29,788 - 29,788 - 29,788
Warrants
issued during
the
year - 79,192 79,192 - - (79,192) (79,192) - - - -
---------------- ----------------- ----------------- ------------- ------------ ----------- ------------- -------------- ------------- ---------------- -------------
Total
contributions
by and
distribution
to owners 92,711 7,371,968 7,464,679 - 29,788 (79,192) (49,404) - 7,415,275 - 7,415,275
of company
recognised
directly
in equity
---------------- ----------------- ----------------- ------------- ------------ ----------- ------------- -------------- ------------- ---------------- -------------
Balance at 31
December 2015 8,439,421 36,186,925 44,626,346 (6,489,085) 561,818 - (5,927,267) (28,303,519) 10,395,560 (2,824,126) 7,571,434
---------------- ----------------- ----------------- ------------- ------------ ----------- ------------- -------------- ------------- ---------------- -------------
Note 13 13 13 14 15
Consolidated and Separate Statement of Changes in
Equity
Total
Foreign Share attributable
Share Share Total share currency option Warrant Accumulated to owner Non-controlling Total
capital premium capital translation reserve reserve Reserves loss of the interest euity
reserve parent
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ----------- ------------- ------------- --------- --------- --------- ------------- -------------- ----------------- ------------
Company
Balance at 01
January 2014 8,305,184 26,885,360 35,190,544 - 526,131 92,000 618,131 (19,350,926) 16,457,749 - 16,457,749
---------- ----------- ------------- ------------- --------- --------- --------- ------------- -------------- ----------------- ------------
Loss for the
year - - - - - - - (1,248,254) (1,248,254) - (1,248,254)
Total
comprehensive
loss
for the year - - - - - - - (1,248,254) (1,248,254) - (1,248,254)
Issue of
shares 41,526 1,929,597 1,971,123 - - - - - 1,971,123 - 1,971,123
Value
attributed
for equity
settled share
based
payments - - - - 5,899 - 5,899 - 5,899 - 5,899
Fair value
adjustment of
reserve - - - - - (12,808) (12,808) - (12,808) - (12,808)
Total
contributions
by and
distributions
to owners 41,526 1,929,597 1,971,123 - 5,899 (12,808) (6,909) - 1,964,214 - 1,964,214
of company
recognised
directly
in equity
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Balance at 01
January 2015 8,346,710 28,814,957 37,161,667 - 532,030 79,192 611,222 (20,599,180) 17,173,709 - 17,173,709
---------- ----------- ------------- ------------- --------- --------- --------- ------------- -------------- ----------------- ------------
Loss for the
year - - - - - - - (1,182,212) (1,182,212) - (1,182,212)
Total
comprehensive
loss
for the year - - - - - - - (1,182,212) (1,182,212) - (1,182,212)
Issue of
shares 92,711 7,292,776 7,385,487 - 29,788 - 29,788 - 7,415,275 - 7,415,275
Warrants
exercised
during
the year - 79,192 79,192 - - (79,192) (79,192) - - - -
Total
contributions
by and
distributions
to owners 92,711 7,371,968 7.464,679 - 29,788 (79,192) (49,404) - 7,415,275 - 7,415,275
of company
recognised
directly
in equity
Balance at 31
December 2015 8,439,421 36,186,925 44,626,346 - 561,818 - 561,818 (21,781,392) 23,406,772 - 23,406,772
---------- ----------- ------------- ------------- --------- --------- --------- ------------- -------------- ----------------- ------------
Note 13 13 13 14 15
Consolidated and Separate Statement of Cash Flows
Group Company
------------- ----- ------------------------------------------ -------------------------------------------------------
2015 2014 2015 2014
Note GBP GBP GBP GBP
------------- ----- ------------- --------------------------- -------------------------- ---------------------------
Cash flows
from
operating
activities
Cash used in
operations 27 (554,640) (879,829) (233,911) (560,646)
Finance
costs - - (20,103) -
Tax received 1,648 - - -
Net cash
used in
operating
activities (552,992) (879,829) (254,014) (560,646)
------------- --------------------------- -------------------------- ---------------------------
Cash flows
from
investing
activities
Purchase of
property,
plant
and
equipment 4 (7,284,396) (7,971,705) - -
Sale of
property,
plant and
equipment 4 5,139 - - -
Loans
advanced to
group
companies - - (6,497,106) (362,330)
Outflow
relating to
other
non-current
asset (26,914) (57,567) - -
Interest
Income 16,909 49 110 49
Net cash
used in
investing
activities (7,289,262) (8,029,223) (6,496,996) (362,281)
------------- --------------------------- -------------------------- ---------------------------
Cash flows
from
financing
activities
Proceeds on
share issue 13 7,464,680 1,971,122 7,464,679 1,971,123
Proceeds
from other
financial
liabilities - 8,733,396 - -
Repayment of
compound
instruments - - (149,585) -
Net cash generated
from financing
activities 7,464,680 10,704,518 7,315,094 1,971,123
------------- --------------------------- -------------------------- ---------------------------
Total cash
movement
for the
year (377,574) 1,795,466 564,084 1,048,196
Cash at the
beginning
of
the year 2,531,420 2.220,130 1,054,175 5,979
Effect of exchange
rate movement
on cash balances (431,360) (1,484,176) - -
Total cash
at end of
the
year 12 1,722,486 2,531,420 1,618,259 1,054,175
------------- --------------------------- -------------------------- ---------------------------
Basis of Preparation and Accounting Policies
1. General information
DiamondCorp plc is a Company incorporated in England and Wales
under the Companies Act 2006 and incorporated as an
external company in South Africa under the Companies Act No 71
of 2008.
These financial statements are presented in pounds sterling
because that is the functional currency of the parent Company
as well as presentation currency of the Group. Foreign
operations are included in accordance with the policies set out
in
this note.
These accounting policies are consistent with the previous
period.
Statement of compliance
The consolidated and separate financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRSs) issued by the IASB and in accordance with IFRS
interpretations committee (IFRS IC) interpretations. The
financial statements have also been prepared in accordance with
IFRSs adopted by the European Union and therefore the
Group financial statements comply with Article 4 of the EU IAS
Regulation.
Basis of preparation
The financial statements have been prepared in accordance with
the UK Companies Act 2006 applicable to companies
reporting under IFRS.
The financial statements have been prepared on the historical
cost basis, except for certain financial instruments that are
measured at fair value, as explained in the accounting policies
below. Historical cost is generally based on fair value of the
consideration given in exchange for assets. The financial
statements have been prepared on a going concern basis. The
principal accounting policies adopted are set out below.
1.1 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating-decision
maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive
Officer that makes strategic decisions.
The basis of segmental reporting has been set out in note 3 of
the financial statements.
1.2 Consolidation
Basis of consolidation
The audited consolidated and separate financial statements
incorporate the audited consolidated and separate financial
statements of the group and all investees which are controlled
by the Company (its subsidiaries).
The group has control of an investee when it has power over the
investee; it is exposed to or has rights to variable returns
from involvement with the investee; and it has the ability to
use its power over the investee to affect the amount of the
investor's returns.
The results of subsidiaries are included in the audited
consolidated and separate financial statements from the
effective
date of acquisition to the effective date of disposal.
Adjustments are made when necessary to the audited consolidated
and separate financial statements of subsidiaries to
bring their accounting policies in line with those of the
group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified and recognised separately from the
group's interest therein, and are recognised within equity.
Losses of subsidiaries attributable to non-controlling interests
are
allocated to the non-controlling interest even if this results
in a debit balance being recognised for non-controlling
interest.
Basis of Preparation and Accounting Policies
1.2 Consolidation (continued)
Basis of consolidation (continued)
Transactions which result in changes in ownership levels, where
the group has control of the subsidiary both before and
after the transaction are regarded as equity transactions and
are recognised directly in the statement of changes in equity.
The difference between the fair value of consideration paid or
received and the movement in non-controlling interest for
such transactions is recognised in equity attributable to the
owners of the parent.
Where a subsidiary is disposed of and a non-controlling
shareholding is retained, the remaining investment is measured
to
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fair value with the adjustment to fair value recognised in
profit or loss as part of the gain or loss on disposal of the
controlling interest.
Changes in the Group's ownership interests in existing
subsidiaries
Changes in the Group's ownership interests in subsidiaries that
do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The
carrying amounts of the Group's interests and the
non-controlling
interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the
amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is
recognised directly in equity and attributed to owners of the
Company.
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and
the fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests.
When
assets of the subsidiary are carried at revalued amounts or fair
values and the related cumulative gain or loss has been
recognised in other comprehensive income and accumulated in
equity, the amounts previously recognised in other
comprehensive income and accumulated in equity are accounted for
as if the Company had directly disposed of the
relevant assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings as specified by
applicable
IFRSs). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the
fair value on initial recognition of the financial asset in
accordance with IAS 39 Financial Instruments: Recognition and
Measurement or, when applicable, the cost on initial recognition
of an investment in an associate or a jointly controlled
entity.
Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the Group's interest in the fair value
of the identifiable assets and liabilities of a subsidiary, at
the date of acquisition. Goodwill is initially recognised as an
asset
at cost and is subsequently measured at cost less any
accumulated impairment losses. Goodwill which is recognised as
an
asset is reviewed for impairment at least annually. Any
impairment is recognised immediately in profit or loss and is
not
subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to
the Group's cash-generating unit expected to benefit from the
synergies of the combination. The cash-generating unit to which
goodwill has been allocated is tested for impairment
annually, or more frequently when there is an indication that
the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the
unit, the impairment loss is allocated first to reduce the
carrying
amount of any goodwill allocated to the unit and then to the
other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
Goodwill arising on acquisition of foreign entities is
considered an asset of the foreign entity. In such cases the
goodwill is
translated to the presentation currency of the group at the end
of each reporting period with the adjustment recognised in
equity through other comprehensive income. Refer to note 5 for
the prior period restatement of goodwill.
Basis of Preparation and Accounting Policies
1.3 Significant judgments and sources of estimation uncertainty
In preparing the audited consolidated and separate financial
statements, management is required to make estimates and
assumptions that affect the amounts represented in the audited
consolidated and separate financial statements and related
disclosures. Use of available information and the application of
judgment are inherent in the formation of estimates. Actual
results in the future could differ from these estimates which
may be material to the audited consolidated and separate
financial statements. Significant judgments include:
Impairment testing
Impairment of goodwill - Judgment is applied in determining
appropriate assumptions to be used in testing for and
calculating impairment. See policy regarding Goodwill in note
1.2 and estimates in note 5.
Provisions
Provisions were raised and management determined an estimate
based on the information available. Additional disclosure
of these estimates of provisions are included in note 18 -
Provisions - of the financial statements.
Provisions are recognised when:
the group has a present obligation as a result of a past
event;
it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation;
and
a reliable estimate can be made of the obligation.
The amount of a provision is the present value of the
expenditure expected to be required to settle the obligation.
Where
some or all of the expenditure required to settle a provision is
expected to be reimbursed by another party, the
reimbursement shall be recognised when, and only when, it is
virtually certain that reimbursement will be received if the
entity settles the obligation. The reimbursement shall be
treated as a separate asset. The amount recognised for the
reimbursement shall not exceed the amount of the provision.
Provisions are not recognised for future operating losses.
If an entity has a contract that is onerous, the present
obligation under the contract shall be recognised and measured as
a
provision.
Valuations
* Valuation of inventory - Judgment was applied in calculating
the initial carrying value of inventory and judgment
continues to be applied in assessing the net realisable value.
See accounting policy regarding Inventories.
* Valuation of warrants, share options and ordinary shares
issued as consideration - Judgment is applied in determining
appropriate assumptions to be used in calculating the fair value
of warrants, shares and share options issued. See notes
14 and 15 of the financial statements.
* Valuation of the bifurcated embedded derivative in the
convertible bonds - Judgment is applied in determining
appropriate assumptions to be used in calculating the fair value
of convertible bonds. See note 16 of the financial
statements.
Going concern
Judgment is applied in assessing the likelihood and timing of
future cash flows associated with the Group's activities.
During the year management have improved the Group's liquidity
position for the next 12 months by raising funds from the share
placing and rescheduling the repayment of the loan to IDC. The
Group expects to commence commercial production in the
third quarter 2016 and thus the current liquidity model is based
on the judgements around the adequate production rates and sales
prices. Whilst there are uncertainties in relation to certain
judgements, management have concluded that no material uncertainty
exist in relation to the ability of the Group to continue as a
going concern.
1.4 Property, plant and equipment
Initial recognition
The cost of an item of property, plant and equipment is
recognised as an asset when:
it is probable that future economic benefits associated with the
item will flow to the company; and
the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
Basis of Preparation and Accounting Policies
1.4 Property, plant and equipment (continued)
Initial recognition (continued)
Costs include costs incurred initially to acquire or construct
an item of property, plant and equipment and costs incurred
subsequently to add to, replace part of, service it, the initial
estimate of the rehabilitation obligation, and for qualifying
assets (where relevant), borrowing costs. If a replacement cost
is recognised in the carrying amount of an item of property,
plant and equipment, the carrying amount of the replaced part is
derecognised. The purchase price or construction cost is
the aggregate amount paid and the fair value any other
consideration given to acquire the asset.
When a mine construction project moves into the production
stage, the capitalisation of certain mine construction costs
ceases and costs are either regarded as part of the cost of
inventory or expensed, except for costs which qualify for
capitalisation relating to mining asset additions or
improvements, underground mine development or mineable reserve
development.
Upon completion of mine construction, the assets are transferred
into "Property, plant and equipment". Items of property,
plant and equipment and mining properties are stated at cost,
less accumulated depreciation and accumulated impairment
losses.
Mines under construction
Upon transfer of "Exploration and evaluation assets" into
"Construction in progress" within "Property, plant and
equipment",
all subsequent expenditure on the construction, installation or
completion of infrastructure facilities is capitalised within
"Construction in progress". Development expenditure is net of
proceeds from the incidental sale of diamonds extracted
during the development phase. After production starts, all
assets included in "Construction in progress" are transferred
to
"Mining properties" within "Property, plant and equipment".
Depreciation/amortisation
Mining properties are depreciated/amortised on a
unit-of-production basis over the economically recoverable reserves
of
the mine concerned, except in the case of assets whose useful
life is shorter than the life of the mine, in which case the
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straight-line method is applied. Only proven and probable
reserves are included in the unit of production calculation.
Other plant and equipment such as mobile mine equipment is
generally depreciated on a straight-line basis over their
estimated useful lives to their residual values.
The useful lives of items of property, plant and equipment have
been assessed as follows:
Item Average useful life
Land N/A
Buildings 20 years
Plant and machinery 5 - 20 years
Mining rights Life of mine
The residual value, useful life and depreciation method of each
asset are reviewed at the end of each reporting period. If
the expectations differ from previous estimates, the change is
accounted for as a change in accounting estimate.
The depreciation charge for each period is recognised in profit
or loss unless it is included in the carrying amount of another
asset.
The gain or loss arising from the derecognition of an item of
property, plant and equipment is included in profit or loss
when
the item is derecognised. The gain or loss arising from the
derecognition of an item of property, plant and equipment is
determined as the difference between the net disposal proceeds,
if any, and the carrying amount of the item.
Assets which the (company/group) holds for rentals to others and
subsequently routinely sell as part of the ordinary course
of activities, are transferred to inventories when the rentals
end and the assets are available-for-sale. These assets are not
accounted for as non-current assets held for sale. Proceeds from
sales of these assets are recognised as revenue. All cash
flows on these assets are included in cash flows from operating
activities in the cash flow statement.
Basis of Preparation and Accounting Policies
1.4 Property, plant and equipment (continued)
Major maintenance and repairs
Expenditure on major maintenance refits or repairs comprises the
cost of replacement assets or parts of assets and
overhaul costs. Where an asset or part of an asset that was
separately depreciated and is now written off is replaced, and
it
is probable that future economic benefits associated with the
item will flow to the Group through an extended life, the
expenditure is capitalised.
Where part of the asset was not separately considered as a
component, the replacement value is used to estimate the
carrying amount of the replaced asset(s).
1.5 Financial liabilities / assets
Initial recognition and measurement
Financial liabilities are classified as either financial
liabilities at fair value through profit or loss ("at FVTPL") or
'other
financial liabilities'.
Other financial liabilities
Other liabilities, including borrowings, are initially measured
at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at
amortised cost using the effective interest method, with
interest
expense recognised on an effective yield basis.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating
interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability,
or, where appropriate, a shorter period, to the net carrying
amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Financial liabilities at fair value through profit or loss
(FVTPL)
Financial liabilities are classified as at FVTPL when the
financial liability is either held for trading or it is designated
as at
FVTPL.
A financial liability is classified as held for trading if:
it has been incurred principally for the purpose of repurchasing
it in the near term; or
on initial recognition it is part of a portfolio of identified
financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking;
or
it is a derivative that is not designated and effective as a
hedging instrument.
A financial liability other than a financial liability held for
trading may be designated as at FVTPL upon initial recognition
if:
such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would
otherwise arise; or
the financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed and
its performance is evaluated on a fair value basis, in
accordance with the Group's documented risk management
or investment strategy, and information about the grouping is
provided internally on that basis; or
it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments:
Recognition and Measurement permits the entire combined contract
(asset or liability) to be designated as at
FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on remeasurement recognised in
profit
or loss.
Basis of Preparation and Accounting Policies
1.5 Financial liabilities / assets (continued)
Derivative financial instruments
Derivatives are initially recognised at fair value at the date a
derivative contract is entered into and are subsequently
remeasured to their fair value at each balance sheet date.
A derivative with a positive fair value is recognised as a
financial asset whereas a derivative with a negative fair value
is
recognised as a financial liability. A derivative is presented
as a non-current asset or a non-current liability if the
remaining
maturity of the instrument is more than 12 months and it is not
expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current
liabilities.
Embedded derivatives
Derivatives embedded in other financial instruments or other
host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of
the host contracts and the host contracts are not measured at
FVTPL.
An embedded derivative is presented as a non-current asset or a
non-current liability if the remaining maturity of the hybrid
instrument to which the embedded derivative relates is more than
12 months and is not expected to be realised or settled
within 12 months. Other derivatives are presented as current
assets or current liabilities.
Loans to / (from) group companies
These include loans to and from holding companies, fellow
subsidiaries, subsidiaries, joint ventures and associates and
are
recognised initially at fair value plus direct transaction
costs.
Loans to group companies are classified as loans and
receivables.
Loans from group companies are classified as financial
liabilities measured at amortised cost.
Trade and other receivables
Trade receivables are measured at initial recognition at fair
value (net of transaction costs), and are subsequently
measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable
amounts are recognised in profit or loss when there is objective
evidence that the asset is impaired. Significant financial
difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or
delinquency in payments (more than 30 days overdue) are
considered indicators that the trade receivable is impaired.
The
allowance recognised is measured as the difference between the
asset's carrying amount and the present value of
estimated future cash flows discounted at the effective interest
rate computed at initial recognition.
The carrying amount of the asset is reduced through the use of
an allowance account, and the amount of the loss is
recognised in profit or loss within operating expenses. When a
trade receivable is uncollectable, it is written off against
the
allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited against
operating expenses in profit or loss.
Trade and other receivables are classified as loans and
receivables.
Trade and other payables
Trade payables are initially measured at fair value (net of
transaction costs), and are subsequently measured at amortised
cost, using the effective interest rate method.
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash receipts
(including all fees on points paid or received that form an
integral part of the effective interest rate, transaction costs
and
other premiums or discounts) through the expected life of the
financial asset, or, where appropriate, a shorter period.
Basis of Preparation and Accounting Policies
1.5 Financial liabilities / assets (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, other short-term highly liquid investments and
restricted cash that are readily convertible to a known amount
of cash and are subject to an insignificant risk of changes in
value. These are initially and subsequently recorded at
amortised cost.
Convertible bond policy
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The component parts of compound instruments (convertible bonds)
issued by the Group are classified separately as an
amortised cost financial liability and an embedded derivative
financial liability in accordance with the substance of the
contractual arrangement. At the date of issue, the fair value of
the embedded derivative financial liability component is
estimated using observable market data input into the Black
Scholes model, modified for the Barone Adesi Whaley
approximation. This amount is recorded as an embedded derivative
financial liability held at fair value through profit and
loss. The amortised cost financial liability (host debt
contract) is determined by deducting the amount of the embedded
derivative component from the fair value of the compound
instrument as a whole. The host debt contract is held on an
amortised cost basis using the effective interest method until
extinguished upon conversion or at the instrument's maturity
date.
Financial guarantee contract liabilities
Financial guarantee contract liabilities are measured initially
at their fair values and, if not designated as at FVTPL, are
subsequently measured at the higher of:
the amount of the obligation under the contract, as determined
in accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets; and
the amount initially recognised (fair value) less, when
appropriate, cumulative amortisation recognised in
accordance with IAS 18 Revenue.
Equity instruments
Equity instruments issued by the company are recorded at the
proceeds received, net of direct issue cost.
1.6 Tax
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent
unpaid, recognised as a liability. If the amount already paid
in
respect of current and prior periods exceeds the amount due for
those periods, the excess is recognised as an asset.
Current tax liabilities (assets) for the current and prior
periods are measured at the amount expected to be paid to
(recovered from) the tax authorities, using the tax rates (and
tax laws) that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax assets and liabilities
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax basis used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. A
deferred tax liability is recognised for all taxable temporary
differences, except to the extent that the deferred tax
liability arises from the initial recognition of an asset or
liability in a
transaction which at the time of the transaction, affects
neither accounting profit nor taxable profit (tax loss).
Deferred tax liabilities (assets) are recognised for taxable
temporary differences arising on investments in subsidiaries
and
associates, and interests in joint ventures, except where the
Group is able to control the reversal of the temporary
difference
and it is probable that the temporary difference will not
reverse in the foreseeable future. A deferred tax asset is not
recognised
when it arises from the initial recognition of an asset or
liability in a transaction at the time of the transaction, affects
neither
accounting profit nor taxable profit (tax loss).
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Basis of Preparation and Accounting Policies
1.6 Tax (continued)
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current
tax liabilities and when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
A deferred tax asset is recognised for the carry forward of
unused tax losses to the extent that it is probable that future
taxable profit will be available against which the unused tax
losses can be utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset
is
realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted by
the
end of the reporting period.
Tax expenses
Current and deferred taxes are recognised as income or an
expense and included in profit or loss for the period, except
to
the extent that the tax arises from:
a transaction or event which is recognised, in the same or a
different period, to other comprehensive income, or
a business combination.
Current tax and deferred taxes are charged or credited to other
comprehensive income if the tax relates to items that are
credited or charged, in the same or a different period, to other
comprehensive income.
Current tax and deferred taxes are charged or credited directly
to equity if the tax relates to items that are credited or
charged, in the same or a different period, directly in
equity.
1.7 Leases
A lease is classified as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership. A
lease
is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to
ownership.
Operating leases - lessee
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term and is included in the
operating expenses of the group. The difference between the
amounts recognised as an expense and the contractual
payments are recognised as an operating lease asset / liability.
This asset / liability is not discounted.
Any contingent rents are expensed in the period they are
incurred.
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease.
1.8 Inventories
Consumable inventories are measured at the weighted average
basis, and diamond inventories are measured at the net
realisable value.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion
and the estimated costs necessary to make the sale.
The cost of inventories comprises of all costs of purchase,
costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
When inventories are sold, the carrying amount of those
inventories are recognised as an expense in the period in which
the related revenue is recognised. The amount of any write-down
of inventories to net realisable value and all losses of
inventories are recognised as an expense in the period the
write-down or loss occurs. The amount of any reversal of any
write-down of inventories, arising from an increase in net
realisable value, are recognised as a reduction in the amount
of
inventories recognised as an expense in the period in which the
reversal occurs.
Basis of Preparation and Accounting Policies
1.9 Impairment of assets
The group assesses at each end of the reporting period whether
there is any indication that an asset may be impaired. If
any such indication exists, the group estimates the recoverable
amount of the asset.
Irrespective of whether there is any indication of impairment,
the group also tests goodwill aquired in a business combination
for impairment annually.
If there is any indication that an asset may be impaired, the
recoverable amount is estimated for the individual asset. If it
is
not possible to estimate the recoverable amount of the
individual asset, the recoverable amount of the cash-generating
unit
to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is
the higher of its fair value less costs to dispose and its
value in use. In assessing value in use, the estimated future
cash flows are discounted to the present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset is less than its carrying
amount, the carrying amount of the asset is reduced to its
recoverable amount. That reduction is an impairment loss. An
impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a re-valued amount, in
which case the impairment loss is treated as a revaluation
decrease.
Where a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the
smallest group of cash-generating units for which a reasonable
and consistent allocation basis can be identified.
An entity assesses at each reporting date whether there is any
indication that an impairment loss recognised in prior
periods for assets other than goodwill may no longer exist or
may have decreased. If any such indication exists, the
recoverable amounts of those assets are estimated.
The increased carrying amount of an asset other than goodwill
attributable to a reversal of an impairment loss does not
exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in
prior periods.
A reversal of an impairment loss of assets carried at cost less
accumulated depreciation or amortisation other than goodwill
is recognised immediately in profit or loss. Any reversal of an
impairment loss of a revalued asset is treated as a revaluation
increase.
1.10 Share capital and equity
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An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities.
Ordinary shares are classified as equity. Mandatorily redeemable
preference shares are classified as liabilities.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of
tax,
from the proceeds.
1.11 Share based payments
Equity-settled share-based payments to employees are measured at
the fair value of the equity instruments granted.
Equity-settled share-based payment instruments issued to persons
other than employees are measured at the fair value of
the goods and services received, unless that fair value cannot
be estimated reliably. If that is the case, the fair value is
measured at the fair value of the equity instruments granted.
The fair value excludes the effect of non market-based vesting
conditions. Details regarding the determination of the fair
value of equity-settled share-based transactions are set out in
note 14 of the financial statements.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed over the vesting
period,
based on the Group's estimate of equity instruments that will
eventually vest. At each balance sheet date, the Group
revises its estimate of the number of equity instruments
expected to vest as a result of the effect of non market-based
vesting conditions. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that
the
cumulative expense reflects the revised estimate, with a
corresponding adjustment to equity reserves.
Basis of Preparation and Accounting Policies
1.12 Revenue
Revenue from the sale of diamonds is recorded when the diamonds
are sold.
Incidental sale of diamonds derived from underground development
is credited to mine development costs.
Revenue earned from sales prior to the new operations achieving
commercial production were recognised as a reduction in
the carrying value of the pre-production expenses held within
intangible assets. Revenue is measured at the fair value of
the consideration received or receivable. Subsequently it is
recognised as a reduction in the carrying value of mine
development costs until production commences once development is
completed.
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying value.
Dividends are recognised, in profit or loss, when the company's
right to receive payment has been established.
1.13 Borrowing costs
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset
are
capitalised as part of the cost of that asset until such time as
the asset is ready for its intended use. The amount of
borrowing costs eligible for capitalisation is determined as
follows:
Actual borrowing costs on funds specifically borrowed for the
purpose of obtaining a qualifying asset less any
temporary investment of those borrowings.
Weighted average of the borrowing costs applicable to the entity
on funds generally borrowed for the purpose of
obtaining a qualifying asset. The borrowing costs capitalised do
not exceed the total borrowing costs incurred.
The capitalisation of borrowing costs commences when:
expenditures for the asset have occurred;
borrowing costs have been incurred, and
activities that are necessary to prepare the asset for its
intended use or sale are in progress.
Capitalisation is suspended during extended periods in which
active development is interrupted.
Capitalisation ceases when substantially all the activities
necessary to prepare the qualifying asset for its intended use
or
sale are complete.
All other borrowing costs are recognised as an expense in the
period in which they are incurred.
Bank overdraft and borrowings are initially measured at fair
value, and are subsequently measured at amortised cost, using
the effective interest rate method. Any difference between the
proceeds (net of transaction costs) and the settlement or
redemption of borrowings is recognised over the term of the
borrowings in accordance with the group's accounting policy for
borrowing costs.
1.14 Translation of foreign currencies
Functional and presentation currency
Items included in the audited consolidated and separate
financial statements of each of the group entities are measured
using the currency of the primary economic environment in which
the entity operates (functional currency).
The audited consolidated and separate financial statements are
presented in Pounds sterling which is the company's
functional and presentation currency for the consolidated
financial statements.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional
currency (foreign currencies) are recorded at the rates of
exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried
at fair value that are denominated in foreign currencies
are retranslated at the rates prevailing on the date when the
fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are
not translated.
Basis of Preparation and Accounting Policies
1.14 Translation of foreign currencies (continued)
Group and Company
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included
in the income statement for the period. Exchange differences
arising on the retranslation of non-monetary items carried at
fair value are included in the income statement for the period
except for differences arising on the retranslation of non-
monetary items in respect of which gains and losses are
recognised directly in equity. For such non-monetary items, any
exchange component of that gain or loss is also recognised
directly in equity.
In addition, in the case of presenting consolidated financial
statements, any foreign exchange differences arising on
elimination of intercompany loan balances upon consolidation of
the Group Companies, are classified as equity and
transferred to the Group's translation reserve, as these loans
are for long term investment purposes.
Determining the rate of exchange to be used
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations
are translated at exchange rates prevailing on the balance sheet
date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are classified as other
comprehensive income and transferred to the Group's translation
reserve. Such translation differences are recognised in
the income statement in the period in which the foreign
operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of
the
foreign entity and translated at the closing rate.
1.15 Environmental restoration and decommissioning
obligations
An obligation to incur environmental restoration, rehabilitation
and decommissioning costs arises when disturbance is
caused by the development or ongoing production of a mining
property. Such costs arising from the decommissioning of
plant and other site preparation work, discounted to their net
present value, are provided for and capitalised at the start of
each project, as soon as the obligation to incur such costs
arises. These costs are recognised in the income statement
over the life of the operation, through the depreciation of the
asset and the unwinding of the discount on the provision.
Costs for restoration of subsequent site damage which is created
on an ongoing basis during production are provided for at
their net present values and recognised in the income statement
as extraction progresses.
Changes in the measurement of a liability relating to the
decommissioning of plant or other site preparation work (that
result
from changes in the estimated timing or amount of the cash flow,
or a change in the discount rate) are added to or deducted
from, the cost of the related asset in the current period. If a
decrease in the liability exceeds the carrying amount of the
asset, the excess is recognised immediately in the income
statement. If the asset value is increased and there is an
indication that the revised carrying value is not recoverable,
an impairment test is performed in accordance with the
accounting policy above.
1.16 Rehabilitation deposit
Contributions for the rehabilitation liability are made to an
investment with an external insurer to fund the estimated cost
of
rehabilitation during and at the end of the life of the mine.
The amounts contributed to this insurance fund are accounted
for
at cost and as a non-current asset.
1.17 Warranty reserve policy
Options issued as warrants are treated as equity settled share
based payments.
Notes to the Consolidated and Separate Financial Statements
2. New Standards and Interpretations
2.1 Standards and interpretations effective and adopted in the current year
In the current year, the group has adopted the following
standards and interpretations that are effective for the current
financial
year and that are relevant to its operations:
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Amendment to IFRS 2: Share-based Payment: Annual improvements
project
Amended the definitions of "vesting conditions" and "market
conditions" and added definitions for "performance condition"
and
"service condition."
The effective date of the amendment is for years beginning on or
after 01 July 2014.
The group has adopted the amendment for the first time in the
2015 audited consolidated and separate financial statements.
The impact of the amendment is not material.
Amendment to IFRS 8: Operating Segments: Annual improvements
project
Management is now required to disclose the judgments made in
applying the aggregation criteria. This includes a brief
description of the operating segments that have been aggregated
in this way and the economic indicators that have been
assessed in determining that the aggregated operating segments
share similar economic characteristics.
The effective date of the amendment is for years beginning on or
after 01 July 2014.
The group has adopted the amendment for the first time in the
2015 audited consolidated and separate financial statements.
The adoption of this amendment has not had a material impact on
the results of the group, but has resulted in more disclosure
than would have previously been provided in the audited
consolidated and separate financial statements.
Amendment to IAS 16: Property, Plant and Equipment: Annual
improvements project
The amendment adjusts the option to proportionately restate
accumulated depreciation when an item of property, plant and
equipment is revalued. Instead, the gross carrying amount is to
be adjusted in a manner consistent with the revaluation of the
carrying amount. The accumulated depreciation is then adjusted
as the difference between the gross and net carrying amount.
The effective date of the amendment is for years beginning on or
after 01 July 2014.
The group has adopted the amendment for the first time in the
2015 audited consolidated and separate financial statements.
The impact of the amendment is not material.
Amendment to IAS 38: Intangible Assets: Annual improvements
project
The amendment adjusts the option to proportionately restate
accumulated amortisation when an intangible asset is revalued.
Instead, the gross carrying amount is to be adjusted in a manner
consistent with the revaluation of the carrying amount. The
accumulated amortisation is then adjusted as the difference
between the gross and net carrying amount.
The effective date of the amendment is for years beginning on or
after 01 July 2014.
The group has adopted the amendment for the first time in the
2015 audited consolidated and separate financial statements.
The impact of the amendment is not material.
Notes to the Consolidated and Separate Financial Statements
2. New Standards and Interpretations (continued)
2.2 Standards and interpretations not yet effective
The group has chosen not to early adopt the following standards
and interpretations, which have been published and are
mandatory for the group's accounting periods beginning on or
after 01 January 2016 or later periods:
IFRS 9 Financial Instruments
This new standard is the result of a three phase project to
replace IAS 39 Financial Instruments: Recognition and
Measurement. To date, the standard includes chapters for
classification, measurement and derecognition of financial
assets
and liabilities as well as new hedging requirements. The
following are main changes from IAS 39:
Financial assets will be categorised as those subsequently
measured at fair value or at amortised cost.
Financial assets at amortised cost are those financial assets
where the business model for managing the assets is
to hold the assets to collect contractual cash flows (where the
contractual cash flows represent payments of principal
and interest only). All other financial assets are to be
subsequently measured at fair value.
For hybrid contracts, where the host contract is an asset within
the scope of IFRS 9, then the whole instrument is
classified in accordance with IFRS 9, without separation of the
embedded derivative. In other circumstances, the
provisions of IAS 39 still apply.
Voluntary reclassification of financial assets is prohibited.
Financial assets shall be reclassified if the group changes
its business model for the management of financial assets. In
such circumstances, reclassification takes place
prospectively from the beginning of the first reporting period
after the date of change of the business model.
Investments in equity instruments may be measured at fair value
through other comprehensive income. When such
an election is made, it may not subsequently be revoked, and
gains or losses accumulated in equity are not recycled
to profit or loss on derecognition of the investment. The
election may be made per individual investment.
IFRS 9 does not allow for investments in equity instruments to
be measured at cost.
The classification categories for financial liabilities remains
unchanged. However, where a financial liability is
designated as at fair value through profit or loss, the change
in fair value attributable to changes in the liabilities
credit risk shall be presented in other comprehensive income.
This excludes situations where such presentation will
create or enlarge an accounting mismatch, in which case, the
full fair value adjustment shall be recognised in profit
or loss.
The new hedging provisions align hedge accounting more closely
with the actual risk management approach.
Certain non-derivative financial instruments are now allowed as
hedging instruments.
Additional exposures are allowed as hedged items. These
exposures include risk components of non-financial items,
net positions and layer components of items, aggregated
exposures combining derivative and non-derivative
exposures and equity instruments at fair value through other
comprehensive income.
The hedge effectiveness criteria have been amended, including
the removal of the 80%-125% "bright line test" to
qualify for hedge accounting.
The concept of rebalancing has been introduced when the hedging
relationship is ineffective because the hedge
ratio is no longer appropriate. When rebalancing is required,
and provided the risk management objective remains
the same, the hedge ratio is adjusted rather than discontinuing
the hedging relationship.
Additional disclosure requirements have been introduced for
hedging.
The effective date has not yet been established as the project
is currently incomplete. The IASB has communicated that the
effective date will not be before years beginning on or after 01
January 2018. IFRS 9 may be early adopted. If IFRS 9 is early
adopted, the new hedging requirements may be excluded until the
effective date.
The group expects to adopt the standard for the first time in
the first annual financial period after the effective date.
The impact of this standard is currently being assessed.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 supersedes IAS 11 Construction contracts; IAS 18
Revenue; IFRIC 13 Customer Loyalty Programs; IFRIC 15
Agreements for the construction of Real Estate; IFRIC 18
Transfers of Assets from Customers and SIC 31 Revenue - Barter
Transactions Involving Advertising Services.
Notes to the Consolidated and Separate Financial Statements
2. New Standards and Interpretations (continued)
2.2 Standards and interpretations not yet effective
(continued)
IFRS 15 Revenue from Contracts with Customers (continued)
The core principle of IFRS 15 is that an entity recognises
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods
or
services. An entity recognises revenue in accordance with that
core principle by applying the following steps:
Identify the contract(s) with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in
the contract
Recognise revenue when (or as) the entity satisfies a
performance obligation.
IFRS 15 also includes extensive new disclosure requirements.
The effective date of the standard is for years beginning on or
after 01 January 2017.
The group expects to adopt the standard for the first time in
the 2017 audited consolidated and separate financial
statements.
The impact of this standard is currently being assessed.
IFRS 16 Leases
After ten years of joint drafting by the IASB and FASB they
decided that lessees should be required to recognise assets and
liabilities arising from all leases (with limited exceptions) on
the balance sheet. Lessor accounting has not substantially
changed in the new standard.
The model reflects that, at the start of a lease, the lessee
obtains the right to use an asset for a period of time and has
an
obligation to pay for that right. In response to concerns
expressed about the cost and complexity to apply the requirements
to
large volumes of small assets, the IASB decided not to require a
lessee to recognise assets and liabilities for short-term
leases
(less than 12 months), and leases for which the underlying asset
is of low value (such as laptops and office furniture).
A lessee measures lease liabilities at the present value of
future lease payments. A lessee measures lease assets, initially
at
the same amount as lease liabilities, and also includes costs
directly related to entering into the lease. Lease assets are
amortised in a similar way to other assets such as property,
plant and equipment. This approach will result in a more
faithful
representation of a lessee's assets and liabilities and,
together with enhanced disclosures, will provide greater
transparency of
a lessee's financial leverage and capital employed.
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One of the implications of the new standard is that there will
be a change to key financial ratios derived from a lessee's
assets
and liabilities (for example, leverage and performance
ratios).
IFRS 16 supersedes IAS 17, 'Leases', IFRIC 4, 'Determining
whether an Arrangement contains a Lease', SIC 15, 'Operating
Leases - Incentives' and SIC 27, 'Evaluating the Substance of
Transactions Involving the Legal Form of a Lease'.
The effective date of the standard is for years beginning on or
after 01 January 2019.
The group expects to adopt the standard for the first time in
the 2019 audited consolidated and separate financial
statements.
Notes to the Consolidated and Separate Financial Statements
3. Segmental information
The Group is currently operating the Lace Diamond Mine. This
operation is located in the northern part of the Free State
province in South Africa, 200 kilometres from Johannesburg, 30
kilometres from Kroonstad and 30 kilometres from
Viljoenskroon. The Lace Diamond Mine operation is treated as a
single operation with the corporate head office and other
subsidiaries reported separately, including consolidation
entries.
The Lace Diamond Mine segment will derive income primarily from
the production and sale of rough and polished diamonds.
All the other segments namely DiamondCorp plc, DiamondCorp
Holdings Ltd and Soapstone Investment Ltd are primarily
focused on administrative and financing activities.
2015
Separately
disclosable
Income items
Loss for
Total other the Depreciation Interest Interest Taxation
income year and income expense
amortisation
GBP GBP GBP GBP GBP GBP
Lace Diamond
Mines (Pty) Ltd 20 611 (597,807) - 16 756 - -
All other
segments 2 700 (1,241,963) (19,818) 153 - -
-------------------- ------------- ------------- ------------------------ --------- ---------
Total 23 311 (1,839,770) (19,818) 16 909 - -
-------------------- ------------- ------------------------ --------- ---------
Reconciling items
Fair value
adjustments (570,257)
Loss after tax (2,410,027)
-------------
2014
Separately
disclosable
Income items
Loss for
Total other the Depreciation Interest Interest Taxation
income year and income expense
amortisation
GBP GBP GBP GBP GBP GBP
Lace Diamond
Mines (Pty) Ltd 35 597 (423,348) - - - -
All other
segments 12 371 (1,142,887) (19,818) 49 - -
-------------------- ------------- ------------- ------------------------ --------- ---------
Total 47 968 (1,566,235) (19,818) 49 - -
-------------------- ------------- ------------------------ --------- ---------
Reconciling items
Fair value
adjustments (1,685,439)
Loss after tax (3,251,674)
-------------
Notes to the Consolidated and Separate Financial Statements
3 Segmental information
(continued)
Reconciliation of other income Total Inter- Income Total Inter- Income
from from
segment segment external segment segment external
income income customers income income customers
2015 2015 2015 2014 2014 2014
GBP GBP GBP GBP GBP GBP
Lace Diamond Mines (Pty)
Ltd
Profit on foreign exchange
transactions 15 472 - 15 472 21 309 - 21 309
Sundry income 5 139 - 5 139 14 288 - 14 288
DiamondCorp Holdings Ltd
Marketing fee - - - 8 871 (8,871) -
DiamondCorp plc
Rental income 2 700 - 2 700 3 500 - 3 500
23 311 - 23 311 47 968 (8,871) 39 097
-------- -------- ---------- -------- ------------ ----------
Segment assets and liabilities
The amounts provided to the Chief Executive Officer with respect to total
assets are measured in a manner consistent with that
of the financial statements. These assets are allocated based on the
operations of the segment and the physical location of
the asset.
2015
Additions
to
Total
non-current assets
assets
------------ ----------
GBP GBP
Lace Diamond Mines (Pty) 10 049 26 834
Ltd 105 984
5 956
All other segments 652 722 079
10 701 32 791
Total 827 063
------------ ----------
2014
Additions
to
Total
non-current assets
assets
GBP GBP
------------ ----------
Lace Diamond Mines (Pty) 9 850 25 359
Ltd 018 311
5 517
All other segments 726 519 528
10 576 30 876
Total 537 839
------------ ----------
Notes to the Consolidated and Separate Financial Statements
Property, plant and
4 equipment
Group 2015 2014
---------- ----------------------- --------------- ------------ ---------------- ----------
Accumulated
Carrying Accumulated
Cost / value Cost / Carrying value
depreciation depreciation
Valuation / Valuation /
amortisation amortisation
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/ /
exchange exchange
differences differences
GBP GBP GBP GBP GBP GBP
---------- ----------------------- --------------- ------------ ---------------- ----------
Land & Buildings 759 506 (217 075) 542 431 941 662 (231,275) 710 387
Plant and
machinery 6 259 799 (3 454 193) 2 805 606 7 202 535 (3,725,078) 3 477 457
Mining Rights 523 591 (209 439) 314 152 558 840 (195,595) 363 245
Construction 25 590 19 442
in Progress 008 (1,779,787) 23 810 221 21 671 561 (2,229,101) 460
33 132 23 993
Total 904 (5 660 494) 27 472 410 30 374 598 (6,381,049) 549
---------- ----------------------- --------------- ------------ ---------------- ----------
Company 2014
---------- ----------------------- --------------- ------------ ---------------- ----------
Accumulated
Cost / Cost / Carrying value
depreciation depreciation
Valuation / Valuation /
amortisation amortisation
/ /
exchange exchange
differences differences
GBP GBP GBP GBP GBP GBP
---------- ----------------------- --------------- ------------ ---------------- ----------
Mining Rights 396 343 (158,539) 237 804 396 343 (138,721) 257 622
---------- ----------------------- --------------- ------------ ---------------- ----------
Reconciliation of property, plant and equipment
- Group - 2015
Opening Additions Disposals * Foreign Depreciation Total
balance exchange
movements
GBP GBP GBP GBP GBP GBP
---------- ----------------------- --------------- ------------ ---------------- ----------
Land & Buildings 710 387 26 059 - (151,624) (42,391) 542 431
Plant and
machinery 3 477 457 797 116 (10,099) (642,411) (816,457) 2 805 606
Mining Rights 363 245 - - (21,777) (27,316) 314 152
Construction 19 442 23 810
in Progress 460 9 878 652 (25,318) (5,485,573) - 221
23 993 27 472
549 10 701 827 (35,417) (6,301,385) (886,164) 410
---------- ----------------------- --------------- ------------ ---------------- ----------
* The foreign exchange movements is due to the devaluation of 28%
in the ZAR/GBP exchange rate in 2015.
Reconciliation of property, plant and equipment
- Group - 2014
Opening Additions Disposals Foreign Depreciation Total
balance exchange
movements
GBP GBP GBP GBP GBP GBP
---------- ----------------------- --------------- ------------ ---------------- ----------
Land & Buildings 671 949 113 565 - (26,992) (48,135) 710 387
Plant and
machinery 3 542 430 732 968 (5,020) (70,188) (722,733) 3 477 457
Mining Rights 395 845 - - (4,586) (28,014) 363 245
Construction 10 281 19 442
in Progress 999 9 730 004 - (569,543) - 460
14 892 23 993
223 10 576 537 (5,020) (671,309) (798,882) 549
---------- ----------------------- --------------- ------------ ---------------- ----------
Notes to the Consolidated and Separate Financial Statements
Property, plant and equipment
4 (continued)
Reconciliation of property, plant and equipment - Company - 2015
Opening Depreciation Total
balance
GBP GBP GBP
Mining Rights 257 622 (19,818) 237 804
----------------------- ------------- --------
Reconciliation of property, plant and equipment - Company - 2014
Opening Depreciation Total
balance
GBP GBP GBP
Mining Rights 277 440 (19,818) 257 622
----------------------- ------------- --------
Plant and machinery includes mining fleet, processing plant,
office equipment and motor vehicles which were previously
separately classified. The property, plant and equipment is
pledged as security for the Convertible Bonds (note 16 of the
financial statements). However, once the Industrial Development
Corporation of SA Limited ("IDC") loan is drawn down in
whole or in part, the Bondholders security interest in these
assets will be subordinated to the security interest of the IDC
(note 17 of the financial statements).
5 Goodwill
Group 2015 2014
---------- ------------ ---------------- -----------------------------------------
Cost Accumulated Carrying value Cost Accumulated Carrying value
impairment impairment
GBP GBP GBP GBP GBP GBP
Goodwill 2 403 483 - 2 403 483 3 069 294 - 3 069 294
---------- ------------ ---------------- ---------- ------------ ---------------
The goodwill relates to the acquisition of DiamondCorp Holdings
Ltd in 2006. The goodwill was previously denominated in
pounds (GBP). However, as the goodwill relates to the Lace
diamond mine cash generating unit, which has a rand (ZAR)
functional currency, it is more appropriate to denominate this
balance in rand (ZAR). Goodwill was therefore retrospectively
restated to reflect goodwill at a fixed ZAR 55,247,900 and
retranslated to the Group presentation currency being pounds
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(GBP). This restatement did not have any income statement, cash
flow statement or earnings per share impact.
Group
As previously As restated As previously As restated
stated 1 January 1 January stated 31 December 31 December
2014 2014 2014 2014
GBP GBP GBP GBP
Goodwill 4 606 026 3 195 164 4 606 026 3 069 294
Foreign currency
translation reserve (2,425,367) (3,836,229) (2,578,463) (4,115,195)
Other Comprehensive
Income 243 532 369 402
---------------------- ------------------ ------------ -------------------- -------------
The Group tests annually for impairment, or more frequently if
there are indications that goodwill might be impaired. The
Group has one reportable business segment and all goodwill is
associated with that segment. The recoverable amounts of
the cash generating unit ("CGU") are determined from discounted
cash flows to estimate fair value less cost to sell. The key
assumptions for the discounted cash flow calculations are those
regarding the discount rates, production, resources and
expected changes to selling prices and direct costs during the
year. A post tax discount rate of 15% (2014: 15%) has been
used.
Notes to the Consolidated and Separate Financial Statements
5 Goodwill (continued)
The Group's test for impairment is based on several considerations including
a model adopted by management from the
model prepared for the Lace Mine by one of its technical advisors. This
model uses grade assumptions based on the
resource statement of the Group's technical advisor and it uses diamond prices
considered representative of market prices.
The model assumes that the Lace mine will reach full production of 1,200,000
tonnes per year of kimberlite in 2019 and run
through 2040. Diamond production is expected to ramp up in 2016 reaching full
production in 2019 with an average grade
of 36.2 carats per hundred tonnes as indicated in the Resource Statement included
in the Letter from the Chief Executive
Officer. The fair value less cost to sell valuations of the Lace Mine
generated by the Model under variable sets of
assumptions as to grades, revenues and costs indicate that there has been
no impairment of goodwill during the year.
Management have considered the key assumptions to be reasonable. A reasonable
possible change in a key assumption
would not lead to an indicator of impairment of the cash generating
unit which contains goodwill.
The 2015 key unobservable assumptions used in the
valuation are:
Significant unobservable Range of unobservable Relationship of unobservable
assumptions
assumptions assumptions
-------------------------- ---------------------------------- ----------- ---------- ------- --------
The ZAR/US$ exchange ZAR 13.00 to ZAR 18.00 The higher the ZAR/US$ exchange
rate rate, the
higher the fair
value
-------------------------- ---------------------------------- ----------------------- ------- --------
The average US$ price US$ 120 to US$ 200 The higher the price per
per carat for carat, the higher the
diamonds fair value
-------------------------- ---------------------------------- ----------- ---------- ------- --------
The yield of diamonds 25 carat per 100 tonnes The higher the yield per
in carats per to 40 hundred tonnes, the
hundred tonnes carat per 100 tonnes higher the fair
value
-------------------------- ---------------------------------- ----------------------- ------- --------
Average yearly tonnes 1,000,000 tonnes to The higher the average yearly
processed in 1,400,000 tonnes, the
the processing plant tonnes higher the fair
value
-------------------------- ---------------------------------- ----------------------- ------- --------
Discount rate applied 10% to 15% The higher the discount rate,
(post tax) the lower the fair
value
-------------------------- ---------------------------------- ----------- ---------- ------- --------
6.0 Investments in subsidiaries
The following table lists the entities which are controlled by the company,
either directly or indirectly through subsidiaries.
Name of company Held by % % Carrying Carrying
holding holding amount amount
and and
voting voting
power power
2015 2014 2015 2014
GBP GBP
DiamondCorp 4 217
DiamondCorp Holdings Ltd plc 100.00% 100.00% 500 4 217 500
- incorporated in the British
Virgin Islands
DiamondCorp
Botswana DiamondCorp Ltd plc 100.00% 100.00% 1 1
- incorporated in the British
Virgin Islands
Lace Diamond Mines (Pty) 74.00
Ltd DiamondCorp 74.00% % - -
- incorporated in South Holdings Ltd
Africa
Soapstone Investment Ltd DiamondCorp 100.00% 100.00% 455 000 455 000
- incorporated in South Holdings Ltd
Africa
DCP Exploration (Pty) Ltd Botswana 100.00% 100.00% - -
- incorporated in Botswana DiamondCorp
Ltd
DCP Diamonds International DiamondCorp 100.00% - % - -
BVBA
- incorporated in Belgium Holdings Ltd
4 672
501 4 672 501
--------- ------------
Notes to the Consolidated and Separate Financial Statements
6 Investments in subsidiaries (continued)
Subsidiaries with material non-controlling interests
The following information is provided for subsidiaries with non-controlling
interests which are material to the reporting
company.The summarised financial information is provided
prior to intercompany eliminations.
Country of % Ownership interest
held
Subsidiary incorporation by non-controlling
interest
2015 2014
--------------- ------------ ------------
Lace Diamond Mines (Pty) Ltd South Africa 26% 26%
Summarised statement of financial position
Lace Diamond Mines
(Pty) Ltd
2015 2014
------------ ------------
GBP GBP
------------ ------------
Assets
25 807 22 980
Non-current assets 092 382
Current assets 1 027 892 2 378 950
26 834 25 359
Total assets 984 332
------------ ------------
Liabilities
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33 237 33 622
Non-current liabilities 639 121
Current liabilities 1 016 101 563 287
------------ ------------
34 253 34 185
Total liabilities 740 408
Total net liabilities (7,418,756) (8,826,076)
------------ ------------
Carrying amount of non-controlling interest (2,824,125) (2,147,362)
------------ ------------
Summarised statement of financial performance
Lace Diamond Mines
(Pty) Ltd
2015 2014
------------ ------------
GBP GBP
------------ ------------
Other income and expenses (597,807) (423,303)
------------ ------------
Loss before tax (597,807) (423,303)
------------ ------------
Loss for the year (597,807) (423,303)
Total comprehensive loss (597,897) (771,133)
Loss allocated to non-controlling interest (155,430) (200,494)
------------ ------------
Notes to the Consolidated and Separate Financial Statements
6 Investments in subsidiaries (continued)
Summarised statement of cash flows
Lace Diamond Mines (Pty)
Ltd
2015 2014
GBP GBP
------------- ----------------------
Cash flows used in operating activities (47,757) (177,599)
Cash flows used in investing activities (7,288,860) (7,552,003)
Cash flows from financing activities 6 196 400 7 203 248
Net (decrease) in cash and cash equivalents (1,140,217) (526 354)
------------- ----------------------
7 Loans to group companies
Company
-------------------------------------
2015 2014
GBP GBP
------------- ----------------------
Subsidiaries
DiamondCorp Holdings Ltd 30 728 532 24 231 426
------------- ----------------------
30 728 532 24 231 426
Impairment of loans to subsidiaries (9,924,126) (9,924,126)
20 804 406 14 307 300
------------- ----------------------
The Directors consider that the carrying amount of these assets approximates
their fair value. All receivable balances are non-
interest bearing. The loan at the end of the year is in terms of agreement
not repayable within the next 12 months.
Credit quality of loans to group companies
The loan is not past due. The loan does not have any published credit
rating. The loan has been impaired to the extent that the
liabilities of the subsidiary exceeds its assets. The company has subordinated
as much of its loan as is requested to support its
subsidiary in this position.
Company
-------------------------------------
2015 2014
GBP GBP
------------- ----------------------
Non-current assets net after impairment 20 804 406 14 307 300
------------- ----------------------
8 Deferred tax
Any deferred tax asset relating to the tax loss has only been recognised
to the extent that there is deferred tax liabilities.
Unutilised deferred tax assets in the Group amounting to GBP3,742,223
(2014: GBP4,890,206) and in the Company amounting to
GBP2,755,622 (2014: GBP2,754,924) have not been recognised due to the
uncertainty of the timing and probability of future
taxable profits that it can be utilised against. The Group's tax losses
have no expiry date.
Notes to the Consolidated and Separate Financial Statements
8 Deferred tax (continued)
The unrecognised deferred tax asset
comprises of:
Group Company
-------------------- --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- -------- -------- ----------
Capital allowances (830,030) 509 961 15 854 12 782
2 587 2 004
Tax losses 428 922 754 942 608 455
Temporary differences (Impairment 1 984 2 375 1 984
of loan) 825 323 826 2 133 687
3 742 4 890 2 755
223 206 622 2 754 924
---------- -------- -------- ----------
9 Rehabilitation deposit
Group Company
-------------------- --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- -------- -------- ----------
At amortised cost:
Rehabilitation deposit 128 113 101 199 - -
---------- -------- -------- ----------
Contributions to an insurance and investment product to cover future
environmental rehabilitation and closure cost. The
premiums and investment returns thereon are recognised as a rehabilitation
deposit. This, together with the restricted cash
in note 12 of the financial statements, serves as security for the
rehabilitation Provision in note 18 of the financial
statements.
10 Inventories
Group Company
-------------------- --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- -------- -------- ----------
Diamond inventories 490 288 188 827 - -
Consumable and other inventories 137 247 266 857 - -
627 535 455 684 - -
---------- -------- -------- ----------
Diamond inventories at 31 December 2015 totalled 6,207.35 (2014: 2,815.12)
carats. There was no write down of
inventories (2014: nil) or any reversal of inventory
write downs during the year.
11 Trade and other receivables
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Group Company
-------------------- --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- -------- -------- ----------
Trade receivables 5 091 57 636 - -
Prepayments 57 369 128 672 - -
VAT 308 660 462 502 - -
371 120 648 810 - -
---------- -------- -------- ----------
The Directors consider that the carrying amount of these assets approximates
their fair value. All receivables balances are
non-interest bearing.
Notes to the Consolidated and Separate Financial Statements
11 Trade and other receivables (continued)
Trade and other receivables past due but not
impaired
Trade and other receivables which are less than 3 months past due are not
considered to be impaired. At 31 December
2015, GBP - (2014: GBP -) were past due but not impaired. Trade and other
receivables are considered to be past due after three
months of outstanding balances.
The ageing of amounts past due but not impaired
is as follows:
Group Company
------------------ ------------------
2015 2014 2015 2014
GBP GBP GBP GBP
3 months past due 5 091 57 636 - -
-------- -------- ------ ----------
There are no external credit ratings available to assess the credit quality
of trade receivables reflected above. Management
reviews the credit worthiness of all customers before
entering into transactions.
12 Cash and cash equivalents
Group Company
------------------ ------------------
2015 2015 2014
GBP GBP GBP GBP
-------- -------- ------ ----------
1 722 2 531 1 618
Cash & cash equivalents - current 486 420 259 1 054 175
Restricted cash - non-current 60 913 70 232 - -
1 783 2 601 1 618
399 652 259 1 054 175
-------- -------- ------ ----------
The restricted cash above form the basis of a guarantee issued by the financial
institution, where the cash is held, in favour
of the Department of Mineral Resources providing for the original determined
cost of environmental rehabilitation and
decommissioning on termination of the Lace
project.
In terms of an agreement the group's right, title and interest in and to
the debit balances have been encumbered for the
benefit of the bond holders as referred to in note
16 of the financial statements.
Credit quality of cash at bank and short term deposits,
excluding cash on hand
The credit quality of cash at bank and short term deposits, excluding cash
on hand that are neither past due nor impaired
can be assessed by reference to external credit ratings (if available)
or historical information about counterparty default
rates: (Also refer to note 31 of the financial
statements).
Group Company
2015 2014 2015 2014
GBP GBP GBP GBP
Credit rating
1 658 1 983 1 618
A- 014 275 259 1 054 175
BBB 124 145 616 505 - -
Other 1 240 1 872 - -
1 783 2 601 1 618
399 652 259 1 054 175
-------- -------- ------ ----------
Notes to the Consolidated and Separate Financial Statements
13 Share capital
AUTHORISED
DiamondCorp plc does not have an authorised share capital, in line with
the provisions of the UK Companies Act 2006.
The Directors' authority to issue and allot shares in the company is
set each year by Company's shareholders at the Annual
General Meeting. The level of disapplication in respect of pre-emption
authority is determined by the Board, in consultation
with the Company's Nominated Adviser, and is based on UK corporate governance
guidelines for AIM companies.
ISSUED
Group Company
-------------------------------- -------------------------------
2015 2014 2015 2014
No. No. No. No.
-------------- ---------------- -------------- ---------------
Reconciliation of number
of shares issued:
Ordinary shares of 0.1 pence
each (2014: 0.1 pence) 318 365 478 276 839 478 318 365 478 276 839 478
Issue of shares - ordinary
shares 92 711 102 41 526 000 92 711 102 41 526 000
Total number of ordinary
shares 411 076 580 318 365 478 411 076 580 318 365 478
-------------- ---------------- -------------- ---------------
Reconciliation of number
of shares issued:
Ordinary shares of 0.1 pence
each (2014: 0.1 pence) 411 076 580 318 365 478 411 076 580 318 365 478
Deferred ordinary shares
of 2.9 pence each (2014:
2.9 276 839 478 276 839 478 276 839 478 276 839 478
pence)
Total number of ordinary
shares 687 916 058 595 204 956 687 916 058 595 204 956
-------------- ---------------- -------------- ---------------
- Existing ordinary shares were sub-divided into one new ordinary share
of 0.1 pence each ("New Ordinary Share") and one
deferred ordinary share of 2.90 pence each
(Deferred Ordinary Share).
- The New Ordinary Shares continue to carry the same rights and benefits
as those attached to the Company's existing
ordinary shares (save for the reduction in nominal value). The number
of New Ordinary Shares in issue following the Share
Capital Reorganisation is identical to the number of existing ordinary
shares in issue immediately prior to the Share Capital
Reorganisation.
- The Deferred Ordinary Shares do not entitle the holders to (a) receive
notice of or attend and vote at any general meeting
of the Company; (b) to receive any dividend or other distribution; or
(c) to participate in any return on capital on winding up,
other than the nominal amount paid on such shares following a substantial
distribution of ordinary shares in the Company.
- The Deferred Ordinary Shares effectively have a zero value, are non-transferable
and have no effect on the economic
interest of the Shareholders.
- In April 2014 the Company issued 41,526,000 ordinary shares of 0.1
pence each at a price of 5 pence with gross
proceeds of GBP2,079,514, and transaction
costs of GBP128,878.
- In May 2015 the Company issued 5,000,000 ordinary shares of 0.1 pence
each at a price of 9 pence per share for a cash
consideration of GBP450,000. This was issued to Darwin Strategic Limited
whom exercised their 5,000,000 warrants.
- On 8 June 2015, the Company issued 31,837,000 ordinary shares of 0.1
pence each at a price of 10 pence per share for
gross proceeds of GBP3,183,700, and transaction
cost of GBP150,826.
- On 6 July 2015, the Company issued 20,894,263 ordinary shares of 0.1
pence each at a price of 10 pence per share for
gross proceeds of GBP2,089,426. These shares were issued in response
to the Company's open offer where eligible
shareholders were able to purchase 1 open offer share
for every 17 existing ordinary shares.
- On 22 December 2015, the Company issued 32,337,000 ordinary shares
of 0.1 pence per share at a price of 6 pence per
share gross proceeds of GBP1,940,220. This was the first tranch of a
two phase placing. On 4 January 2016 the Company
issued 34,329,667 ordinary shares at 0.1 pence at a price of 6 pence
per share for gross proceeds of GBP2,059,780.
Notes to the Consolidated and Separate Financial Statements
13 Share capital (continued)
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- On 22 December 2015, the Company issued 2,642,839 ordinary shares
of 0.1 pence each at a price of 5.6 pence per
share. This was in response to bondholder
converting his bonds.
Group Company
------------------------- --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
----------- ------------ ------------ ------------
Issued
Ordinary shares of 0.1 pence each
(2014: 0.1 pence) 411 076 318 365 411 076 318 365
Deferred ordinary shares of 2.9
pence each (2014: 2.9 8 028 345 8 028 345 8 028 345 8 028 345
pence)
Share premium at shares of 5 pence 36 186 28 814 36 186 28 814
and 3.5 pence 925 957 925 957
each (2014: 5 pence and
3.5 pence)
44 626 37 161 44 626 37 161
346 667 346 667
----------- ------------ ------------ ------------
14 Share based payments
Equity-settled share option
scheme
The Company has a share option scheme for all employees of the Group.
Options are exercisable at a price equal to the
average quoted market price of the Company's shares on the date of grant.
If the options remain unexercised after a period
of ten years from the date of grant the options expire. Options are
generally forfeited if the employee leaves the Group
before the options vest.
`
Details of the share options outstanding
during the year are as follows. 2015 Number 2014 Number
Outstanding at the beginning 12 845
of the year 000 8 345 000
Granted during the year - 4 500 000
Forfeited during the year 50 000 -
Exercised during the year - -
Expired during the year - -
Outstanding at the end of 12 795 12 845
the year 000 000
Exercisable at the end of 12 795 12 845
the year 000 000
At 31 December 2015, 12,795,000 (2014: 12,845,000) options were outstanding
at a weighted average exercise price of
13.2 pence (2014: 13 pence), and a weighted average remaining contractual
life of 5.25 years (2014: 6.25 years).
During 2015, the Group recognised an expense of GBP29,788 (2014: GBP5,899)
relating to equity-settled share-based payment
transactions.
2014 2013
Black-Scholes Assumptions Option Option 2010 Option 2007 UK The
Option
Plan Plan Plan Plan DiamondCorp
Share
Option
Plan
Vesting period 3 Years 5 Years 3 Years 3 Years 3 Years
Expected dividend yield Nil Nil Nil Nil Nil
Risk free interest rate 1,961% 5% 2% 5% 2%
Share price volatility 32% 90% 50% 40% 40%
Share price at time of grant 7 pence 5 pence 6.88 pence 90 pence 34.5 pence
Notes to the Consolidated and Separate Financial Statements
14 Share based payments (continued)
2007 UK Options ("2007 Plan")
During 2007, options over 2,940,000 ordinary shares of 3 pence each
were granted to employees and management of the
Company, exercisable at 135 pence for a period of 10 years from the
date of issue.
270,000 of these options vested on grant date and the balance vest
over 3 years at one-third at each anniversary of the
issue date. 690,000 of these options were forfeited during 2008 by
reason of retirement and 120,000 options were forfeited
in 2009.
Share options granted during the year ended 31 December 2007 were valued
by the Directors using the Black-Scholes
valuation model, based upon the assumptions as detailed in the table
above.
At 31 December 2015, 2,130,000 options were outstanding under this
plan (2014 - 2,130,000).
The DiamondCorp Share Option Plan ("DCP Plan")
During 2008, a share option plan was approved and registered in the
Republic of South Africa to provide eligible employees
of the Group with the opportunity to acquire as an incentive an interest
in the equity of the Company. Eligible employees
were granted options over 695,000 ordinary shares of 3 pence each,
exercisable at 50 pence for a period of 10 years from
the date of issue, 16 December 2008. These options vest over 3 years
at one-third at each anniversary of the issue date.
During 2009, a further 200,000 options were granted under this plan
and 340,000 options were forfeited.
These options were valued by the Directors using the Black-Scholes
valuation model, based upon the assumptions as
detailed in the table above.
In August 2010, the exercise price of these options was adjusted to
21 pence. All other conditions remain unchanged.
At 31 December 2015, the number of options outstanding under this plan
was 555,000 (2014 - 555,000).
2010 Option Plan ("2010 Plan")
During 2010, options over 4,570,000 ordinary shares of 3 pence each
were granted to employees and management of the
Company, exercisable at 12 pence each for a period of 10 years from
the date of issue. These options vest over 3 years at
one third on each anniversary of the date of issue, subject to the
share price of the Company attaining and trading at or
above 17 pence for a period of 3 consecutive months.
These options were valued by the Directors using the Black-Scholes
valuation model, based upon the assumptions as
detailed above.
During the year ended 31 December 2010, 660,000 options expired.
During the year ended 31 December 2011, 250,000 options expired.
During 2012 the exercise price of these options was adjusted to 5 pence.
All other conditions remain unchanged.
At 31 December 2015, 3,660,000 options were outstanding under this
plan (2014 - 3,660,000).
Notes to the Consolidated and Separate Financial Statements
14 Share based payments (continued)
2013 Option Plan ("2013 Plan")
During 2013, options over 2,000,000 ordinary shares of 0.10 pence
each were granted to Mr. E A Worthington, exercisable
at a price of 5 pence each for a period of 5 years from the date
of issue. The 2,000,000 options vest immediately.
These options were valued by the Directors using the Black-Scholes
valuation model, based upon the assumptions as
detailed above.
At 31 December 2015, 2,000,000 options were outstanding under
this plan (2014 - 2,000,000).
2014 Option Plan - Amended 2007 option
plan
During 2014, options over 4,500,000 ordinary shares of 0.1 pence were
granted to employees and management of the
Company, exercisable at 8.5 pence for a period of 10
years from the date of issue.
All these options vest over 3 years at one-third at each anniversary
of the issue date, and no options vested in 2015.
Share options granted during the year ended 31 December 2014 were
valued by the Directors using the Black-Scholes
valuation model, based upon the assumptions detailed
in the table above.
At 31 December 2015, 4,450,000 options were outstanding under
this plan (2014 - 4,500,000).
15 Warrant Reserve
GROUP AND COMPANY Warrants in Warrant
issue reserve
GBP
Outstanding at 31 December 2015 - -
------------- --------
GROUP AND COMPANY Warrants in Warrant
issue reserve
GBP
Outstanding at 31 December 2014 5 000 000 79 192
------------- --------
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Darwin Warrants
In respect of agreeing to provide a standby equity finance facility
of up to GBP10,000,000 which could be drawn upon at the
Company's discretion during a period of 36 months ending on 18 October
2015, the Company grants 5,000,000 warrants to
Darwin Strategic Limited, a unit of Henderson Global Investors, which
are exercisable at 9 pence on or before 18 October
2015. During May 2015 Darwin Strategic Limited exercised their
right to convert the warrant at 9 pence.
The warrants were exercised during the
financial year.
These warrants were valued by the Directors using the Black-Scholes
valuation model, based on the assumptions as
detailed below.
Notes to the Consolidated and Separate Financial Statements
15 Warrant Reserve (continued)
Black-Scholes Assumptions Darwin
Warrants
Term range 3 years
Expected dividend yield Nil
Risk free interest rate 1.68%
Share price volatility 90.09%
Share price at time of grant 4 pence
Exercise price 9 pence
------------ ------------ ------------ ----------
Group Company
-------------------------- ------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------ ------------ ------------ ----------
Warrant Reserve - End of
the year - 79 192 - 79 192
------------ ------------ ------------ ----------
16.0 Compound instruments
The compound instruments have been split in a debt component and derivative
as presented below:
Group Company
-------------------------- ------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------ ------------ ------------ ----------
At amortised cost
Current liabilities 2 684 835 2 811 742 1 363 050 1 234 488
2 684 835 2 811 742 1 363 050 1 234 488
------------ ------------ ------------ ----------
At fair value through profit
or loss
Derivative financial instruments 3 596 870 3 730 434 1 480 203 1 409 446
3 596 870 3 730 434 1 480 203 1 409 446
------------ ------------ ------------ ----------
UK Bonds
On 14 December 2012, the Company, issued GBP1,410,000 14% senior secured
bonds (the "UK Bonds") to investors in the
United Kingdom. The proceeds of the UK Bonds was held in escrow and released
from escrow upon completion of a loan
agreement between DiamondCorp Holdings Ltd, an associated company, and
Laurelton Diamonds Inc. The UK Bonds are
due for repayment 14 December 2018 with interest payable quarterly in
arrears, with the first 24 months of interest on the
UK Bonds to be accumulated and added to the principal amount to be repaid.
Bondholders can request conversion of the
UK Bonds and outstanding interest at any time after 24 January 2013.
Any request for conversion can be settled at the
absolute discretion of the Company with ordinary shares at 5.80 pence
per share or the cash equivalent of the number of
underlying shares multiplied by the share price at the time of conversion.
The UK Bonds are secured by the assets of the
Company and have a reversionary interest in the assets of Lace Diamond
Mines (Pty) Ltd. GBP250,000 of the UK Bonds were
taken up by directors of the Company or other related parties (see
note 28 of the financial statements).
Notes to the Consolidated and Separate Financial Statements
16 Compound instruments (continued)
SA Bonds
On 14 December 2012, Soapstone Investment Ltd ("Soapstone"), wholly-owned
subsidiary of the Company, issued
ZAR40,000,000 (GBP2,868,864 at spot rate on 14 December 2012) 14% senior
secured bonds (the "SA Bonds") to investors in
South Africa. The proceeds of the SA Bonds was held in escrow and released
from escrow upon completion of a loan
agreement between DiamondCorp Holdings Ltd, a subsidiary company, and
Laurelton Diamonds Inc. The SA Bonds are
due for repayment 14 December 2018 with interest payable quarterly in
arrears, the first payment being 14 March 2013.
The first two years of interest will be held in escrow to be paid on
the quarterly interest dates. Bondholders can request
conversion of the SA Bonds and outstanding interest at any time after
24 January 2013. Any request for conversion can be
settled at the absolute discretion of the Company with ordinary shares
at ZAR 0.81 per share or the cash equivalent of the
number of underlying shares multiplied by the share price at the time
of conversion. The SA Bonds are secured by the
assets of Soapstone Investment Ltd and have a reversionary interest in
the assets of Lace Diamond Mines (Pty) Ltd. The
SA Bond is also secured by way of a financial guarantee provided by DiamondCorp
plc. The SA Bonds is further secured as
indicated in note 4 of the financial
statements.
Fair Value
Refer to note 36 of the financial statements for the valuation techniques
and assumptions applied for the purposes of
measuring fair value.
17 Other financial liabilities
Group Company
------------------------- ------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------ ----------- -------- --------
At fair value through profit or loss
Financial guarantee contract - 455 000 455 000
Held at amortised cost
Loan from the Industrial Development
Corporation of 11 790 454 13 442 518 - -
SA Limited
Loan from Laurelton Diamonds Inc. 5 184 061 4 530 325 - -
Total financial liabilities 16 974 515 17 972 843 455 000 455 000
------------ ----------- -------- --------
IDC Loan
On 20 September 2012, Lace Diamond Mines (Pty) Ltd ("Lace"), a 74% owned
subsidiary of the Company, entered into an
agreement with the Industrial Development Corporation of SA Limited ("IDC")
whereby IDC will provide a project loan facility
of ZAR 220,000,000. The initial term of the loan was 7 years from the
initial drawdown date which was 14 August 2013 with
an interest rate of South Africa Prime Rate + 2%. Interest was capitalised
for two years, subject to a maximum of ZAR
20,141,000 and thereafter is payable bi-annually in arrears. The loan
was repayable in 10 bi-annual payments of ZAR
24,014,000 commencing on the date that is 2 years after the initial drawdown
date and every six months thereafter. The
loan was fully drawn in July 2014, and all interest was capitalised during
the year. In December 2015 the IDC agreed to
capitalise the interest on the loan for a further 12 months against the
outstanding balance. The terms of the agreement
were amended. The term of the loan is extended to 8 years with an amended
interest rate of South Africa prime plus 3.2%.
Interest will be capitalised to a maximum of ZAR44,633,117 repayable
in equal quarterly instalments, the first of which will
be 1 February 2017. The IDC Loan is secured by a general charge over
the assets of Lace. In addition there is a cession
in favour of IDC of shares held by Lace's shareholders and of loans to
Lace by shareholders and associated companies.
The initial drawdown was conditional on ZAR 100,000,000 having been advanced
to Lace by shareholders and associated
companies after 20 September 2012.
Notes to the Consolidated and Separate Financial Statements
17 Other financial liabilities (continued)
from Laurelton Diamonds Inc
On 4 January 2013 DiamondCorp Holdings Ltd, a wholly-owned subsidiary
of the Company, entered into an agreement with
Laurelton Diamonds Inc ("Laurelton") whereby Laurelton would provide a
Lace project loan facility of $6,000,000 in total.
The terms of the loan are 8 years, an interest rate of 9% per annum. Interest
from the initial drawdown date would be
capitalised for 3 years and the interest accrued added to the loan balance.
The loan is repayable in 30 quarterly payments
of $463,298 commencing on the date 3 years after the initial drawdown
date and every quarter thereafter. This loan is
further secured by a guarantee from DiamondCorp plc and a third ranking
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bond over the assets of Lace Diamond Mines
(Pty) Ltd.
Based on expectations at the end of the reporting year, the Company considers
that it is more likely than not that no
amount will be payable under the arrangement. However, this estimate is
subject to change depending on the probability of
the counterparty claiming under the guarantee which is a function of the
likelihood that the financial receivables held by the
counterparty which are guaranteed
suffer credit losses.
Financial Guarantee Contract
DiamondCorp plc has provided a financial guarantee to the Bondholders
of the SA Bond, guaranteeing any amounts due
under the SA Bond agreement by its wholly-owned subsidiary, Soapstone
Investment Ltd. This financial guarantee meets
the definition of a financial guarantee contract under IAS 39, Financial
Instruments: Recognition and Measurement. In
accordance with IAS 39, the financial guarantee contract must be recognised
initially at fair value. The fair value of the
financial guarantee contract has been determined to be GBP455,000 and
this amount has been recorded as a financial liability
on the Company's balance sheet, with a corresponding increase
in the cost of its investment balance.
Based on expectations at the end of the reporting year, the Company considers
that it is more likely than not that no
amount will be payable under the arrangement. However, this estimate is
subject to change depending on the probability of
the counterparty claiming under the guarantee which is a function of the
likelihood that the financial receivables held by the
counterparty which are guaranteed
suffer credit losses.
The maximum exposure of the company under this guarantee is GBP455,000
(2014: GBP455,000) as recognised as a liability in
the company stand-alone financial
statements.
Group Company
-------------------- ----------------------
2015 2014 2015 2014
GBP GBP GBP GBP
-------- ---------- ------------ --------
Non-current liabilities
Fair value through profit or loss - - 455 000 455 000
16 974 17 972
At amortised cost 515 843 - -
16 974 17 972
515 843 455 000 455 000
-------- ---------- ------------ --------
18 Provisions
Reconciliation of provisions - Group
- 2015
Opening Additions Exchange Closing
balance differences balance
GBP GBP GBP GBP
Rehabilitation provision 581 756 93 394 (156,849) 518 301
-------- ---------- ------------ --------
Notes to the Consolidated and Separate Financial Statements
18 Provisions (continued)
Reconciliation of provisions -
Group - 2014
Opening Additions Exchange Closing
balance differences balance
GBP GBP GBP GBP
Rehabilitation provision 528 828 74 368 (21,440) 581 756
---------- ---------- -------------- ----------
A provision is recognised for the site restoration and decommissioning
of current mining activities based on current
environmental and regulatory requirements. The additions of GBP93,394
(2014: GBP74,368) have been capitalised to construction
in progress (mine development costs).
19 Trade and other payables
----------
Group Company
---------------------- --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- ---------- -------------- ----------
Trade payables 1 363 512 263 309 627 945 18 955
Accrued leave pay 81 596 82 346 - -
1 445 108 318 655 627 945 18 955
---------- ---------- -------------- ----------
The Directors consider that the carrying amount of these liabilities
approximate their fair value. All payable balances are
non-interest bearing.
20 Operating loss
Operating loss for the year is stated after
accounting for the following:
Group Company
---------------------- --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- ---------- -------------- ----------
Other income
Gain on foreign exchange transactions 15 472 21 309 - -
Sundry income - 14 288 - -
Office rental income 2 700 3 500 2 700 3 500
Profit on sale of non-current asset 5 139 - - -
23 311 39 097 2 700 3 500
---------- ---------- -------------- ----------
Operating lease charges
Premises
Contractual
amounts 62 454 61 526 62 454 61 526
Notes to the Consolidated and Separate Financial Statements
20 Operating loss (continued)
--------------------
Group Company
------------------ --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
-------- -------- -------- ----------
Share based payment expense 29 788 5 899 29 788 5 899
Reversal of impairment on loans to group
companies - - - (230,460)
Loss on exchange differences 168 197 285 060 - -
Depreciation on property, plant and equipment
(not 19 818 19 818 19 818 19 818
capitalised)
General and administrative expenses 599 942 254 269 526 544 225 713
Employee costs 932 662 913 606 149 811 200 770
Auditors' remuneration 67 129 65 203 27 600 35 704
-------- -------- -------- ----------
Attributable depreciation costs of GBP866,346 (2014: GBP779,064) were
capitalised to mine development cost.
21 Employee cost
Employee costs including Directors' emoluments of the
Group and Company were:
Group Company
------------------ --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
-------- -------- -------- ----------
Wages and salaries 765 209 756 996 129 976 183 819
Social security costs 19 835 16 951 19 835 16 951
Other pension and medical aid costs 147 618 139 659 - -
Share-based payment 29 788 5 899 29 788 5 899
962 450 919 505 179 599 206 669
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-------- -------- -------- ----------
Additional attributable payroll costs of GBP2,475,807 were capitalised
to mine development cost (2014: GBP2,033,557).
Average monthly number of persons employed during the
year was:
Group Company
------------------ --------------------
2015 2014 2015 2014
No. No. No. No.
GBP GBP GBP GBP
-------- -------- -------- ----------
Administration 13 11 2 2
Operational 249 234 - -
262 245 2 2
-------- -------- -------- ----------
Notes to the Consolidated and Separate Financial Statements
22 Finance costs
Group Company
--------------------------- --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------ ------------- ------------ ------------
Effective interest cost on
Bonds - - 151 308 253 466
------------ ------------- ------------ ------------
Borrowing costs for the Group capitalised to qualifying assets (mine
development) are disclosed as below:
Reconciliation of Group finance cost Total as
capitalised - 2015 Finance cost Capitalised per
Income
Statement
2015 2015 2015
GBP GBP GBP
IDC interest 1 489 551 (1,489,551) -
Soapstone Investment Ltd
interest 382 394 (382,394) -
Laurelton interest 414 990 (414,990) -
Effective interest cost on
bonds 539 776 (539 776 -
2 826 711 (2 826 711) -
------------- ------------ ------------
Reconciliation of Group finance cost Total as
capitalised - 2014 Finance cost Capitalised per
Income
Statement
2014 2014 2014
GBP GBP GBP
IDC interest 1 117 097 (1,117,097) -
Soapstone Investment Ltd
interest 317 632 (317,632) -
Laurelton interest 357 445 (357,445) -
Effective interest cost on
bonds 649 900 (649,900) -
2 442 074 (2,442,074) -
------------- ------------ ------------
23 Taxation
There was no tax expense
during the year.
Reconciliation
Reconciliation between accounting loss
and tax expense.
Group Company
--------------------------- --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------ ------------- ------------ ------------
Accounting loss (2,410,027) (3,251,674) (1,182,212) (1,248,254)
Tax at the applicable weighted
UK tax rate of 20% (482,005) (650,335) (236,442) (249,651)
(2014: 20%)
Tax effect of adjustments
on taxable income
Expenses not tax deductible 174 402 424 438 43 540 135 873
Deferred tax not recognised (4,944,155) (4,967,297) (2,562,720) (2,648,274)
Effect of different tax rates 359 093 249 039 - 199 332
Tax losses carried forward 4 892 665 4 944 155 2 755 622 2 562 720
- - - -
------------ ------------- ------------ ------------
Notes to the Consolidated and Separate Financial Statements
23 Taxation (continued)
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply to the period when the asset is realised
or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the balance
sheet date.
Factors affecting future tax charges
The main UK corporation tax rate was reduced from 21% to 20% with
effect from 1 April 2015. Further reductions in the applicable
rate of corporation tax to 19% with effect from 1 April 2017 and
to 18% with effect from 1 April 2020 were enacted on 26 October
2015. On the basis the Company does not have any recognised deferred
tax assets or liabilities at the balance sheet date, no re-measurement
of these balances is necessary.
24 Auditors' remuneration
Group Company
--------------------- --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------- ------------ ------------ ------------
Fees payable to the Company's auditors
and it's 27 600 35 704 27 600 35 704
associates for the audit of parent
company and
consolidated financial statements
Fees payable to the Company's auditors
and its
associates for audit services:
- The audit of company's subsidiaries 39 529 29 499 - -
Total auditors' remuneration 67 129 65 203 27 600 35 704
------- ------------ ------------ ------------
There were no non-audit services
in 2015 (2014: nil).
Other comprehensive loss for
25 the year
Components of other comprehensive loss
- Group - 2015
Gross Tax Net before Non- Net
non- controlling
controlling interest
interest
GBP GBP GBP GBP GBP
Items that may be reclassified
to
profit or loss
Exchange differences on translating
foreign operations
Exchange differences arising during
the (2,895,221) - (2,895,221) 521 333 (2,373,888)
------------ ------- ------------ ------------ ------------
year
Components of other comprehensive loss
- Group - 2014
Gross Tax Net before Non- Net
non- controlling
controlling interest
interest
GBP GBP GBP GBP GBP
Items that may be reclassified
to
profit or loss
Exchange differences on translating
foreign operations
Exchange differences arising during
the (369,402) - (369,402) 90 436 (278,966)
------------ ------- ------------ ------------ ------------
Notes to the Consolidated and Separate Financial Statements
26 Loss per share
Basic loss per share
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Basic loss per share is determined by dividing loss attributable to
the owners of the parent by the weighted average number
of ordinary shares outstanding during the
year.
Group
-------------------------------
2015 2014
GBP GBP
----------------- ------------
Basic loss per share
From continuing operations (pence per share) (0.64) (1.02)
----------------- ------------
Basic loss per share was based on loss of GBP 2,254,597 (2014: GBP
3,141,615) and a weighted average number of ordinary
shares of 352,438,990 (2014: 307,671,111).
Reconciliation of loss for the year to
basic loss
Loss for the year attributable to equity
holders of the (2,254,597) (3,141,615)
parent
----------------- ------------
Diluted loss per share
International Accounting Standard 33 requires presentation of diluted
loss per share when a company could be called upon
to issue shares that would decrease the net profit or increase the
net loss per share. The calculation of diluted loss per
share does not assume conversion, exercise, or other issue of potential
ordinary shares that would increase the net profit or
decrease the net loss per share. As the Group is currently in a loss-making
position then the inclusion of the potential
ordinary shares associated with share options or the convertible bonds
in the diluted loss per share calculation would serve
to decrease the net loss per share. On that basis, no adjustment has
been made for diluted loss per share.
Headline loss per share
The Group presents an alternative measure, as required by the JSE
listing requirements, of loss per share after excluding
all capital gains and losses from the loss attributable to ordinary
shareholders. Due to there being no adjustments headline
loss per share and basic loss per share is the same.
Group
2015 2014
GBP GBP
Headline loss per share (pence) (0.64) (1.02)
----------------- ------------
Notes to the Consolidated and Separate Financial Statements
27 Cash used in operations
Group Company
------------------------------ --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------------- ------------ ------------ ------------
Loss before taxation (2,410,027) (3,251,674) (1,182,212) (1,248,254)
Adjustments for:
Depreciation (not capitalised) 19 818 19 818 19 818 19 818
Profit on sale of assets (5,139) - - -
Loss on foreign exchange 152 455 306 369 - -
Interest received - investment (16,909) (49) (110) (49)
Finance costs - 151 308 253 466
Fair value adjustments 570 257 1 685 439 217 699 679 367
Impairment loss - - (230,460)
Movements in provisions (63,455) 52 928 - -
Share option expense 29 788 5 899 29 788 5 899
Other non-cash loss 3 619 - -
Adjustment for warrant reserve (79,192) (12,808) (79,192) (12,808)
Changes in working capital:
Inventories (171,851) 101 401 - -
Trade and other receivables 277 690 232 180 - -
Trade and other payables 1 141 925 (22,951) 608 990 (27,625)
(554,640) (879,829) (233,911) (560,646)
---------------- ------------ ------------ ------------
28 Related parties
`
Relationships
Subsidiaries Refer to note 6
Directors Refer to directors' report
Company of which Mr. P R Loudon Gelndree Capital Management Limited
Company of which Mr. P R Loudon
and Dr. J Willis-Richards are directors Loeb Aron & Company Limited
Company of which Mr. M Toxvaerd
is a director European Islamic Investment Bank plc
Company of which Mr. H Scholes
is a director Malan Scholes Attorneys
Related party balances
Group Company
------------------------------ --------------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------------- ------------ ------------ ------------
Loan accounts - Owing (to) by
related parties
DiamondCorp Holdings Ltd (before
impairment - 30 728 532 24 231 426
provision)
Bonds held by related parties
Loeb Aron & Company Limited 60 000 60 000 60 000 60 000
Mr. E A Worthington 100 000 100 000 100 000 100 000
Mr. P R Loudon 100 000 100 000 100 000 100 000
Financial Guarantees to bondholders
of
Soapstone Investment Ltd - 455 000 455 000
---------------- ------------ ------------ ------------
Notes to the Consolidated and Separate Financial Statements
Related parties
28 (continued)
Related party transactions
Group Company
---------------------- -------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------ -------- --------- --------
Directors Remuneration paid to related
parties
Glendree Capital Management
Limited 134 190 129 114 134 190 129 114
European Islamic Investment
Bank plc 15 000 15 000 15 000 15 000
Legal Fees paid to related
parties
Malan Scholes Attorneys 12 747 - 6 744 -
29 Directors' emoluments
Executive and Non-executive
2015
Medical Fees paid Share
and to Bonuses based Total
Medical
and pension third party payments
benefit
GBP GBP GBP GBP GBP GBP
Mr. E A Worthington (Chairman)
* 90 000 - - - 2 678 92 678
Mr. R N Allen
** 15 000 - - - 2 008 17 008
Mr. P R Loudon
* 45 810 4 487 134 190 - 5 355 189 842
Dr. J Willis-Richards ** 15 000 - - - 2 008 17 008
Mr. M Toxvaerd
** - - 15 000 - 2 008 17 008
Mr. H Scholes
** 12 000 - - - 2 008 14 008
177 810 4 487 149 190 - 16 065 347 552
----------- -------- ------------ -------- --------- --------
2014
Medical Fees paid Share
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Emoluments and to Bonuses based Total
pension third party payments
benefit
GBP GBP GBP GBP GBP GBP
Mr. E A Worthington (Chairman)
* 90 000 - - - 524 90 524
Mr. R N Allen
** 15 000 - - - 393 15 393
Mr. P R Loudon
* 50 886 4 904 129 114 - 1 049 185 953
Dr. J Willis-Richards ** 15 000 - - - 393 15 393
Mr. M Toxvaerd
** - - 15 000 - 393 15 393
Mr. H Scholes
** 16 000 - - - 393 16 393
186 886 4 904 144 114 - 3 145 339 049
----------- -------- ------------ -------- --------- --------
Indicator Type of Director
* Executive
** Non-executive
Notes to the Consolidated and Separate Financial Statements
30 Compensation to key personnel
Group Company
--------------------- ------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------- --------- ----- -----
Short term employee benefits 271 775 264 111 - -
Contribution to pension fund 17 429 18 355 - -
Share based payment 9 929 1 966 - -
299 133 284 432 - -
---------- --------- ----- -----
The key personnel included in these amounts are Mr. S West, Chief Operating
Officer, Mrs. S De Wet, Chief Financial
Officer and Mr. A Labuschagne, Lace Mine Manager. All directors are
regarded as key personnel. Their salaries are not
included above, refer to note 29 for
their remuneration.
31 Risk management
Capital risk management
The group's objectives when managing capital are to safeguard the group's
ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to
reduce the cost of capital.
The capital structure of the group consists of debt, which includes
the borrowings (excluding derivative financial liabilities)
disclosed in notes 7, 16, 17 & 35, cash and cash equivalents disclosed
in note 12, and equity attributable to owners of the
parent, comprising issued capital, reserves and retained earnings.
The Group is not subject to any externally imposed
capital requirements.
The Group reviews the capital structure on a regular basis. As part
of this review the Directors consider the cost of capital
and the risks associated with each class of capital. In order to maintain
or adjust the capital structure, the group may adjust
the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce
debt.
Significant accounting policies
Details of the significant accounting policies and methods adopted,
including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised,
in respect of each class of financial asset,
financial liability and equity instrument are disclosed
in note 1 to the financial statements.
Categories of financial instruments
The Directors consider that the carrying amounts of financial assets
and financial liabilities recorded at amortised cost in the
financial statements approximate their
fair values.
There have been no changes to what the entity manages as capital, the
strategy for capital maintenance or externally
imposed capital requirements from the
previous year.
Notes to the Consolidated and Separate Financial Statements
31 Risk management (continued)
Categories of financial instruments
(continued)
Group Group Company Company
Carrying Carrying Carrying Carrying
amount amount amount amount
2015 2014 2015 2014
GBP GBP GBP GBP
FINANCIAL ASSETS
Loans and receivables (Including
cash and cash 2 093 606 3 180 230 22 422 665 15 361 475
equivalents)
FINANCIAL LIABILITIES
21 104 21 103
Amortised cost 458 241 1 990 995 1 253 443
Financial guarantee contracts - - 455 000 455 000
Derivative instruments designated
as fair value through 3 596 870 3 730 434 1 480 203 1 409 446
profit and loss (FVTPL)
The Directors consider that the carrying amounts of financial assets
and financial liabilities recorded at amortised cost in the
financial statements approximate
their fair values.
Valuation techniques and assumptions applied for
the purposes of measuring fair value
The fair values of derivative instruments are calculated using quoted
prices. Where such prices are not available, a
discounted cash flow analysis is performed using the applicable yield
curve for the duration of the instruments for non-
optional derivatives, and option pricing models for optional derivatives.
The fair value of the embedded derivative
component of the convertible bonds (as per note 16 of the financial
statements) was determined using the Black Scholes
(using the Barone-Adesi and Whaley approximation technique) option pricing
model. The table below outlines the fair value
inputs used in the embedded derivative
valuation.
Black-Scholes Assumptions 31 December 31 December
2015 2014
Term range 5 years 5 years
Expected dividend yield Nil Nil
Risk free interest rate 1.96% 1.68%
Share price volatility 90.70% 90.09%
Share price at time of valuation 6.8 pence 7.4 pence
Financial risk management objectives
The Group's financial function provides services to the business, monitors
and manages the financial risks relating to the
operations of the Group. These risks include market risk (including
currency risk, fair value interest rate risk, cash flow
interest rate risk and price risk), credit
risk and liquidity risk.
The Group does not enter into or trade financial instruments, including
derivative financial instruments, for any purpose.
Credit risk management
The Group and Company's principal financial assets are bank balances
and cash. The credit risk on liquid funds is limited
because the counterparties are banks with high credit-ratings assigned
by international credit-rating agencies. Management
reviews the credit worthiness of all customers before
entering into a transaction.
Notes to the Consolidated and Separate Financial Statements
31 Risk management (continued)
Credit risk management (continued)
The Company transacts with the following financial
institutions:
Financial Institution External
credit rating
Barclays A-
ABSA A-
KBC Bank A-
Standard Bank BBB
First National Bank BBB
Rand Merchant Bank BBB
The Company also holds amounts receivable from related parties as disclosed
in note 28 of the financial statements.
Management reviews the credit worthiness of all balances due from related
parties with reference to future profitability.
Credit risk consists mainly of cash deposits, cash equivalents, derivative
financial instruments and trade receivables. The
company only deposits cash with major banks with high quality credit standing
and limits exposure to any one counter-
party.
Management evaluated credit risk relating to customers on an ongoing basis. If customers are
independently
rated, these
ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality
of the customer, taking
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into account its financial position, past experience and other factors. Individual risk limits are
set based on internal or
external ratings in accordance with limits set by the board. The utilisation of credit limits is
regularly
monitored.
Market risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange
rates. There has
been no change to the Group's exposure to market risks or the manner in which it is measured and managed.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange
rate
fluctuations arise.
The carrying amounts of the Group's and Company's foreign currency denominated monetary assets and
monetary
liabilities at the reporting date are as follows:
Assets Assets
(Liabilities) (Liabilities)
2015 2014
GBP GBP
-------------- --------------
Cash denominated in South African Rand 618 302 1 106 488
Loan denominated in South African Rand (11,790,454) (13,442,518)
Cash denominated in United States Dollar 7 027 433 355
Loan denominated in United States Dollar (5,184,061) (4,530,325)
(16,349,186) (16,433,000)
-------------- --------------
Notes to the Consolidated and Separate Financial Statements
Risk management
31 (continued)
Foreign currency sensitivity analysis
The Group is exposed to the currency of South Africa (ZAR) and the United States
Dollar.
The following table details the Group's sensitivity to a 20% increase and decrease in the
Great British Pound against South
African Rand and United States Dollar. 20% is the sensitivity rate used when reporting foreign
currency risk internally to key
management personnel and represents management's assessment of the reasonably possible change
in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary
items and adjusts their
translation at the year-end for a 20% change in foreign currency rates. A negative number
below indicates a decrease in
profit where the Great British Pound strengthens 20% against the relevant currency. For a
20% weakening of the Great
British Pound against the relevant currency, there would be an equal and opposite impact on
the profit and the balances
below would be
positive.
ZAR Currency Impact 2015 2014
GBP GBP
Gain due to a 20% depreciation of the
ZAR 2 234 430 2 467 206
Loss due to a 20% appreciation of the
ZAR (2,234,430) (2,467,206)
USD Currency Impact 2015 2014
GBP GBP
Gain due to a 20% depreciation of the
USD 1 035 407 819 394
Loss due to a 20% appreciation of the
USD (1,035,407) (819,394)
The Group's sensitivity to foreign currency has increased during the current year, because
the Company held higher
balances of foreign currency. However, the Group's South African Rand deposits are held at
a subsidiary level in South
Africa and as such this sensitivity analysis does not represent a real cash foreign exchange
risk to the Group.
In management's opinion, the impact of the sensitivity analysis is representative of the inherent
foreign exchange risk.
Liquidity and
interest risk
tables
The following table details the Group's remaining contractual maturity for its non-derivative
financial liabilities. The tables
have been drawn up on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Group
can be required to pay. The table includes the principal cash flows all of which are due within
less than one year and more
than one year.
In respect of the financial liability and the financial guarantee contract liability (Company
only), the terms on which those
instruments might be required to be settled are outlined in note 17 of the financial
statements.
LIABILITIES
GROUP Weighted Less than 1 More than 1 Weighted Less than 1 More than 1
average year year average year year
effective effective
interest rate interest rate
2015 2015 2015 2014 2014 2014
% GBP GBP % GBP GBP
Non-interest
bearing - % 3 596 870 - - % 4 049 090 -
Fixed interest rate
instruments 12.0 % 3 007 015 21 881 454 13.0 % 3 177 268 26 150 487
Notes to the Consolidated and Separate Financial Statements
Risk management
31 (continued)
Liquidity and interest risk tables
(continued)
LIABILITIES (continued)
Less than More than Less than More than
COMPANY Weighted 1 1 Weighted 1 1
average year year average year year
effective effective
interest interest
rate rate
2015 2015 2015 2014 2014 2014
% GBP GBP % GBP GBP
2 108 1 428
Non-interest bearing - % 141 - - % 401 -
1 553 1 518
Fixed interest rate instruments 14.0 % 877 - 23.0 % 420 -
Financial guarantee contract - % - 455 000 - % - 455 000
LIQUIDITY RISK MANAGEMENT
Ultimate responsibility for liquidity risk management rests with the Board
of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group's short
term funding and liquidity management
requirements. The Group manages liquidity risk by maintaining adequate reserves,
by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets
and liabilities. The Group expects to ramp up to
full production in the second half of 2016 and this will
contribute to the Group cash flows.
The following table details the Group's and Company's expected maturity
for its non-derivative financial assets. The tables
below have been drawn up based on the undiscounted contractual maturities
of the financial assets including interest that
will be earned on those
assets.
ASSETS
Less than More than Less than More than
GROUP Weighted 1 1 Weighted 1 1
average year year average year year
effective effective
interest interest
rate rate
2015 2015 2015 2014 2014 2014
% GBP GBP % GBP GBP
Non-interest bearing - % 371 120 128 113 - % 648 810 101 199
1 728 2 531
Interest bearing 1.0 % 402 54 997 4.0 % 420 70 232
Less than More than Less than More than
COMPANY Weighted 1 1 Weighted 1 1
average year year average year year
effective effective
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interest interest
rate rate
2015 2015 2015 2014 2014 2014
% GBP GBP % GBP GBP
20 790 14 307
Non-interest bearing - % - 116 - % - 300
1 618 1 054
Interest bearing - % 259 - - % 175 -
Notes to the Consolidated and Separate Financial Statements
31 Risk management (continued)
INTEREST RATE RISK MANAGEMENT
The Group is exposed to interest rate risk because entities in the
Group borrow funds at both fixed and floating interest
rates. The risk is managed by the Group by maintaining an approximate
mix between fixed and floating rate borrowings.
The Group's exposure to interest rates on financial assets and financial
liabilities are detailed in the liquidity risk
management section of this note.
Based on simulations performed, the recalculated impact on net profit
after tax of a 2% shift in the prime interest rate of
South Africa would be a maximum increase of GBP
268,850.
32 Going concern
In determining the appropriate basis of presentation of the financial
statements, the Directors are required to consider
whether the Group can continue existence of the foreseeable future,
this being a period of not less than 12 months from the
date of the approval of the financial statements. The Group's business
activities and goals are set out in the Letters from
the Chairman and Chief Executive.
For the year ended 31 December 2015 the Group incurred a loss of GBP2,410,027
(2014: GBP3,251,674 loss).
After reviewing the existing cash resources, facilities and Life of
Mine model and the ongoing ramp up of production the Directors have
a reasonable expectation that the Group can meet all its liabilities
as they fall due,
therefore they continue to adopt the going concern basis of presentation
of the financial statements. (Refer 1.3 Going concern)
33 Contingent liabilities
A claim was submitted by Acrux Resources (Pty) Ltd against Lace Diamond
Mines (Pty) Ltd for an amount of GBP207,229
plus interest during the financial year. The claim submitted is for
the structuring fee of a terminated contract between Acrux
Resources (Pty) Ltd and Lace Diamond Mines (Pty) Ltd. The claim is
disputed by Lace Diamond Mines (Pty) Ltd and
management is of the opinion that the claim will be unsuccessful. Management
anticipates that the outcome of the claim
will only be resolved in 2017.
34 Events after the reporting year
On 4 January 2016, the Company issued 34,329,667 ordinary shares of
0.1 pence each at a price of 6 pence per share for
gross proceeds of GBP2,059,780.
35 Operating lease
Group Company
------------------------ -----------------------
2015 2014 2015 2014
GBP GBP GBP GBP
--------------- ------- -------- ---------
Minimum lease payments due
- within one year 41 677 50 012 41 677 50 012
- in second to fifth year inclusive - 41 677 - 41 677
Present value of minimum lease payments 41 677 91 689 41 677 91 689
--------------- ------- -------- ---------
The operating lease on the premises expires in
October 2016.
Notes to the Consolidated and Separate Financial Statements
36 Fair value information
Fair value hierarchy
The table below analyses assets and liabilities carried at fair
value. The different levels are defined as follows:
Level 1: Quoted unadjusted prices in active markets for identical
assets or liabilities that the group can access at
measurement date.
Level 2: Inputs other than quoted prices included in level 1 that are observable
for the asset or liability either directly or
indirectly.
Level 3: Unobservable inputs for the
asset or liability.
Levels of fair value measurements
Level 3
Group Company
---------------------- --------------------------
2015 2015 2015 2014
GBP GBP GBP GBP
---------- ---------- ------------ ------------
Note
Liabilities 17
Financial liabilities at fair
value through profit or
loss
Derivative financial instruments 3 596 870 3 730 434 1 480 203 1 409 446
Financial guarantees - - 455 000 455 000
Total 3 596 870 3 730 434 1 935 203 1 864 446
---------- ---------- ------------ ------------
Transfers of assets and liabilities within
levels of the fair value hierarchy
No transfers were made between levels in the fair value hierarchy
in the 2014 or 2015 financial years.
Valuation techniques used to derive
level 3 fair values
Valuation techniques and assumptions applied for the
purposes of measuring fair value
The fair values of derivative instruments are calculated using quoted prices.
Where such prices are not available, a
discounted cash flow analysis is performed using the applicable yield curve
for the duration of the instruments for non-
optional derivatives, and option pricing models for optional
derivatives. The fair value of the embedded derivative
component of the convertible bonds was determined using the Black Scholes
(using the Barone-Adesi and Whaley
approximation technique) option pricing model. The table below outlines
the fair value inputs used in the embedded
derivative valuation.
No changes have been made to the valuation
technique.
Black Scholes Assumptions 31 December 31 December
2015 2014
Term range 5 years 5 years
Expected dividend yield Nil Nil
Risk free interest rate 1.96% 1,68%
Share price volatility 90.70% 90.09%
Share price at time of grant 6.8 pence 7.4 pence
Description of valuation method and inputs
of another class of level 2 fair values.
For the valuation method and assumptions used for the Darwin Warrants refer
to note 15 of the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGUWWAUPQGCW
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