RNS Number:5754E
Toledo Mining Corporation PLC
27 September 2007
27 September 2007
TOLEDO MINING PLC
("Toledo" or the "Company")
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
In the year under review, Toledo Mining Corporation's activities continued to be
focused on the development and evaluation of several large laterite nickel
orebodies on Palawan Island in the Philippines.
Without doubt the most exciting time for a developing mining company is when it
commences production and achieves positive cash flow. In January 2007 we
delivered our first shipment of laterite ore from our Berong deposit, a
milestone for the Company. Other shipments followed, all from the Berong
orebody and almost all has been shipped to China.
What makes this a particularly significant achievement is that it was done in
less than three years from the Company's formation, an outstanding achievement
and one of which we are extremely proud. The Company's management team, led by
CEO George Bujtor, and workforce, must be congratulated for this achievement.
Our orebodies are, in total, amongst the largest in the world, with a pre-JORC
resource of over 350m tonnes of 1.3% Ni and 0.1%Co, containing about 4.5m tonnes
of Ni with an in-situ value in excess of US$127 billion at the current price of
nickel. Given the relatively high grade of the deposits compared to most other
nickel laterite orebodies around the world, the Philippines pro-mining attitude
and the sheer size of the orebodies, it is reasonable to expect that they will
be developed well ahead of most others. We also have the advantage that the
Berong orebodies on the western side of Palawan are largely saprolite and the
Celestial orebody, on the eastern side, is largely limonite. This allows us to
consider all of the available options for value added processing on site. SNC
Lavalin has been appointed to work with us to evaluate these options.
With the experience the Company is gaining in China in the pig nickel industry,
we are looking closely at participating with some of our customers in further
developing their pig nickel businesses. We feel that this will give us valuable
experience to build similar facilities in the Philippines. We have recently
appointed CIBC World Markets to assist us evaluate future financing options and
to provide other advisory and banking services.
We have now signed our first long term supply agreement with Queensland Nickel
Pty Ltd, a wholly owned subsidiary of BHP Billiton, for up to 500,000 tonnes of
ore per annum which is another milestone for the Company. However, demand for
similar grade nickel ore remains very strong from Chinese customers and we do
see our developing relationships here as also very important. We expect that
until we have developed our own value added processing on site, the majority of
our exports will be to Chinese customers. Long term contracts with a number of
these existing customers are being negotiated.
For calendar 2007 we anticipate producing 850,000 tonnes of ore and, subject to
the vagaries of the weather and availability of vessels, shipping 700,000
tonnes. Annualised production is now running in excess of 1 million tonnes with
a target of 1.5 million tonnes for calendar 2008.
Demand for nickel remains strong world-wide and particularly from China and
India, with stainless steel production being the major driver. Most analysts
see the supply-demand gap increasing in the future with limited supply and
increasing demand. Whilst the Company's view is one of cautious optimism, given
the grade of our orebodies and their size, we expect to be able to weather any
downturns, whilst being in a position to reap considerable rewards during
positive market conditions.
In March 2007, I was very pleased to welcome Reg Eccles as an independent
non-executive director. Mr Eccles has extensive experience in the mining
industry, specialising in the areas of planning, strategy and finance. He has
worked for major international mining houses (Anglo American Corporation and
Consolidated Goldfields plc), co-founded a successful minerals consultancy and
publishing business and served as Head of Global Mining Equities for both SBC
Warburg (now UBS) and ABN Amro.
During the year Merfyn Roberts resigned as a non-executive director of the
Company due to other work commitments. I would like to express my heartfelt
thanks to Mr Roberts for his significant contribution to the Company.
Chris Kyriakou
26 September 2007
CHIEF EXCUTIVE OFFICER'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
The key achievement in the year under review was the successful development and
bringing into production of the Berong Nickel Project. Mining of laterite
nickel ore for trial metallurgical samples commenced in November 2006, and
significantly, less than one year after the start of test pitting and drilling
of the ore body within the 288 hectare MPSA area. The first metallurgical
sample was shipped out in late January 2007 as a partial shipment of 18,819
tonnes, with the first full shipment of 51,103 tonnes in late February 2007.
Laterite ore shipped to the end of March 2007 amounted to approximately 121,390
tonnes at an average grade of 1.53% nickel.
Testing and evaluation of the laterite nickel ore body was undertaken using test
pitting, diamond drilling and industry standard software packages.
Approximately 10,529 metres of test pitting and 7,627 metres of diamond drilling
was completed. Normal check assaying and duplicate samples were taken to ensure
the statistical accuracy of the results. Snowden Mining Industry Consultants
estimated a JORC compliant ore resource of 9.92 million tonnes at a 1.55% nickel
grade using a 1% nickel cut-off grade.
The overriding philosophy in the development of the project was "speed into
production" to capture the benefits of the historically high nickel prices. To
this extent, many of the facilities put into place were of a temporary nature
and included the barge causeway, the Barangay-Sorex road linking the mine to the
coastal facilities, and the accommodation facilities. Permanent facilities put
into place included the coastal stockpile and drying areas, the off-shore ship
anchorage area and the 50 kilometre approach channel lined with eight
navigational buoys, and mine site environmental structures.
For the coming year, permanent facilities to be constructed include heavy
equipment workshops, accommodation facilities, offices, assay laboratory, and
the Dangla road. Still under evaluation are the trestle/pylon conveyor and ship
loader, and development of Dangla Bay as an additional stockpile area and barge
loading facility.
Operationally, mining activities have been concentrated on the trial
metallurgical sample areas defined to best test the various ore types in
customers' plants. Whilst these areas were not the highest grade areas, the
mining practices and grade sampling procedures were established and tested. Ore
dilution is less than 10% of the grade, and is expected to decrease to less than
3% through learning and better operator training. This is not unexpected
considering much of the operation is contractor based.
The Company is setting new standards in responsible mining in the Philippines
and, pleasingly, is being recognised as a role model for other mining
operations. Berong Nickel Corporation takes its environmental/safety/health and
social licence very seriously. The Company is developing the systems for
international certification in Environmental Management Systems (ISO 14001) and
Occupational Health and Safety Systems (ISO 18001). An MOU was signed with the
local indigenous peoples on how the mandated 1% gross royalty is to be spent for
the benefit of current and future generations. Similarly, a Social Development
and Management Plan is being developed with spending directed at priority
community and livelihood projects. The Company is also an active member of the
Kabuhayan, Kaunlaran, Kalikasan, Inc which acts as an advocacy group on
responsible mining on Palawan, and offers benefits to those people not directly
impacted by mining operations.
The primary markets for Berong laterite nickel ore include Japan, China, Europe
and Australia. With historically high nickel prices reflecting a shortage of
primary nickel, the Chinese market has developed exponentially though the
innovative use of blast furnace technology to produce a nickel pig iron for the
stainless steel sector. Many smaller steel plants in China have converted to
nickel pig iron production and this has led to the rapid increase in demand for
laterite nickel ore. Most shipments to date from Berong have been sold to China
on a spot basis, targeting the blast furnace producers and the electric arc
furnace producers. Longer term contracts will be negotiated once operations
stabilise.
Value added processing within the Philippines is seen as a critical component in
leveraging off the large pre-JORC resource of over 350 million tonnes of nickel
laterite managed by the Company on Palawan. Samples of the various ore types
have been taken and will be tested in the laboratory to assess the most viable
processing options. The processing options to be assessed include leaching
(atmospheric & high temperature), the Chinese blast furnace process, and
ferro-nickel production.
Exploration and permitting activities in the tenement areas adjacent to the
Berong Project, and at the Ipilan Project area, continued in parallel with
development activities. The detailed work program for the Ipilan Project was
scoped with test pitting and drilling commencing in May 2007.
As at the time of writing this review, total shipments from Berong amount to
approximately 452,595 tonnes at an average grade of 1.53% nickel. The operation
is currently running at an annualised rate of approximately one million tonnes,
and is well on the way to the target of 1.5 million tonnes planned for year
2008.
We look forward to another equally successful year ahead.
George Bujtor
26 September 2007
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 MARCH 2007
The directors present their report with the audited Group financial statements
for the year ended 31 March 2007.
Principal activities and review of business
The principal activity of the group is investment directly and indirectly in,
and operation of mining exploration and development projects.
During the year the Company's main undertaking was the continuing investment in
the Berong nickel project, in which the Company has a 56.1% economic interest,
the Ipilan nickel project, in which the Company has a 52% economic interest and
the Ulugan nickel project in which the Company has a 58% economic interest.
The Company commenced direct shipping operations from its Berong nickel project
in January 2007. A total of approximately 121,390 tonnes of laterite nickel ore
was shipped to China in the financial year ended 31 March 2007. A JORC
compliant mineral resource prepared by Snowdens Mining Industry Consultants,
Australia was completed. The measured, indicated and inferred resource within
the 288 ha MPSA area is estimated at 9.92 million tonnes at an average grade of
1.55% Ni using a 1% nickel cut-off grade. Drilling within the MPSA area is
ongoing and is aimed at delineating additional tonnage. The assessment of
processing options to add value to the large Berong lateritic resource
continued. SNC Lavalin is undertaking this work and covers the metallurgical
testing of the various ore types and assessing the most suitable processing
options covering high pressure acid leaching, vat leaching, ferro-nickel
smelting and the Chinese nickel pig iron process.
In respect of the Ipilan nickel project, the Company expended #672,642 on
project related items thereby meeting its commitment to spend US$2 million on
project development activities by mid-January 2007. Field exploration and
evaluation activities continued throughout the year. Development concepts and
options for an initial Direct Shipping Operation continue to be assessed and
costed.
In respect of the Ulugan nickel project, limited work was undertaken over the
financial year.
On 12 April 2006, the Company announced that it had negotiated to subscribe for
up to US$5 million in a three-year Loan Note in Atlas Consolidated Mining and
Development Corporation ('ACMDC'), secured over ACMDC's share of the Berong
nickel project. The Note bears interest at the rate of 10% per annum and is
repayable out of ACMDC's share of the Berong nickel project cash flow or is
convertible into ACMDC shares (at the election of the Company). During the
year, the Company advanced US$2,753,250 on behalf of ACMDC to the Berong nickel
project. Subsequent to 31 March 2007, Berong Nickel Corporation repaid amounts
advanced to the project in excess of capital contributions and at that time the
Company elected to convert its loan to ACMDC into shares in that company.
The Company agreed to make a loan facility available to Brooks Nickel Ventures
Inc ("Brooks") of up to US$3 million to enable that company to meet its funding
requirements under the Celestial joint venture agreement, secured over Brooks'
share of the Ipilan nickel project. The loan bears interest at the rate of 10%
per annum and is repayable out of Brooks' share of the Ipilan nickel project
cash flow. By 31 March 2007, US$585,191 (#340,119) had been advanced under this
facility.
On 4 April 2006, the Company successfully completed a placing to raise #8.5
million. This was achieved through placing 7,870,370 ordinary shares at #1.08
each. On 12 April 2006, the Company placed 1,704,630 ordinary shares at #1.08
each to raise #1,841,000. The raising was on deferred settlement terms with
settlement due and received in November 2006.
In the period January to March 2007, the Company allotted 1,040,000 ordinary
shares to raise #1,335,000, following the exercise of options and warrants.
On 6 February 2007, the Company participated in the formation of China Nickel
Corporation, a company which has the same ownership structure as the Berong
nickel project and which provides marketing support services to that project.
Further details are set out in the Chairman's and Chief Executive Officer's
Statements.
Results and dividends
The loss for the year from ordinary activities before tax amounted to #1,264,416
(2006 : #723,633). The directors do not recommend the payment of a dividend.
Share capital
Details of share capital are given in note 21 to the financial statements.
Risk management
See note 30 to the financial statements.
Future developments
The directors anticipate the Company's major future developments will revolve
around further investment in and development of the Berong, Ipilan and Ulugan
nickel projects. In particular, the Company is planning, subject to receipt of
all required permits and approvals, to ramp-up production at the Berong nickel
project and to commence commercial direct shipping operations at the Ipilan
nickel project during the 2008 financial year.
Principal risks and uncertainties facing the Group
The principal risks faced by the Company are as follows:
* The exploration for and development of mineral deposits involves
significant risks, which even a combination of careful evaluation,
experience and knowledge may not eliminate. There can be no guarantee that
the estimates of quantities and grades of minerals disclosed will be
available to extract. With all mining operations there is uncertainty and,
therefore, risk associated with operating parameters and costs resulting
from the scaling up of extraction methods tested in pilot conditions.
* The operations of the Company may be disrupted by a variety of risks and
hazards which are beyond the control of the Company. These may include
geological, geotechnical and seismic factors, environmental hazards,
industrial accidents, occupational and health hazards, technical failures,
labour disputes, unusual or unexpected rock formations, flooding and
extended interruptions due to inclement or hazardous weather conditions,
explosions and other acts. These risks and hazards could also result in
damage to, or destruction of, production facilities, personal injury,
environmental damage, business interruption, monetary losses and possible
legal liability.
* The Company's future success is substantially dependent on the continued
services and performance of its key personnel. Their loss or the inability
to recruit personnel of the appropriate calibre could have a significant
adverse effect of the business of the Company.
* The selling price of the nickel ore produced by the Company's operations
varies in line with movements of the price of nickel as quoted on the
London Metal Exchange.
* Some or all of the operating and exploration licences issued in respect of
the projects may be subject to conditions which, if not satisfied, may lead
to the revocation of such licences.
* The Company may have minority interests in the companies, partnerships and
ventures in which it invests and may be unable to exercise control over the
operations of such companies.
* The operations of the Group are located in the Philippines where there may
be a number of associated risks over which it will have no control. These
may include economic, social or political instability or change, terrorism,
hyperinflation, currency non-convertibility or instability, changes of laws
affecting foreign ownership, government participation, taxation, working
conditions, rates of exchange, exchange control, and exploration licensing.
* The Company's total return and net assets can be significantly affected
by currency movements.
Directors and their interests
The directors who served during the year and their interests in the Company's
ordinary shares were were as follows:
5p Ordinary shares
Appointed Resigned At date of appointment
At 31 March 2007 / 1 April 2006
C Kyriakou 1,400,000 1,000,000
G Bujtor 37,037 -
R Eccles 13 March 2007 - -
R Cleary 200,000 -
J M Roberts 20 December 2006 - -
R Shakesby 9,260 -
During the year the following options were granted to the directors:
Date Granted Number Exercise Price Expiry Date
C Kyriakou 22 December 2006 50,000 #1.50 30 November 2011*
G Bujtor 22 December 2006 150,000 #1.50 30 November 2011*
R Cleary 22 December 2006 100,000 #1.50 30 November 2011*
R Eccles 13 March 2007 100,000 #1.75 30 November 2011*
Options held by directors at 31 March 2007 are as follows:
Number Exercise Price Expiry Date
C Kyriakou 50,000 #1.50 30 November 2011*
G Bujtor 350,000 #1.50 30 November 2007*
G Bujtor 150,000 #1.50 30 November 2011*
R Cleary 100,000 #1.50 30 November 2011*
R Eccles 100,000 #1.75 30 November 2011*
R Shakesby 100,000 #1.00 7 April 2007*
* Or 90 days after the director ceases to be engaged by the Company if earlier.
Events since the balance sheet date
Subsequent to 31 March 2007, the Company has:
* recovered US$6,129,259 (#3,129,522) of funds advanced to the Berong
nickel project
* elected to convert its loan to ACMDC of US$2,753,250 into shares in
that company
* advanced a further US$1.9 million to Brooks, bringing the total amount
advanced to that company under the loan facility to US$2.5 million
* allotted 600,000 ordinary shares to raise #875,000 following the
exercise of options and warrants
Substantial shareholdings
On 31 March 2007 the following shareholders held 3% or more of the issued share
capital of the Company:
Number of Percentage issued
Ordinary Shares Ordinary Shares
AXA SA 3,445,000 12.1%
Investika Limited 3,191,019 11.1%
FMR Corporation 1,764,544 6.2%
Barclays PLC 1,443,868 5.1%
Chris Kyriakou 1,400,000 4.9%
Throgmorton Trust Plc 1,400,000 4.9%
Alfredo Ramos 1,300,000 4.5%
MF Global UK Limited 1,162,300 4.1%
Man Financial Limited 1,156,200 4.0%
Presidio Capital Holdings Limited 1,024,762 3.6%
Corporate Governance
As Toledo Mining Corporation Plc is not a fully listed company, it is not
required to comply with the Code of Best Practice published by the Committee on
the Financial Aspects of Corporate Governance ("the Combined Code"). However,
the directors do place a high degree of importance on ensuring that high
standards of corporate governance are maintained. As a result, most of the
relevant principles set out in the Combined Code have been adopted during the
period and these are summarised below.
Directors
The Company supports the concept of an effective Board leading and controlling
the Company. The Board is responsible for approving the Company's policies and
strategies. It meets frequently and receives and reviews on a timely basis
financial and operating information appropriate to being able to discharge its
duties. Directors are free to seek any further information they consider
necessary. All directors submit themselves for re-election every three years by
rotation in accordance with the Articles of Association. Given the size of the
Company it is not considered appropriate that there should be a separate
nomination committee. It is the view of the Board that the appointment of new
directors should be a matter for consideration by the Board as a whole. All
appointments to the Board are subject to confirmation by shareholders at the
following AGM.
Relations with Shareholders
The Company values the views of its shareholders and recognises their interest
in the Company's strategy and performance. The Board is available to discuss
current events with its institutional and private shareholders and positively
encourages attendance at General Meetings.
Audit Committee
The Company has established an audit committee comprised of the non-executive
directors. It is responsible for making recommendations to the Board on the
appointment of auditors and the audit fee, is responsible for ensuring that the
financial performance of the Company is properly monitored and reported on and
receives and reviews reports from management and the auditors relating to the
interim report, the annual report and accounts and the internal control systems
of the Company.
Remuneration Committee
The Company has established a remuneration committee comprised of the
non-executive directors. It is responsible for the review and recommendation of
the scale and structure of remuneration for key management personnel, including
any bonus arrangements or the award of share options. Details of the directors'
emoluments are set out in the financial statements. However, there is no
separate Report of the Remuneration Committee. It is the Company's policy that
the remuneration of directors should be commensurate with services provided by
them to the Company.
Internal Financial Control and Risk Management
The directors are responsible for the Company's system of internal financial
control and also for identifying the major business risks faced by the Company.
The system of internal financial control is designed to provide reasonable, but
not absolute, assurance against material misstatement or loss. In fulfilling
these responsibilities, the Board has reviewed the effectiveness of the system
of internal financial control. The directors have established procedures for
planning, budgeting and for monitoring, on a regular basis, the performance of
the Company and for determining the appropriate course of action to manage any
major business risks. The Board has considered the need for an internal audit
function but has decided the size of the Company does not justify it at present.
This decision will be reviewed annually.
Supplier Payment Policy
It is the Company's policy to agree terms of payment with all suppliers at the
time of the transaction and to pay suppliers as and when they fall due for
payment or alternatively to agree revised terms of payment. No distinction is
made between different classes of suppliers. At the year end trade payables
amounted to 26 days (2006: 32 days).
Political and charitable donations
No political or charitable donations were made during the year.
Auditors
Sawin & Edwards have indicated their willingness to continue in office. A
resolution to reappoint Sawin & Edwards for the ensuing year will be proposed at
the Annual General Meeting in accordance with Section 385 of the Companies Act
1985.
By order of the Board.
J Reynolds
Company Secretary
26 September 2007
STATEMENT OF DIRECTORS' RESPONSIBILITIES
FOR THE YEAR ENDED 31 MARCH 2007
The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards and applicable law. The financial statements are required by law to
give a true and fair view of the state of affairs of the Company and Group and
of the profit or loss of the Group for that period. In preparing those
financial statements, the directors are required to:
a) select suitable accounting policies and then apply them consistently
b) make judgements and estimates that are reasonable and prudent
c) state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements
d) prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company and Group will continue in
business
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and of the Group and to enable them to ensure that the financial
statements comply with the Companies Act 1985. They are also responsible for
safeguarding the assets of the Company and Group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company website. Legislation in the
United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The directors confirm that so far as they are aware, there is no relevant audit
information (as defined by section 234ZA of the Companies Act 1985) of which the
Company's auditors are unaware. They have taken all the steps that they ought to
have taken as directors in order to make themselves aware of any relevant audit
information and to establish that the Company's auditors are aware of that
information.
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF
TOLEDO MINING CORPORATION PLC
We have audited the Group and parent Company financial statements of Toledo
Mining Corporation Plc for the year ended 31 March 2007 which comprise the
Consolidated Income Statement, the Consolidated and Company Balance Sheets, the
Statements of Changes in Equity, the Consolidated and Company Cash Flow
Statements and the related notes numbered 1 to 33. These financial statements
have been prepared under the accounting policies set out therein.
This report is made solely to the Company's members, as a body, in accordance
with Section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the Company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the Statement of Directors' Responsibilities the Company's
directors are responsible for the preparation of the financial statements in
accordance with applicable law and International Financial Reporting Standards
(IFRSs) as adopted for use in the European Union.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the Company has not kept proper
accounting records, if we have not received all of the information and
explanations we require for our audit, or if information specified by law
regarding directors' remuneration and transactions with the Company is not
disclosed.
We report to you whether in our opinion the information given in the Directors'
Report is consistent with the Financial Statements.
We read other information contained in the Annual Report, and consider whether
it is consistent with the audited financial statements. This other information
comprises only the Chairman's and the Chief Executive Officer's Statements. We
consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial statements. Our
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes an
examination on a test basis, of evidence relevant to the amounts and disclosures
in the financial statements. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation of the
financial statements, and of whether the accounting policies are appropriate to
the Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements:
* give a true and fair view, in accordance with IFRSs as adopted for use in
the European Union, of the state of the Group and the Company's affairs as
at 31 March 2007 and of the Groups' loss for the year then ended; and
* have been properly prepared in accordance with the Companies Act 1985; and
* the information given in the Directors' Report is consistent with the
financial statements.
Sawin & Edwards 15 Southampton Place
Chartered Accountants London
& Registered Auditors WC1A 2AJ
26 September 2007
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
Year Year
Ended Ended
31 March 2007 31 March 2006
Notes # #
Revenue 3 186,229 187,345
Gross profit 186,229 187,345
Administration expenses (2,098,316) (1,511,007)
Other operating income 143,448 132,022
Realised / unrealised gains /(losses) on current (93,543) 721,731
asset investments
Share of results of associates 276,289 (388,865)
Loss from operations 4 (1,585,893) (858,774)
Investment income 7 321,477 135,141
Loss before taxation (1,264,416) (723,633)
Income tax expense 8 - -
Loss for the year (1,264,416) (723,633)
Attributable to:
Equity holders of the parent (1,300,374) (723,633)
Minority interest 35,958 -
(1,264,416) (723,633)
Loss per share (pence) - including share of
associates results
Basic 9 (4.72) (4.79)
Diluted 9 (4.48) (3.98)
Loss per share (pence) - excluding share of
associates results
Basic 9 (5.73) (2.22)
Diluted 9 (5.43) (1.84)
The Company has taken advantage of section 230 of the Companies Act 1985 not to
publish its own income statement account
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2007
Notes 31 March 2007 31 March 2006
# #
ASSETS
Non-current assets
Intangible assets 10 - 50,048
Property, plant and equipment 11 33,397 58,784
Investments in associated undertakings 13 10,353,674 10,077,385
Loans and receivables 14 1,812,274 -
Trade and other receivables 15 38,450 38,450
Total non-current assets 12,237,795 10,224,667
Current assets
Trade and other receivables 16 490,282 139,531
Loans and receivables 17 3,129,520 -
Current investments 18 915,568 897,000
Cash and cash equivalents 19 8,031,291 2,847,749
Total current assets 12,566,661 3,884,280
__________ __________
TOTAL ASSETS 24,804,456 14,108,947
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 20 1,659,721 1,516,599
________ ________
Total current liabilities 1,659,721 1,516,599
________ ________
Total liabilities 1,659,721 1,516,599
Equity
Share capital 21 1,429,417 898,667
Share premium account 22 23,062,908 12,523,833
Share based payments reserve 23 1,107,326 360,571
Retained loss (2,491,097) (1,190,723)
Equity attributable to equity holders of the parent 23,108,554 12,592,348
Minority Interest 24 36,181 -
Total equity 23,144,735 12,592,348
__________ __________
TOTAL EQUITY AND LIABILITIES 24,804,456 14,108,947
The financial statements were approved by the Board of Directors on 26 September
2007 and signed on their behalf by:
C Kyriakou
Chairman
COMPANY BALANCE SHEET
AS AT 31 MARCH 2007
Notes 31 March 2007 31 March 2006
# #
ASSETS
Non-current assets
Intangible assets 10 - 50,048
Property, plant and equipment 11 33,397 58,784
Investments in subsidiary undertaking 12 286 -
Investments in associated undertakings 13 10,466,250 10,466,250
Loans and receivables 14 1,812,274 -
Trade and other receivables 15 38,450 38,450
Total non-current assets 12,350,657 10,613,532
Current assets
Trade and other receivables 16 407,734 139,531
Loans and receivables 17 3,129,520 -
Current investments 18 915,568 897,000
Cash and cash equivalents 19 8,030,768 2,847,749
Total current assets 12,483,590 3,884,280
_________ _________
TOTAL ASSETS 24,834,247 14,497,812
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 20 1,659,068 1,516,599
Total current liabilities 1,659,068 1,516,599
________ ________
Total liabilities 1,659,068 1,516,599
Equity
Share capital 21 1,429,417 898,667
Share premium account 22 23,062,908 12,523,833
Share based payments reserve 23 1,107,326 360,571
Retained loss (2,424,472) (801,858)
Equity attributable to equity holders of the parent 23,175,179 12,981,213
Total equity 23,175,179 12,981,213
_________ _________
TOTAL EQUITY AND LIABILITIES 24,834,247 14,497,812
The financial statements were approved by the Board of Directors on 26 September
2007 and signed on their behalf by:
C Kyriakou
Chairman
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2007
Share based
Share Share Payments Retained
Capital Premium Reserve Loss Total
Group # # # # #
Balance at 1April 2006 898,667 12,523,833 - (1,202,229) 12,220,271
IFRS Transition adjustments (see - 360,571 11,506 372,077
note 31)
-
Restated balances 1 April 2006 898,667 12,523,833 360,571 (1,190,723) 12,592,348
Share issue 530,750 10,539,075 - - 11,069,825
Loss for the period - - - (1,300,374) (1,300,374)
Share based payments - - 746,755 - 746,755
Balance at 31 March 2007 1,429,417 23,062,908 1,107,326 (2,491,097) 23,108,554
Share based
Share Share Payments Retained
Capital Premium Reserve Loss Total
Company # # # # #
Balance at 1 April 2006 898,667 12,523,833 - (813,364) 12,609,136
IFRS Transition adjustments (see - 360,571 11,506 372,077
note 31) -
Restated balances 1 April 2006 898,667 12,523,833 360,571 (801,858) 12,981,213
Share issue 530,750 10,539,075 - - 11,069,825
Loss for the period - - - (1,622,614) (1,622,614)
Share based payments - - 746,755 - 746,755
Balance at 31 March 2007 1,429,417 23,062,908 1,107,326 (2,424,472) 23,175,179
Share Share Share based Retained
Payments
Capital Premium Reserve Loss Total
Group # # # # #
Balance at 1April 2005 688,667 7,393,833 - (467,090) 7,615,410
Share issue 210,000 5,130,000 - - 5,340,000
Loss for the period - - - (346,274) (346,274)
Share of associates results - - (388,865) (388,865)
-
Balance at 31 March 2006 898,667 12,523,833 - (1,202,229) 12,220,271
IFRS Transition adjustments (see - 360,571 11,506 __372,077
note 31) -
Restated balances at 31 March 898,667 12,523,833 360,571 (1,190,723) 12,592,348
2006
Share based
Share Share Payments Retained
Capital Premium Reserve Loss Total
Company # # # # #
Balance at 1 April 2005 688,667 7,393,833 - (467,090) 7,615,410
Share issue 210,000 5,130,000 - - 5,340,000
Loss for the period - - (346,274) (346,274)
-
Balance at 31 March 2006 898,667 12,523,833 - (813,364) 12,609,136
IFRS Transition adjustments (see - - 360,571 11,506 372,077
note 31)
Restated balances at 31 March 898,667 12,523,833 360,571 (801,858) 12,981,213
2006
CONSOLIDATED CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
Notes Year Year
Ended Ended
31 March 2007 31 March 2006
# #
Net cash outflow from operating activities 25 (1,143,095) (412,679)
Investing activities
Investment income 193,843 107,623
Purchase of property, plant & equipment (11,939) (66,126)
Investments in associated companies - (6,370,060)
Loan investments (advanced) / repaid (4,925,092) 270,000
Development expenditure - (50,048)
_________ _________
Net cash outflow from investing activities (4,743,188) (6,108,611)
Financing activities
Issue of equity share capital 11,069,825 5,340,000
_________ ________
Net cash inflow from financing activities 11,069,825 5,340,000
Net increase / (decrease) in cash and cash 5,183,542 (1,181,290)
equivalents
Cash and cash equivalents at 1 April 2,847,749 4,029,039
________ ________
Cash and cash equivalents at 31 March 19 8,031,291 2,847,749
COMPANY CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
Notes Year Year
Ended Ended
31 March 2007 31 March 2006
# #
Net cash outflow from operating activities 25 (1,143,331) (412,679)
Investing activities
Investment income 193,842 107,623
Purchase of property, plant & equipment (11,939) (66,126)
Investments in associated companies - (6,370,060)
Investment in subsidiary (286) -
Loan investments (advanced) / repaid (4,925,092) 270,000
Development expenditure - (50,048)
_________ _________
Net cash outflow from investing activities (4,743,475) (6,108,611)
Financing activities
Issue of equity share capital 11,069,825 5,340,000
_________ ________
Net cash inflow from financing activities 11,069,825 5,340,000
Net increase / (decrease) in cash and cash 5,183,019 (1,181,290)
equivalents
Cash and cash equivalents at 1 April 2,847,749 4,029,039
________ ________
Cash and cash equivalents at 31 March 19 8,030,768 2,847,749
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2007
1. General information
Toledo Mining Corporation Plc is a company incorporated in England and Wales
under the Companies Act 1985. The Company's registered office is 11 Albemarle
Street, London, W1S 4HH.
The principal activity of the Group is the investment in and exploration and
development of mining projects, specifically in the Philippines.
The Group's principal activity is carried out in US dollars. The financial
statements are presented in pounds sterling as this is the currency of the
country (the UK) from which the Group operates.
The Board of directors has authorised the issue of these financial statements on
the date of the statement as set out on page 16.
2. Accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) for the first time. The disclosures
required by IFRS 1 concerning the transition from UK GAAP to IFRSs are given in
note 31 to the financial statements.
The financial statements have been prepared on the historical cost basis
except that certain financial instruments are accounted for at fair values. The
principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and all Group undertakings. Control is achieved when
the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent liabilities of
a subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair value of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair value of the identifiable net assets acquired (ie
discount on acquisition) is credited to profit and loss in the period of
acquisition. The interest of minority shareholders is stated at the minority's
proportion of the fair values of the assets and liabilities recognised.
Subsequently, any losses applicable to the minority interest in excess of the
minority interest are allocated against the interests of the parent.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Investments in Associates
An associate is an entity over which the Group is in a position to exercise
significant influence, but not control or joint control, through participation
in the financial and operating policy decisions of the investee.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting. Investments in
associates are carried in the balance sheet at cost as adjusted by post-
acquisition changes in the Group's share of the net assets of the associate,
less any impairment in the value of individual investments. Losses of the
associates in excess of the Group's interest in those associates are not
recognised.
Where a Group company transacts with an associate of the Group, profits and
losses are eliminated to the extent of the Group's interest in the relevant
associate. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made for impairment.
Revenue recognition
Revenue and other operating income represents the provision of consultancy,
management and office services for the year.
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 amount.
Gains and losses on current asset investments income represent realised and
unrealised gains/(losses).
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates
of exchange prevailing on the dates of the individual transactions. For
practical reasons, a rate that approximates to the actual rate at the date of
the transaction is often used. 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 assets and liabilities
that are denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date. Gains and losses arising on retranslation
are included in net profit or loss for the period. On consolidation, the assets
and liabilities of the Group's overseas 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
fluctuate significantly. Exchange differences arising, if any, are classified
as equity and transferred to the Group's translation reserve. Such translation
differences are recognised as income or as expenses in the period in which the
operation is disposed of.
Deferred taxation
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 bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the original recognition of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
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.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
No recognition has been made for the deferred tax asset arising in respect of
current losses as the directors are of the opinion that this may not be
realisable in the foreseeable future.
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Company becomes a party to the contractual provisions of the
instrument.
Non-current intangible assets
Non-current intangible assets are shown at cost less any provisions made in
respect of impairment.
Asset impairments
Non-current intangible assets are reviewed for impairments if events or changes
in circumstances indicate that the carrying amount may not be recoverable. When
a review is conducted, the recoverable amount is assessed by reference to the
net present value of expected future cash flows of the relevant income
generating unit or disposal value, if higher.
If an asset is impaired, a provision is made to reduce the carrying amount to
its estimated recoverable amount.
Non-current asset investments
Loan investments are shown at cost less provision for any permanent diminution
in value. Loan investments are recognised as an asset when sums are advanced.
Property, plant and equipment
Office equipment and furniture are shown at cost less accumulated depreciation
and any recognised impairment loss. Depreciation is charged so as to write off
the cost of assets over their estimated useful lives, using the straight line
method on the following basis:
Office furniture and fittings 33% - 50%
Computer and office equipment 33% - 100%
Cash and cash equivalents
Cash and cash equivalents comprise cash held at bank and on short term deposits.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangement entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
value as reduced by appropriate allowances for estimated irrecoverable amounts.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received
except where those proceeds appear to be less than the fair value of the equity
instruments issued, in which case the equity instruments are recorded at fair
value. The difference between the proceeds received and the fair value is
reflected in the share based payments reserve.
The costs of issuing new equity are charged against the share premium account.
Operating Leases
Rental costs under operating leases are changed to the income statement on a
straight line basis over the term of the lease. Where an incentive to sign the
lease has been taken the incentive is spread on a straight line basis over the
lease term.
Pension costs
The Company makes defined contributions to the independent pension scheme of its
employees.
Share based payments
The Group has applied the requirements of IFRS 2 Share-based Payments.
The Group issues equity-settled based payments to directors, staff, and certain
professional advisors of the Group. Equity-settled share-based payments are
measured at fair value at the date of grant. The fair value determined at the
grant date of the equity-settled share-based payment is expensed on a
straight-line basis over the vesting period, based on the Group's estimate of
shares that will eventually vest.
Fair value is measured using a Black-Scholes model. The expected life used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural
considerations.
3. Segmental analysis
The turnover and loss before tax are attributable to the principal activities of
the Group.
Segmental information on a geographical basis is set out below:
Year ended
31 March 2007
UK Philippines China Total
# # # #
Turnover 103,681 - 82,548 186,229
(Loss) / profit for the year (1,622,613) 276,289 81,908 (1,264,416)
Net assets 8,925,618 14,136,699 82,418 23,144,735
Year ended
31 March 2006
UK Philippines China Total
# # # #
Turnover 187,345 - - 187,345
Loss for the year (334,768) (388,865) - (723,633)
Net assets 2,464,915 10,127,433 - 12,592,348
4. Net loss from operations
Net loss from operations is stated after charging / (crediting):
Year ended Year ended
31 March 2007 31 March 2006
# #
Auditors remuneration:
- as auditors 27,300 26,000
- as reporting accountants 11,700 15,900
- taxation compliance 2,000 2,990
Audit fees - other auditor 9,441 -
Operating lease - office rent 69,298 65,982
Realised gains on current asset investments - (349,654)
Unrealised losses / (gains) on current asset investments 93,543 (372,077)
Depreciation 37,326 27,874
5. Particulars of employees
The average number of staff employed by the Group during the financial
year amounted to:
Year ended Year ended
31 March 2007 31 March 2006
No. No.
Administrative staff 2 3
The aggregate costs of the above were:
# #
Wages and salaries 85,001 154,354
Social security costs 8,629 17,375
Pension costs - defined contribution 2,350 3,700
Share based payments 35,078 -
131,058 175,429
6. Directors' emoluments
The Company also employed six (2006: five) directors during the year with
aggregate emoluments in respect of qualifying services as follows:
Year ended Year ended
31 March 2007 31 March 2006
# #
Directors' fees 15,000 15,000
Amounts paid to third parties for the provision of 87,000 134,995
directors' services
Share based payments 342,050 -
444,050 149,995
Number of directors who exercised share options during 3 -
the year
7. Investment income
Year ended Year ended
31 March 2007 31 March 2006
Company and Company and
Group Group
2007 2006
# #
Interest on bank deposits 302,482 112,989
Interest on loan investments 16,703 -
Other interest 2,292 22,152
321,477 135,141
8. Income tax expense
Group Group
Year ended Year ended
31 March 2007 31 March 2006
# #
Taxation charge - -
Due to the taxable losses arising there is no charge to UK corporation tax
Current tax reconciliation
Loss for the year before taxation (1,264,416) (723,633)
Loss for the year multiplied by standard
rate of UK corporation tax 30% (379,325) (217,089)
Effects of:
Expenses not deductible for tax purposes 223,355 126,693
Non taxable income/tax allowable expenses - (162,644)
Overseas profits (24,573) -
Share of associate results (82,887) 116,660
Increase in potential tax credits 263,430 136,380
Tax charge - -
No recognition has been made of the deferred tax asset in respect of the losses
shown above as the directors are of the opinion that this may not be realisable
in the foreseeable future.
9. Loss per share - including share of associates results
Loss per share has been calculated by dividing the loss for the year after
taxation including share of associates profits of #276,289 (2006: loss #388,865)
attributable to the equity holders of the parent company of #1,300,374 (2006:
#723,633) by the weighted average number of shares in issue at the year end of
27,529,424 (2006: 15,096,621).
Diluted loss per share has been calculated using the weighted average number of
shares in issue at the year end, diluted for the effect of share options in
existence at the year end of 1,495,000 (2006: 3,075,000).
Loss per share - excluding share of associates results
Loss per share has been calculated by dividing the loss for the year after
taxation excluding share of associates profits of #276,289 (2006: loss #388,865)
attributable to the equity holders of the parent company of #1,576,663 (2006:
#334,768) by the weighted average number of shares in issue at the year end of
27,529,424 (2006: 15,096,621).
Diluted loss per share has been calculated using the weighted average number of
shares in issue at the year end, diluted for the effect of share options in
existence at the year end of 1,495,000 (2006: 3,075,000).
10. Intangible assets
Company and Group
2007 2006
Exploration expenditure # #
Cost
Balance brought forward 50,048 3,132,887
Additions - 7,643,909
Transferred to investments in associate companies - (10,464,306)
Disposal - (262,442)
Write down (50,048) -
Balance carried forward - 50,048
Impairment
2007 2006
# #
Balance brought forward - 262,442
Disposal - (262,442)
Balance carried forward - -
Net book value - 50,048
The exploration expenditure relates to the Company's development costs
and qualifying expenditure under the Company's Venture Agreements relating to
the Berong, Celestial/Ipilan and Ulugan nickel projects. During the year ended
31 March 2006, the Company's interests in these projects vested and the total
cost of these investments at that date was transferred to fixed asset
investments (refer note 13). Additional expenditure incurred of #50,048 has
been charged to the income statement.
11. Property, plant and equipment
Company and Group
Computer and office Furniture, fixtures and Total
equipment fittings
# # #
Cost
Balance at 1 April 2006 52,391 36,185 88,576
Additions 7,699 4,240 11,939
Disposals (13,252) - (13,252)
Balance at 31 March 2007 46,838 40,425 87,263
Depreciation
Balance at 1 April 2006 18,647 11,145 29,792
Charge for the year 23,016 14,310 37,326
Disposals (13,252) - (13,252)
Balance at 31 March 2007 28,411 25,455 53,866
Net book value
At 31 March 2007 18,427 14,970 33,397
At 31 March 2006 33,744 25,040 58,784
Computer and office Furniture, fixtures and Total
equipment fittings
# # #
Cost
Balance at 1 April 2005 17,450 5,000 22,450
Additions 34,941 31,185 66,126
Balance at 31 March 2006 52,391 36,185 88,576
Depreciation
Balance at 1 April 2005 1,778 140 1,918
Charge for the year 16,869 11,005 27,874
Balance at 31 March 2006 18,647 11,145 29,792
Net book value
At 31 March 2006 33,744 25,040 58,784
At 31 March 2005 15,672 4,860 20,532
12. Investment in Group Undertakings
Company
Subsidiary Undertakings
#
Balance at 1 April 2006 -
Additions 286
Balance at 31 March 2007 286
Subsidiary Country of Holding Proportion of Nature of
Undertaking incorporation voting shares held Business
China Nickel British Virgin Ordinary shares 56.1% Consultancy Services
Corporation Islands
During the year the Company acquired 56.1% of a newly formed company, China
Nickel Corporation.
13. Investments in Associated Undertakings
Company
2007 2006
# #
Cost
Balance brought forward 10,466,250 1,944
Transferred from intangibles - 10,464,306
Balance carried forward 10,466,250 10,466,250
Investments in Associated Undertakings
Group
2007 2006
# #
Cost
Balance brought forward 10,077,385 1,944
Transferred from intangibles - 10,464,306
Share of associate undertakings results 276,289 (388,865)
Balance carried forward 10,353,674 10,077,385
14. Loans and receivables
Company and Group
2007 2006
# #
Balance brought forward - 270,000
Additions 1,812,274 -
Disposals - (270,000)
Balance carried forward 1,812,274 -
On 12 April 2006, the Company announced that it had negotiated to subscribe for
up to US$5million in a three-year Loan Note in Atlas Consolidated Mining and
Development Corporation ('ACMDC'), secured over ACMDC's share of the Berong
nickel project. The Note bears interest at the rate of 10% per annum and is
repayable out of ACMDC's share of the Berong nickel project cash flow or is
convertible into ACMDC shares (at the election of the Company). The total
amount advanced at 31 March 2007 including accrued interest of US$32,737 was
US$2,785,987 (#1,472,155).
In May 2007, under the terms of the loan agreement, the Company elected to
convert the loan into shares in ACMDC.
The Company entered into an agreement to make a loan facility available to
Brooks Nickel Ventures Inc. (Brooks) of up to US$3 million, secured over Brooks'
share of the Ipilan nickel project. The loan bears interest at 10% per annum
and is repayable out of Brooks' share of the Ipilan nickel project cash flow.
The total amount advanced at 31 March 2007 was US$585,191 (#340,119).
15. Trade and other receivables - non-current
Company and Group
2007 2006
# #
Rent deposit 38,450 38,450
16. Trade and other receivables - current
Group Company Group Company
2007 2007 2006 2006
# # # #
Trade receivables 316,144 233,596 23,576 23,576
Prepayments and accrued income 174,138 174,138 115,955 115,955
490,282 407,734 139,531 139,531
17. Loans and receivables - current
Group Company Group Company
2007 2007 2006 2006
# # # #
Balance brought forward - - - -
Loan amounts advanced 3,129,520 3,129,520 - -
Balance carried forward 3,129,520 3,129,520 - -
During the year the Company advanced #3,129,520 (US$6,129,258) to Berong Nickel
Corporation to meet the Company's pro rata share of expenditure on the Berong
nickel project. This amount was repaid to the Company in May and June 2007.
18. Current investments
Group Company Group Company
2007 2007 2006 2006
# # # #
Listed investments- market value 915,568 915,568 897,000 897,000
19. Cash and cash equivalents
Group Company Group Company
2007 2007 2006 2006
# # # #
Cash held in trust bank account 29,957 29,957 174,514 174,514
Cash at bank and in hand 8,001,334 8,000,811 2,673,235 2,673,235
8,031,291 8,030,768 2,847,749 2,847,749
The carrying amount of these approximates to their fair values.
20. Trade and other payables
Group Company Group Company
2007 2007 2006 2006
# # # #
Trade payables 103,689 103,036 100,906 100,906
Taxation 2,929 2,929 16,368 16,368
Accruals 360,937 360,937 175,525 175,525
Project expenditure payables 636,473 636,473 - -
Other payables 555,693 555,693 1,223,800 1,223,800
1,659,721 1,659,068 1,516,599 1,516,599
Other payables relate to the Company's remaining expenditure commitments which
have been capitalised as part of the cost of acquiring the equity interests in
the fixed asset investments as follows:
2007 2006
# #
Celestial / Ipilan nickel project - 672,800
Ulugan nickel project 555,693 551,000
555,693 1,223,800
21. Called up share capital - Company and Group
Authorised Number # Number #
2007 2007 2006 2006
Ordinary shares of 5p each 40,000,000 2,000,000 40,000,000 2,000,000
Allotted and fully paid 28,588,333 1,429,417 17,973,333 898,667
During the year the Company issued the following shares:
Date Number Price Nominal Value Share premium
4 April 2006 7,870,370 #1.08 #393,519 #8,106,481
12 April 2006 1,704,630 #1.08 #85,231 #1,755,769
17 January 2007 300,000 #1.25 #15,000 #360,000
12 February 2007 50,000 #1.00 #2,500 #47,500
13 March 2007 200,000 #1.00 #10,000 #190,000
13 March 2007 240,000 #1.50 #12,000 #348,000
22 March 2007 50,000 #1.00 #2,500 #47,500
23 March 2007 200,000 #1.50 #10,000 #290,000
_________ ______ _________
Total 10,615,000 #530,750 #11,145,250
The Company has one class of ordinary shares which carry no right to fixed
income.
Share options and warrants in existence at 31 March 2007 are as follows:
Number Description Exercise price Expiry date
100,000 Ordinary shares #1.00 7 April 2007*
425,000 Ordinary shares #1.50 30 November 2007*
250,000 Ordinary shares #1.50 7 March 2009
620,000 Ordinary shares #1.50 30 November 2011*
100,000 Ordinary shares #1.75 30 November 2011*
* Or 90 days after the optionholder ceases to be engaged by the Company if
earlier.
22. Share premium account
Company and Group
2007 2006
# #
Balance brought forward 12,523,833 7,393,833
Premium arising on issue of equity shares 11,145,250 5,130,000
Placing commission (450,908) -
Placing commission- share warrants granted (155,267) -
Balance carried forward 23,062,908 12,523,833
23. Share based payments reserve
Company and Group
2007 2006
# #
Balance brought forward 360,571 -
Options issued to directors, staff and professional advisors and
charged to the income statement
591,488 360,571
Options issued to professional advisors and charged to share premium 155,267 -
account
Balance carried forward 1,107,326 360,571
24. Minority interest - Group
The minority interest is in relation to a 43.9% share in China Nickel
Corporation.
2007 2006
# #
Share of current assets 36,468 -
Share of current liabilities (287) -
36,181 -
25. Cash flows from operating activities
Group 2007 2006
# #
Net loss from operations (1,585,893) (858,774)
Adjustments for:
(Increase)/decrease in trade and other receivables (239,596) 273,844
Increase in trade and other payables 143,122 171,191
Write down of intangible expenditure 50,048 -
Share based payments 746,755 360,571
Share of associate undertakings (profits)/losses (276,289) 388,865
Increase in current investments (18,568) (776,250)
Depreciation 37,326 27,874
Net cash outflow from operating activities (1,143,095) (412,679)
Company 2007 2006
# #
Net loss from operations (1,944,090) (469,909)
Adjustments for:
Increase/(decrease) in trade and other receivables (157,271) 273,844
Increase in trade and other payables 142,469 171,191
Write down of intangible expenditure 50,048 -
Share based payments 746,755 360,571
Increase in current investments (18,568) (776,250)
Depreciation 37,326 27,874
Net cash outflow from operating activities (1,143,331) (412,679)
26. Controlling party
There is no ultimate controlling party of the Company.
27. Related party transactions
C Kryiakou, R Cleary and R Shakesby are directors, and R Eccles was a director,
of Tarquin Resources Plc.
The Company provided and recharged to Tarquin Resources Plc, office, support
staff and expenses of #64,463 (2006: #67,055).
Tarquin Resources Plc provided support and consultancy services to the Company
for #14,205 (2006: #2,758).
At the year end Tarquin Resources Plc owed the Company #6,084 (2006: #8,225).
C Kyriakou and R Cleary are directors of Investika Limited, an Australian
investment company.
Investika Limited provided and recharged to the Company support staff and
expenses of #61,372 (2006: #80,776) and #nil (2006: #3,745) for the provision of
the director services of R Cleary.
The Company owed #nil (2006: #29,506) to Investika Limited and which is shown in
trade payables.
The Company was charged #nil (2006: #90,000) by Capma Pty Ltd for the provision
of the services of C Kyriakou as director of the Company. Capma Pty Ltd paid
expenses on behalf of the Company of #96,121 (2006: #198,369) which was
re-charged to the Company.
At the year end the Company owed #13,994 (2006: #nil) to Capma Pty Ltd.
The Company was charged #60,000 (20065: #15,000) by Resource Capital Partners
Inc. for the provision of services of C Kyriakou as Director of the Company.
The Company was charged #41,557 (2006: #26,078) by Accomplishments Pty Ltd for
the provision of services of R Cleary; #15,000 (2006: #11,250) for services as
Director of the Company and #26,557 (2006: #14,828) for services as a consultant
to the Company.
The Company was charged #11,250 (2006: #15,000) by Match Number Limited for the
provision of J M Roberts as Director of the Company.
The Company was charged #750 (2006: #nil) by Metal Analysis Limited for the
provisions of R Eccles as Director of the Company.
The Company was charged #15,000 (2006: #15,000) by R Shakesby for the provision
of director services.
The Company was charged #192,733 (2006: #70,312) by G Bujtor as consultant and
which are included in accruals.
The Company was charged #64,665 (2006: #nil) for the services of G Bujtor as
consultant by Global Resources & Marketing Services SA.
The Company was charged #2,956 (2006: #nil) for the services of G Bujtor as
consultant by Resource & Project Commercialisation Pty Ltd.
C Kyriakou, R Cleary and G Bujtor are directors, and J M Roberts was a director,
of UMC Energy Plc.
The Company provided and recharged to UMC Energy Plc office, support staff and
expenses of #64,462 (2006: #78,963).
UMC Energy Plc provided support staff to the Company for #7,161 (2006:#nil).
At the year end the Company was owed #6,084 by UMC Energy Plc.
C Kyriakou, G Bujtor and R Eccles are directors of Belitung Zinc
Corporation Plc.
The Company provided and recharged to Belitung Zinc Corporation Plc office,
support staff and expenses of #64,482 (2006: #20,678).
Belitung Zinc Corporation Plc provided support staff to the Company for #7,161
(2006: #nil).
At the year end the Company was owed #6,084 (2006: #nil) by Belitung Zinc
Corporation Plc.
The Company is joint venture partner with Atlas Consolidated Mining and
Development Corporation ('ACMDC') under the Berong Venture Agreement.
Under the Berong, Celestial and Ulugan Venture agreements, the Company has
through the expenditure of qualifying costs of #10,464,306 (2006: #10,464,306)
acquired equity interests in the following Philippines' registered companies.
Ulugan Nickeline Nickel
Resources Resources Laterite
TMM Management Holdings Inc Ulugan Holdings Inc Resources Inc Berong Ipilan
Inc Nickel Corp. Nickel Corp. Nickel Corp.
Direct 40% 30% 40% 40% 20% 21.3% 40%
Indirect - - 18% 18% - 34.8% 12%
Total 40% 30% 58% 58% 20% 56.1% 52%
In April 2006, the Company entered into an agreement to subscribe for up to US$5
million, in a three-year Loan Note in Atlas Consolidated Mining and Development
Corporation ('ACMDC') secured over ACMDC's share of the Berong nickel project
cash flows. The Note bears interest at the rate of 10% per annum and is
repayable out of ACMDC's share of the Berong nickel project cash flow or is
convertible into ACMDC shares (at the election of the Company). In order to
fund the Note, the Company placed 1,704,630 new ordinary shares at #1.08 per
share to raise #1,841,000.
The Company advanced US$2,753,250 to ACMDC under the Loan Note. This amount
together with accrued interest of US$32,737 is shown under non current loan
investments at #1,472,155 (see note 14). Accrued interest of US$100,000 arising
on the loan note was waived during the year.
In May 2007, the Company consummated an arrangement whereby it agreed to make a
loan facility available to Brooks Nickel Ventures Inc ('Brooks') of up to US$3
million to enable that company to meet its funding requirements to Ipilan Nickel
Corporation under the Celestial joint venture agreement. Brooks confirmed that
the #340,119 (US$585,191) already advanced by the Company in excess of its US$2
million funding commitment would be subject to the terms of the agreement. This
amount is shown under non current loan investments (see note 14).
The Company, under the Celestial venture agreement, advanced the remainder of
its expenditure commitments of US$1,160,000 (#672,800).
At the year end the Company's expenditure commitment under the Ulugan venture
agreement is $950,000 (#551,256).
Under the Berong venture agreement the Company has advanced funds to Berong
Nickel Corporation to meet ongoing mine development costs.
The total amount advanced at the year end was #3,129,520 (US$6,129,258) and is
shown in current loans and receivables (see note 17). This amount was repaid by
June 2007.
Celestial Nickel Mining Exploration Corporation (CNMEC) owns 40% of the issued
share capital of Nickel Laterite Resources Inc. There is a royalty agreement in
place such that the Company has a commitment to make certain payments to CNMEC
as follows:
Upon completion of a feasibility study US$200,000
Upon completion of a positive bankable feasibility study US$500,000
Upon the commencement of construction of plant US$1,200,000
28. Commitments
Under a royalty agreement the Company has made a commitment to make certain
payments to Celestial Nickel Mining Exploration Corporation as follows:
Upon completion of a feasibility study US$200,000
Upon completion of positive bankable feasibility study US$500,000
Upon the commencement of construction of plant US$1,200,000
29. Post balance sheet events
Subsequent to 31 March 2007, the Company has:
* recovered US$6,129,259 (#3,129,522) of funds advanced to the Berong
nickel project.
* elected to convert its loan to ACMDC of US$2,753,250 into shares in
that company.
* advanced a further US$1.9 million to Brooks, bringing the total amount
advanced to that company under the loan facility to US$2.5 million.
* allotted 600,000 ordinary shares to raise #875,000 following the
exercise of options and warrants.
30. Financial assets and liabilities
The Group's financial instruments comprise cash and cash equivalents,
intangible assets, loan investments and financial assets and various items such
as trade receivables, trade payables, accruals and prepayments that arise
directly from its operations.
The main purpose of these financial instruments is to finance the Group's
operations.
The Board regularly reviews and agrees policies for managing the level of
risk arising from the Group's financial instruments. These are summarised
below:
Foreign currency risk - The Group undertakes transactions principally in
Sterling and US Dollars. While the Group continually monitors its exposure to
movements in currency rates, it does not utilise hedging instruments to protect
against currency risks. The main currency exposure risk to the Company is in
relation to the US Dollar loan investments which are repayable in US Dollars.
Interest rate risk - The Group utilises cash deposits at variable rates
of interest for a variety of short term periods, depending on cash requirements.
The rates are reviewed regularly and the best rate obtained in the context of
the Group's needs.
Liquidity risk - The Group's policy throughout the period has been to
ensure that it has adequate liquidity by careful management of its working
capital.
Credit risk - The Group's credit risk is primarily attributable to its
loan investments. The amounts presented in the balance sheet are considered by
the Group's management to be recoverable in full.
Extent and nature of financial instruments
The Group held the following financial assets at the year end:
2007 2006
# #
Intangible assets - 50,048
Tangible assets 33,397 58,784
Investments in associate undertakings 10,353,674 10,077,385
Loans and receivables 4,941,794 -
Trade and other receivables 528,732 177,981
Investments in listed securities 915,568 897,000
Short-term deposits 6,915,102 2,506,000
Cash at bank and in hand 1,116,189 341,749
Total 24,804,456 14,108,947
Short-term deposits are held on Call Money Market accounts. The weighted
average rate of interest earned on these deposits was 4%. No funds are held on
fixed rate terms.
The Group held the following financial liabilities at the year end:
2007 2006
# #
Trade and other payables 464,626 276,431
Tax liabilities 2,929 16,368
Project related payables 1,192,166 1,223,800
1,659,721 1,516,599
31. First time adoption of IFRS
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) for the first time.
A reconciliation between the 2006 Income Statement and Balance Sheet as
shown under UK GAAP is shown below and comprises the following reconciling
items:
#
Share based payments (360,571)
Increase in current asset investments from
cost to market value 372,077
Net decrease in retained loss (11,506)
Income Statement
Year ended Year ended
31 March 2006 Reconciling 31 March 2006
IFRS items UK GAAP
# # #
Revenue 187,345 187,345
Gross profit 187,345 187,345
Administration expenses (1,511,007) (360,571) (1,150,436)
Other operating income 132,022 132,022
Movement / gains on current asset investments 721,731 372,077 349,654
Share of results of associates (388,865) (388,865)
Loss from operations (858,774) (870,280)
Investment income 135,141 135,141
Loss before taxation (723,633) (735,139)
Income tax expense - -
Loss for the year (723,633) (735,139)
Balance Sheet
As at As at
31 March 2006 Reconciling 31 March 2006
IFRS items UK GAAP
# # #
ASSETS
Non-current assets
Intangible assets 50,048 50,048
Property, plant and equipment 58,784 58,784
Investments in associate undertakings 10,077,385 10,077,385
Loans and receivables - -
Trade and other receivables 38,450 38,450
Total non-current assets 10,224,667 10,224,667
Current assets
Trade and other receivables 139,531 139,531
Loans and receivables - -
Current investments 897,000 372,077 524,923
Cash and cash equivalents 2,847,749 2,847,749
Total current assets 3,884,280 3,512,203
TOTAL ASSETS 14,108,947 13,736,870
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 1,516,599 1,516,599
Total current liabilities 1,516,599 1,516,599
Total liabilities 1,516,599 1,516,599
Equity
Share capital 898,667 898,667
Share premium account 12,523,833 12,523,833
Share based payments reserve 360,571 360,571 -
Retained loss (1,190,723) 11,506 (1,202,229)
Equity attributable to equity holders of the
parent 12,592,348 12,220,271
Total equity and liabilities 14,108,947 13,736,870
32. Associate Undertakings
The Company has equity holdings in the following associate undertakings:
Ulugan Nickeline Nickel
Resources Resources Laterite
TMM Holdings Inc Ulugan Nickel Holdings Inc Resources Inc Berong Nickel Ipilan Nickel
Management Corp. Corp. Corp.
Inc
Direct 40% 30% 40% 40% 20% 21.3% 40%
Indirect - - 18% 18% - 34.8% 12%
Total 40% 30% 58% 58% 20% 56.1% 52%
Summarised results of the associate undertakings as translated in sterling are
as follows:
Berong Nickel Ipilan Nickel Remaining Total
Corporation Corporation Associates
Year ended 31 March 2007 # # # #
Revenue 2,910,323 - 13,926 2,924,249
Profit / (loss) for the year 566,039 (59,829) (15,517) 490,693
Total assets 9,797,642 1,518,015 227,332 11,542,989
Total liabilities 7,692,443 140,901 68,571 7,901,915
Year ended 31 March 2006 # # # #
Revenue - - 5,505 5,505
Loss for the year (350,818) (359,573) (14,959) (725,350)
Total assets 2,085,276 464,996 238,530 2,788,802
Total liabilities 102,647 4,008 128,318 234,973
33. Operating lease commitments
The Company and Group had outstanding operating lease commitments falling due as
follows:
2007 2006
# #
Land and buildings
Within one year 76,895 76,895
Within 2 - 5 years 153,790 230,685
Total 230,685 307,580
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PUUMWBUPMGMQ
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