TIDMPML
RNS Number : 6384J
Papua Mining Plc
30 June 2017
Papua Mining plc
("Papua" or "the Company")
Financial Statements for the year ended 31 December 2016
Papua Mining plc, a UK company focused on the exploration of
gold and copper deposits in Papua New Guinea, is pleased to
announce its Annual Report and Accounts for the year ended 31
December 2016, which will be posted to shareholders today. The
Annual Report and Accounts are also available on the Company's
website.
For further information on the Company please visit
www.papuamining.com or contact:
Papua Mining plc
Hugh McCullough, Director +353 1 532 9535
Cenkos Securities plc - Nominated
Adviser and Broker
Derrick Lee/Beth McKiernan +44 131 220 6939
Chairman's Statement
I am pleased to present our report for Papua Mining plc ("Papua"
or "the Company") for the financial year ending 31st December 2016.
We have completed additional exploration work on our Mt Visi
licence in Papua New Guinea while rationalizing our groundholding
and relinquishing two additional licences which had not shown
sufficient promise in the initial exploration programmes.
Papua now holds six Exploration Licences granted by the Minister
for Mining in PNG all of which are located in the central part of
New Britain Island. The total area under licence is approximately
1,400 square kilometres.
Greenfields exploration programmes such as ours in PNG have been
very much out of favour amongst the investing community in the last
few years. Nonetheless, the work we have carried out has confirmed
our belief that we are close to discovery of a copper porphyry
system near surface at Mt Visi. Notwithstanding the currently
depressed view that the market takes of early stage projects such
as ours, we firmly believe that this will change in due course as
the lack of recent exploration activity globally leads to an
inevitable dearth of new projects to take to production. At that
time, the technical attractiveness of what we have established at
Mt Visi, and also at Tripela, will be recognized, thus presenting
an opportunity to realise true value for the shareholders.
This is the objective of your Board. To further prove the
existence of a commercially mineralised porphyry at Mt Visi or at
Tripela will require significant drilling which in turn will
require significant financing. Raising such finance in current
market conditions and at the current share price has proven
extremely difficult. The Board is examining ways in which the value
of the work to date in PNG may be preserved and protected for the
benefit of the shareholders until such time as the realisation of
that value may be achieved in the way most advantageous to the
shareholders.
This year, you will again notice that the audit report for the
2016 financial statements has been qualified with respect to the
issue of going concern. Our financial resources are still limited
while we consider the matters referred to above. We are in
discussions with investors that should they prove successful, may
provide additional funds that could assist the company forward. At
this stage, we cannot comment on the likely success of these
discussions, or that they will fully reflect the value of what we
have discovered in PNG. Should we fail in our discussions, we
cannot guarantee that the company will be able to continue trading
indefinitely.
As was the case last year, we continue to have the support of
members of staff and former members of staff, as well as the Board
of Directors who are receiving little or no remuneration for their
efforts. We are very grateful for this support.
I would like to thank my Board and our people in Papua New
Guinea for their loyalty and commitment to the Company's future. I
hope that we will be able to demonstrate the value of what we have
achieved in PNG to such an extent that the shareholders will see
that value reflected in the share price.
Michael Gordon Jolliffe
29 June 2017
Review of Operations
Papua Mining plc, ("PML") through its two PNG - incorporated
subsidiaries, holds six exploration licences ("ELs") with a total
area of 1,400 square kilometres in the central part of New Britain
island. Details of the ELs currently held are given on the project
pages of our Company website www.papuamining.com
Mt Visi target
The Mt. Visi area was identified as a porphyry copper gold
target through remote sensing studies and follow- up reconnaissance
fieldwork in May 2014. The initial prospecting discovered
significant copper and gold mineralisation in surface outcrop and
significantly the mineralization is associated with potassic
alteration at surface. Follow up, grid - based soil sampling
confirmed extensive copper gold mineralization and a porphyry
alteration zonation around the potassic alteration. The first drill
targets were delineated at the Kanavuli prospect in this remote,
inaccessible area and between December 2015 and March 2016 five
diamond core drillholes were drilled using a small heli-portable
drill rig for a total metreage of 776 metres, with the deepest hole
being drilled to a downhole depth of 211 metres.
Details of the holes completed are given in Table 1 below.
HoleID Easting Northing Elevation Azimuth Dip Length
========== ======= ======== ========= ======= === ======
V22DDH001 260885 9363807 1165 35 -55 191 m
========== ======= ======== ========= ======= === ======
V22DDH002 260885 9363807 1165 215 -55 68 m
========== ======= ======== ========= ======= === ======
V22DDH003 260753 9363886 1187 115 -55 211 m
========== ======= ======== ========= ======= === ======
V22DDH004 260878 9363871 1165 120 -70 133 m
========== ======= ======== ========= ======= === ======
V22DDH005 260885 9363807 1165 22 -75 173 m
========== ======= ======== ========= ======= === ======
Table 1: Diamond drill hole parameters for the Mt. Visi Prospect
drilling programme
Results of the drilling programme were reported in the 2015
Annual Report. Potassic alteration and anomalous copper
mineralization within a dioritic intrusion were confirmed by the
drilling but no ore-grade mineralization was intersected. We
believe the intersected diorite could well represent a narrow
finger stemming from a much larger, and more intensely mineralised,
porphyry apophysy and infer a large porphyry target at depth around
and below the drilled area. Given the relatively depressed state of
the resource investment market in the region during 2016 only
limited funds were directed at further fieldwork in the area and
follow-up drilling was postponed.
During the third quarter of the year in review, ridge & spur
geochemical sampling was completed over a northwest-southeast
trending corridor centered on the Kanavuli target with the surveys
spanning the eastern margin of EL2051, the western half of EL2322
and the northern margin of EL1804.
The programme comprised of three elements: An infill grid over
the Southeast soil anomaly;
Ridge & Spur samping over the Mt. Visi Corridor; and
Float and outcrop sampling over the Mt. Visi Corridor.
Infill soil grid on the Southeast anomaly
Some 99 soil samples were collected from the southeastern
portion of the previously completed soil grid at Mt. Visi. This
southeastern zone had shown some elevated copper values and it was
determined that those results warranted follow up sampling. The
results so far obtained have confirmed the anomalous nature of this
area. Highest copper values of 697ppm and 408ppm are generally
coincident with the originally defined anomaly. Overall, the work
confirms that the Southeast Anomaly is indeed anomalous in terms of
copper in soil and is worthy of further evaluation. This evaluation
will enable the Company to establish the next phase of activity at
Mt. Visi and the associated cost.
Ridge & Spur Sampling
The purpose of ridge and spur sampling is to quickly and
cost-effectively delineate any broadly anomalous zones which may
occur in the selected target area. In theory the soil profile along
ridgelines is suitable for soil sampling and should produce results
that essentially reflect significant underlying bedrock
mineralisation. The sampling interval was 50 metres along
ridgelines.
In general, the copper in soil values are more consistently
anomalous some distance (2-3 kilometres) from the already drilled
target at Mt. Visi than they are in the immediate proximity of that
target itself or indeed around the Southeast Anomaly zone. In
addition to following up the encouraging results from the drilling
previously completed at Mt. Visi, these results point to the
necessity to carry out further exploration in the area east and
south east of Mt. Visi to confirm the source of the anomalism, as
these may reflect additional porphyry centres. Some support for
this view comes from the rock sampling results given below.
Rock sample results
The rock sampling was carried on a reconnaissance basis to see
if any in situ float hosted mineralisation could be identified
whilst completing the ridge and spur soil sampling. The key points
arising from the analysis of the rock samples are:
Copper: 8 values greater than 800ppm, with a maximum value of
36,063ppm; almost all of the significant values occur in a zone
between 3,000 and 4,000 metres east of the drilled area at Mt.
Visi.
Molybdenum: 5 values greater than 15ppm, with a maximum of
1,253ppm; the highest values occur 3,900 metres east of the drilled
area.
Zinc: 12 values greater than 800ppm, with a maximum value of
8,238ppm; the anomalous values fall within the same zone as the
copper mineralisation.
Silver: 3 values greater than 15ppm, with a maximum value of
100ppm; the peak value occurs 3,000 metres east of the drilled
area.
Although most of the rock samples were collected in creek
valleys, as this is where the outcrop is exposed, the soil sampling
does seem to pick up the anomalism south and west of the copper in
rock mineralization. In summary, the zone 3,000 to 4,000 metres
east of the drilled area at Mt Visi appears prospective in terms of
hosting a mineralisation centre and warrants follow up work.
Another anomalous zone 1,700 metres north of the drilled target
with copper values up to 405ppm may also warrant follow up work
once the data have been fully assessed.
The infill sampling on the Southeast Anomaly has added
definition to that anomaly while not yet producing a clearcut,
standalone drilling target.
Intriguingly, the ridge and spur sampling suggests that an area
2-3 kilometres southeast of the drilled area at Mt. Visi is more
strongly anomalous for copper than the drilled target itself. The
rock sampling confirms this area as worthy of follow-up mapping.
Anomalous zones north and south of Mt. Visi could also reflect
porphyry centres.
This new work expands our area of interest in this highly
attractive, mineralised porphyry system with the potential for a
number of porphyry centres within the system as a whole. We believe
that the exploration results to date clearly support our view that
the Mt. Visi area is a prime target for the location of
significant, mineralized copper porphyries.
The data obtained validated the decision to undertake further
work at Mt. Visi and, whilst there can be no guarantee of
commercial success, Mt. Visi remains an exciting target. Further
exploration work in this area is clearly warranted in order to
delineate drill targets.
The Tripela target and other licences
Exploration activities on our other licences, including the
Tripela porphyry target in EL1462, were limited to desk
studies.
Geological mapping and sampling in 2011 and 2012 discovered
significant copper and molybdenum soil anomalism at Tripela in
licence area EL1462 in the West New Britain Province. Float and
outcrop sampling and geological mapping delineated numerous
occurrences of in situ, high grade copper and molybdenum
mineralisation with grades up to 29% copper returned from outcrop
assays. Subsequent shallow diamond drilling confirmed the presence
of zoned argillic and phyllic alteration which we believed to be
marginal to a porphyry body. Follow-up, deeper drilling intersected
high temperature, inner propylitic alteration, characteristic of
nearby porphyry development.
As described above the work to date has identified a significant
porphyry system with strong vectors supporting the potential for an
economic copper-gold porphyry orebody. The next phase of drilling
at Tripela will be designed to test for the projected porphyry
core. However, as announced in our interim statement last year that
drilling programme has been postponed until market conditions
improve.
An aggregate total of 9,031 metres has been drilled within
EL1462 over the past four years. The drilling and petrology on
drill cores at Tripela has confirmed the presence of a significant
hydrothermal system at depth, with strong inner propylitic
alteration (epidote-albite-hematite) intervals in diorite, below
intense phyllic alteration assemblages (silica-sericite-pyrite)
hosted predominantly in volcanics. A major shear zone, coupled with
concentrations of copper, molybdenum and arsenic in mineralized D
veins, is believed to be linked to a source intrusion. Reports from
four consultants provide important independent validation of the
excellent results achieved at Tripela Prospect during the reporting
period, marking this as one of the major recent exploration
programmes in central New Britain.
-- CMC Consulting - geology report,
-- Rinne Geological Consulting - geology report
-- Panda Geoscience - petrography studies
-- Spectral Geoscience Pty - spectral analysis
The discovery of the potassic alteration zone at the heart of a
porphyry system with associated copper and gold mineralization, in
EL2322 some 40 kilometres to the northeast of Tripela has further
strengthened the case for a significant mineralized porphyry centre
at Tripela. Further work proposed at Tripela is targeted at
delineating the expected potassic core of the hydrothermal system,
within the inner propylitic envelope. However, drilling operations
have been suspended until market conditions are more
favourable.
Directors Report
Principal Activity
The principal activities of the Group are the exploration for
gold and copper resources in Papua New Guinea (PNG). The Group's
strategy is to explore for and, where the Directors believe that it
is commercially feasible, develop deposits of gold and/or copper
within the territory of PNG.
The Group currently holds six Exploration Licences granted by
the Minister for Mining in PNG. The licences are located in the
central part of New Britain.
Financial overview
The loss for the year is in line with the Directors'
expectations. With significant funding being raised in June
2014 and further funding completed in December 2015 and October
2016, the Directors are hopeful that they will secure additional
funding when required to do so. The Directors are also of the view
that the investment sentiment in the resource sector will improve,
to the extent that the exploration success the Company has achieved
to date should enable it to raise sufficient additional exploration
funding to continue the exploration programmes in Papua New
Guinea.
A detailed review of the Group's business, including its targets
and strategies is given in the Chairman's
Statement and the Review of Operations.
Results and Dividends
The results for the year are in line with Directors'
expectations. The consolidated loss for the financial year, after
taxation, amounted to ($8,198,001) (2015: ($10,173,377)). The
Directors do not recommend a dividend.
Going Concern
As noted in the Chairman's statement, Papua Mining plc will
continue to seek additional equity funding as and when available in
order to continue its exploration programmes in the short term and
for general working capital purposes.
The Directors have prepared a cash flow forecast up to 30 June
2018 which supports the Directors' reasonable expectation that
Papua Mining plc has adequate resources to continue in operational
existence throughout this period. This cash flow forecast assumes
that the exploration programmes will only continue with additional
equity funding secured by the Group. Thus, they have adopted the
going concern basis of accounting in preparing the annual financial
statements.
Directors
The Directors in office during the year are listed below. The
interests of the Directors in the shares of the
Company at the relevant dates were as follows:
As at As at As at Number
31 December 31 December 31 December of options
2016 2015 2014 held at
Ordinary Ordinary Ordinary 31 December
Shares Shares Shares 2016
======================== ============= ============= ============= =============
Michael Jolliffe 185,004 185,004 185,004 626,763
Hugh McCullough 504,571 504,571 354,571 1,997,886
Kieran Harrington 328,392 328,392 328,392 1,997,886
Keith Lough - - - -
Gunnar Palm - - - -
Michael Somerset-Leeke 37,991,102 23,191,102 11,991,102 -
John Hutchinson - - - -
======================== ============= ============= ============= =============
On December 21, 2015 Michael Jolliffe surrendered 250,000
options which he held at 31 December 2014, Hugh McCullough
surrendered 796,908 options which he held at 31 December 2014 and
Kieran Harrington surrendered 796,908 options which he held at 31
December 2014.
Substantial Shareholdings
As at 22 June 2017, being the latest practical date prior to
publication of this document, the Company was aware of the
following holdings of 3% or more of the issued share capital of the
Company:
% of the
Company's
Shares in the issued
company share
capital
================================= ============== =========
Thalassa Holdings Limited 40,000,000 26.32
Michael Somerset-Leeke 37,991,102 25.00
South Pacific Mining Holdings
Limited 11,384,621 7.49
Salida Capital (Europe) Limited 14,885,000 9.79
Paul and Michelle Johnson 6,365,000 4.19
Marnie Holdings Limited 4,850,000 3.19
================================= ============== =========
Directors' remuneration
Salaries were severely curtailed for executive directors during
2016, and suspended in full for the non- executive directors during
2016. There were no benefits paid to Directors during 2016.
The Group made no payments into the private pension schemes
Directors during 2016. No share options were granted to Directors
during the year.
Full details of Directors' emoluments are set out in note 19 of
the financial statements.
Environmental Policy
The Group's projects are subject to the relevant PNG laws and
regulations relating to environmental matters.
The Group's strategy is to explore for and, where the Directors
believe that it is commercially feasible, develop deposits of gold
and/or copper within the territory of PNG. It is the Group's
intention to conduct its activities in a professional and
responsible manner, for the benefit of the Company's shareholders,
its employees and the national and local communities within which
it operates.
The Group aims to, at all times, conduct its operations in an
environmentally responsible manner and in accordance with relevant
legislation. The Group aims to adopt Best Practice policies as
recommended by the World Bank, the International Council on Mining
& Metals ("ICMM") and others where the Group deems that local
legislation to be inadequate in terms of environmental protection.
The Group has in place a detailed Field Operations Guidelines
Manual which covers in considerable detail the measures to be taken
by field personnel to minimize any negative environmental impact of
current exploration activities on the environment.
The Group also recognises the enormous potential of its
activities for positive impact on the communities in which it
operates and strives to optimise these positive impacts as far as
is possible.
Directors' Indemnities
The Group has no current insurance to cover its Directors and
officers against the costs of defending themselves in legal
proceedings taken against them in that capacity and in respect of
any damages resulting from those proceedings.
Political contributions
No political donations have been made.
Corporate Governance
The Board of Directors is committed to maintaining high
standards of corporate governance and is accountable to the
Company's shareholders for the proper corporate governance of the
Group. The UK Corporate Governance Code does not apply to AIM
companies, and PM plc instead follows the principles of corporate
governance set out in the QCA Guidelines. PM plc operates within
the mining sector in an effective and efficient way, with integrity
and due regard for the interests of shareholders, and applies
principles of general governance applicable to the size and stage
of development of the Group.
Audit Committee
The Audit Committee ensures the operation of good financial
practices throughout the Group, ensures that controls are in place
to protect the assets of the Group, reviews the integrity of
financial information, reviews the interim and annual financial
statements and reviews all aspects of the audit programme.
The Audit Committee is chaired by Mr. Michael Jolliffe and also
comprises Mr. Michael Somerset-Leeke who replaces Mr. Gunnar Palm
who resigned on 9 June 2017.
Remuneration Committee
The Remuneration Committee is responsible for establishing a
formal and transparent procedure for developing policy on executive
remuneration and for setting the remuneration packages of
individual Executive Directors, and will meet at least twice per
annum.
The Remuneration of Non-Executive Directors will be a matter for
the executive members of the Board. The Remuneration Committee is
chaired by Mr. Michael Jolliffe and also comprises Mr. Michael
Somerset-Leeke who replaces Mr. Gunnar Palm who resigned on 9
June 2017.
Auditor
The auditor, Grant Thornton, Dublin has indicated its
willingness to continue in office and a resolution proposing that
they be re-appointed will be put to the Annual General Meeting.
Statement of Disclosure to Auditor
The Directors who held office at the date of approval of the
Directors' Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is unaware and each Director has taken all steps that he
ought to have taken as a Director in order to make himself aware of
any relevant audit information and to establish that the Company's
auditor is aware of that information.
Shareholders' consent will be sought at the Annual General
Meeting which will propose the reappointment of Grant Thornton
Dublin as independent auditor of the Company and to authorise the
Directors to determine the auditor's remuneration.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic
Report, the Director's 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 giving a true and fair view of
the state of affairs of the group for each financial year. The
Directors are required by the AIM Rules of the London Stock
Exchange to prepare group financial statements in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union ("EU") and have elected to prepare the company
financial statements in accordance with IFRS as adopted by the
EU.
The group financial statements are required by law and IFRS
adopted by the EU to present fairly the financial position of the
Group and the Company and the financial performance of the Group.
The Companies Act
2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements
giving a true and fair view are references to their achieving a
fair presentation.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of
the profit or loss of the Group for that period.
In preparing the Group and Company financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRSs adopted by the EU;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Group's report and accounts will be published on the Group's
website and in this regard the Directors accept responsibility for
the maintenance and integrity of the PM plc website.
Annual General Meeting and Recommendation
The Board considers that the resolutions to be proposed at the
Annual General Meeting are in the best interests of the Company and
the Group as a whole and its unanimous recommendation is that
shareholders support these proposals as the Directors intend to do
in respect of their own holdings.
On behalf of the board
Hugh McCullough
Director
29 June 2017
Independent auditor's report
To the members of Papua Mining plc
We have audited the financial statements of Papua Mining plc for
the year ended 31 December 2016 which comprise the consolidated and
parent company statements of financial position, the consolidated
statement of comprehensive income, the consolidated and parent
company statements of changes in equity, the consolidated and
parent company statements of cash flow, and the related notes. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards
the parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 auditor
As explained more fully in the Directors' Responsibilities
Statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Basis for qualified opinion on financial statements
In forming our opinion on the financial statements, we have
considered the evidence available in respect of the going concern
basis of preparation of the financial statements which was limited.
The Company and Group are reliant on further investment from third
parties in order to continue in operational existence for a period
of at least 12 months from the date of approval of these financial
statements. Whilst the directors have attempted to raise additional
finance, this has not been done to date and evidence of receiving
further investment is not available. The financial statements (and
notes thereto) do not include adjustments that would result if the
company were unable to realise its assets and discharge its
liabilities in the normal course of business. These matters and
their possible effects are described more fully on page 26.
Qualified opinion on financial statements
In our opinion, except for the possible effects of the matter
described in the Basis for qualified opinion paragraph, the
financial statements:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2016 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the
European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act
2006
. Emphasis of matter - carrying value of intangible assets
In forming our opinion, we have considered the adequacy of
disclosures made in Note 9 to the financial statements, in relation
to the Directors' assessment of the carrying value of the Group's
exploration licenses and deferred exploration costs amounting to
$1.87million. The realisation of the intangible assets is dependent
on the successful development or disposal of precious metal and
other minerals in the Group's licence areas. Such successful
development is dependent on several variables including the
existence of commercial deposits of precious metal and other
minerals, availability of finance and the market price of precious
metal and other minerals. These conditions indicate the existence
of a material uncertainty around the valuation of the exploration
licences and deferred exploration costs. In view of the
significance of these uncertainties we consider that they should be
drawn to your attention.
The financial statements do not include the adjustments that
would result if the exploration and evaluation assets were not
recoverable. Our opinion is not qualified in these respects.
Opinions on other matter prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report and
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns;
or
-- certain disclosures of directors' remuneration specified by law are not made or
-- we have not received all the information and explanations we
require for our audit.
Except for the evidence of receiving further investment, as
referred to in the basis of qualified opinion paragraph, we have
received all of the information and explanations we require for our
audit.
Aidan Connaughton
Senior Statutory Auditor
for and on behalf of Grant Thornton
Chartered Accountants and Statutory Auditors
Molyneux House Bride Street Dublin 8
Ireland
29 June 2017
Consolidated statement of financial position at 31 December
2016
2016 2015
Note US$ US$
--------------------------- ----- ------------- -------------
Assets
Non-current assets
Intangible assets 9 1,869,300 9,270,355
--------------------------- ----- ------------- -------------
1,869,300 9,270,355
--------------------------- ----- ------------- -------------
Current Assets
Cash and cash equivalents 12 461,911 299,183
Other Debtors - 18,042
--------------------------- ----- ------------- -------------
461,911 317,225
--------------------------- ----- ------------- -------------
Total assets 2,331,211 9,587,580
--------------------------- ----- ------------- -------------
Equity and liabilities
Equity attributable
to shareholders
of the parent
Share capital 13 8,317,196 8,230,864
Share premium 13 15,359,416 14,444,849
Other reserves 3,087,062 3,087,062
Share based payment
reserve 1,413,914 1,368,830
Retained deficit (26,010,955) (17,812,954)
--------------------------- ----- ------------- -------------
Total equity 2,166,633 9,318,651
--------------------------- ----- ------------- -------------
Current liabilities
Trade and other
payables 15 164,578 268,929
--------------------------- ----- ------------- -------------
Total equity and
liabilities 2,331,211 9,587,580
--------------------------- ----- ------------- -------------
Company statement of financial position at 31 December 2016
2016 2015
Note US$ US$
--------------------------- ----- ------------- -------------
Assets
Non-current assets
Intangible assets 9 500,000 1,768,631
Investments 10 - 2,444,110
Trade and other
receivables 11 1,369,300 4,852,222
--------------------------- ----- ------------- -------------
1,869,300 9,064,963
--------------------------- ----- ------------- -------------
Current Assets
Cash and cash equivalents 12 453,517 286,897
Other Debtors - 18,042
--------------------------- ----- ------------- -------------
453,517 304,939
--------------------------- ----- ------------- -------------
Total assets 2,322,817 9,369,902
--------------------------- ----- ------------- -------------
Equity and liabilities
Equity attributable
to shareholders
of the parent
Share capital 13 8,317,196 8,230,864
Share premium 13 15,359,416 14,444,849
Other reserves 2,425,281 2,425,281
Share based payment
reserve 1,413,914 1,368,830
Retained deficit (25,357,568) (17,372,373)
--------------------------- ----- ------------- -------------
Total equity 2,158,239 9,097,451
--------------------------- ----- ------------- -------------
Current liabilities
Trade and other
payables 15 164,578 272,451
--------------------------- ----- ------------- -------------
Total equity and
liabilities 2,322,817 9,369,902
--------------------------- ----- ------------- -------------
Consolidated statement of comprehensive income for the year
ended 31 December 2016
2016 2015
Note US$ US$
================================= ======= ============= ==============
Administrative expenses (8,198,001) (10,176,680)
================================= ======= ============= ==============
Operating loss 6 (8,198,001) (10,170,680)
Finance income 5 - 3,303
================================= ======= ============= ==============
Loss before taxation (8,198,001) (10,173,377)
Income tax expense 7 - -
================================= ======= ============= ==============
Loss for the year attributable
to the owners of the company (8,198,001) (10,173,377)
Other comprehensive income - -
================================= ======= ============= ==============
Total comprehensive income
attributable to the owners
of the company (8,198,001) (10,173,377)
================================= ======= ============= ==============
Loss per share attributable
to shareholders
Basic 8 (0.08) (0.20)
Diluted 8 (0.08) (0.20)
================================= ======= ============= ==============
The Company has elected to take exemption under section 408 of
the Companies Act 2006 to not present the parent Company statement
of comprehensive income. The loss for the Company is shown in the
statement of changes in equity.
Consolidated statement of changes in equity for the year ended
31 December 2016
Share
Based
Payment Retained Total
Share Capital Share Premium Other Reserve Reserve Deficit Equity
US$ US$ US$ US$ US$ US$
==================== ============= ============= ============= ============ ================= ================
At 1 January
2015
Comprehensive
income 8,194,453 14,117,154 3,087,062 1,351,176 (7,639,577) 19,110,268
Loss for the
year and
total comprehensive
income
Transactions - - - - (10,173,377) (10,173,377)
with owners
Issue of share
capital 36,411 327,695 - - - 364,106
Share based
payment - - - 17,654 - 17,654
==================== ============= ============= ============= ============ ================= ================
Total transactions
with owners 36,411 327,695 - 17,654 -
==================== ============= ============= ============= ============ ================= ================
At 31 December
2015 8,230,864 14,444,849 3,087,062 1,368,830 (17,812,954) 9,318,651
==================== ============= ============= ============= ============ ================= ================
Comprehensive
income
Loss for the
year and
total comprehensive
income
Transactions - - - - (8,198,001) (8,198,001)
with owners
Issue of share
capital 86,332 914,567 - - - 1,000,899
Share based
payment - - - 45,084 - 45,084
==================== ============= ============= ============= ============ ================= ================
Total transactions
with owners 86,332 914,567 - 45,084 - 1,045,983
==================== ============= ============= ============= ============ ================= ================
At 31 December
2016 8,317,196 15,359,416 3,087,062 1,413,914 (26,010,955) 2,166,633
==================== ============= ============= ============= ============ ================= ================
Share capital
Represents the par value of shares in issue.
Share premium
Represents amounts subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Share based payment reserve
Represents the reserve account which is used for the
corresponding entry to the share based payment charge through
profit and loss (note 14).
Other reserves
Represents the reserve arising from a share for share exchange
as part of a group reorganisation in 2011.
Company statement of changes in equity for the year ended 31
December 2016
Share
Based
Share Share Payment Retained Total
Capital Premium Other Reserve Reserve Deficit Equity
US$ US$ US$ US$ US$ US$
-------------------- ---------------- ------------ ------------- ------------ ------------- -------------
Comprehensive
income
At 1 January
2015 8,194,453 14,117,154 2,425,281 1,351,176 (5,630,559) 20,457,505
Comprehensive
income
Loss for the
year and total
comprehensive
income - - - - (11,741,814) (11,741,814)
Transactions
with owners
Issue of share
capital 36,411 327,695 - - - 364,106
Share based
payment - - - 17,654 - 17,654
==================== ================ ============ ============= ============ ============= =============
Total transactions
with owners 36,411 327,695 - 17,654 - 381,760
==================== ================ ============ ============= ============ ============= =============
At 31 December
2015 8,230,864 14,444,849 2,425,281 1,368,830 (17,372,373) 9,097,451
==================== ================ ============ ============= ============ ============= =============
Comprehensive
income
Loss for the
year and
total comprehensive
income
Transactions - - - - (7,985,195) (7,985,195)
with owners
Issue of share
capital 86,332 914,567 - - - 1,000,899
Share based
payment - - - 45,084 - 45,084
==================== ================ ============ ============= ============ ============= =============
Total transactions
with owners 86,332 914,567 - 45,084 - 1,045,983
==================== ================ ============ ============= ============ ============= =============
At 31 December
2016 8,317,196 15,359,416 2,425,281 1,413,914 (25,357,568) 2,158,239
==================== ================ ============ ============= ============ ============= =============
Share capital
Represents the par value of shares in issue.
Share premium
Represents amounts subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Share based payment reserve
Represents the reserve account which is used for the
corresponding entry to the share based payment charge through
profit and loss (note 14).
Other reserves
Represents the reserve arising from a share for share exchange
as part of a group reorganisation in 2011.
Consolidated statement of cash flows for the year ended 31
December 2016
2016 2015
US$ US$
------------------------------------------ ------------ -------------
Cash flow from operating activities
Total comprehensive expense for
the year before tax (8,198,001) (10,173,377)
Adjustments to reconcile net
loss before income tax to cash
flow from operating activities:
Impairment of intangible assets 7,837,782 9,114,064
Share based payments 45,084 17,654
Currency adjustments (21,918) 66,505
Movement in operating assets/liabilities
* Other debtors 18,042 (18,042)
* Other liabilities (104,351) (155,768)
------------------------------------------ ------------ -------------
Net cash flow from operating
activities (423,362) (1,148,964)
------------------------------------------ ------------ -------------
Cash flow from investing activities
Exploration expenditure (436,727) (1,363,328)
------------------------------------------ ------------ -------------
Net cash generated from investing
activities (436,727) (1,363,328)
------------------------------------------ ------------ -------------
Cash flow from financing activities
Proceeds from issuance of ordinary
shares 1,000,899 364,106
------------------------------------------ ------------ -------------
Net cash generated from financing
activities 1,000,899 364,106
------------------------------------------ ------------ -------------
Net increase/(decrease) in cash
and cash equivalents 140,810 (2,148,186)
Cash and cash equivalents at
the beginning of the year 299,183 2,513,874
Effect of foreign exchange rates
changes 21,918 (66,505)
------------------------------------------ ------------ -------------
Cash and cash equivalents at
the end of the year 461,911 299,183
------------------------------------------ ------------ -------------
Company statement of cash flows for the year ended 31 December
2016
2016 2015
US$ US$
-------------------------------------- ------------ -------------
Cash flow from operating activities
Total comprehensive expense for
the year before tax (7,985,195) (11,741,814)
Adjustments to reconcile net
loss before income tax to cash
flow from operating activities:
Impairment of investments 2,444,109 2,444,109
Impairment of intangible assets 1,332,522 1,768,631
Share based payments 45,084 17,654
Currency adjustments (21,918) 66,505
Net increase in operating assets
* Other receivables 3,500,964 5,637,412
Net (decrease)/increase in operating
liabilities
* Other liabilities (107,873) (155,767)
-------------------------------------- ------------ -------------
Net cash flow from operating
activities (792,307) (1,963,270)
-------------------------------------- ------------ -------------
Cash flow from investing activities
Exploration expenditure 63,890 369,126
-------------------------------------- ------------ -------------
Net cash generated from investing
activities (63,890) (369,126)
-------------------------------------- ------------ -------------
Cash flow from financing activities
Proceeds from issuance of ordinary
shares 1,000,899 364,106
-------------------------------------- ------------ -------------
Net cash generated from financing
activities 1,000,899 364,106
-------------------------------------- ------------ -------------
Net increase/(decrease) in cash
and cash equivalents 144,702 (1,968,290)
Cash and cash equivalents at
the beginning of the year 286,897 2,321,692
Effect of foreign exchange rates
changes 21,918 (66,505)
-------------------------------------- ------------ -------------
Cash and cash equivalents at
the end of the year 453,517 286,897
-------------------------------------- ------------ -------------
Notes to the financial statements
1 Group and principal activities
For the purposes of these financial statements, the term "PM plc
Group" is defined as the companies Papua
Mining plc (the "Company"), Papua Mining Limited, Aries Mining
Limited and Sagittarius Mining Limited.
Papua Mining plc is a public limited company, quoted on AIM, and
is incorporated and domiciled in England and Wales.
The PM plc Group's main activity is the exploration for gold and
copper resources in Papua New Guinea, as set out in the Strategic
Report and the Directors' Report.
2 Adoption of new and revised standards
The statements, standards and interpretations, effective for
reporting periods beginning on or before
1 January 2014 have been applied, being those standards that
will be applied to PM plc Group's financial statements for the year
ending 31 December 2016.
Standards affecting presentation and disclosure
The following standards and interpretations became effective for
the 2016 financial statements but these were either not relevant to
or did not have a material impact on the Group's financial
statements:
- IAS 19 (amendment) - Defined benefit plans: Employee Contributions;
- Annual improvements to IFRSs 2010 - 2012 Cycle - various standards;
- Annual improvements to IFRSs 2011 - 2013 Cycle - various standards.
The Group has not applied the following standards and
interpretations which have been issued and become effective for
accounting periods beginning after the commencement of the Group's
next financial year but either have no impact or are not expected
to have a material impact on the Group's financial statements:
- IFRS 9 - Financial Instruments;
- IFRS 10, IFRS 12, IAS 28 (amendment) - Investment Entities:
Applying the Consolidation Exception;
- IFRS 10, IAS 28 (amendment) - Sale or Contribution of Assets
between an Investor and its Associate or
Joint Venture;
- IFRS 11 (amendment) - Accounting for Acquisitions of Interests in Joint Operations;
- IFRS 14 - Regulatory Deferral Accounts;
- IFRS 15 - Revenue from contracts with customers;
- IAS 1 (amendment) - Disclosure Initiative;
- IAS 16/38 (amendment) - Property, Plant and
Equipment/Intangible Assets; Clarification of acceptable methods of
depreciation and amortisation;
- IAS 16/41 (amendment) - Agriculture: Bearer Plants;
- IAS 27 (amendment) - Equity Method in Separate Financial Statements;
The standards and interpretations addressed above will be
applied for the purposes of the Group financial statements with
effect from the date they become effective.
3 Basis of preparation and significant accounting policies
a) Basis of preparation
These consolidated financial statements have been prepared in
accordance with applicable International Financial Reporting
Standards (IFRSs), International Accounting Standards (IASs) and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations (collectively IFRSs) as adopted for use in the
European Union, and with the Companies Act 2006.
The financial statements are prepared on the historical cost
basis. The principal accounting policies adopted are set out
below.
The financial statements are presented in US Dollar ($).
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies
b) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and subsidiaries controlled by the
Company as at 31 December 2016.
Subsidiaries are entities controlled by the Company. Control
exists when the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that
presently are exercisable are taken into account. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued, contingent consideration and liabilities
incurred or assumed at the date of exchange. Costs directly
attributable to the acquisition are expensed as incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially
measured at fair value at the acquisition date.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used in line with
those of the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
c) Going concern
The group will seek to raise capital through the issuance of
equity to continue their exploration activities in the short term
and for general working capital purposes. The Directors have
prepared a cash flow forecast up to 30 June 2018 which supports the
Directors' reasonable expectation that Papua Mining plc has
adequate resources to continue in operational existence throughout
this period. This cash flow forecast assumes that the exploration
programmes will only continue with additional equity funding
secured by the Group. The financial statements have been prepared
assuming the Group will continue as a going concern. Under the
going concern assumption, an entity is ordinarily viewed as
continuing in business for the foreseeable future with neither the
intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws or regulations.
In assessing whether the going concern assumption is appropriate,
management has considered the group's existing working capital
position and the necessity to seek future fund raising. Management
are of the opinion that subject to an additional fund raising the
group has adequate resources to continue as a going concern. If
alternative funding is not available then the group would be
unlikely to be able to continue as a going concern. These
circumstances indicate the existence of a material uncertainty
which may cast significant doubt about the group's ability to
continue as a going concern and, therefore, that it may be unable
to realise its assets and discharge its liabilities in the normal
course of business.
d) Intangible assets - exploration and evaluation costs
Exploration and evaluation expenditure costs comprise costs
associated with the acquisition of mineral rights and mineral
exploration and are capitalised as intangible assets pending the
feasibility of the project. They also include certain
administrative costs that are allocated to the extent that those
costs can be related directly to operational activities.
If an exploration project is deemed successful based on
feasibility studies, the related expenditures are transferred to
development and production assets and amortised over the estimated
useful life of the ore reserves on a unit of production basis.
Where a project is abandoned or considered to be no longer
economically viable, the related costs are written off to profit or
loss.
To date the PM plc Group has not progressed to the development
and production stage in any areas of operation.
e) Impairment of non financial assets
The PM plc Group assesses at each reporting date whether there
is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset
is required, the PM plc Group estimates the asset's recoverable
amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's fair value less costs to sell and its
value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their 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. In determining fair value less
costs to sell, an appropriate valuation model is used.
Impairment losses of continuing operations are recognised in
profit or loss in those expense categories consistent with the
function of the impaired asset. For assets, an assessment is made
at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the PM plc Group makes
an estimate of recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the
estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years.
f) Financial instruments
Financial assets
The PM plc Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired.
Other receivables: These are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. They arise principally through the provision of
goods and services but also incorporate other types of contractual
monetary assets. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Cash and cash equivalents: These include cash in hand, deposits
held at call with banks and bank overdrafts.
Investments in subsidiaries: These are included in these
financial statements at the cost of the ordinary share capital
acquired. Adjustments to this value are only made when, in the
opinion of the Directors, a permanent diminution in value has taken
place and where there is no prospect of an improvement in the
foreseeable future.
Financial liabilities
The PM plc Group classifies its financial liabilities as:
Trade and other payables: These are initially recognised at
fair-value and then carried at amortised cost. They arise
principally from the receipt of goods and services.
Equity instruments: These are recorded at fair value on initial
recognition net of transaction costs.
g) Provisions
A provision is recognised in the balance sheet when the PM plc
Group has a present legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect
is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects the current
market assessment of the time value of money and, where
appropriate, the risks specific to the liability.
h) Current and deferred tax
The tax expense represents the sum of the current tax expense
and deferred tax expense.
Tax payable is based on taxable profit for the year. Taxable
profit differs from accounting profit as reported in the Statement
of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and further
excludes items that are never taxable or deductible. The Group's
liability for current tax is measured using tax rates that have
been enacted or substantively enacted by the reporting date.
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 future 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 goodwill or if from the initial liabilities in a
transaction that affect either the taxable profit or the accounting
profit.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient future taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the 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 profit and loss,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
I) Pensions
Pension costs charged in the financial statements represent the
contributions payable by the group during the year into defined
contribution pension schemes. Defined contribution plans are
recognised as an expense in the period in which they are
incurred.
j) Foreign currency
Functional and presentation currency
The consolidated financial statements are presented in US
Dollars which is also the functional currency of the parent
company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional
currency of the respective PM plc Group entity, using the exchange
rate prevailing on the date of the transaction. Foreign exchange
gains and losses resulting from the settlement of such transactions
and from the re-measurement of monetary items denominated in
foreign currency at year-end exchange rates are recognised in
profit or loss. Non-monetary items are not retranslated at year-end
and are measured at historical cost (translated using the exchange
rates at the transaction date), except for non-monetary items
measured at fair value which are translated using the exchange
rates at the date when fair value was determined.
Foreign operations
In the PM plc Group's financial statements, all assets,
liabilities and transactions of PM plc Group entities with a
functional currency other than the US Dollar are translated into US
Dollar upon consolidation. The functional currency of the entities
in the PM plc Group has remained unchanged during the reporting
period. On consolidation, assets and liabilities have been
translated into US Dollars at the closing rate at the reporting
date. Income and expenses have been translated into US Dollars at
the average rate over the reporting period. Exchange differences
are charged/credited to other comprehensive income and recognised
in the currency translation reserve in equity. On disposal of a
foreign operation, the related cumulative translation differences
recognised in equity are reclassified to profit or loss and are
recognised as part of the gain or loss on disposal.
The principal exchange rates used to the US Dollar in the
preparation of the 2016 financial statements are:
Annual average Year end
================== ================ ==============
2016 2015 2016 2015
================== ======= ======= ====== ======
Sterling 1.3429 1.5254 1.2332 1.4763
PNG Kina 0.3182 0.3596 0.3148 0.3326
Australian Dollar 0.7242 0.7544 0.7201 0.8181
Euro 1.1000 1.1031 1.0522 1.0866
================== ======= ======= ====== ======
k) Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive & Technical
Director. They are the Directors of the PM plc Group that allocate
resources to and assess the performance of the segments. The
Directors consider there to be only one operating segment, being
the exploration licences in Papua New Guinea.
l) Investments (parent company)
Investments held as non-current assets comprise investments in
subsidiary undertakings and are stated at cost less any provision
for any impairment.
m) Equity and reserves
Equity and reserves comprises the following:
- "Share capital" is the nominal value of equity shares.
- "Share premium" represents amounts subscribed for share
capital in excess of nominal value, net of directly attributable
issue costs.
- "Share based payment reserve" represents a reserve arising on
the grant of share options to certain
Directors and key employees.
- "Other reserve" represents a reserve arising from a group reorganisation in 2011.
- "Retained deficit" comprises cumulative profit and loss to date.
n) Share based payments
The Group issues equity-settled share-based payments to certain
directors and key employees. Equity-settled share-based payments
are measured at fair value at the date of grant by reference to the
fair value of the equity instruments granted. The fair value
determined at the grant date of equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of the number of instruments that will
eventually vest with a corresponding adjustment to equity. Fair
value is measured by use of a Black Scholes model. The expected
life used in the model has been adjusted, based on management's
best estimate, for the effect of non-transferability, exercise
restrictions, and behavoural considerations.
Non-vesting and market vesting conditions are taken into account
when estimating the fair value of the option at grant date. Service
and non-market vesting conditions are taken into account by
adjusting the number of options expected to vest at each reporting
date.
o) Critical accounting estimates and judgements
The PM plc Group makes estimates and assumptions concerning the
future. The resulting estimates will by definition, seldom equal
the actual results. Estimates and judgements are continually
evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. Certain amounts included in the
financial statements involve the use of judgement and/or
estimation. These judgements and estimates are based on
management's best knowledge of the relevant facts and
circumstances, but actual results may differ from the amounts
included in the financial statements. The Board has considered the
critical accounting estimates and assumptions used in the
historical financial information and concluded that the area of
judgement that has the most significant effect on the amounts
recognised in the financial statements concern.
Recoverability of deferred exploration costs
All costs associated with gold and copper exploration are
capitalised on a project basis, pending a decision on the economic
feasibility of the project. This capitalisation of such costs gives
rise to an intangible asset in the consolidated statement of
financial position. Exploration costs are capitalised where it is
considered likely that the amount will be recovered by future
exploitation, sale or alternatively where the activities have not
reached a stage which permits a reasonable assessment of the
existence of reserves. This requires management to make estimates
and assumptions as to the future events and circumstances,
especially in relation to whether an economically viable extraction
operation can be established. Such estimates are subject to change
and following initial capitalisation, should it become apparent
that recovery of the expenditure is unlikely, the relevant
capitalised amount will be impaired and written off to the
consolidated statement of comprehensive income on disposal of the
net investment.
Functional currency of the parent company
Management has concluded that the US dollar is the currency of
the primary economic environment in which the group operates and
therefore it's functional currency. The US dollar is the currency
in which business risks and exposures are measured and the
Company's assets and liabilities are largely denominated and
settled in US dollars.
p) Exceptional items
The PM plc Group has adopted an accounting policy and income
statement format that seeks to highlight significant items of
income and expense within PM plc Group results for the year. The
Directors believe that this presentation provides a more helpful
analysis as it highlights one-off items. Such items may include
significant restructuring costs, profits or losses on disposal or
termination of operations, litigation costs and settlements, profit
or loss on disposal of investments, significant impairment of
assets and unforeseen gains/losses arising on derivative
instruments. The Directors use their judgement in assessing the
particular items, which by virtue of their scale and nature are
disclosed in the income statement and related notes as exceptional
items.
q) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
maturing within 90 days from the date of acquisition that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EASKNAAFXEFF
(END) Dow Jones Newswires
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