TIDMTSTR
RNS Number : 0741Z
Tri-Star Resources PLC
10 March 2017
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
10 March 2017
TRI-STAR RESOURCES PLC
RESULTS FOR THE YEARED 31 DECEMBER 2016
Tri-Star Resources plc ("Tri-Star" or the "Company") the
independent metal processing and technology company, is pleased to
announce its financial results for the year ended 31 December
2016.
Financial highlights:
-- Loss from operations reduced by 88% to GBP832,000 (2015: GBP7,192,000)
-- Administrative expenses down 57%
-- Directors remuneration cut by over 60%
-- Cash as at 29 February 2017 of GBP350,000
Operational highlights:
-- In January 2017 Tri-Star completed the sale of its non-core gold interests in Canada
-- In February 2016 Strategic & Precious Metals Processing
LLC ("SPMP"), Tri-Star's joint venture company in Oman signed up a
major global engineering consultancy as its EPCM contractor
-- In April 2016, SPMP formally approved the incorporation of a
gold plant as part of the overall design of the Oman Antimony
Roaster ("OAR")
-- In August 2016, SPMP began the OAR procurement process in
earnest with the order of three furnaces
-- Construction of the OAR has now commenced on site in Sohar, Oman, in the first part of 2017
Guy Eastaugh, Chief Executive Officer, said:
"We are very pleased to present these results to shareholders
demonstrating the financial impact of some tough but necessary
decisions taken towards the end of 2015 and into 2016 concerning
the scale of the business that our resources could reasonably
support. On the operational side, significant progress has been
achieved at the Company's joint venture in Oman where, in
conjunction with our partners, the construction of the Oman
Antimony Roaster is now physically taking place. Many challenges
remain but our enthusiasm for the OAR remains undimmed and the
Board looks forward to further significant accomplishments in
2017."
CHAIRMAN'S STATEMENT
I am pleased to report another year of steady progress for the
Company. In conjunction with its joint venture partners, Tri-Star
has continued the development of the Oman Antimony Roaster Project
("OAR") from a successful financial close in September 2015 through
to actual construction works, which commenced on site in Sohar,
Oman, in 2017.
Tri-Star owns 40% of the equity in the Oman joint venture
company, Strategic & Precious Metals Processing LLC ("SPMP").
During 2016 SPMP brought on board an experienced engineering,
procurement, construction and management partner to assist in
completing the detailed design work and commenced actual
procurement of the key items of equipment required. As at the date
of this report, SPMP has contracted to acquire approximately
two-thirds, by value, of an updated estimated $80 million capital
budget for the OAR. Hot commissioning of the OAR is slated to
commence before the end of 2017, with first antimony being produced
in Q1 2018. Meanwhile the outlook for antimony processing looks
strong as Chinese smelters face closure by environmental inspectors
due to those facilities' high pollution emissions.
As the first environmentally compliant antimony smelter to be
built in the West for over 50 years, the OAR plant has relied
heavily on R&D and technology. In addition to the approx. $6.0
million TSTR spent on developing the core technology, SPMP has
spent a further $1.3 million to date in enhancing the process and
improving its operational deliverability. It is that technology
which underpins SPMP's competitive position and as such further
testing will be continuing throughout the first half of 2017. We
have been fortunate in having engaged with technology partners from
an early stage and we are confident that all parties are working to
a fault-free and successful start-up.
An increase in the capital cost estimate to $80 million has
arisen as a result of the decision by SPMP to change the plant
flowsheet in order to increase throughput, improve operating
flexibility and also to add on a gold recovery circuit. Throughput
has increased by 39% and the introduction of a gold recovery
circuit, which accounts for approximately $10 million of cost
increase, has added an important co-product, raising SPMP forecast
revenues by 45%. The plant's competitive position as the lowest
cost source of antimony has therefore been further enhanced. The
joint venture remains on track to delivering the OAR into
commercial production in 2018, and it continues to represent an
attractive project for all stakeholders in the business.
In 2015, shareholders will recall we took some very difficult
decisions around the scale of business that our limited resources
could support and we are now able to see the beneficial financial
impacts of that rationalisation clearly in these results. We
reduced our footprint to comprise solely the strategically
important antimony prospect in the Bald Hill region of New
Brunswick, Canada. The associated gold assets had long been
considered non-core and in January 2016 a significant proportion of
these gold assets, comprising the Golden Pike properties were sold.
Operations at the Company's sole antimony mine in Göynük, Turkey
have been significantly scaled back in light of prevailing market
conditions.
As regards the overall result for the year, I am extremely
pleased to report that the Group recorded a very greatly reduced
loss from operations of GBP832,000 (2015: GBP7,192,000) coupled
with a reduced total comprehensive loss of GBP3,373,000 (2015:
GBP7,630,000). The Directors do not recommend the payment of a
dividend at this time.
I would like to thank our partners, the management team and our
employees for their dedication and effort during what turned out to
be another good year for Tri-Star. The Board is looking forward to
the coming year with confidence.
Mark Wellesley-Wood
Chairman
CHIEF EXECUTIVE OFFICER'S REPORT
Our goal is to become a leading antimony metal processing and
technology company. The Company's principal asset is its 40% share
in Strategic & Precious Metals Processing LLC FZC which is
developing a 26,000 tonne per annum antimony and 50,000 oz. per
annum gold production facility in Sohar, Sultanate of Oman, the
"OAR". Tri-Star also owns upstream antimony assets in Canada and
Turkey.
I am pleased to report on the Company's progress towards
achieving its aims during 2016 and set out the clear priorities for
Tri-Star's financial and other resources for the future.
Result for the year
The results for 2016 reflect the impact of the considerable
rationalisation of the business that took place in the latter part
of 2015 and into the first part of 2016. Tri-Star was successful in
substantially reducing administrative overheads in 2016, as
compared with previous years, and accomplished this without
recourse to further stakeholder funding during the year.
Administration costs, which are very largely cash in nature, fell
by 57% in 2016 to GBP763,000 after stripping out the one-off
advisory costs associated with financial close in 2015. Share based
payments fell by over 80% to GBP66,000.
2016 2015
Expanded Profit and Loss Account GBP'000 GBP'000
Share based payments (66) (337)
Exploration and administrative
costs (763) (1,789)
Impairments and amortisation (3) (4,203)
Financial advisory costs payable
on financial close - (863)
Loss from operations (832) (7,192)
Gain on sale of Intellectual
Property - 1,555
Share of loss in associates (769) (382)
Loss before finance expense (1,601) (6,019)
Net finance (expense) (1,978) (1,710)
Taxation 179 601
Loss after taxation (3,400) (7,128)
Share of loss in associates represents Tri-Star's share of
SPMP's pre-tax results for the year. SPMP has been loss making to
date during what are the early stages of its development.
Net finance expense of GBP1,978,000 in 2016 (2015: GBP1,710,000)
represents the net impact on profit and loss of the revaluation of
the Convertible Notes at the financial year end. This item is
non-cash in nature. Further detail on this is set out in the
accompanying notes to the financial statements.
The net tax credit of GBP179,000, comprises GBP151,000 actual
cash tax receivable in the year rebated to the Company under the UK
tax regime in respect of qualifying research and development
expenditure, and GBP28,000 of deferred tax offset against losses in
the year.
With respect to the statement of financial position the Group
had cash of GBP447,000 as at 31 December 2016 and continues to hold
its equity method investment in SPMP, which was reduced to
GBP1,483,000 as at the end of the year in order to record
Tri-Star's share of that company's losses. Tri-Star had loans
outstanding of GBP10,429,000 which increased from GBP8,318,000 in
the prior year.
Antimony
Antimony (Sb) is a silvery-white, shining, soft and brittle
metal, sometimes classified also as a metalloid. It is a
semiconductor and has thermal conductivity lower than most metals.
Due to its poor mechanical properties, pure antimony is only used
in very small quantities; larger amounts are used for alloys and in
antimony compounds. Antimony is a member of the Group 15
"pnictogen" elements, also known as the nitrogen family, in the
Periodic Table. Antimony has atomic number 51 and an atomic weight
of 122. The metal is brittle and has a low melting point of 630(o)
C and boils at 1380(o) C.
The principal use of antimony is in flame retardants as antimony
trioxide (ATO). ATO is most commonly used as a synergist to improve
the performance of other flame retardants such as aluminium
hydroxide, magnesium hydroxide and halogenated compounds. ATO is
used in this way in many products including plastics, textiles,
rubber, adhesives and plastic covers for aircrafts and automobiles.
The largest applications for metallic antimony are as alloying
material for lead and tin and for lead antimony plates in lead-acid
batteries. Alloying lead and tin with antimony improves the
properties of the alloys which are used in solders, bullets and
plain bearings. The second most common use of antimony alloy is as
a hardener for lead electrodes in lead acid batteries. This use is
in decline as the antimony content of typical automotive battery
alloys has declined by weight as calcium, aluminium and tin alloys
are expected to replace it over time.
An emerging application is the use of antimony in
microelectronics.
Oman Antimony Roaster
Background
In 2011, the Company began seeking partners in the Gulf region
to investigate the siting and construction of an antimony
production facility to be engineered to meet EU environmental and
regional based standards. The facility currently under construction
is being designed to produce antimony ingot, ATO and related
products, including gold.
Oman joint venture
Strategic & Precious Metals Processing LLC FZC, an Omani
company, was formed in June 2014 to develop and build the OAR
within the Port of Sohar Free Zone in the Sultanate of Oman.
Tri-Star has a 40% equity interest in SPMP, with the other joint
venture partners being; Oman Investment Fund (which also owns 40%)
and DNR Industries Limited (which owns the remaining 20%).
Development and financial close
During 2014 and the first half of 2015, the Company worked
closely with its joint venture partners to progress the legal,
engineering and environmental due diligence work streams associated
with the project. The process moved on to the finalisation of the
banking documentation in August 2015 and ultimately financial
closure in September 2015.
In 2016, the Company made a number of announcements relating to
progress made by SPMP, most notably:
-- In February 2016, SPMP secured the appointment of a leading
global engineering consultancy as its engineering, procurement,
construction and management ("EPCM") contractor;
-- In March 2016, SPMP's annual environmental permit from the
Ministry of Environmental and Climate Affairs was renewed for a
further year;
-- In April 2016, the Board of SPMP formally approved the
incorporation of a gold plant as part of the overall OAR. The gold
plant has an outline design capacity of 50,000ozs Au per annum;
-- In August 2016, SPMP began its procurement process in earnest
with the order of three furnaces
Since financial year end, SPMP has announced, in February 2017,
that it has successfully renewed its preliminary environmental
permit for the third consecutive year. SPMP has now commenced
groundworks and actual construction of the project. The joint
venture's goal being to work towards commencement of hot
commissioning of the OAR by the end 2017, with commercial
production starting in 2018.
Refractory Gold
Refractory gold is in the ground gold 'ore' trapped in sulphide
lattice structures that conventional processes are unable to
unlock. The clean roasting antimony technology developed by
Tri-Star and sold to SPMP in 2015 has opened the treatment again of
these world gold resources, estimated to be 30% - 50% of remaining
gold in the ground. The second phase of SPMP's proposed antimony
plant in Oman envisages a refractory gold roaster that solves this
problem efficiently and at low cost to provide potentially a very
valuable alternative processing route for the world's gold
resources trapped in this manner.
Canada
In 2013, the Company completed the acquisition of Portage
Minerals, a Canadian exploration company. As a consequence of the
transaction, Tri-Star now owns Portage's Bald Hill deposit, which
is one of the largest undeveloped antimony projects in Canada. As
outlined in the NI 43-101 technical report for the Bald Hill
property, drilling indicated a potential quantity and grade in the
725,000 to 1,000,000 tonne range grading 4.11% to 5.32% contained
antimony. The Bald Hill deposit presents a synergistic opportunity
for Tri-Star given the potential to develop the deposit and for
Bald Hill to become a potential future supplier of feedstock for
the Roaster Project.
In 2016, the Company completed the rationalisation of its
operations in Canada, selling (in January 2016) a portion of
historically held gold assets (the Golden Pike discovery) and
ceasing further exploration at Bald Hill, for the time being. The
consideration for the sale of Golden Pike, which completed in
January 2016, comprised 350,000 shares in Globex Mining Enterprises
Inc. and a potential future royalty payment accruing to Tri-Star
dependent on production. The Golden Ridge joint venture has been
discontinued.
Turkey
Tri-Star's Göynük Project is a historical artisanal mine in a
known antimony belt in the Murat Dagi mountains of western Turkey.
The mine is about 250 kilometres east of the port of Izmir on the
west coast and 50 kilometres north of Usak.
The property comprises a permitted mining area of 47 hectares
within an exploration area of 783 hectares. A further exploration
area of 696 hectares (Göynük East) which was added in June 2011
contiguous to the east of the original area is in the process of
being released. The Company announced the grant of a licence
extension to the original 783 hectare area in January 2016.
Financial position
As at 28 February 2017, the Company had GBP350,000 in cash.
Costs
The Company pays close attention to its costs, looking to
minimise these wherever possible. One of the largest cash cost
items is employee and Board costs. The Company has made
considerable progress in this area and in 2016 Directors
remuneration has been reduced by 61.5% over 2015 levels.
Key Performance Indicators
Given the early stage of the Company's development and its
current scale of operations, the Board does not consider the use of
particular financial or operational KPIs.
Safety, health and environmental policies
Tri-Star is committed to meeting international best industrial
practice in each jurisdiction in which it operates with respect to
Human rights, Safety, Health and Environmental (SHE) policies.
Management, employees and contractors are governed by and
required to comply with Tri-Star's SHE policies as well as all
applicable international, national federal, provincial and
municipal legislations and regulations. It is the primary
responsibility of the supervisors and other senior field staff of
Tri-Star and its subsidiaries to oversee safe work practices and
ensure that rules, regulations, policies and procedures are being
followed.
Principal risks and uncertainties
The Board continually reviews the risks facing the Group. The
Group is not yet revenue generating. The principal risks and
uncertainties facing the Group involve the ability to raise funding
in order to finance the continued development of the OAR. Although
the OAR is proceeding on schedule, the timing and progress is not
under the direct control of the group.
The Group is currently relying upon the receipt of the balance
of the $2 million due from SPMP to continue as a going concern, as
detailed in the going concern note. Should it look likely that this
will not be received, the Company will need to seek additional
financing.
Financial risk management objectives and policies
The Group's principal financial instruments comprise of cash,
convertible notes and other financial liabilities. The main purpose
of these financial instruments is to raise financing for the
Group's operations. The Group has various other financial
instruments such as loans and also trade payables, which arise
directly from its operations.
It is, and has been throughout the year under review, the
Group's policy that no trading in financial instruments shall be
undertaken. The main risks arising from the Group's financial
instruments are liquidity risk, price risk and foreign exchange
risk. The Board reviews and agrees policies for managing each of
these risks and they are summarised below.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash reserves to fund the Group's operating activities. Management
monitors the forecasts of the Group's cash flows and cash balances
monthly and raises funds in discrete tranches to manage the
activities through to revenue generation.
Price risk
The Group is exposed to fluctuating commodity prices of antimony
and the existence and quality of the antimony product within the
licensed area. The Directors will continue to review the prices of
antimony when significant mining is undertaken and will consider
how this risk can be mitigated at that stage.
Foreign exchange risk
The Group operates in a number of jurisdictions and carries out
transactions in Sterling, Turkish Lira, Canadian dollars and US
dollars. The Group puts in place hedging arrangements only when
receipts and/or payments in a foreign currency are due and known
with a high degree of certainty. Otherwise, no currency hedging
takes place. Furthermore, it is the Group's policy not to engage in
use of currency derivatives, derivative trading or to take part in
currency speculation.
Future prospects
We expect the remainder of the year to be challenging, but
Tri-Star will remain focussed on active management of its 40%
interest in SPMP as the OAR moves forward into the commissioning
phase.
Guy Eastaugh
Chief Executive Officer
Enquiries:
Tri-Star Resources plc Tel: +44 (0) 20 3470 0470
Guy Eastaugh, Chief Executive Officer
SP Angel Corporate Finance (Nomad and Broker) Tel: +44 (0) 20 3470 0470
Robert Wooldridge / Jeff Keating
Yellow Jersey PR Limited (Media Relations) Tel: +44 (0) 7769 325254
Felicity Winkles / Alistair de Kare-Silver / Joe Burgess
Tri-Star Resources plc
Consolidated Statement of Comprehensive Income
For the year ended 31 Notes 2016 2015
December 2016 GBP'000 GBP'000
Share based payments (66) (337)
Amortisation and impairment
of intangible assets (3) (4,203)
Exploration expenditure
and other administrative
expenses (763) (2,652)
----------------------- ---------
Total administrative
expenses and loss from
operations (832) (7,192)
Profit on sale of intangible
asset - 1,555
Share of loss in associated
companies (769) (382)
Finance income 2 133 3
Finance cost 2 (2,111) (1,713)
----------------------- ---------
Loss before taxation (3,579) (7,729)
Taxation 3 179 601
Loss after taxation,
and loss attributable
to the equity holders
of the Company (3,400) (7,128)
Loss after taxation attributable
to
Non-controlling interest - 232
Equity holders of the
parent (3,400) (7,360)
Other comprehensive income/(expenditure)
Items that will be reclassified
subsequently to profit
and loss
Increase in value of
available for sale asset 47 -
Exchange loss on translating
foreign operations (20) (502)
----------------------- ---------
Other comprehensive income
for the period, net of
tax 27 (502)
----------------------- ---------
Total comprehensive loss
for the year, attributable
to owners of the company (3,373) (7,630)
======================= =========
Total comprehensive loss
attributable to
Non-controlling interest - 232
Equity holders of the
parent (3,373) (7,862)
Loss per share
Basic and diluted loss
per share (pence) 4 (0.04) (0.09)
======================= =========
Tri-Star Resources plc
Consolidated Statement of Financial Position
Notes GBP'000 GBP'000
At 31 December
ASSETS
Non-current
Intangible assets 17 -
Investment in associates 1,483 2,252
Property, plant and
equipment 43 62
1,543 2,314
----------------------- -----------------------
Current
Cash and cash equivalents 447 1,308
Available for resale
asset 89 -
Trade and other receivables 37 148
Total current assets 573 1,456
Total assets 2,116 3,770
----------------------- -----------------------
LIABILITIES
Current
Trade and other payables 74 373
Financial liability 5 969 1,100
Total current liabilities 1,043 1,473
Loans repayable after
one year
Loans 5 10,429 8,318
Deferred tax liability 148 176
Total liabilities 11,620 9,967
----------------------- -----------------------
EQUITY
Issued share capital 2,601 2,601
Share premium 14,525 14,515
Share based payment
reserve 1,130 1,074
Other reserves (6,887) (6,914)
Retained earnings (20,870) (17,470)
(9,501) (6,194)
Non-controlling interest (3) (3)
Total equity (9,504) (6,197)
Total equity and liabilities 2,116 3,770
======================= =======================
Tri-Star Resources plc
Consolidated Statement of Changes in Equity
Share Share Other Share Trans-lation Retained Total Non-control-ling Total
capital premium reserves based reserve earnings attributable interest equity
payment to owners
reserves of parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
at 1 January
2015 2,525 13,179 (6,156) 767 (256) (10,140) (81) (235) (316)
Share based
payments - - - 337 - - 337 - 337
Issue of
share capital 76 1,449 - - - - 1,525 - 1,525
Share placing
costs - (113) - - - - (113) - (113)
Transfer
on exercise
of warrants - - - (30) - 30 - - -
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- --------
Transactions
with owners 76 1,336 - 307 - 30 1,749 - 1,749
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- --------
Exchange
difference
on translating
foreign
operations - - - - (502) - (502) - (502)
Loss for
the year - - - - - (7,360) (7,360) 232 (7,128)
------------- -----------------
Total
comprehensive
loss for
the period - - - - (502) (7,360) (7,862) 232 (7,630)
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- --------
Balance
at 31 December
2015 2,601 14,515 (6,156) 1,074 (758) (17,470) (6,194) (3) (6,197)
======== ========== ========== ========== ============= ========== ============== ================= ========
Share based
payments - - - 56 - - 56 - 56
Issue of
share capital - 10 - - - - 10 - 10
Transactions
with owners - 10 - 56 - - 66 - 66
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- --------
Exchange
difference
on translating
foreign
operations - - - - (20) - (20) - (20)
Increase
in value
of available
for sale
asset - - 47 - - - 47 - 47
Loss for
the period - - - - - (3,400) (3,400) - (3,400)
Total
comprehensive
loss for
the period - - 47 - (20) (3,400) (3,373) - (3,373)
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- --------
Balance
at 31 December
2016 2,601 14,525 (6,109) 1,130 (778) (20,870) (9,501) (3) (9,504)
======== ========== ========== ========== ============= ========== ============== ================= ========
Tri-Star Resources plc
Consolidated Statement
of Cashflows
For the year ended 31
December
2016 2015
GBP'000 GBP'000
Cash flow from operating
activities
Continuing operations
Loss after taxation (3,400) (7,128)
Amortisation and impairment
of intangibles 3 4,203
Depreciation 20 20
Finance income (2) (3)
Finance cost 2,111 1,503
Loss from associates 769 382
Fees paid by shares 10 25
Share based payments 56 337
Movement on fair value
of derivatives (131) 210
Decrease/(increase) in
trade and other receivables 116 (30)
(Decrease) in trade and
other payables (448) (483)
Net cash (outflow) from
operating activities (896) (964)
-------- --------
Cash flows from investing
activities
Finance income 2 3
Cash invested in associates - (2,589)
Investment in AFSA (41) -
Purchase of property,
plant and equipment (1) (15)
Purchase of intangible
assets (20) -
Net cash outflow from
investing activities (60) (2,601)
-------- --------
Cash flows from financing
activities
Proceeds from issue of
share capital - 1,500
Share issue costs - (113)
New loans - 2,000
Net cash inflow from financing
activities - 3,387
-------- --------
Net change in cash and
cash equivalents (956) (178)
Cash and cash equivalents
at beginning of period 1,308 1,496
Exchange differences on
cash and cash equivalents 95 (10)
Cash and cash equivalents
at end of period 447 1,308
======== ========
BASIS OF PREPARATION
The group and company financial statements have been prepared
under the historical cost convention except for the derivative
financial instrument which is at fair value and in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRS). The Company's ordinary shares are quoted on
AIM, a market operated by the London Stock Exchange. The Company
applies the Companies Act 2006 when preparing its annual financial
statements.
The Group financial statements for the Company and its
subsidiaries (together "the Group") financial statements have been
prepared under IFRS and the principal accounting policies adopted
remain unchanged from those adopted by the Group in preparing its
financial statements for the prior year.
GOING CONCERN
The Directors have prepared cash flow forecasts for the period
ending 31 March 2018. The forecasts assume that the balance of $2
million due from SPMP on completion of testing will be received,
and identify unavoidable running costs of the Group. Although the
directors are confident that the $2m will be paid, until the
testing has been completed there remains uncertainty as to when or
if this balance will be received. In the event that this receipt is
not received or is delayed significantly, the Company would have to
seek additional financing. This represents a material uncertainty
which may cast significant doubt on the group's and the parent
company's ability to continue as a going concern and, therefore,
that the group and parent company may not be able to realise its
assets or discharge its liabilities as they fall due. The forecasts
demonstrate that the Group will have sufficient cash resources
available, assuming the $2m is received, to allow it to continue in
business for a period of at least twelve months from the date of
approval of these financial statements. Accordingly, the accounts
have been prepared on a going concern basis.
BASIS OF CONSOLIDATION
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to the statement of
financial position date. Subsidiaries are entities which are
controlled by the Group. Control is achieved when the Group has
power over the investee, has the right to variable returns from the
investee and has the power to affects its returns. The Group
obtains and exercises control through voting rights and control is
reassessed if there are indications that the status of any of the
three elements have changed.
Unrealised gains on transactions between the Company and its
subsidiaries are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
asset transferred. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
The Group's investment in associated undertakings is accounted
for using the equity method. The consolidated income statement
includes the Group's share of the associated profits and losses
while the Group's share of net assets of associates is shown in the
consolidated statement of financial position.
NOTES TO THE FINANCIAL STATEMENTS
1 SEGMENTAL REPORTING
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's chief operating decision maker to make decisions
about the allocation of resources and an assessment of performance
and about which discrete financial information is available.
The Board considers that the Company comprises only one
operating segment, that of mining and development.
In respect of the non-current assets, GBP27,000 (2015:
GBP41,000) arise in the UK, and GBP1,516,000 (2015: GBP2,273,000)
arise in the rest of the world.
2 FINANCE INCOME AND COSTS
2016 2015
GBP'000 GBP'000
Finance costs
Interest payable on historic
loans - (6)
Movement in derivative - 210
Interest payable on convertible
loan 2,111 1,509
2,111 1,713
============= ==============
2016 2015
GBP'000 GBP'000
Finance income
Bank interest 2 3
Movement in derivative 131 -
133 3
======== ========
Further details regarding the movement in fair value of
derivatives and interest payable on the convertible loan are set
out in note 5.
3 TAXATION
Unrelieved tax losses of approximately GBP15.58 million (2015:
GBP14.92 million) remain available to offset against future taxable
trading profits. The unprovided deferred tax asset at 31 December
2016 is GBP3,932,000 (2015: GBP3,269,000) which has not been
provided on the grounds that it is uncertain when taxable profits
will be generated by the Group to utilise those losses.
The tax charge for the year comprises:
2016 2015
GBP'000 GBP'000
Research and development
taxation relief 151 76
Deferred taxation in respect
of transition to IFRS 28 (176)
Deferred taxation in respect
of intangible asset - 701
179 601
-------- --------
The tax assessed for the period differs from the standard rate
of corporation tax in the UK as follows:
2016 2015
GBP'000 GBP'000
Loss before taxation (3,579) (7,729)
-------------------- --------------------
Loss multiplied by standard
rate (716) (1,661)
of corporation tax in the
UK of 20% (2015: 20.25%)
Effect of:
Expenses not deductible
for tax purposes 16 (2)
Overseas loss not recognised 172 293
R&D tax rebate 151 76
Impairment of goodwill - 140
Interest disallowed 396 409
Unrelieved tax losses 160 1,346
Total tax charge for year 179 601
==================== ====================
4 LOSS PER SHARE
The calculation of the basic loss per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of ordinary shares in issue during the period.
2016 2015
GBP'000 GBP'000
(Loss) attributable to owners
of the Company after tax (3,400) (7,128)
--------------- ---------------
2016 2015
Number Number
Weighted average number of
ordinary shares for calculating
basic loss per share 8,464,881,335 7,554,686,570
--------------- ---------------
2016 2015
Pence Pence
Basic and diluted loss per
share (0.04) (0.09)
--------------- ---------------
Dilutive earnings per share is the same as basic loss per share
in each year because the potential shares arising under the share
option scheme and share warrants are anti-dilutive. The weighted
average number of ordinary shares excludes deferred shares which
have no voting rights and no entitlement to a dividend.
5 CONVERTIBLE SECURED LOAN NOTES
The Company has issued three tranches of convertible secured
loan notes ("Notes") to Odey European Inc.("OEI"). The Notes carry
a non-cash coupon of 15% per annum which compounds half yearly and
are secured by way of a guarantee and debenture granted by Tri-Star
Antimony Canada Inc. The Notes are redeemable at 100% of their
principal amount plus accrued interest by way of the issue of new
Tri-Star ordinary shares on 19 June 2018 (unless otherwise
previously so converted).
On 19 June 2013, Tri-Star made the initial issuance of GBP4.0
million of Notes to OEI. These Notes were drawn down in two
tranches of GBP1.33 million on 20 June 2013 and of GBP2.67 million
on 27 September 2013.
On 27 August 2014, Tri-Star issued additional GBP2.0 million of
Notes to OEI under the same terms as in 2013. On 11 August 2015,
Tri-Star issued a further GBP2.0 million of Notes, again, under the
same terms.
The Notes were initially, on issue, convertible at 100% of their
principal amount plus accrued interest at the holder's option into
ordinary shares at a conversion price which is fixed at the time of
conversion at a 10% discount to the lower of:
- The latest equity funding round completed prior to the issue of the conversion notice; and
- Any equity funding round completed within 10 days of the conversion notice
On 16 September 2015, the terms of the Notes were amended. The
conversion price was fixed at GBP0.0020 (0.2 pence) for the
remainder of the term of the Notes (until June 2018). On maturity
in June 2018, if a conversion notice has not been served
previously, the Loan Notes will convert into new Tri-Star ordinary
shares at GBP0.0020 (0.2 pence) removing the pre-existing option
for OEI to otherwise have the loan notes redeemed in cash in
full.
The rate of interest accruing on the Notes remains unchanged
(being a non-cash coupon of 15% per annum, calculated on a daily
basis, and compounding half yearly). OEI has the option to serve a
conversion notice at any time in the period to maturity of the
Notes in June 2018. If the conversion of Notes results in OEI
holding more than 29.9% of the Company's enlarged voting share
capital, OEI has the option of either continuing to hold those
notes the conversion of which would increase its holding of shares
above 29.9% or to have those notes redeemed in cash.
The Directors consider that the use of the Black-Scholes model
is the most appropriate method of valuing the derivative component
of the Notes.
The following assumptions were used in calculating the fair
value:
- The model assumes that the Notes will be exercised on 30 September 2017;
- The share price volatility is 87% which was based on historic volatility;
- An exercise price of 0.20p and a share price of 0.115p being
the market share price at that time;
- The effects of potential dilution were not factored in.
The Notes are recorded in the Consolidated Statement of
Financial Position as:
Notes issued in 2013
At 31 December Profit At 31 December
2015 and loss 2016
Liability movement
GBP'000 GBP'000 GBP'000
Carrying value of
host debt instrument (4,280) (1,248) (5,528)
Fair value of derivative (608) 72 (536)
TOTAL (4,888) (1,176) (6,064)
--------------- ---------- ---------------
Notes issued in 2014
At 31 December Profit At 31 December
2015 and loss 2016
Liability movement
GBP'000 GBP'000 GBP'000
Carrying value of
host debt instrument (2,162) (460) (2,622)
Fair value of derivative (263) 32 (231)
TOTAL (2,425) (428) (2,853)
--------------- ---------- ---------------
Notes issued in 2015
At 31 December Profit At 31 December
2015 and loss 2016
Liability movement
GBP'000 GBP'000 GBP'000
Carrying value of
host debt instrument (1,876) (403) (2,279)
Fair value of derivative (229) 27 (202)
TOTAL (2,105) (376) (2,481)
--------------- ---------- ---------------
All notes consolidated
At 31 December Profit At 31 December
2015 and loss 2016
Liability movement
GBP'000 GBP'000 GBP'000
Carrying value of
host debt instrument (8,318) (2,111) (10,429)
Fair value of derivative (1,100) 131 (969)
TOTAL (9,418) (1,980) (11,398)
--------------- ---------- ---------------
The key data for the valuation model were the share price and
number of shares, expected option maturity, risk free interest rate
and underlying volatility as set out in the table below.
2016 2015
"Spot Tri-Star"
price, in GBP 0.00115 0.00085
"Strike" conversion
price, in GBP 0.0020 0.0020
Maturity 30 September 2017 31 December 2016
Volatility 87% 117%
Number of shares 6,549,780,004 5,882,066,881
On issue the host debt instrument of the 2013 loan note was
recorded at GBP2,343,000 being the difference between the fair
value of the derivative and the proceeds. Thereafter in line with
accounting standards the host debt instrument is carried at
amortised cost with an effective interest rate of 27.24%.
On issue the host debt instrument of the 2014 loan note was
recorded at GBP1,666,713 being the difference between the fair
value of the derivative and the proceeds. Thereafter in line with
accounting standards the host debt instrument is carried at
amortised cost with an effective interest rate of 20.18%.
On issue the host debt instrument of the 2015 loan note was
recorded at GBP1,736,376 being the difference between the fair
value of the derivative and the proceeds. Thereafter in line with
accounting standards the host debt instrument is carried at
amortised cost with an effective interest rate of 20.35%.
As at 31 December 2016, the combined nominal value of the Notes
in issue amounted to GBP11.8 million, inclusive of rolled-up,
unpaid interest accrued to that date.
6 ANNUAL REPORT AND ACCOUNTS
The financial information set out in this announcement does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006.
The Consolidated Statement of Financial position at 31 December
2016, the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Statement
of Cash Flows and associated notes for the year then ended have
been extracted from the Group's 2016 financial statements upon
which the auditor's opinion is unqualified and does not include any
statement under Section 498(2) or (3) of the Companies Act 2006.
Whilst the auditor's opinion is unqualified, their report does
contain an emphasis of matter paragraph relating to going concern,
as set out in the going concern paragraph in this announcement.
The accounts for the year ended 31 December 2016 will be posted
to shareholders shortly and laid before the Company at the Annual
General Meeting, which will be held on 1 June 2017, at 12:00 noon,
at the offices of Fladgate LLP, 16 Great Queen Street, London, WC2B
5DG. Following publication, a copy of the accounts will also be
available on the Company's website (www.tri-starresources.com) in
accordance with AIM Rule 26, and will be delivered to the Registrar
of Companies in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKVNRBKAORAR
(END) Dow Jones Newswires
March 10, 2017 02:00 ET (07:00 GMT)
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