TIDMTSTR
RNS Number : 8224M
Tri-Star Resources PLC
02 May 2018
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.
2 May 2018
TRI-STAR RESOURCES PLC
RESULTS FOR THE YEARED 31 DECEMBER 2017
Tri-Star Resources plc ("Tri-Star" or the "Company" and together
with its subsidiaries the "Group") the independent metal processing
and technology company, is pleased to announce its financial
results for the year ended 31 December 2017. The Company's
principal activities are in an antimony and gold production
facility (the "SPMP Project" or the "Project") being developed in
Sohar, Sultanate of Oman by Strategic & Precious Metals
Processing Group LLC FZC ("SPMP"), an Omani company in which
Tri-Star has a 40% equity interest.
Financial highlights:
-- Tri-Star saw a near 80% reduction in debt levels to GBP2.4
million as at 31 March 2018 (2016: GBP11.4 million).
-- In December 2017, Tri-Star injected a further GBP4.34m into
the SPMP Project in the form of mezzanine debt.
-- Successful completion of an open offer on 10 January 2018
which raised GBP4.42 million before expenses, of which GBP2.05
million was further invested into the SPMP Project.
Operational highlights:
-- There was continued progress in the construction of the SPMP
Project in 2017. The SPMP team was successful in completing the
Bankable Feasibility Study and achieved process design freeze for
the Project.
-- In November 2017, SPMP announced the replacement of Emin Eyi
as CEO and a restructuring of the senior management team, with the
addition of Jason Peers as interim CEO. Jason has been involved in
SPMP since its formation and has managed a large number of major
project financings across the Middle East.
-- In March 2018, SPMP entered into a new banking agreement with
Alizz Islamic Bank S.A.O.G, which provided $30 million to be used
for a combination of project and trade finance for SPMP.
-- The SPMP Project is now close to completion. Cold
commissioning commenced in Q2 2018 and hot commissioning is due to
start later in Q2 2018. The first outputs of the Project ("First
Metal") are due in the summer of 2018.
-- SPMP has entered into contracts for the supply of feedstock
and is in ongoing contractual discussions with offtakers. SPMP is
seeing high demand for the end products of the Project.
Karen O'Mahony, Acting Chief Executive Officer & Chief
Financial Officer, said:
"We are pleased with the progress of the SPMP Project in Oman
which has seen significant construction development over the course
of 2017. Financially, we have achieved a healthy reduction in our
debt levels while still providing ongoing financial support to the
SPMP Project. We have also seen a positive transformation in both
Tri-Star and SPMP management teams and continue to be supported by
the funds managed by Odey Asset Management. We remain optimistic
alongside our joint venture partners in the SPMP Project and look
forward to the production of First Metal from the Project in
2018."
CHAIRMAN'S STATEMENT
2017 represented a pivotal year for Tri-Star. The Company
substantially strengthened its financial position, reducing its
debt from GBP11.4 million as of year-end 2016 to GBP2.4 million as
at 31 March 2018 whilst at the same time investing a further $8.8
million (GBP6.6 million) in the form of a mezzanine loan in SPMP.
In carrying out this restructuring, we welcomed the funds managed
by Odey Asset Management LLP ("OAM") which collectively became the
Company's majority shareholder (together the "OAM Funds").
In order to achieve this, Tri-Star negotiated the conversion of
the convertible secured loan notes held by the OAM Funds
("Convertible Loan Notes") into the equity share capital of the
Company, together with some additional fund raising. This resulted
in the OAM Funds collectively taking a 54% stake in Tri-Star, a
transaction that required approval by the Takeover Panel as well as
shareholders at a general meeting in June 2017. In November 2017,
the OAM Funds lent a further $6 million (GBP4.5 million) to
Tri-Star to allow the Company to invest in a mezzanine structure
(15% loan facility) into SPMP. The Board elected to replace the
majority of this loan with equity and an open offer was announced
on 21 December 2017 to raise GBP4.4m of equity for the Company (the
"Open Offer"). As a result of the Open Offer, the OAM funds
collective shareholding in Tri-Star increased to 65% and,
subsequently, Tri-Star increased its loan to SPMP from $6 million
to $8.8 million.
SPMP is constructing a roasting facility in Oman to process
mixed antimony and gold ores, the SPMP Project. During 2017, SPMP
conducted further test work, completing the Bankable Feasibility
Study and achieving process design freeze. At the time of writing,
construction of the Project is 94% complete and work is focused on
connecting the services and control systems in preparation for
commissioning. Cold commissioning has already commenced on certain
sections of the plant and will continue through to the conclusion
of hot commissioning during Summer 2018. It is intended that
production of both antimony and gold will then ramp up to a rate of
approximately 25,000 tonnes of feedstock per annum by year end or
about 50% of design capacity. The precise split of output between
antimony and gold will depend on the grade of feedstock being
treated at the time.
SPMP has entered into contracts for the supply of concentrate
with numerous feedstock suppliers so that the plant can be tested
on a variety of sources in order to assess its performance and its
capacity for variability. Much work has gone into broadening the
range of acceptable feedstock specifications and dealing with
impurities. It is anticipated that this will be a focus for
improving efficiencies once the plant is in production. SPMP is
also engaged in ongoing contractual discussions for the offtake of
end product, where demand remains high.
As previously reported, the capital cost for the project
increased during the year, primarily due to the addition of the
gold calcine plant. With procurement and construction now close to
finalisation, we can confirm that the total cost is expected to be
around $112 million.
Changes in Board composition in the second half of 2017
reflected the change of control in the Company, general overall
cost control and the continued need to support our partners in
SPMP. OAM appointed two Directors to the Board of Tri-Star, David
Fletcher and Karen O'Mahony, and their support and advice has been
invaluable. In July, I became Executive Chairman (previously
Non-Executive Chairman) and after many years of service to the
Company, Jonathan Quirk retired from the Board and Dr Scott
Morrison joined. In December, Emin Eyi, the founder and promoter of
the Company stepped down as Deputy Chairman and Director following
his resignation as CEO of SPMP.
Post year end, the Board continued to focus on reducing
operational costs at the parent level and we elected to reduce the
Board headcount from six directors to four. Scott Morrison resigned
as Director and Guy Eastaugh, former CFO and, for the last two
years CEO, stood down. Karen O'Mahony has stepped into the CEO role
in an acting capacity whilst we transition the SPMP project through
completion and commissioning.
The Group recorded a loss from operations during the year of
GBP1,006,000 (2016: GBP832,000). The Group's share of losses in
SPMP was GBP41,397 (2016: GBP769,000). The GBP3.64 million charge
on conversion of the convertible secured loan notes was a major
factor in the Company's total comprehensive loss of GBP5,948,000
(2016: GBP3,373,000). The Directors do not recommend the payment of
a dividend.
With the Project in Sohar so close to completion, we now look
forward to commissioning and production ramp up. We are optimistic
that the goal to establish a high cashflow generating plant in Oman
is in sight.
Mark Wellesley-Wood
Executive Chairman
strategic report
Introduction
The Company's principal activities are in the SPMP Project, an
antimony and gold production facility. The SPMP Project is based in
Sohar, Sultanate of Oman, and is being developed by SPMP, an Omani
company in which Tri-Star has a 40% equity interest and an $8.8
million mezzanine loan position accruing 15% interest per annum.
The Project is due to become operational in the second half of
2018.
Tri-Star also has antimony exploration licenses in Canada and
Turkey and a mining permit in Turkey which are held for their
potential contribution of feedstock to the SPMP Project.
SPMP Project
Background
The SPMP Project is a commercial facility which will produce
high grade antimony ingots, powdered antimony trioxides ("ATO"),
gypsum and gold ore bars. Feedstock will be sourced internationally
and will be treated by an environmentally friendly roasting
process.
The Project remains an attractive prospect for Tri-Star:
-- Scale: The Project is the largest antimony roaster outside of
China and the world's first clean plant, designed to EU
environmental standards. It will have the capacity to produce more
than 50,000 oz. of gold per annum and 20,000 tonnes in combined
antimony metal and ATO products which represents 12%-15% of average
annual world antimony production and will thus establish Oman as a
major global producer of antimony.
-- Earnings: The Project will generate significant revenues,
divided approximately 60:40 between antimony and gold. In terms of
developing end products, antimony derivatives offer the potential
for further margin growth over and above the normal conversion
margin.
-- Technology: The Project applies a proprietary antimony and
gold roasting technology that is flexible and sophisticated enough
to be able to process many types of grade and impurities.
-- Logistics: The Project will supply value added antimony
products to customers across the globe. The location of the Project
in the Gulf region provides an excellent centralised logistics
route, and access to relatively inexpensive energy and modern
infrastructure.
-- Demand for product: Antimony is a rare metal with a range of
industrial applications. Amongst other things it is used as an
additive to flame retardant compounds, utilised in printed circuit
boards, computers and other electronic products. Antimony has
consistently ranked highly in European and US risk lists for supply
of chemical elements or element groups required to maintain the
current economy and lifestyle.
-- Board: SPMP has an experienced and internationally focused
Board of Directors who have helped manage the project from
inception through to near completion.
Oman joint venture
SPMP was formed in June 2014 to develop and build the Project.
Tri-Star has a 40% equity interest in SPMP, with the other joint
venture partners being The Oman Investment Fund (40% equity holder)
and DNR Industries Limited, part of Dutco Group in Dubai (20%
equity holder). Tri-Star also has an $8.8 million mezzanine
instrument in SPMP accruing 15% interest per annum, alongside the
other joint venture partners who also have mezzanine instruments
with SPMP on similar terms.
Significant events
In 2017, several announcements relating to Tri-Star's interest
in SPMP were made, most notably:
-- In July 2017, SPMP announced a capital budget update for the
Project which included progress on test-work and operational
readiness;
-- In November 2017, SPMP announced the replacement of Emin Eyi
as CEO and a restructuring of the senior management team, with
Jason Peers as interim CEO. Jason has been involved in SPMP since
its formation and has managed a large number of major project
financings across the Middle East;
-- In November 2017, Tri-Star announced that it had invested a
further $6 million in SPMP by way of a Mezzanine Loan to SPMP.
Since its financial year end, Tri-Star has announced further
progress by SPMP. This included the announcement in January 2018
that the Company had invested a further $2.8 million in the SPMP
Project, again by way of Mezzanine Loan to SPMP. This was part of a
total $22 million invested into SPMP by its shareholders. In March
2018, SPMP announced that it had entered into a new banking
agreement with Alizz Islamic Bank SAOG for a further $30 million
facility, bringing SPMP's total debt facilities to $70 million in
addition to the total of $52 million invested by shareholders in
the form of mezzanine and equity. To date, Tri-Star has invested $6
million (GBP4.5 million) by way of equity and $8.8 million (GBP6.6
million) by way of Mezzanine Loans to SPMP. Details of the terms of
these investments are set out in the accompanying notes to the
financial statements.
Project status
Cold commissioning (testing of the facility with inert
materials) began in Q2 2018 and hot commissioning (testing of the
facility with actual feedstock) is expected to start later in Q2
2018. The Project is due to become operational in the second half
of 2018.
SPMP is in the process of securing feedstock from a number of
providers and is also engaged in detailed discussions with
purchasers on the offtake side of the business.
Antimony
Currently, 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 cars. The largest applications for metallic antimony
(metal ingots) 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.
Refractory Gold
Refractory gold is gold 'ore', where the metal is trapped in
sulphide lattice structures that conventional processes are unable
to extract. The clean antimony roasting technology developed by
Tri-Star and sold to SPMP in 2015 has unlocked the potential of
these gold resources, estimated to be 30% - 50% of remaining gold
in the ground globally.
Financing
Tri-Star undertook three financing transactions during 2017 to
strengthen its financial position and enable further investment by
the Company in the SPMP Project.
Conversion of OAM Convertible Loan Notes and private placing
In June 2017, Tri-Star announced that it had reached an
agreement with the holders of its Convertible Loan Notes to
restructure the Company's financial position. The proposals
subsequently put to shareholders entailed all of the outstanding
loan notes, amounting to approximately GBP12.2 million at that
time, being converted or redeemed. At the same time the Company
raised GBP1.3 million, before expenses, for general corporate
purposes by way of a placing.
The placing and related transactions completed on 20 June 2017.
Three funds under the discretionary management of Odey Asset
Management LLP, i.e. the Odey Swan Fund, Odey European Inc ("OEI")
and OEI MAC Inc ("OMI"), (together the "OAM Funds") became the
holders of 54% of the Company's enlarged share capital.
Under IFRS, the Company was required to book a loss of GBP3.6
million in connection with the extinguishment of the Convertible
Loan Notes. This loss and how it is derived is explained in detail
in the accompanying note 13 to the financial statements. As a
consequence of these transactions, the Company's debt and related
derivative balances were eliminated, leaving the Company with net
assets of GBP2.2 million as at 30 June 2017.
Issue of secured loan notes to OEI and OMI
In November 2017, Tri-Star announced that it had invested a
further $6.0 million (GBP4.5 million) via a Mezzanine Loan in SPMP
to assist in further development of the SPMP Project. The
investment in SPMP was financed through the issuance of short-dated
secured loan notes to OEI and OMI.
The principal terms of the loan notes are as follows:
-- Principal: $6.0 million;
-- Security: a fixed and floating charge over all the assets of the Company;
-- Term: the notes were originally due to be redeemed on the
earlier date of 30 June 2018 or the completion of an equity
fundraise however, in April 2018, OAM agreed to extend the maturity
date for the notes to 30(th) June 2019. This extension constitutes
a Post Balance Sheet Event;
-- Interest: the notes accrue interest at 25% per annum,
accruing daily, capitalised and added to the outstanding principal
amount on the last day of each calendar month and is payable on
redemption.
In January 2018, $2.7 million of the $6.0 million secured loan
notes were redeemed by means of funds raised through the Open Offer
described below. This redemption constitutes a Post Balance Sheet
event.
GBP4.4 million Open Offer to Tri-Star shareholders
Tri-Star announced an Open Offer on 21 December 2017 to raise up
to approximately $5.7 million (GBP4.4 million) before expenses
through the issue of new ordinary shares in the Company at an issue
price of 0.01 pence per share.
The Open Offer provided funds for:
Partial pre-payment of the $6 million GBP2.00 million
of the secured loan notes issued to
OEI and OMI in November 2017
Investment into the SPMP Project ($2.8 GBP2.05 million
million mezzanine loan)
General corporate purposes GBP0.37 million
Total GBP4.42 million
The Open Offer successfully closed on 10 January 2018 having
been substantially oversubscribed. As a consequence, the OAM Funds
increased their shareholdings in the Company to 65%, in
aggregate.
The Open Offer and its impact on the Company constitutes a Post
Balance Sheet Event and further information can be found in the
relevant note accompanying the financial statements.
Result for the year
The results for 2017 reflect the impact of the extinguishment of
the OAM convertible loan liability that took place in June 2017.
Administration costs rose by 14% in 2017 to GBP869,000 from
GBP763,000 in 2016.
2017 2016
Summary Profit and Loss Account GBP'000 GBP'000
Loss from operations (1,006) (832)
Share of loss in associate (41) (769)
Profit on sale of Globex shares 55 -
Finance expense (net) (1,333) (1,978)
Loss before extinguishment of
debt (2,325) (3,579)
Loss on extinguishment of debt (3,637) -
Loss before taxation (5,962) (3,579)
Share of loss in associate represents Tri-Star's share of SPMP's
pre-tax result for the year. SPMP has not been profitable to date
as the SPMP Project is only due to commence operations in 2018,
with full production forecast for 2020.
Tri-Star made a profit of GBP55,000 during the year from the
sale of 350,000 Globex Mining Enterprises Inc. shares.
Net finance expense of GBP1,333,000 in 2017 (2016: GBP1,978,000)
predominantly represents the interest payable on the Convertible
Loan Notes before redemption in June 2017, amounting to
GBP1,176,000.
The loss on extinguishment of debt of GBP3,637,000 (2016:
GBPnil) represents the impact on the Company of the redemption and
alteration to the conversion terms of the Convertible Loan Notes
redeemed in June 2017. This item is also non-cash in nature.
Further detail on this amount is set out in the accompanying notes
to the financial statements.
Financial position and Going Concern
As at 31 March 2018, the Company had GBP483,800 in cash. Since
31 December 2017, the Company has reduced its debt position from
GBP4,348,000 to GBP2,374,000 as at 31 March 2018 whilst increasing
its mezzanine investment in SPMP by a further $2.8 million (GBP2.05
million) in January 2018 to a total investment of $8.8 million.
The Company is not yet revenue generating and is reliant upon
funds raised from issuing loans and shares. The holders of the
secured loan notes have agreed to extend the term of the notes to
30 June 2019. However, an additional cash requirement of GBP430,000
in unavoidable running costs was identified based on cash flow
forecasts for the period ending 31 May 2019, as prepared by the
Directors. The Directors consider that there are a number of
options to cover this deficit:
1) SPMP arrange refinancing and make early repayment of part or
all of its loan from Tri-Star which amounts to approximately $9
million ($8.8 million capital plus rolled up interest) (GBP6.4
million) at 31 March 2018.
2) SPMP makes the $2 million (approximately GBP1.5 million)
payment in respect of its acquisition from Tri-Star of the
intellectual property ("IP") of the Project.
3) Tri-Star raises further funds by way of an equity or debt
placing or a further loan from the OAM Funds.
The Directors are confident that the Company will secure the
funds required from one of the above sources. Accordingly, the
Directors believe that it is appropriate to prepare accounts on a
going concern basis. However, there is no certainty that they will
be able to do so. These matters along with the matter set forth
above mean that there is a material uncertainty which may cast
significant doubt on the Group's and the Company's ability to
continue as a going concern and, therefore, that the Group and
Company may not be able to realise its assets or discharge its
liabilities as they fall due.
Future prospects
We expect the remainder of 2018 to be challenging, but Tri-Star
will remain focussed on the active management of its 40% interest
in SPMP as the Project moves forward into the commissioning phase.
We will also remain focused on cutting costs at the Group (i.e. the
Company and its subsidiaries) level in order to maintain a lean
operation.
Karen O'Mahony
Acting Chief Executive Officer & Chief Financial Officer
Enquiries:
Tri-Star Resources plc Tel: + 44 (0) 20 7653 6290
Karen O'Mahony, Chief Executive Officer Email:
ir@tri-starresources.com
SP Angel Corporate Finance (Nomad and Broker) Tel: +44 (0) 20 3470 0505
Robert Wooldridge / Jeff Keating
Yellow Jersey PR Limited (Media Relations) Tel: +44 (0)776 932 5254
Charles Goodwin / Joseph Burgess
Tri-Star Resources plc
Consolidated Statement of Comprehensive Income
For the year ended 31 Notes 2017 2016
December 2017
GBP'000 GBP'000
Share based payments (135) (66)
Amortisation and impairment
of intangible assets (2) (3)
Administrative expenses (869) (763)
----------------------- -----------------------
Total administrative
expenses and loss from
operations (1,006) (832)
Profit on sale of available
for sale asset 55 -
Share of loss in associate
company (41) (769)
Finance income 2 31 133
Loss on extinguishment
of debt 5 (3,637) -
Finance cost 2 (1,364) (2,111)
----------------------- -----------------------
Loss before taxation (5,962) (3,579)
Taxation 3 80 179
Loss after taxation,
and loss attributable
to the equity holders
of the Company (5,882) (3,400)
Loss after taxation attributable
to
Non-controlling interest (1) -
Equity holders of the
parent (5,881) (3,400)
Other comprehensive expenditure
Items that will be reclassified
subsequently to profit
and loss
Recycle to income statement
on disposal of available
for sale asset (47) -
Increase in value of
available for sale asset - 47
Exchange loss on translating
foreign operations (19) (20)
----------------------- -----------------------
Other comprehensive income
for the period, net of
tax (66) 27
----------------------- -----------------------
Total comprehensive loss
for the year, attributable
to owners of the company (5,948) (3,373)
======================= =======================
Total comprehensive loss
attributable to
Non-controlling interest (1) -
Equity holders of the
parent (5,947) (3,373)
Loss per share
Basic and diluted loss
per share (pence) 4 (0.04) (0.04)
======================= =======================
Tri-Star Resources plc
Consolidated Statement of Financial Position
At 31 December 2017 2016
ASSETS Notes GBP'000 GBP'000
Non-current
Intangible assets 12 17
Investment in associates 1,421 1,483
Loan to associate 4,439 -
Property, plant and
equipment 21 43
5,893 1,543
----------------------- -----------------------
Current
Cash and cash equivalents 485 447
Available for resale
asset - 89
Trade and other receivables 106 37
Total current assets 591 573
Total assets 6,484 2,116
----------------------- -----------------------
LIABILITIES
Current
Trade and other payables 77 74
Short term loans 4,348 -
Financial liability 5 - 969
Total current liabilities 4,425 1,043
Loans repayable after
one year
Loans 5 - 10,429
Deferred tax liability 130 148
Total liabilities 4,555 11,620
----------------------- -----------------------
EQUITY
Issued share capital 3,160 2,601
Share premium 31,347 14,525
Share based payment
reserve 1,105 1,130
Other reserves (6,953) (6,887)
Retained earnings (26,726) (20,870)
1,933 (9,501)
Non-controlling interest (4) (3)
Total equity 1,929 (9,504)
Total equity and liabilities 6,484 2,116
======================= =======================
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
2016 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 year - - - - - (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)
======== ========== ========== ========== ============= ========== ============== ================= =========
Issue
of share
capital 559 13,062 - - - - 13,621 - 13,621
Share
issue
costs - (54) - - - - (54) - (54)
Transfer
on lapse
of options - - - (25) - 25 - - -
Fair value
on
extinguishment
of loan - 3,814 - - - - 3,814 - 3,814
Transactions
with owners 559 16,822 - (25) - 25 17,381 - 17,381
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- ---------
Exchange
difference
on translating
foreign
operations - - - - (19) - (19) - (19)
Transfer
on sales
of available
for sale
asset - - (47) - - - (47) - (47)
Loss for
the period - - - - - (5,881) (5,881) (1) (5,882)
-----------------
Total
comprehensive
loss for
the period - - (47) - (19) (5,881) (5,947) (1) (5,948)
-------- ---------- ---------- ---------- ------------- ---------- -------------- ----------------- ---------
Balance
at 31
December
2017 3,160 31,347 (6,156) 1,105 (797) (26,726) 1,933 (4) 1,929
======== ========== ========== ========== ============= ========== ============== ================= =========
Tri-Star Resources plc
Consolidated Statement of Cashflows
For the year ended 31 December 2017 2016
GBP'000 GBP'000
Cash flow from operating
activities
Continuing operations
Loss after taxation (5,882) (3,400)
Amortisation and impairment
of intangibles 2 3
Depreciation 20 20
Finance income (31) (2)
Finance cost 1,312 2,111
Loss from associates 41 769
Fees paid by shares 135 10
Loss on extinguishment of
loans 3,637 -
Share based payments - 56
Movement on fair value of
derivatives 52 (131)
Profit on disposal of AFSA (55) -
(Increase)/ decrease in
trade and other receivables (10) 116
Decrease in trade and other
payables (15) (448)
Net cash outflow from operating
activities (794) (896)
-------- -----------------------
Cash flows from investing
activities
Finance income - 2
Cash invested in subsidiaries - -
Loans made to associate (4,511) -
Investment in AFSA - (41)
Net receipts on sale of
AFSA 96 -
Purchase of property, plant
and equipment - (1)
Purchase of intangible assets - (20)
Net cash outflow from investing
activities (4,415) (60)
-------- -----------------------
Cash flows from financing
activities
Proceeds from issue of share
capital 1,300 -
Share issue costs (54) -
Finance costs (498) -
New loans 4,511 -
Net cash inflow from financing
activities 5,259 -
-------- -----------------------
Net change in cash and cash
equivalents 50 (956)
Cash and cash equivalents
at beginning of period 447 1,308
Exchange differences on
cash and cash equivalents (12) 95
Cash and cash equivalents
at end of period 485 447
======== =======================
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 and the Company financial statements have been
prepared under IFRS and the principal accounting policies adopted
remain unchanged from those adopted by the Group and the Company in
preparing its financial statements for the prior year.
GOING CONCERN
The Company is not yet revenue generating and is reliant upon
funds raised from issuing loans and shares. The holders of the
secured loan notes have agreed to extend the term of the notes to
30 June 2019. However, an additional cash requirement of GBP430,000
in unavoidable running costs was identified based on cash flow
forecasts for the period ending 31 May 2019, as prepared by the
Directors. The Directors consider that there are a number of
options to cover this deficit:
1) SPMP arrange refinancing and make early repayment of part or
all of its loan from Tri-Star which amounts to approximately $9
million ($8.8 million capital plus rolled up interest) (GBP6.4
million) at 31 March 2018.
2) SPMP makes the $2 million (approximately GBP1.5 million)
payment in respect of its acquisition from Tri-Star of the
intellectual property ("IP") of the Project.
3) Tri-Star raises further funds by way of an equity or debt
placing or a further loan from the OAM Funds.
The Directors are confident that the Company will secure the
funds required from one of the above sources. Accordingly, the
Directors believe that it is appropriate to prepare accounts on a
going concern basis. However, there is no certainty that they will
be able to do so. These matters along with the matter set forth
above mean that there is a material uncertainty which may cast
significant doubt on the Group's and the Company's ability to
continue as a going concern and, therefore, that the Group and
Company may not be able to realise its assets or discharge its
liabilities as they fall due.
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 Group comprises only one operating
segment, that of mining, development and operations.
In respect of the non-current assets, GBP12,000 (2016:
GBP27,000) arise in the UK, and GBP5,881,000 (2016: GBP1,516,000)
arise in the rest of the world.
2 FINANCE INCOME AND COSTS
2017 2016
GBP'000 GBP'000
Finance income
Bank interest - 2
Interest on loan to associate 31 -
Movement in derivative - 131
31 133
======== ========
2017 2016
GBP'000 GBP'000
Finance costs
Interest and fees payable
on short term loans 136 -
Movement in derivative 52 -
Interest payable on convertible
loan 1,176 2,111
1,364 2,111
========== =========
Further details regarding the movement in fair value of
derivatives and interest payable on the loans are set out in note
5.
3 TAXATION
Unrelieved tax losses of approximately GBP4.99 million (2016:
GBP4.21 million) remain available to offset against future taxable
trading profits. The related deferred tax asset arising at 31
December 2017 is GBP847,456 (2016: GBP842,505) and 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 unrelieved tax losses and related associated deferred tax
asset were incorrectly stated as being GBP15.58 million and
GBP3,932,000 in the Company's 2016 annual report and financial
statements and accordingly have been restated.
The tax charge for the year comprises:
2017 2016
GBP'000 GBP'000
Research and development
taxation relief 62 151
Deferred taxation in respect
of transition to IFRS 18 28
80 179
--------------------- -----------------------
The tax assessed for the period differs from the standard rate
of corporation tax in the UK as follows:
2017 2016
GBP'000 GBP'000
Loss before taxation (5,962) (3,579)
----------------------- -----------------------
Loss multiplied by standard
rate (1,148) (716)
of corporation tax in the
UK of 19.25% (2016: 20.00%)
Effect of:
Expenses not deductible
for tax purposes 31 16
Overseas loss not recognised 34 172
R&D tax rebate 62 151
Interest disallowed 952 396
Unrelieved tax losses 149 160
Total tax charge for year 80 179
======================= =======================
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.
2017 2016
GBP'000 GBP'000
(Loss) attributable to
owners of the Company after
tax (5,882) (3,400)
---------------- ---------------
2017 2016
Number Number
Weighted average number
of ordinary shares for
calculating basic loss
per share 14,378,618,913 8,464,881,335
---------------- ---------------
2017 2016
Pence Pence
Basic and diluted loss
per share (0.04) (0.04)
---------------- ---------------
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 SECURED LOAN NOTES (GROUP AND COMPANY)
Issue of secured loan notes to OEI and OMI
Current Loan Notes comprise short-dated secured loan notes
issued to OEI and OMI, two of the three OAM funds. The Loan Notes
are secured on a debenture comprising a fixed and floating charge
over all the assets of Tri-Star Resources plc.
The Loan Notes carry an annual interest rate of 25% and had an
original repayment date of 30 June 2018 or equity placement
whichever is earlier. As an equity placement took place in January
2018, the loans technically fell due, but OEI and OMI have agreed
to extend repayment to 30 June 2019 or earlier at the Company's
discretion.
Conversion of OAM Convertible Loan Notes and private
placement
On 1 June 2017, Tri-Star announced that it has reached an
agreement with OAM to restructure the Company's balance sheet and
raise additional working capital (the "Proposals"). The Proposals,
which were subject to shareholder approval, entailed all of the
previously outstanding Convertible Loan Notes being converted or
redeemed. The Company also raised GBP1.3 million, before expenses,
for general working capital purposes. Full details of the Proposals
were set out in the circular to Tri-Star shareholders dated 1 June
2017 and were approved by shareholders at a general meeting on 20
June 2017.
Under the Proposals, the OAM funds converted approximately
GBP4.4 million of Convertible Loan Notes into 3,614 million new
ordinary shares of the Company (the "Conversion") at a conversion
price of 0.121855p and participated in a placing of 7,453 million
new ordinary shares in the Company (the "Placing") also at
0.121855p per ordinary share (the "Placing Price"). Approximately
GBP7.8 million of the Placing proceeds were then to be applied to
redeem the balance of the Convertible Loan Notes with the remaining
GBP1.3 million of proceeds being used to meet expenses of the
transaction and for general working capital purposes.
IFRS requires that the difference between the carrying amount of
financial liability (or part of financial liability) extinguished
or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed
should be recognised in profit and loss. Additionally, equity
instruments issued to the creditor to extinguish the liability
should be measured at the fair value of the instruments issued. The
fair value of the shares issued in respect of both the Conversion
and the Placing in respect of the extinguishment of the Convertible
Loan Notes has been measured at 0.16p per ordinary share, being the
closing price on 31 May 2017, the day prior to the agreement with
OAM being reached. The difference between the Conversion and
Placing Price (0.121855 pence per ordinary share) and the fair
value of the ordinary shares issued (0.16 pence per ordinary share)
amounts to GBP3,814,000.
The loss on extinguishment recorded in the income statement is
measured as follows:
GBP'000
Book value of debt 12,626
Repaid by issue of 3,613,884,866
shares (4,404)
Repaid via shares purchased
by OAM Funds (7,782)
Fair value adjustment
for shares issued for
conversion and repayment (3,814)
Costs incurred (263)
Loss on extinguishment
of loan (3,637)
--------
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
2017, 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 2017 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 2017 will be posted
to shareholders shortly and laid before the Company at the Annual
General Meeting, details of which will be announced in due course.
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 UARORWRAVRUR
(END) Dow Jones Newswires
May 02, 2018 02:00 ET (06:00 GMT)
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