TIDMKDNC
RNS Number : 3140P
Cadence Minerals PLC
25 May 2018
Cadence Minerals Plc
("Cadence Minerals" or "Cadence")
Results for the year ended 31 December 2017
The Company is pleased to announce its final results for the
year ended 31 December 2017. A copy of full results will be made
available on the Company's website from today at
http://www.cadenceminerals.com/
For further information, please contact:
Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
Hannam & Partners LLP (Joint Broker) +44 (0) 207 907 8500
Neil Passmore
Giles Fitzpatrick
Square1 Consulting +44 (0) 207 929 5599
David Bick
Chairman's Statement
For the year ended 31 December 2017
STRONG ASSET GROWTH AND RETURN ON EQUITY
The rise in electric vehicle usage is fast approaching and with
that the demand for batteries is increasing. More and more
governments are committing to phasing out vehicles burning oil
products and investment in new battery technologies continues apace
For example China's New Energy Vehicle Mandate Policy of Sept 2017
and California's ZEV ( Zero emission vehicle). Recent significant
announcements from the world's major automakers to boost production
of hybrid and fully electric vehicles complement this global drive
to legislate for more rapid and intensive take up of emissions-free
transportation.
Cobalt, lithium , Nickel along with rare earth elements have
been identified as key strategic minerals in this rapidly expanding
market. Supply of each must be increased substantially over the
coming years to match predicted demand.
This is precisely where Cadence is focused, particularly on
mining projects that are both low-cost and scalable. We have
witnessed continued consolidation in the Lithium space , along with
institutional and strategic involvement in a number of assets and
projects Cadence was early to identify. Lithium's importance has
been highlighted at the political and legislative level
globally.
Our principal investments now include stakes in Bacanora
Minerals, European Metals Holdings, Macarthur Minerals, Yangibana
North Project , Clancy , San Luis stakes in Argentina and Auroch
Minerals.
The sale of part of our stake in Bacanora was a strategic
decision centered on reinvestment. Cadence will redeploy some of
the profits in other early-stage mineral exploration companies
where we can both hold larger stakes and add our considerable
mining and financial management expertise. This will provide us
with an opportunity to achieve returns of a similarly high level to
those made on our Bacanora investment to date.
Cadence continues to have great confidence in Bacanora Minerals
and its management team, and we look forward to being a supportive
shareholder and joint-venture partner in the development of the
Sonora Lithium Project. We believe that Sonora has the potential to
be a significant producer of battery-grade lithium carbonate,
forming an important part of the global lithium-compound supply
chain in the coming years.
The board and Cadence's strategy have evolved significantly
since the company took a stake in Bacanora four years ago. We have
begun to take an active role in management of the companies in
which we invest.
Cadence's future prospects are growing and are very exciting. We
will continue to support our investee companies and identify new
areas for expansion that offer the potential for superior returns
on capital.
Our strategy for delivering material value to shareholders rests
on three pillars:
- Supporting existing projects through to production.
- Identifying new strategic investments which principally will
be lithium exploration assets demonstrating a high probability of
entering into commercial production
- Evaluation of the investment potential in other key metals
used widely in the rapidly expanding energy-storage sector, such as
cobalt, copper and nickel.
In this regard, we see added value in acquiring stakes in assets
that are currently unlisted but fit our investment criteria, an
approach which has to date delivered excellent returns. In this way
we will provide our shareholders access to assets that have the
same fundamentals as prior investments offerring potentially higher
returns.
We continue to view the medium and long term prospects for the
Company with confidence.
The directors would like to take this opportunity to thank our
shareholders, staff and consultants for their continued
support.
Andrew Suckling
Executive Chairman
25 May 2018
Strategic Report
Our focus in 2017 was to continue our investment strategy, that
is, to identify, invest and play an active role in the development
and progress in assets and companies that have unique access to
projects that have the right chemistry, are low cost and represent
a value investment.
Cadence typically invests at the early stage of the resource
development cycle. This can be as early as target delineation and
up to scoping study level. The risk associated with investing in
any resource projects at an early stage is high particularly within
the lithium sector, which is not commoditised and the success or
failure of a project is highly dependent on the metallurgical
risks.
Our approach to mitigate this risk is to obtain a deep
fundamental understanding of the resource, its chemistry and
management team. By doing so we can eliminate the many potential
investments that we review during the year and fund projects that
we believe will come to production and deliver value to our
shareholders. Importantly we also take an active approach to our
investments by either being part of the management team or, if not,
assisting incumbent management in their endeavours.
This approach has led to good absolute return figures which at
the end of the financial year stood at 119% for our public listed
investments and around 121% inclusive of our non listed
investments. The mark market valutions of all our investments,
inclusive of our portions of joint ventrures stood at some GBP33
million, while the valution of our public assets stood at GBP24.8
million (table 1).
Table 1: Absolute Return Figures
31/12/2015 31/12/2016 31/12/2017
------------------------------- ----------- ----------- -----------
Book Value 9,876 17,689 11,345
------------------------------- ----------- ----------- -----------
Mark to Market Equity Value
(GBGBP ,000) 14,232 24,152 24,869
------------------------------- ----------- ----------- -----------
Absolute Return on Equity (%) 44% 36% 119%
------------------------------- ----------- ----------- -----------
LITHIUM MARKET REVIEW
The primary driver for the increasing demand in lithium and
lithium compounds is the penetration of electric vehicles ("EV").
2017 was the year that dramatically changed the EV industry.
Several prominent countries announced mandatory EV adoption rates.
Many car companies from the U.S. to China to Europe announced new
EV cars or at times introduced plans to electrify their entire
fleet. Examples of this include, GM's commitment of at least 20 new
EVs by 2023, Mercedes announcing that it will electrify its entire
line up by 2022, VW announcing to invest $84 billion to bring 300
new EV models to the market by 2030 and the most aggressive target
by Volvo who announced that all of their new models will be EV by
2019.
Looking back at how lithium prices performed in 2017, it's clear
that prices remained strong throughout the year with CIF in Asia
for 99% Lithium Carbonate increasing from US$15,500 per tonne at
the beginning of the year to US$20,750 at the end of the year. This
was a surprise to a lot of commentators, however given the positive
moves from the demand curve and the disappointments in the supply
curve it became inevitable that we would see upward movement in
prices.
In the early part of 2018 we saw several negative forecasts for
pricing, based erroneously on the "wave" of supply from SQM and
several other assets forecast to come online, these analysts still
fail to understand the industry. In making this forecast they have
applied some of the most optimistic factors to construction and
commissioning and applied a linear approach to growth curves, which
for a disruptive technology such as EV's is inappropriate.
Our forecast suggests that there could be up to 800kt lithium
compound demand by 2025. The big caveat to this is that supply
comes online in time and projects gett financed. It is the latter
point that Cadence sees as the largest constraint to EV adoption.
In essence there is a pipeline of project which would allow the
penetration of EV's of 25%, however the large majority of these do
not have financing in place, by our estimates there is some US$8
billion to be invested to hit production targets and in addition
given the timelines to production it seems unlikely that there will
be enough supply to deliver 800kt of lithium per annum by 2025,
which will mean continued supply constraints.
We continue to see plenty of evidence demand growth, Benchmark
Mineral Intelligence is now tracking 26 battery mega-factories, up
from just three back in 2014. The combined planned capacity of
these plants is 344.5 GWh. To put that into perspective, total
lithium-ion cell demand in 2017 is estimated at 100 GWh.
Looking ahead to 2018, supply constraints look set to continue
as the lithium demand forecast rises. In terms of demand, analysts
agree that the lithium space will be led by battery production.
Cadence still maintains its belief that lithium prices will
remain strong and anticipates that this pattern will continue for
the foreseeable future. We believe that the assets that we have
invested in will form part of the medium-term lithium supply chain
from 2020 onwards.
INVESTMENT REVIEW
Bacanora Lithium Plc ("Bacanora")
Cadence holds an interest in Bacanora through a direct equity
holding of approximately 8%, and a 30% stake in the joint venture
interests in each of Mexalit S.A. de CV ("Mexalit") and Megalit
S.A. de CV ("Megalit"). Mexalit forms part of the Sonora Lithium
Project. Bacanora is a London-listed lithium asset developer and
explorer (AIM: BCN).
Bacanora's has two key projects under development. The first is
the Sonora Lithium Project in Northern Mexico and the second is the
Zinnwald Lithium Project in southern Saxony, Germany.
Sonora Lithium Project
The Sonora Lithium Project consists of ten contiguous
concessions covering 97,389 hectares. Two of the concessions (La
Ventana, La Ventana 1) are owned 100% by Bacanora through its
wholly-owned subsidiary Minera Sonora Borax S.A de C.V. ("MSB"). El
Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions are owned
by, Mexilit S.A. de C.V. ("Mexilit") (which is owned 70% by
Bacanora and 30% by Cadence). These concessions are located
approximately 190 kilometres northeast of the city of Hermosillo,
in Sonora State, Mexico. They are roughly 170 kilometres south of
the border with Arizona, USA. The San Gabriel and Buenavista
concessions are owned by Minera Megalit S.A. de C.V. ("Megalit")
(which is owned 70% by Bacanora and 30% by Cadence)
Key Operational Highlights on the Sonora Project are as
follows:
-- On April 10th, 2017, Bacanora announced that it had entered
into a strategic partnership with Hanwa Co. Ltd. ("Hanwa"), a
leading Japan-based global trading company and one of the larger
traders of battery chemicals in Japan, with reported net sales of
more than Yen1,000 billion in 2016. Hanwa was awarded an off-take
agreement for up to 100% of Bacanora's stage 1 production of the
lithium carbonate ("Li2CO3") produced at the Sonora Lithium Project
at market price at the time. Hanwa also acquired a 10% equity stake
in Bacanora by purchasing 12,333,261 of the Company's common shares
and has an option to increase its interest up to 19.9%.
-- On October 20th, 2017, Bacanora announced that the
Environmental Impact Statement, the Manifestacion de Impacto
Ambiental ("MIA"), for its flagship Sonora project has been
approved by SEMARNAT, the Environment Ministry of Mexico. The
approval represents a major milestone for Bacanora as it grants
Bacanora the governments' approval to construct an open pit mine
and a large-scale beneficiation processing facility at Sonora.
-- On December 12th, 2017, Bacanora announced the results of the
Feasibility Study ("FS") for Sonora prepared in accordance with
National Instrument 43-101 - Standards of Disclosure for Mineral
Projects ("NI 43-101"). The results of the FS confirm the positive
economics and favourable operating costs of a 35,000 tonnes per
annum ("tpa") battery grade lithium carbonate ("Li2CO3")
operation.
o The FS estimates a pre-tax project Net Present Value ("NPV")
of US$1.253 billion at an 8% discount rate and
o an Internal Rate of Return ("IRR") of 26.1%, and
o Life of Mine ("LOM") operating costs of US$3,910/t Li2CO3.
Both the equity stake in Bacanora and our ownership in the
Mexalit joint venture could represent a substantial return for
Cadence in the form of cash flow from the Sonora Lithium
Project.
Zinnwald Lithium Project
On 21 February 2017 Bacanora announced the acquisition of a 50%
interest in, and joint operational control of, the Zinnwald Lithium
Project ("Zinnwald") in southern Saxony, Germany from SolarWorld AG
("SolarWorld").
Bacanora holds 50% interest in a jointly controlled entity,
Deutsche Lithium GmbH, which operates the Zinnwald Project located
in southern Saxony, Germany, adjacent to the border of the Czech
Republic and within 5 kilometres of the towns of Altenberg and
Freiberg. The Company acquired its interest in February 2017 for a
cash consideration of EUR5 million and an undertaking to contribute
up to EUR5 million toward the costs of completion of a feasibility
study, which is anticipated to be completed during the second
quarter of 2019.
Bacanora has an option to acquire the remaining 50% of the
jointly controlled entity, alone or together with any reasonably
acceptable third party within a 24-month period for EUR30 million.
In the event that Bacanora does not exercise this right within the
above stated timeframe, then SolarWorld has the right but not the
obligation to purchase the Company's 50% interest for EUR1.
Deutsche Lithium represents a strategic asset located in close
proximity to a thriving market for lithium and energy products,
which is being fuelled by Germany's electric automotive industry
and the rise of renewable energy storage. Zinnwald is located in a
world-class granite hosted Sn/W/Li belt that has been mined
historically for tin, tungsten and lithium at different times over
the past 300 years.
The project has a historical resource estimate which was
reported in accordance with the PERC Code1, comprised of Measured,
Indicated and Inferred Resources. A Qualified Person (under NI
43-101) has not done sufficient work to confirm the historical
estimate; hence the Company is not treating the historical estimate
as current Mineral Resources or Mineral Reserves. demonstrates its
potential for economic extraction of lithium products, as well as
potential by-products of tin, tantalum and SOP. Bacanora's
investment and expertise will facilitate further development in
order to achieve higher-value, downstream lithium products which
command higher prices in the market.
A resource infill drilling programme to upgrade the existing
resource model in accordance with NI 41-101 has now been completed.
Collection of a 100 tonne bulk ore sample from the legacy mine at
Zinnwald to provide samples for metallurgical testwork has also
been completed. On completion of the concentration testwork,
hydrometallurgical testwork for downstream processing will be
undertaken, focusing on the production of higher value lithium
battery chemical products.
Deutsche Lithium has been granted a mining licence covering
256.5 hectares of the Zinnwald project.The 30 year mining licence
has been issued by the Saxony State Mining Authority.
Subsequent to the transaction SolarWorld filed for bankruptcy
protection in Germany due to ongoing pricing pressures in its core
solar markets. The Company is confident that the SolarWorld
insolvency process will have no material impact on the Company's
interest in Deutsche Lithium and the Zinnwald project.
Details of Cadence's ownership
Cadence owns approximately 8% of Bacanora. The Sonora Lithium
Project is comprised of the following lithium properties.
-- La Ventana, La Ventana 1, and Megalit concessions, which are
100 percent owned by Minera Sonora Borax S.A. de C.V.("MSB"), a
wholly-owned subsidiary of Bacanora; Cadence, through its
approximate direct interest of 8% of Bacanora, has an indirect
interest in these concessions of 8%.
-- El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions,
which are held by Mexilit S.A. de C.V. ("Mexilit"). Cadence has a
30% direct interest in Mexalit through its Joint Venture with
Bacanora, and when combined with Cadence's direct interest of
approximately 8% in Bacanora, has a total economic interest in
Mexalit of 35%.
Cadence also owns a 30% direct interest in The Megalit,
Buenavista, and San Gabriel concessions, which are held by Megalit
S.A de C.V ("Megalit") which when combined with Cadences' direct
interest of approximately 8% in Bacanora, has a total economic
interest in Megalit of 35%.These areas are not part of the mining
plans of the Sonora Lithium Project and have not been assessed in
sufficient detail to provide a 43-101 compliant Mineral Resource
Estimate.
European Metals Holdings Limited (European Metals)
Cadence has been investing in EMH since June 2015 and continued
to do so during the period. It currently owns approximately 20% in
the Cinovec deposit in the Czech Republic through a direct holding
in the share capital of European Metals Holdings Limited that owns
100 per cent of the exploration rights to the Cinovec lithium/tin
deposit. The Cinovec lithium and tin deposit is located in the
Krusne Hory mountain range. The deposit that straddles the border
between Germany and the Czech Republic and in Germany, it is known
as the Zinnwald deposit (50% owned by Bacanora). The district has
an extensive mining history, with various metals having been
extracted since the 14th Century.
Summary of Activities
European Metals made significant progress during the year. With
the Company's efforts focusing on the completion of a
pre-feasibility study ("PFS"). This was announced in April 2017 and
confirmed the potential that the Cinovec deposit could be developed
into a low-cost producer of lithium products.
Highlights of the PFS include:
* Net overall cost of production - * US$3,483 /tonne Li(2) CO(3)
* Net Present Value (NPV) - * US$540 M (post tax, 8%)
* 21 % (post tax)
* Internal Rate of Return (IRR) -
* US$393 M
* Total Capital Cost -
* 20,800 tonnes
* Annual production of Battery Grade Lithium Carbonate
-
Project development for the year was centered on a significant
drilling program embarked upon by the Company. There were numerous
updates to this program released to the market during the period.
Overall, results from the program either confirmed or exceeded
expectations with respect of both lithium content and width of
mineralisation.
In November 2016, the Company announced a significant increase
in the indicated resource at Cinovec. This upgrade was a result of
the drilling program to that point and increased the indicated
resource by approximately 420%.
Highlights from the Mineral Resource Estimate include:
-- Lithium Indicated Resource increased 420% to 2.6 Mt LCE,
contained in 232.8 Mt @ 0.45% Li2O (0.1% Li cutoff)
-- Lithium total resource increased 11.8% to 6.46 Mt LCE,
contained in 606.8 Mt @ 0.43% Li2O (0.1% Li cutoff)
-- Tin Indicated Resource increased by 64% to 28.6 Mt @ 0.23%
Sn, 0.54% Li2O (0.1% Sn cutoff) for 65.8 kt Sn, 0.38 Mt LCE
-- Lithium exploration target remains 350 to 450 Mt @ 0.39% to
0.47% for 3.4 Mt to 5.3 Mt of LCE
In June 2017, and based on the PFS taken on the Cinovec Project,
European Metals declared a maiden Probable Ore Reserve of 34.5 Mt
@0.65% Li2O.
This drilling program provided important data to the Company's
Preliminary Feasibility Study ("PFS") which was ongoing throughout
the period. The Company released various updates with regards to
this study throughout the year, and the completion at the end of
March 2017.
Highlights of the work program for the PFS included a
significant reduction of pre-production capital costs and
outstanding recoveries, and the successful manufacture of >99.5%
pure lithium carbonate using an industry proven, sodium sulphate
roast-based flow-sheet.
Since the completion of the PFS European Metals has been
embarking on elements of the Definitive Feasibility Study,
including the appointments a DFS manager, further optimisation
testwork on the metallurgy and further increases in indicated
resource figures.
European Metals is now progressing its permits, environmental
studies and the BFS and we look forward to 2018 and the progress
that will be made to bring this asset into production.
Details of Cadence's ownership
Cadence owns a direct interest of approximately 20% of European
Metals.
San Luis Lithium Project, Argentina
In December 2017 Cadence Minerals announced that it had executed
binding investment agreements wto acquire up to 100% of six
prospective hard rock lithium assets in Argentina.
These transactions mark the start of the Company's strategic
shift to earn in to early stage lithium assets in well-known
lithium jurisdictions where we see the potential to deliver
shareholder value by investing in projects that have shorter
development timeline to cashflow than a typical lithium carbonate
producer.
The San Luis Project Consist of claims over 55,773 hectares for
six exploration permits within the known spodumene bearing
pegmatite fields in San Luis Province, Central Argentina. The
pegmatite fields of San Luis have an important past record of
producing mica, beryl, spodumene, tantalite (tantalum oxide),
columbite (niobium oxide), and recently potassium feldspar, albite
and quartz. Historic mines outside of the claims have produced
lithium oxide ("Li2O") at grades ranging from 4.5% to 6.5%.
On grant of the exploration permits Cadence will acquire up to
49% by spending GBP1.1m on exploration and drilling, and by issuing
GBP0.4 million of new ordinary shares in Cadence to The Vendors.
Cadence has an option to acquire up to 100% by issuing a further
GBP1.75m of new ordinary shares in Cadence.
Subsequent to the year-end, remote exploration has begun on the
assets, including geophysical, remote mapping and historic data
collection. We anticipate publishing these results over the coming
weeks. Once the exploration licenses are granted we can progress
with the field mapping and drilling with the aim of delivering a
maiden ore resource.
Clancy Exploration Limited ("Clancy Exploration")
In September 2017 Cadence announced that Clancy's investigations
into its tenure determined that there were 28 overlapping licences
out of Clancy's 200 licences that were preceding priority claimants
('Preceding Claims'). These Preceding Claims cover a total area of
approximately 12km2 and included the historical Nockelberg and
Leogang mines. Clancy continues to have priority over the balance
of the project area, being 172 licences covering approximately
68km2 ('Remaining Licenses').
Prior to the investigations, Cadence acquired a 10% interest
(refer to ASX release dated 3 July 2017) in all 200 licences held
by Clancy, and the parties entered into a joint venture. Cadence
was subsequently made aware of the licensing situation and we
agreed with Clancy to continue to evaluate the Remaining Licenses,
in which Cadence holds 10%.
Furthermore. the board of Clancy, in discussions with Cadence,
have considered it appropriate to issue Cadence 140,000,000 fully
paid ordinary shares at a deemed price of $0.003 ('Clancy Shares')
as compensation for the discovery of third party priority over the
28 overlapping licenses (including the historical Nockelberg and
Leogang mines).
Yangibana Project, Australia
Since December 2011 Cadence has owned a 30% interest in the
Yangibana rare earth project situated in the Gascoyne region of
Western Australia. Cadence's interest is free carried up to the
commencement of the bankable feasibility study on Yangibana.
Summary of Activities
Hastings Technology Metals Limited ("Hastings") is the manager
of the Project and holds a 70% interest. Hastings continued to
explore and develop the Yangibana project during the year.
Hastings continued to develop the Yangibana project as a whole
(inclusive or areas outside our interest) with the publictions of
the Yangibana Definitive Feasibility Study published in November
2017. This study did not include any material mined from the joint
venture with Hastings.
Discussions with management have determined that given the
mineralogy of the deposit on the joint venture areas, processing of
the ore prior to the ten years contemplated in the Definitive
Feasibility Study would reduce the economics of the project as a
whole there it has been excluded, it has yet to be determined if
the joint venture areas would form part of the twenty year mine
plan.
Macarthur Minerals Limited ("Macarthur")
In March 2016 Cadence Minerals made a strategic investment in
Macarthur (TSX-V: MMS) and now currently holds approximately 15% of
Macarthur.
Summary of Activities
Macarthur has made progress on several fronts during the
year.
Western Australina Gold Prospects
During the period Macarthur has been active in the development
of its Gold exploration business. Securing options over or
applications over several prospective gold properties in Western
Australia. The most significant of which appears to be the Hillside
Gold Project.
The Hillside Gold Project encompasses Exploration Licence
Applications E45/4824, E45/4708 and E45/4709 held by Macarthur
Lithium Pty Ltd ("MLi"), a wholly owned subsidiary of Macarthur
Minerals. Macarthur has also entered into an option agreement to
acquire Exploration Licence E45/4685, which immediately adjoins the
tenements of the Hillside Gold Project. This group of tenements are
located approximately 185 kilometres ("km") South East of Port
Hedland and 50 km South West of Marble Bar (the "Hillside Gold
Project").
The Hillside Gold Project is highly prospective for gold and
copper. The area has previously been explored by various companies
for gold, copper, zinc and lead but limited drilling exists.
Historical rock chip sampling by Great Southern Mines in 1998
returned 37 samples grading above one gram per tonne (g/t) up to a
maximum of 447 g/t Au.
These tenements surround the mining lease of the historic
Edelwiess gold mine. A limited drilling program consisting of six
rotary percussion ("RC") holes conducted by Metana Minerals N.L in
1980 intersected gold mineralisation associated with quartz veins.
Gold was recorded in three holes with an average grade of
approximately 12 g/t Au and a maximum of 25.83 Au g/t. In addition,
sampling along a discontinuous outcropping gossan over a strike of
18 km, showed high potential for copper mineralisation. A total of
20 results yielded above 1,000 ppm Cu to a maximum of 7.8% Cu.
Macarthur recently conducted a reconnaissance field trip to the
Hillside Gold Project to investigate further the highly anomalous
gold results previously reported. This trip confirmed the potential
for high grade gold on the Hillside Gold Project.
Western Australian Lithium Projects
Macarthur Minerals has 11 Exploration Licenses and 5 Exploration
License Applications in the Pilbara covering a total area of
approximately 1,312 km2.
In prior years Macarthur completed two heliborne reconnaissance
field trips across a portion of its tenements in the Pilbara
region. Sampling across several pegmatites yielded encouraging
results warranting further exploration. The best lithium results
are from a swarm of pegmatites within Exploration Licence
application E45/4702 exploited in the past for tin and tantalum. A
sample of lithium muscovite from one old working returned 0.2% Li2O
and elevated tantalum and tin values confirming the rare element
character of this pegmatite. A feldspar-quartz-muscovite pegmatite
within Exploration Licence E45/4711 also returned 111 parts per
million ("ppm") lithium ("Li"). In addition to the reconnaissance
sampling, historical results of the Geological Society of WA
("GSWA") include the Tambourah North lithium pegmatite located in
Exploration Licence Application E45/4848. A rock sample collected
by Fortescue Metals Group Ltd in 2012 on the western edge of
Exploration Licence E45/4702 returned a result of 876 ppm Li (0.19%
Li2O).
Nevada Brine Project
On June 15, 2017 Macarthur announced that it had staked 210 new
unpatented placer mining claims at its new Reynolds Springs Lithium
Brine Project ("Reynolds Springs Project") in the Railroad Valley,
Nevada.
The new claims are located near the town of Currant, in Nye
County, Nevada. The Reynolds Springs Project is located
approximately 180 miles (300 km) North of Las Vegas, Nevada. A
total of 206 soil samples were collected across the full extent of
the Reynolds Springs Project. Lithium values in the soil samples
ranged from a low of 39.3 ppm to a high of 405 ppm Li. Samples were
consistently high averaging 168.3 ppm Li with 85% of samples
recording over 100 ppm Li and 19% greater than 200 ppm Li.
These results are considered high in comparison to the majority
of non-lithium producing playas and amongst the highest we have
seen outside of the Clayton Valley.
Western Australian Iron Ore Projects
Macarthur Minerals' Iron Ore Projects are located on mining
tenements covering approximately 62 km2 located 175 km northwest of
Kalgoorlie in Western Australia. Within the tenements, at least 33
km strike extent of outcropping banded iron formation ("BIF")
occurs as low ridges, surrounded by intensely weathered and mostly
unexposed granites, basalts and ultramafic rocks.
The Iron Ore Projects are situated in the Yilgarn Region of
south-western, Western Australia. The Yilgarn Region is a host to
many significant mineral deposits that have been or are being mined
for iron ore. The tenements cover the Yeriligee greenstone belt
which is some 80 km in length and lies within the Southern Cross
Province of the Yilgarn.
The Iron Ore Projects are approximately 107 km from the existing
Eastern Goldfields Railway (located near the township of Menzies)
that has a direct connection to the Port of Esperance in Western
Australia, where it is intended that ore from the Projects will be
shipped. Export is subject to capacity becoming available, which is
not certain.
The Ularring Hematite Project's Mineral Resources are comprised
of Indicated Mineral Resources of approximately 54.5 Mt @ 47.2% Fe
and approximately 26Mt @ 45.4% Fe Inferred resources.
The Mineral Resource estimates were prepared by CSA Global on
behalf of Macarthur Minerals (N143-101 Technical Report, 20123) and
reported in accordance with the JORC Code. Macarthur Minerals' Iron
Ore Projects are located on mining tenements covering approximately
62 km2 located 175 km northwest of Kalgoorlie in Western Australia.
Within the tenements, at least 33 km strike extent of outcropping
banded iron formation ("BIF") occurs as low ridges, surrounded by
intensely weathered and mostly unexposed granites, basalts and
ultramafic rocks.
Auroch Minerals Ltd ("Auroch")
Cadence owns a direct interest of approximately 7% of
Auroch.
Auroch is an Australian ASX listed company which during the year
focused on the development of three prospective, lithium, copper
and cobalt assets. After the year-end Auroch terminated or decided
not to pursue these projects further.
Auroch has instead completed the acquisition of 90% of the
tenement known as the Arden Zinc Project (Arden Project) and 100%
of the tenement known as the Bonaventura Zinc Project. Highlights
form both projects are outlined below
-- The Arden Zinc Project (Arden) has the potential to host
large-scale zinc, lead, copper and cobalt stratiform sedimentary
exhalative (SEDEX) deposits
o Large 710km(2) Exploration Licence (EL) already granted with
several key mineralised targets already identified within the
tenure
o Multiple assays of between 9-10% zinc and 0.1% cobalt in
historic trench-sampling at the Arden target over a strike length
of 1.5km, with a total strike length of the prospective geological
unit of over 10km
o Up to 2.5% cobalt(1) from recent sampling at the Kanyaka
target within the Arden Project
o The Arden Project is supported by excellent infrastructure
including rail, sealed roads and grid power
-- The Bonaventura Zinc Project (Bonaventura) covers highly
prospective geology and historic mines along 30km of strike of the
regional-scale Cygnet-Snelling Fault
o Previous drilling at Bonaventura hit high-grade zinc
intersections, including:
-- 16m @ 3.4% Zn and 0.7% Pb from 52m (including 6m @ 6.3% Zn)
-- 11m @ 3.1% Zn and 1.5% Pb from 26m (including 1m @ 8.0% Zn)
o Samples from the historic Kohinoor gold mine returned grades
up to 28 g/t Au
o The Bonaventura Project has several high-grade zinc
(base-metal) and gold targets that are drill-ready.
Greenland Rare Earth Projects
During the year Cadence reduced it licenses' exposure to 1 in
Greenland, of which it owns 100%. This licenses abuts the northern
and eastern boundaries of Greenland Minerals and Energy Limited's
'GGG' licences that encompass the world-class Kvanefjeld, Sørenson,
Zone 3 and Steenstrupfjeld Rare Earth Element (REE) deposits.
An extensive exploration programme was carried out on all of
Cadence's exploration licences in south Greenland from June to
August 2014. We have continued to review these licenses on an
annual basis. We will continue to review these licenses on an
annual basis, and will monitor the progress that GGG makes over the
coming year as it progresses the Kvanefjeld REE deposits.
FINANCIAL REVIEW
During the period the Group made an operating profit of GBP2.51
million (2016: GBP2.84 million). This slight decrease was due to a
GBP300,000 impairment on our Greenland investment (2016: nil).
Total comprehensive profit for the year attributable to equity
holders was GBP1.88m (2016: GBP0.13m). This increase is mainly due
to reduced finance costs (approximatelyGBP1m reduction for the
period) and favourable foreign exchange (approximately GBP1m
increase for the period).
Diluted earnings per share were 0.013p (2016 : 0.007p).).
Administrative costs decreased by approximately 30% for the
period to GBP1.80m (2016: GBP2.22m). We anticipate to be able to
deliver further cost savings in the coming year. Subsequent to the
year end, Directors cash remuneration reduced on average by some
28%.
The net assets of the Group increased to GBP26.72 million at 31
December 2017 (2016: GBP24.53 million). This was driven by the part
repayment of the convertible loan note and the increase in value of
available for sale investments.
During the period our net cash outflow from operating activities
was GBP2.06 million (2016: GBP1.83m). We had a net inflow from our
investing activities of GBP6.29m, associated with the sale of part
of our available sale investments, in particular our sale of just
under 50% of our stake in Bacanora Minerals. These receipts were
used to pay back some of the convertible loan notes, which resulted
in a net cash outflow from financing activities of GBP6.34 million.
As a result of the above we had a net reduction in cash and cash
equivalents of GBP2.16 million for the period and cash equivalents
of GBP2.04 million at the end of the period.
Kiran Morzaria
Chief Executive Officer
25 May 2018
Report of the Directors
For the year ended 31 December 2017
The Directors present their annual report together with the
audited consolidated financial statements of the Group and the
Company for the Year Ended 31 December 2017.
Principal activity
The principal activity of the Group and the Company is that of
the identification, investment and development of Lithium and rare
earth assets. The Group is also exploring other mining related
opportunities.
Domicile and principal place of business
Cadence Minerals plc is domiciled in the United Kingdom, which
is also its principal place of business.
Business review
The results of the Group are shown on in this report. The
directors do not recommend the payment of a dividend.
A review of the performance of the Group and its future
prospects is included in the Chairman's Statement and the Strategic
Report within this report.
Key Performance Indicators
Due to the current status of the Group, the Board has not
identified any performance indicators as key.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group involve
the ability to raise funding in order to finance the acquisition
and exploitation of mining opportunities and the exposure to
fluctuating commodity prices.
In addition, the amount and quality of minerals available and
the related costs of extraction and production represent a
significant risk to the group.
Financial risk management objectives and policies
The Group's principal financial instruments are available for
sale assets, trade receivables, trade payables, loans and cash at
bank. The main purpose of these financial instruments are to fund
the Group's operations.
It is, and has been throughout the period 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 and interest rate risk. The board
reviews and agrees policies for managing each of these risks and
they are summarised below.
Liquidity risk
The Group's objective is to maintain a balance between
continuity of funding and flexibility through the use of equity and
its cash resources. Further details of this are provided in the
principal accounting policies, headed 'going concern' and note 17
to the financial statements.
Interest rate risk
The Group only has borrowings at a fixed coupon rate of 10% and
therefore minimal interest rate risk, as this is deemed its only
material exposure thereto. The Group seeks the highest rate of
interest receivable on its cash deposits whilst minimising
risk.
Market risk
The Group is subject to market risk in relation to its
investments in listed Companies held as available for sale
assets.
Directors
The membership of the Board is set out below. All directors
served throughout the period unless otherwise stated.
Andrew Suckling
Kiran Morzaria
Don Strang
Adrian Fairbourn
Substantial shareholdings
Interests in excess of 3% of the issued share capital of the
Company which had been notified as at 10 May 2018 were as
follows:
Ordinary Percentage
shares held of capital
Number %
Barclays Direct Investing Nominees Limited 866,101,816.00 11.03%
Hargreaves Lansdown (Nominees) Limited
Des:CLIENT1 866,044,049.00 11.03%
Interactive Investor Services Nominees
Limited Des:SMKTNOMS 612,438,459.00 7.80%
Interactive Investor Services Nominees
Limited Des:SMKTISAS 540,102,200.00 6.88%
Hargreaves Lansdown (Nominees) Limited
Des:VRA 497,246,751.00 6.33%
HSDL Nominees Limited Des:MAXI 437,264,827.00 5.57%
Hargreaves Lansdown (Nominees) Limited
Des:HLNOM 408,295,871.00 5.20%
HSDL Nominees Limited 338,309,489.00 4.31%
HSBC Client Holdings Nominee (UK) Limited 285,249,689.00 3.63%
Forest Nominees Limited 277,646,000.00 3.54%
Payment to suppliers
It is the Group's policy to agree appropriate terms and
conditions for its transactions with suppliers by means ranging
from standard terms and conditions to individually negotiated
contracts and to pay suppliers according to agreed terms and
conditions, provided that the supplier meets those terms and
conditions. The Group does not have a standard or code dealing
specifically with the payment of suppliers.
Trade payables at the year end all relate to sundry
administrative overheads and disclosure of the number of days
purchases represented by year end payables is therefore not
meaningful.
Events after the Reporting Period
Events after the Reporting Period are outlined in Note 20 to the
Financial Statements.
Going concern
The Directors have prepared cash flow forecasts for the period
ending 31 May 2019 which take account of the current cost and
operational structure of the Group.
The cost structure of the Group comprises a high proportion of
discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the
Group to operate within its available funding.
These forecasts demonstrate that the Group has sufficient cash
funds available 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 financial statements have been
prepared on a going concern basis.
Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group financial statements in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs). 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 and profit or loss of the group for that period. In
preparing these financial statements, the directors are required
to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements;
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group 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 hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
In so far as each of the Directors are aware:
-- there is no relevant audit information of which the Group's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Auditors
Chapman Davis LLP, offer themselves for re-appointment as
auditor in accordance with Section 489 of the Companies Act
2006.
ON BEHALF OF THE BOARD
Kiran Morzaria
Director
Date: 25 May 2018
Corporate Governance
For the year ended 31 December 2017
Directors
The Group supports the concept of an effective board leading and
controlling the Group. The Board is responsible for approving Group
policy and strategy. It meets on a regular basis and has a schedule
of matters specifically reserved to it for decision. Management
supply the Board with appropriate and timely information and the
Directors are free to seek any further information they consider
necessary. All Directors have access to advice from the Company
Secretary and independent professional advice at the Group's
expense.
The Board consists of four Directors, who hold the key
operational positions in the Company. The Chairman of the Board is
Andrew Suckling and the Group's business is run by the Chief
Executive, Kiran Morzaria.
Relations with shareholders
The Company values the views of its shareholders and recognises
their interest in the Group's strategy and performance. The Annual
General Meeting will be used to communicate with private investors
and they are encouraged to participate. The Directors will be
available to answer questions. Separate resolutions will be
proposed on each issue so that they can be given proper
consideration and there will be a resolution to approve the annual
report and financial statements.
Internal control
The Board is responsible for maintaining a strong system of
internal control to safeguard shareholders' investments and the
Group's assets. The system of internal financial control is
designed to provide reasonable, but not absolute, assurance against
material misstatement or loss.
The Board has considered the need for an internal audit function
but has decided the size of the Group does not justify it at
present. However, it will keep the decision under annual
review.
Board Committees
Audit and Remuneration Committees have been established. The
Audit committee comprises Adrian Fairbourn (Chairman), Donald
Strang, and Andrew Suckling, and the Remuneration Committee
comprises Adrian Fairbourn (Chairman) and Andrew Suckling.
The role of the Remuneration Committee is to review the
performance of the executive Directors and to set the scale and
structure of their remuneration, including bonus arrangements. The
Remuneration Committee also administers and establishes performance
targets for the Group's employee share schemes and executive
incentive schemes for key management. In exercising this role, the
terms of reference of the Remuneration Committee require it to
comply with the Code of Best Practice published in the Combined
Code.
The Audit Committee is responsible for making recommendations to
the Board on the appointment of the auditors and the audit fee, and
received and reviews reports from management and the Company's
auditors on the internal control systems in use throughout the
Group and its accounting policies.
Report on Remuneration
For the year ended 31 December 2017
Directors' remuneration
The Board recognises that Directors' remuneration is of
legitimate concern to the shareholders. The Group operates within a
competitive environment, performance depends on the individual
contributions of the Directors and employees and it believes in
rewarding vision and innovation.
Policy on executive Directors' remuneration
The policy of the Board is to provide executive remuneration
packages designed to attract, motivate and retain Directors of the
calibre necessary to maintain the Group's position and to reward
them for enhancing shareholder value and return. It aims to provide
sufficient levels of remuneration to do this, but to avoid paying
more than is necessary. The remuneration will also reflect the
Directors' responsibilities and contain incentives to deliver the
Group's objectives.
The remuneration of the Directors was as follows:
A Fairbourn A Suckling K Morzaria D Strang Total
GBP GBP GBP GBP GBP
Short-term
employment
benefits:
Year to
31 December
2017
Salary
and fees - - 150,000 28,800 178,800
Consulting
fees 85,000 150,000 - 121,200 356,200
Share based
payments
(1) 283 654 654 654 2,245
Total 85,283 150,654 150,654 150,654 537,245
============ =========== =========== ========= ==========
Year to
31 December
2016
Salary
and fees 6,000 6,000 150,000 12,000 174,000
Consulting
fees 42,000 144,000 - 138,000 324,000
Share based
payments
(1) 143,280 286,560 143,280 143,280 716,400
Total 191,280 436,560 293,280 293,280 1,214,400
============ =========== =========== ========= ==========
(1) Share based payments represent a Black and Scholes valuation
of the incentive options granted to the directors during the year.
Options are used to incentivise directors and are a non-cash form
of remuneration.
At 31 December 2017 the following amount was outstanding in fees
to directors; GBP138,000 (2016: GBP150,000).
Pensions
The company only operates a basic pension scheme for its
directors and employees as required by UK legislation.
Benefits in kind
No benefits in kind were paid during the year to 31 December
2017 or the year ended 31 December 2016.
Bonuses
No amounts were payable for bonuses in respect of the Year ended
31 December 2017 or the year ended 31 December 2016.
Notice periods
Andrew Suckling, Kiran Morzaria, Don Strang and Adrian
Fairbourn, each have a 12 month rolling notice period.
Share option incentives
At 31 December 2017 the following options were held by the
Directors:
Date of grant Exercise Number of options Note
price
K Morzaria 21 May 2014 0.48p 60,000,000
K Morzaria 29 August 2017 0p 6,032,608 1
K Morzaria 29 August 2017 0p 7,994,506 2
K Morzaria 29 August 2017 0p 33,302,753 3
107,329,867
-------------------
13 December
A Fairbourn 2012 0.06p 20,000,000
A Fairbourn 21 May 2014 0.48p 40,000,000
A Fairbourn 29 August 2017 0p 5,570,652 1
A Fairbourn 29 August 2017 0p 7,760,989 2
A Fairbourn 29 August 2017 0p 32,522,936 3
105,854,577
-------------------
D Strang 21 May 2014 0.48p 60,000,000
D Strang 29 August 2017 0p 6,032,608 1
D Strang 29 August 2017 0p 7,994,506 2
D Strang 29 August 2017 0p 33,302,753 3
107,329,867
-------------------
A Suckling 29 August 2017 0p 11,250,000 1
A Suckling 29 August 2017 0p 15,576,923 2
A Suckling 29 August 2017 0p 65,229,358 3
92,056,281
-------------------
Note 1 - Only vest if VWAP is greater or equal to
0.92p on vesting date
Note 2 - Only vest if VWAP is greater or equal to
1.82p on vesting date
Note 3 - Only vest if VWAP is greater or equal to
2.18p on vesting date
Additionally the option holder must have made market purchases
of ordinary shares equal to a total of one third of the
Option Holders's annual salary or particpated in a Company
share purchase programme for a period of at least six months
prior to the grant date.
All options are exercisable between 18 months and ten years from
the date of grant.
The high and low share price for the year were 0.60p and 0.249p
respectively (year ended 31 December 2016: 0.925p and 0.404p). The
share price at 31 December 2017 was 0.315p (31 December 2016:
0.5p).
Independent Auditors report to the members of
Cadence Minerals PLC
OPINION
We have audited the financial statements of Cadence Minerals Plc
(the 'Parent Company') and its subsidiaries (the 'Group') for the
year ended 31 December 2017 which comprise the consolidated
statement of comprehensive income, the consolidated and company
statements of financial position, the consolidated and company
statements of changes in equity, the consolidated and company
statements of cash flows and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the company financial statements is applicable law
and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
In our opinion:
-- 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 2017 and of the Group's losses 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.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group's or the parent company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our
audit. Our audit procedures in relation to these matters were
designed in the context of our audit opinion as a whole. They were
not designed to enable us to express an opinion on these matters
individually and we express no such opinion.
We have determined the matters described below to be the key
audit matters to be communicated in our report.
CARRYING VALUE OF AVAILABLE FOR SALE INVESTMENTS
The Group's Available for Sale Investment assets ('AFS assets')
represents one of the most significant asset on its statement of
financial position totalling GBP13.5m as at 31 December 2017, all
of which includes listed investments.
The carrying value of AFS assets represents significant assets
of the Group and Parent Company, and assessing whether facts or
circumstances exist to suggest that impairment indicators were
present, and if present, whether the carrying amount of these asset
may exceed its recoverable amount was considered key to the audit.
This assessment involves significant judgement applied by
management to the Group and Parent Company's listed
investments.
We considered it necessary to assess whether facts and
circumstances existed to suggest that impairment indicators were
present, and if present, whether the carrying amount of these
assets may exceed its recoverable amount.
How the Matter was addressed in the Audit
The procedures included, but were not limited to, assessing and
evaluating management's assessment of whether any impairment
indicators have been identified across the Group and Parent
Company's AFS assets, the indicators being:
-- Expiring, or imminently expiring, rights to licences or
assets held by the investee Companies.
-- A lack of flow of information in regards to the investee
companies exploration activities and/or production, trading or
strategic advancement.
-- Discontinuation of, or a plan to discontinue, exploration
activities in the areas, or cessation or delays in trading of
interest by the Investee Companies.
-- Sufficient data exists to suggest carrying value of
exploration and evaluation assets is unlikely be recovered in full
through successful development or sale by the Investee
Companies.
-- Updates on trading activities by Investee Companies.
We also reviewed Stock Exchange RNS announcements and Board
meeting minutes for the year and subsequent to year end for
activity to identify any indicators of impairment.
We also assessed the disclosures included in the financial
statements and our results found the carrying value for AFS assets
to be acceptable.
MATERIALITY
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified. Based on professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
GBP310,000, based on a 1% percentage consideration of the Group's
total assets.
OTHER INFORMATION
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the
Directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' report have been
prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and
Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
Strategic report or the Directors' report.
We have nothing to report in respect of the following matters in
relation to which 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.
RESPONSIBILITIES OF DIRECTORS
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, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group and Parent Company's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Group or Parent Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
USE OF OUR REPORT
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.
Keith Fulton
(Senior Statutory Auditor)
For and on behalf of Chapman Davis LLP, Statutory Auditor
London
Chapman Davis LLP is a limited liability partnership registered
in England and Wales (with registered number OC306037).
25 May 2018
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Year ended Year ended
Note 31 December 31 December
2017 2016
GBP'000 GBP'000
Income
Unrealised profit on available
for sale assets 9 1,353 5,701
Realised profit/(loss) on available
for sale assets 9 3,118 (107)
Other income 1 145 189
------------ ------------
4,616 5,783
Share based payments (2) (717)
Impairment of intangible assets 6 (300) -
Other administrative expenses (1,800) (2,223)
------------ ------------
Total administrative expenses (2,102) (2,940)
Operating profit 1 2,514 2,843
Share of associates losses 8 (339) (200)
Finance cost 3 (986) (2,027)
Profit before taxation 1,189 616
Taxation 4 - -
Profit attributable to the equity
holders of the Company 1,189 616
------------ ------------
Other comprehensive income
Foreign exchange 686 (484)
Total other comprehensive income
for the period, net of tax 686 (484)
------------ ------------
Total comprehensive profit for
the year, attributable to the
equity holders of the company 1,875 132
============ ============
Earnings per ordinary share
Basic earnings per share (pence) 5 0.015 0.008
============ ============
Diluted earnings per share (pence) 5 0.013 0.007
============ ============
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
Consolidated Statement of Financial Posititon
As at 31 December 2017
31 December 31 December
2017 2016
ASSETS Note GBP'000 GBP'000
Non-current
Intangible assets 6 1,887 1,909
Investment in associates 8 12,988 12,982
14,875 14,891
------------ ------------
Current
Trade and other receivables 10 722 402
Available for resale assets 9 13,534 15,967
Cash and cash equivalents 2,037 4,192
Total current assets 16,293 20,561
Total assets 31,168 35,452
------------ ------------
LIABILITIES
Current
Trade and other payables 11 262 603
Borrowings 12 4,182 10,324
Total current liabilities 4,444 10,927
------------ ------------
Total liabilities 4,444 10,927
------------ ------------
EQUITY
Issued share capital 13 1,202 1,192
Share premium 27,552 27,145
Share based premium reserve 3,178 4,410
Equity loan and exchange reserve 337 (254)
Retained earnings (5,545) (7,968)
Equity attributable 26,724 24,525
to equity holders of the Company
Total equity and liabilities 31,168 35,452
============ ============
The consolidated financial statements were approved by the Board
on 25 May 2018, and signed on their behalf by;
Kiran Morzaria Don Strang
Director Director
Company number 05234262
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
Consolidated Statement of Changes in Equity
As at 31 December 2017
Share Share Share Equity Retained Total
capital premium based loan and earnings equity
payment exchange
reserves reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31
December 2015 1,098 22,161 2,783 (277) (8,826) 16,939
Share based payments - - 717 - - 717
Warrants issued - - 1,152 - - 1,152
Transfer on lapse
of options - - (80) - 80 -
Transfer on exercise
of options - - (162) - 162 -
Equity component
on issue of loan
notes - - - 507 - 507
Share issue 94 5,123 - - - 5,217
Share placing
costs - (139) - - - (139)
Transactions with
owners 94 4,984 1,627 507 242 7,454
--------- --------- ---------- ---------- ---------- --------
Foreign exchange - - - (484) - (484)
Profit for the
period - - - - 616 616
Total comprehensive
income for the
period - - - (484) 616 132
--------- --------- ---------- ---------- ---------- --------
Balance at 31
December 2016 1,192 27,145 4,410 (254) (7,968) 24,525
========= ========= ========== ========== ========== ========
Share based payments - - 2 - - 2
Transfer on lapse
of warrants - - (681) - 681 -
Transfer on cancellation
of options - - (553) - 553 -
On issue of loan
notes - - - 412 - 412
On settlement
of loan notes - - - (507) - (507)
Share issue 10 407 - - - 417
Transactions with
owners 10 407 (1,232) (95) 1,234 324
--------- --------- ---------- ---------- ---------- --------
Foreign exchange - - - 686 - 686
Profit for the
period - - - - 1,189 1,189
---------- ---------- --------
Total comprehensive
income for the
period - - - 686 1,189 1,875
--------- --------- ---------- ---------- ---------- --------
Balance at 31
December 2017 1,202 27,552 3,178 337 (5,545) 26,724
========= ========= ========== ========== ========== ========
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Cash flow from operating activities
Continuing operations
Operating profit 2,514 2,843
Net realised/unrealised profit
on AFSA (4,471) (5,594)
Impairment of intangible assets 300 -
Equity settled share-based payments 2 717
(Increase) in trade and other
receivables (320) (173)
(Decrease)/increase in trade
and other payables (83) 373
Net cash outflow from operating
activities from continuing operations (2,058) (1,834)
------------ ------------
Cash flows from investing activities
Investment in exploration costs (270) (105)
Payments for investments in
associates (345) -
Payments for investments in
AFS assets (214) (7,847)
Receipts on sale of AFS assets 7,118 1,040
Net cash inflow/(outflow) from
investing activities 6,289 (6,912)
------------ ------------
Cash flows from financing activities
Proceeds from issue of share
capital - 3,728
Share issue costs - (139)
Net borrowings (5,400) 9,331
Finance costs (986) (875)
Net cash (outflow)/inflow from
financing activities (6,386) 12,045
------------ ------------
Net change in cash and cash
equivalents (2,155) 3,299
Cash and cash equivalents at
beginning of period 4,192 893
Cash and cash equivalents at
end of period 2,037 4,192
============ ============
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEASWIFASESI
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