Company No. 5285814
Alba Mineral Resources plc
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2017
Alba Mineral Resources plc
CONTENTS
Officers and professional advisers
Chairman’s statement
Strategic report
Directors’ report
Directors’ responsibilities statement
Independent auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated cash flow statement
Company cash flow statement
Notes to the financial statements
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Alba Mineral Resources plc
OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
George Frangeskides (Chairman)
Michael Nott
Manuel Lamboley
SECRETARY
Ben Harber
REGISTERED OFFICE
6th Floor
60 Gracechurch St
London EC3V 0HR
NOMINATED ADVISERS
Cairn Financial Advisers LLP
Cheyne House, Crown Court
62-63 Cheapside
London EC2V 6AX
BROKERS
First Equity Limited
Salisbury House
London Wall
London EC2M 5QQ
AUDITOR
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London EC2R 6AY
SOLICITORS
Hill Dickinson
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
PRINCIPAL BANKERS
Allied Irish Bank (GB)
Berkeley Square House
4-19 Berkeley Square
London W1J 6BR
REGISTRARS
Share Registrars Limited
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey GU9 7LL
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT
The Board of Alba Mineral Resources plc (the “Company” or “Alba”, and collectively with its Subsidiary
Companies, the “Group”) is pleased to report the results for the year ended 30 November 2017.
INTRODUCTION
This has been an exceedingly busy year for Alba. We have consolidated our interests in the UK onshore oil and
gas sector by increasing our interests at the Horse Hill exploration project and at the same time completing the
acquisition of a 5 per cent interest in the Brockham production licence. Significant strides forward have been taken
at both those projects, not only as regards work on the ground but also in terms of the pursuit of key regulatory
approvals as we and our partners seek to push those projects forward to production.
On the mining side, which of course is where Alba started out and which remains a key focus of our business,
during the year we carried out a two-phase exploration programme at our high-grade Amitsoq graphite project in
southern Greenland, and were able to report a significant new discovery. It is one of the most exciting and
rewarding aspects of exploration work when you unearth a new find through exploration work. Sometimes that can
be as a result of painstaking desktop reviews of historical and in-house technical data, but sometimes, as here, it
can also be the result of having good people in your exploration team who keep an open mind when out in the field
and have the skill to spot the signs of a potential new zone of mineralisation. That is how we made the Kalaaq
graphite discovery.
Aside from Amitsoq, and given our positive experience in the Greenland mining sector, during the year we
undertook a widespread review of mining opportunities in Greenland and this led us to apply for – and to be granted
– three new projects, all in the north-west of Greenland. Most immediately exciting, I would say, is our 100 per
cent owned Thule Black Sands project (“TBS”). This encompasses approximately 30 kilometres of coastline which
is now known to host high-grade ilmenite mineralisation. I say “now known” because the TBS exploration licence
was granted to us only last August, and just a month later, in September, having received of the support of the
Mines Department in Greenland (the MLSA) to expedite our field application, we were out in the field working so
that we could collect as many samples as possible to send to independent laboratories for analysis. The results of
this initial testwork have very much confirmed that we were right to stake this ground in north-west Greenland.
Our strategy at Alba, where possible, is to target assets that have a production history, such as our high- grade
Amitsoq graphite project, and also the Clogau gold project, the 49 per cent stake in which we acquired after the
year end. Clogau has a long and illustrious production history; indeed most of the United Kingdom’s gold
production has come from there. On the oil and gas side, when acquiring from Angus Energy a five per cent interest
in the Horse Hill exploration licence back in 2015, we were attracted by the nearby Brockham production licence
which Angus were majority owners of, and were able to negotiate, as part of the transaction with Angus, an option
to farm in for 5 per cent of Brockham. I am very pleased to say that Brockham is now back in production – modestly
to start with but we hope, in due course, in much greater volumes, and so at Alba we are now able to say that we
are a participant in a producing natural resources project.
Now we are working to bring some of our other key assets through the exploration and development phase and into
the mining and production phases in the years ahead. This is what we were formed to do as a company, and it
remains a key objective for Alba as we seek to create real value for our shareholders.
I set out below my thoughts on the outlook for Alba in the year ahead, followed by a detailed review of activities.
OUTLOOK
Our objectives at Alba over the past few years have been to strengthen our asset portfolio by identifying assets with
real potential to be brought into commercial production. This began within a few months of my appointment in
2014, when we made our first foray into the UK oil and gas sector with the acquisition of an initial five per cent
interest in the Horse Hill consortium. Some four years later, having amassed an 18.1 per cent stake in the Horse
Hill consortium, we are now the second largest shareholder in that consortium, as well owning as a five per cent
interest in the Brockham Oil Field which has post financial year end brought the first production revenues since
Alba was formed as a company. And on the mining side, we have strengthened our portfolio greatly, in particular
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT (continued)
as we now own 90 per cent of the high grade Amitsoq graphite project, and 100 per cent of the high grade Thule
Black Sands ilmenite project, both in Greenland.
Having now developed what we consider to be a strong asset base, with a diversified mix of commodities in stable
jurisdictions, we enter a year at Alba when we expect to see key development milestones reached at some of our
key projects. At Horse Hill, once the final regulatory approvals are forthcoming, the Operator will commence long-
term flow testing of the HH-1 well, which we hope will lead to a declaration of commerciality and, therefore, to an
application for a production licence. At Brockham, as I write we await final approvals for Angus Energy, the
operator at Brockham, to commence production at the key BR-X4Z well. In Greenland, we enter our first full field
season at Thule Black Sands with the objective of building on the successful field and testwork programme we
have undertaken to date.
In terms of market sentiment for the key commodities in which we are involved, the oil price has more than doubled
from its 2015 lows and graphite is a key component of lithium-ion batteries demand for which is projected to
increase with the forecast growth of the Electric Vehicle sector in the coming years. Ilmenite, meanwhile, is the
primary source of titanium dioxide which is a multi-billion dollar market the growth in which is expected to be
fuelled by demand from India, China and the Asia Pacific region.
For all these reasons, Alba is well placed for growth.
REVIEW OF ACTIVITIES
Horse Hill (Oil and Gas, United Kingdom)
The Horse Hill-1 well (“HH-1”) is located within onshore exploration licence PEDL 137, on the northern side of
the Weald Basin near Gatwick Airport. Alba owns a 18.1% direct interest in Horse Hill Developments Limited
(“HHDL”). HHDL is a special purpose company that owns a 65% participating interest and operatorship of Licence
PEDL137 and the adjacent Licence PEDL246 in the UK Weald Basin. The remaining 35% participating interests
in the PEDL137 and PEDL246 licences are held by a subsidiary of US-based Tellurian Inc. (formerly known as
Magellan Petroleum Corporation). Alba’s effective interest in the licences is therefore 11.765%.
The key development at Horse Hill during the reporting year was the decision by Surrey County Council’s planning
committee in October 2017 to grant planning permission to enable HHDL to carry out extended well tests (“EWTs”)
at HH-1 as well as to drill and test both a sidetrack from the existing HH-1 well and a new well HH-2. With
regulatory approval having also been received from the Environment Agency, the objective, once approval is
granted by the Oil and Gas Authority (“OGA”), is to carry out a 150 day EWT programme comprising 30-40 days
of testing at the Portland sandstone reservoir and 30-40 days of further testing at each of Kimmeridge limestone
reservoirs KL-3 and KL-4.
As commercially viable initial flow rates were established by the 2016 flow tests (equating to 1,688 barrels of oil
per day (“bopd”) in total, the 2018 testing programme’s goal is to confirm that HH-1’s reservoirs are each connected
to a commercially viable oil volume, thereby enabling a declaration of commerciality to be made. Testing will
commence with the Portland reservoir which, given the 323 bopd stable pumped rate achieved in 2016 and the 32
million barrels most likely OIP calculated by Xodus in 2017, is considered a strong candidate for commercial
viability.
At the end of the reporting year, we announced that we had completed the acquisition of a 3.1 per cent shareholding
interest in HHDL held by Regency Mines Plc. This has cemented Alba’s position as the second largest shareholder
in HHDL with 18.1 per cent.
In prior years, the directors considered that it was not possible to determine a reliable value for the Group’s
investment in HHDL as the range of reasonable fair value measurements was significant. However, by reference
to recent HHDL share transactions where there has been no substantial variation in the range of values applied to
those transactions, the directors judge that it is possible to estimate a reliable fair value for the investment (see note
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT (continued)
9). This change in estimation technique has resulted in a gain on investments in the year of £700,000. Estimates
are inherently subjective, as is the determination as to whether a valuation can be reliably made, and hence whether
the investment should be held at cost or at valuation. The position will be kept under review.
Brockham (Oil and Gas, United Kingdom)
Alba holds a 5% interest in Production Licence 235 (“PL 235”), which comprises the onshore Brockham Oil Field,
which is located just to the north-west of the Horse Hill licences in the Weald Basin in Surrey, southern England.
The key development at Brockham during the reporting year was the completion of drilling at the BR-X4Z well,
following which the Operator, Angus Energy, announced that, following extensive analysis of the results from the
well, its intention was to bring the Kimmeridge into production at the existing Brockham production facility as
soon as the necessary OGA approval was in place. The BR-X4Z well, drilled to a total depth of 1,391m, was
planned to evaluate the Portland, Corallian and Kimmeridge formations at Brockham, including an evaluation of
the Kimmeridge reservoir that had been demonstrated by the Horse Hill discovery 8 km to the south.
The Operator confirmed that the preliminary results from the BR-X4Z well confirm very similar thickness of
reservoir and properties to those reported at Horse Hill, with the gross thickness of the Kimmeridge formation in
BR-X4Z being some 385m. The information obtained has confirmed not only evidence of natural fractures in the
two main limestones intervals previously tested at Horse Hill, but also confirmed abundant natural fractures in
sections of interbedded shales and limestones between and below the two main limestones. Around 200m of the
reservoir has this potential.
As reported below, in March 2018 production was resumed from well BR-X2Y and we await the receipt of planning
permission for the continued surface activities of the production plant which is required to enable production to
commence from well BR-X4Z.
Greenland Mining Projects (Amitsoq, Thule Black Sands, Inglefield Land, Melville Bay)
The principal activities in Greenland during the year have been focused on further exploration work at our high
grade Amitsoq graphite project in southern Greenland, as well as undertaking a maiden field programme at our
new Thule Black Sands project in north-west Greenland.
At Amitsoq, we were very pleased to have discovered a new graphite zone during the summer 2017 field season.
This new discovery, which we have called Kalaaq, consists of multiple thick graphite layers covering a distance of
at least 460 metres. The structural mapping our technical team carried out in the field last summer has been used
to help predict the thickness and distribution of graphite at depth, which has enabled us to refine the location of
proposed drilling sites. The logical next steps at Amitsoq will include carrying out a maiden drilling campaign to
confirm structure and thereafter to seek to define a maiden JORC resource.
During the reporting year, Alba was awarded new exploration licences at Thule Black Sands (ilmenite), Inglefield
Land (multi-commodity) and Melville Bay (iron ore). All the licences are situated in north-west Greenland,
meaning the Company can benefit from logistical economies in its exploration work in that part of Greenland. Our
focus this coming field season in north-west Greenland will be on pushing forward with our prospective Thule
Black Sands project, while at the same time undertaking a maiden field campaign at Inglefield Land, targeting
copper, cobalt and gold, among other minerals and metals.
At Thule Black Sands, a maiden exploration programme was completed towards the end of the reporting year. This
work confirmed the presence of active beach environments with heavy mineral sands being actively deposited,
along with raised beach terraces containing heavy mineral sand. Following laboratory testwork, it was confirmed
that the samples taken from the project showed a weighted average Total Heavy Mineral (“THM”) content of
46.7%. Seven composite samples which were generated of the Heavy Mineral Concentrate from the project showed
an in-situ ilmenite content averaging 10.0% and ranging from 5.7% to 14.9%. Ilmenite-bearing sands were found
to occur over a combined sampled strike length of approximately 8.5 km. Mapping and aerial photography of the
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT (continued)
project coastline showed the potential for ilmenite-bearing sands over the full length of the project coastline, being
approximately 22 km in length.
Other mining projects (Ireland, Mauritania)
The exploration licence in the Limerick Basin is highly prospective for zinc, lead and silver and is only 10 km away
from and part of the same target unit as the Pallas Green zinc discovery. During the reporting year, we reported
the results of a microgravity study and portable XRF shallow soil sampling programme at our Limerick project.
The assay results confirmed four main areas of anomalism. The most pronounced anomalism for copper-silver-
arsenic (Cu-Ag-As) is similar to that found at former Gortdrum copper-silver (Cu-Ag) mine 25 km due east.
Gortdrum was mined for copper-silver-mercury (Cu-Ag-Hg) between 1967 and 1975, producing 3.8 million tonnes
containing 1.19% Cu and 25.1 g/t Ag.
In relation to Mauritania, prior to the reporting year Alba submitted an application to the Mauritanian authorities
to take out a new uranium exploration licence over a reduced area within the original licence area. This new
application area includes the centre of the previously discovered and announced high-tenor uranium anomalies.
The application is currently being processed by the Mauritanian authorities. If a new licence is issued, Alba and its
joint venture partner will then consider their options regarding funding the next stage of exploration. The continued
development of the Mauritania exploration activities is dependent on the grant of a new licence. Because of the
continuing uncertainty regarding precisely when the new licence will be granted and, given the length of time that
has elapsed to date, the Directors have decided that it is prudent to impair the Company’s investment in the
Mauritania project. This gives rise to a non-cash charge in the year of £569,218 (2016 - £nil) bringing the carrying
value of the assets associated with the Mauritania uranium project to nil.
Corporate
Our corporate activities in the year have been primarily focused on securing the Company’s interests in its projects,
notably moving to a 90 per cent holding at Amitsoq and exercising the Company’s option to earn 5 per cent of the
Brockham Oil Field. In addition, the Company undertook a single capital raising round during the reporting year,
raising just over £1 million.
The auditor’s report for the year ended 30 November 2017 includes a paragraph relating to a material uncertainty
as to whether further funding can be obtained to enable the Group to continue as a going concern and to continue
its exploration activities. However we have a reasonable expectation that the Group will continue to be able to meet
its commitments for the foreseeable future, in particular by raising funds when required from the equity capital
markets.
The Company announced at the Annual General Meeting on 30 May 2017 that Michael Nott was to step down as
CEO effective 1 June 2017. Mike has remained on the Board as a non-executive director and continues to give
Alba the benefit of his considerable experience and wise counsel. The Company also strengthened its team with
the appointment in October 2017 of senior geologist Howard Baker as Alba’s Technical Director.
EVENTS AFTER THE REPORTING PERIOD
Acquisition of Stake in Clogau Gold Project
On 4 December 2017 Alba announced that it has acquired a 49 per cent interest in Gold Mines of Wales Limited
(“GMOW”), the ultimate owner of the Clogau Gold Project situated within the Dolgellau Gold Belt in Wales,
United Kingdom (the “Clogau Project”). The Clogau Project comprises the Clogau Gold Mine and includes a
large number of highly prospective gold targets and former gold workings within a total option area of 106.94
km².
The Dolgellau Gold Belt has produced about 131,000 oz of gold, by far the most of any region within the United
Kingdom. Most of this gold (81,000 oz) has been exploited from the historic Clogau-St David’s mine that lies
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT (continued)
within the Clogau Project area. Alba’s review of the Clogau Project concludes that there is high potential to find
unworked veins containing gold mineralisation of similar grade to that known in historic mines in the area. The
focus will be on bringing the Clogau Gold Mine back into production and also making a push into the regional
exploration of the wider Project area.
Very little contemporary gold-focused exploration has been undertaken in the region. Based on the outcome of its
review, Alba has concluded that there is a high potential within the Clogau Project area to find unworked veins
containing gold mineralisation of similar style and grade to that known in historic mines in the area. This includes
near-mine exploration targets and new regional targets.
Significant work initiated and/or completed by Alba at Clogau since acquisition includes a 3D geological model
being constructed for the entire licence area and existing mine workings, detailed underground surveying being
completed by means of 3D scanning, a preliminary mine plan being generated and primary targets for regional gold
exploration being refined for the forthcoming field programme.
Horse Hill (Oil and Gas, United Kingdom)
In March 2018 Alba announced that it had been informed by HHDL, the operator of Horse Hill licenses PEDL137
and PEDL246, containing the Horse Hill-1 ("HH-1") oil discovery, that Surrey County Council had confirmed the
discharge by HHDL of all of pre-commencement planning conditions.
At the date of publication of these accounts, HHDL has received the necessary permission from the Environment
Agency and, to our knowledge, is awaiting approval from the Oil and Gas Authority, following which it will be
able to commence the planned 150 day EWT programme at Horse Hill.
Brockham (Oil and Gas, United Kingdom
In March 2018 Alba announced that the Operator, Angus Energy, had confirmed the resumption of continuous
production from the Portland Reservoir of the BR-X2Y well at Brockham, at a production rate of 21 bopd but that
it expected this flow rate to increase to roughly 35 bopd, albeit that a natural decline in production rates is expected
over time.
In addition, the Operator advised that it had submitted a normalisation planning application to Surrey County
Council (“SCC”) for the continued surface activities of the production plant required for well BR-X4 (and its
inclusive component BR-X4Z). The Operator further advised that it was awaiting SCC’s completion of its process.
As at the date of publication of these accounts, we await a further update from the Operator.
Greenland Mining Projects (Amitsoq, Thule Black Sands, Inglefield Land, Melville Bay)
After the end of the reporting year, we reported the geochemical assays from the Amitsoq project in southern
Greenland. This included graphitic carbon content at the new Kalaaq discovery averaging 25.62% carbon, with a
maximum content of 29.0% carbon.
In March 2018 we announced that Alba’s Amitsoq graphite licence had been renewed to Alba for a further five-
year period and that the Government of Greenland had granted a 12 month moratorium on the exploration
expenditure commitment attaching to the Amitsoq licence. Further metallurgical testwork confirmed the ability to
produce a marketable grade concentrate from Amitsoq graphite.
At Thule Black Sands, Alba announced the completion of the compilation by GEUS, the Geological Survey of
Denmark and Greenland, of a georeferenced orthophoto and digital elevation model across the project area.
Alba announced after the end of the reporting year that it had been granted a mineral exploration licence in
Inglefield Land, north-west Greenland, close to Alba’s existing Inglefield licence area. Extensive exploration has
been carried out across Inglefield Land by previous operators in the region as well as by GEUS, and the historical
data on Alba’s combined Inglefield Land ground includes assay results confirming the presence of copper, gold,
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Alba Mineral Resources plc
CHAIRMAN’S STATEMENT (continued)
cobalt, vanadium and nickel. GEUS has identified that Inglefield Land has the potential for copper-zinc
volcanogenic massive sulphide (VMS) deposits, which are associated with and created by volcanic-associated
hydrothermal events in submarine environments. Previous extensive surface sampling has reported anomalous
copper (up to 1.39%), gold (up to 1.7g/t), cobalt (up to 0.16%), vanadium and nickel.
Corporate
In March 2018, Alba announced two senior oil and gas appointments. Sue Corrigan joined as Alba's Technical
Consultant - Oil & Gas. Ms Corrigan is a Geologist and Geoscientist with 40 years' industry experience in both
Exploration and Development geology. In addition, Feroz Sultan was appointed as Alba's Special Adviser - Oil &
Gas. Mr Feroz Sultan is a petroleum geologist with over 40 years of diverse experience in the management,
exploration, development and production of oil and gas.
Also in March 2018, the Company announced that it had raised £750,000 (before expenses) in a share placing.
I would like to thank all our shareholders for their continued support.
George Frangeskides
Executive Chairman
26 April 2018
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Alba Mineral Resources plc
STRATEGIC REPORT
The directors present the strategic report for Alba Mineral Resources plc (the “Company” or “Alba”, and
collectively with its Subsidiary Companies, the “Group”) for the year ended 30 November 2017.
PRINCIPAL ACTIVITIES
The Group’s principal activity is exploration for and development of natural resources.
BUSINESS REVIEW
The Company operates principally as a holding company and specifically provides support to the Subsidiary
Companies, which hold or have applied for exclusive rights to explore a portfolio of mineral exploration properties.
A review of activities is given in the Chairman’s Statement. The other principal risks and uncertainties relate to
funding risk and the ability to raise funds to further exploration activities, as well as to exploration risk in the event
that exploration programs are not successful. (See also note 1 to the accounts).
KEY PERFORMANCE INDICATORS (KPIs)
As the Group is a pure exploration group with no production or proven reserves at present, other than a 5%
investment in Brockham Oil Field which is operated by a third party, at present KPIs would not provide useful
information for investors. The Board is considering whether KPIs could be considered for adoption in the year
ahead.
Approved by the Board of Directors
and signed on behalf of the Board
George Frangeskides
Director
26 April 2018
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Alba Mineral Resources plc
DIRECTORS’ REPORT
The directors present their report and the audited financial statements of Alba Mineral Resources plc (the
“Company” or “Alba”, and collectively with its Subsidiary Companies the “Group”) for the year ended 30
November 2017. The consolidated financial results of the Group include the results of Aurum Mineral Resources
Ltd, Mauritania Ventures Limited, Obsidian Mining Limited, White Eagle Resources Limited, White Fox
Resources Limited and Dragonfire Mining Limited (collectively the “Subsidiary Companies”). Alba Mineral
Resources Sweden AB was dissolved during the reporting period.
RESULTS AND DIVIDENDS
The loss of the Group for the year, after taxation, attributable to equity holders of the parent amounted to £227,699
(2016: £425,390 loss).
The directors do not recommend the payment of a dividend (2016: £nil).
DIRECTORS
George Frangeskides, Michael Nott and Manuel Lamboley served as directors throughout the year.
DISCLOSURE OF INFORMATION TO THE AUDITOR
In the case of each person who was a director at the time this report was approved:
•
so far as that director was aware there was no relevant audit information of which the company’s auditor was
unaware; and
that director had taken all steps that the director ought to have taken as a director to make himself or herself
aware of any relevant audit information and to establish that the company’s auditor was aware of that
information.
•
This information is given and should be interpreted in accordance with the provisions of section 418 of Companies
Act 2006.
FINANCIAL INSTRUMENTS AND RISKS
The disclosure relating to financial instruments and risks have been included in the notes to the financial statements
(note 20).
EVENTS AFTER THE REPORTING PERIOD
See note 23 and the Chairman’s Statement.
FUTURE DEVELOPMENTS
See Chairman’s Statement.
AUDITOR
A resolution to re-appoint the auditor, Nexia Smith & Williamson, will be proposed at the next Annual General
Meeting.
Approved by the Board of Directors
and signed on behalf of the Board
George Frangeskides
Director
26 April 2018
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Alba Mineral Resources plc
DIRECTORS’ RESPONSIBILITIES STATEMENT
The Company’s ordinary shares are traded on AIM and the Company is therefore not formally required to comply
with the provisions of the UK Corporate Governance Code. However, the Board is committed to high standards of
corporate governance and as the Company grows the Board will review the Code from time to time and will adopt
such of the provisions as it considers to be appropriate to the size of the Company.
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial period. Under that law the
directors have elected to prepare the group and parent company financial statements in accordance with applicable
law and International Financial Reporting Standards (“IFRSs”) as adopted by the European Union and as regards
the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Under company law the directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group
for that period.
In preparing those financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether applicable IFRSs as adopted by the European Union have been followed subject to any
material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company/Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL
RESOURCES PLC
Opinion
We have audited the financial statements of Alba Mineral Resources plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 30 November 2017 which comprise Consolidated Income Statement, 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 Cash
Flow Statements and the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the parent 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 parent 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 parent company
and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
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 30 November 2017 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
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 and parent company 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 as applied to listed entities, 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.
Material uncertainty related to going concern
We draw attention to Note 1 of the financial statements which, under the heading “Going Concern”, sets out the
circumstances which lead to there being a material uncertainty that may cast significant doubt over the ability of
the group and company to continue as going concerns. Our opinion is not modified in respect of this matter.
Key audit matters
In addition to the matter described in the Material uncertainty related to going concern paragraph above we
identified the key audit matters described below as those that were of most significance in the audit of the financial
statements of the current year. Key audit matters include the most significant assessed risks of material
misstatement, including those risks that had the greatest effect on our overall audit strategy, the allocation of
resources in the audit and the direction of the efforts of the audit 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.
11
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL
RESOURCES PLC (continued)
Key audit matters (continued)
Carrying values and impairment of exploration and evaluation costs
Description of the risks
The exploration and evaluation costs form a significant part of the group’s assets. The costs relate to projects which
are at an early stage of exploration and there is no certainty as to whether commercially viable quantities of mineral
resources will be discovered and whether the directors intend to continue each of the exploration activities.
Our response to the risk
In respect of each material license, our work included:
• by reference to the relevant Government databases of licenses we confirmed that the Group still retained its
exploration licenses
• where the licenses were near to expiry we considered whether the directors intended to seek renewal of the
licenses and whether there were any indications that the relevant licenses may not be renewed
• we agreed a sample of the costs making up the capitalised expenditure for the year to supporting documentation,
assessing whether the capitalisation was appropriate
• we considered whether the outcome of the exploration activities to date indicated that the prospective mineral
resources may be commercially unviable
• we considered if the directors intended to undertake further substantive exploration activities in each license
and whether such expenditure was included within the financial forecasts
Carrying value of the investment in Horse Hill Development Company Limited
Description of the risks
As explained in Note 9, the Group and company’s investment in Horse Hill Development Company Limited are
recorded at valuation, as the directors have determined it is possible to reliably estimate that value. In prior years,
the investment was recorded at cost, as the directors considered that it was not possible to reliably estimate the fair
value of the investments.
Estimates are inherently subjective, as is the determination as to whether a valuation can be reliably made, and
hence whether the investment should be held at cost or at valuation.
Our response to the risk
We undertook the following procedures:
• we established the basis on which the directors’ valuation was undertaken and assessed if the valuation
methodology was in accordance with relevant accounting standards
• we verified the observable inputs to the valuation
• we considered if the range of estimates for the valuation were significant, which would indicate that it was
inappropriate for the investment to be held at valuation.
12
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL
RESOURCES PLC (continued)
Key audit matters (continued)
Carrying values and impairment of the parent company’s investment in its subsidiaries and loans due to the parent
company from its subsidiaries
Description of the risk
Due to accumulated losses incurred by the subsidiaries of the parent company, the value of investments held by the
parent company in those subsidiaries and the value of loans due to the parent company from those subsidiaries may
not be recoverable. This could lead to impairment in these asset values on the parent company’s statement of
financial position.
As described in Note 1 under the heading “Impairment assessment of investment in and loans to each of Mauritania
Ventures Limited (£nil), Aurum Mineral Resources Ltd (£1,399,734), Obsidian Mining Limited (£737,503), White
Eagle Resources Limited (£108,345) and White Fox Resources Limited (£32,077) – company only” the directors
of the parent company have assessed whether the investments and loans are recoverable by reference to their
impairment assessments of the respective assets of the subsidiary companies.
Our response to the risk
We reviewed and challenged the directors’ assessments in respect of the parent company’s investment in and loans
due from the subsidiary companies and, for each subsidiary company, considered whether the directors assessment
was consistent with their conclusions regarding the impairments of the subsidiaries’ underlying exploration assets.
Materiality
The materiality for the group financial statements as a whole was set at £159,000. This has been determined with
reference to the benchmark of the group’s total assets, which we consider to be one of the principal considerations
for members of the parent company in assessing the performance of the group. Materiality represents 3% of the
group’s total assets as presented on the face of the consolidated statement of financial position.
The materiality for the parent company financial statements as a whole was set at £127,200. This has been
determined with reference to the benchmark of the parent company’s total assets as the parent company exists as a
holding company for the Group and certain of the group’s assets. Materiality represents 3% of net assets as
presented on the face of the parent company’s statement of financial position, capped at 80% of group materiality.
An overview of the scope of our audit
The Group has seven reporting components, of which the parent company was subject to a full scope audit and we
directly audited certain assets, liabilities and expenses of four components. In total our audit work covered 99.4%
of the consolidated assets, 99.4% of the consolidated liabilities and 93.8% of the consolidated expenses. Two of
the remaining components were inactive in the year and had no assets or liabilities as at the year end; the assets and
liabilities of the other component are immaterial to the group.
All group entities have common management and centralised process and controls and all our audit work was all
conducted in solely the UK.
Other information
The other information comprises the information included in the Report and Consolidated Financial Statements,
other than the financial statements and our auditor’s report thereon. The directors are responsible for the other
information. 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.
13
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL
RESOURCES PLC (continued)
Other information (continued)
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.
Opinion 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 the parent company and their 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 where the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 12, 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’s and the 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 the parent
company or to cease operations, or have no realistic alternative but to do so.
14
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALBA MINERAL
RESOURCES PLC (continued)
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.
Andrew Bond
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London
EC2R 6AY
26 April 2018
15
Alba Mineral Resources plc
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2017
Revenue
Cost of sales
Gross loss
Administrative expenses
Impairment of deferred exploration expenditure
Operating loss
Revaluation of investment
Finance costs
Loss before tax
Taxation
Loss for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Loss per ordinary share
Basic and diluted
Note
8
3
9
5
2017
£
-
-
-
(649,125)
(569,218)
(1,218,343)
700,000
-
(518,343)
-
(518,343)
2016
£
-
-
-
(425,562)
-
(425,562)
-
-
(425,562)
-
(425,562)
(227,699)
(290,644)
(425,390)
(172)
(518,343)
(425,562)
7
(0.012) pence
(0.031) pence
16
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 NOVEMBER 2017
Loss after tax
Items that may subsequently be reclassified to profit or
loss:
- Foreign exchange movements
Total comprehensive loss
Total comprehensive loss attributable to:
Equity holders of the parent
Non-controlling interests
2017
£
(518,343)
2016
£
(425,562)
4,526
(513,817)
5,190
(420,372)
(223,173)
(290,644)
(513,817)
(420,200)
(172)
(420,372)
17
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 NOVEMBER 2017
Note
2017
£
2016
£
Non-current assets
Intangible fixed assets
Investments
Available for sale assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Financial liabilities
Total current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Retained losses
Merger reserve
Foreign currency reserve
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
8
9
11
12
13
14
15
16
1,145,336
3,619,465
14,335
1,383,895
2,286,315
56,285
4,779,136
3,726,495
35,276
626,939
662,215
15,261
668,340
683,601
(180,014)
(253,073)
(433,087)
(377,212)
(253,073)
(630,285)
5,008,264
3,779,811
3,086,246
4,655,702
231,969
2,654,703
3,472,671
546,098
(3,095,120)
200,000
(3,309,246)
200,000
193,685
5,272,482
(264,218)
189,159
3,753,385
26,426
5,008,264
3,779,811
These financial statements were approved and authorised for issue by the Board of Directors on 26 April 2018.
Signed on behalf of the Board of Directors
George Frangeskides
Director
Company No. 5285814
18
Alba Mineral Resources plc
COMPANY STATEMENT OF FINANCIAL POSITION
30 NOVEMBER 2017
Note
2017
£
2016
£
Non-current assets
Intangible fixed assets
Investments
Available for sale assets
Investments in subsidiaries
Loans to subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Total current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Warrant reserve
Retained losses
Merger reserve
Equity shareholders’ funds
8
9
10
10
11
12
13
15
208,030
3,619,465
14,335
530,729
1,746,989
187,125
2,286,315
56,285
581,633
1,633,800
6,119,548
4,745,158
35,276
626,793
662,069
15,261
667,712
682,973
(177,422)
(372,551)
(177,422)
(372,551)
6,604,195
5,055,580
3,086,246
4,655,702
231,969
2,654,703
3,472,671
546,098
(1,569,722) (1,817,892)
200,000
200,000
6,604,195
5,055,580
The loss of the parent company for the year was £193,655 (2016 - £232,392).
These financial statements were approved and authorised for issue by the Board of Directors on 26 April 2018.
Signed on behalf of the Board of Directors
George Frangeskides
Director
Company No. 5285814
19
Alba Mineral Resources plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2017
Share
capital
Share
premium
£
1,993,171
£
2,586,286
At 1 December 2015
Warrant Profit and Merger Foreign Attributable
reserve
reserve
loss
currency
reserve
£
£
446,291 (2,883,856) 200,000
£
£
183,969
to equity
holders
of parents
£
2,525,861
Total
Non
controlling
interest
£
26,598
£
2,552,459
Loss for the period
Translation differences
Comprehensive loss for the period
-
-
-
-
-
-
-
-
-
(425,390)
-
(425,390)
-
-
-
-
5,190
5,190
(425,390)
5,190
(420,200)
(172)
-
(172)
(425,562)
5,190
(420,372)
Shares and warrants issued
Share issue costs
Equity settled share based payments
At 30 November 2016
661,532
-
-
2,654,703
958,069
(71,684)
-
3,472,671
-
-
99,807
-
-
-
546,098 (3,309,246) 200,000
-
-
-
-
-
-
189,159
1,619,601
(71,684)
99,807
3,753,385
-
-
-
26,426
1,619,601
(71,684)
99,807
3,779,811
Loss for the period
Translation differences
Comprehensive loss for the period
-
-
-
-
-
-
-
-
-
(227,699)
-
(227,699)
-
-
-
-
4,526
4,526
(227,699)
4,526
(223,173)
(290,644)
-
(290,644)
(518,343)
4,526
(513,817)
Shares issued
Share issue costs
Equity settled share based payments
Transfer on expiry of warrants
At 30 November 2017
431,543
-
-
-
3,086,246
1,245,931
(62,900)
-
-
4,655,702
-
-
127,696
(441,825)
-
-
-
-
231,969 (3,095,120) 200,000
-
-
-
441,825
-
-
-
-
193,685
1,677,474
(62,900)
127,696
-
5,272,482
-
-
-
-
(264,218)
1,677,474
(62,900)
127,696
-
5,008,264
20
Alba Mineral Resources plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2017
Share
capital
Share
premium
Warrant
reserve
Profit and
loss
Merger
reserve
At 30 November 2015
£
£
1,993,171
2,586,286
£
446,291
£
(1,585,500)
£
200,000
Attributable
to equity
holders
of parents
£
3,640,248
Loss for the period
Comprehensive loss for the period
-
-
-
-
-
-
(232,392)
(232,392)
Shares and warrants issued
Share issue costs
Equity settled share based payments
661,532
-
-
958,069
(71,684)
-
-
-
99,807
-
-
-
-
-
-
-
-
(232,392)
(232,392)
1,619,601
(71,684)
99,807
At 30 November 2016
2,654,703
3,472,671
546,098
(1,817,892)
200,000
5,055,580
Loss for the period
Comprehensive loss for the period
-
-
-
-
-
-
Shares issued
Share issue costs
Equity settled share based payments
Transfer on expiry of warrants
431,543
-
-
-
1,245,931
(62,900)
-
-
-
-
127,696
(441,825)
(193,655)
(193,655)
-
-
-
441,825
-
-
-
-
-
-
(193,655)
(193,655)
1,677,474
(62,900)
127,696
-
At 30 November 2017
3,086,246
4,655,702
231,969
(1,569,722)
200,000
6,604,195
21
Alba Mineral Resources plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2017
Note
2017
£
2016
£
Cash flows from operating activities
Operating loss
Consulting fees settled in shares
Share option charge
Provision for impairment
Foreign exchange revaluation adjustment
Increase/(decrease) in creditors
Decrease/(increase) in debtors
Net cash used in operating activities
Cash flows from investing activities
Payments for deferred exploration expenditure
Payments for available for sale assets
Investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares and warrants
Costs of issue
Net cash generated from financing activities
8
9
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
12
(1,218,343)
(425,562)
65,000
127,695
611,168
4,526
23,702
(20,015)
60,000
99,807
-
5,190
75,312
81,682
(406,267)
(103,571)
(356,616)
-
(449,049)
(805,665)
1,233,431
(62,900)
1,170,531
(41,401)
668,340
626,939
(380,121)
(56,285)
(433,494)
(869,900)
1,425,001
(71,684)
1,353,317
379,846
288,494
668,340
Non-cash transactions
Significant non cash transactions related to the purchase of investments of £315,000 (2016 - £134,600), the
purchase of deferred development expenditure of £64,043 (2016 - £nil) and consulting fees of £65,000 (2016 -
£60,000) which were settled by way of the issue of shares.
Accruals includes capital items of £35,461 (2016 - £220,900).
22
Alba Mineral Resources plc
COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 NOVEMBER 2017
Note
2017
£
2016
£
Cash flows from operating activities
Operating loss
Consulting fees settled in shares
Share option charge
Provision for impairment
Foreign exchange revaluation adjustment
Increase/(decrease) in creditors
Decrease/(increase) in debtors
Net cash used in operating activities
Cash flows from investing activities
Investments in and loans to subsidiaries
Payments for deferred exploration activities
Payments for available for sale assets
Payments for intangible fixed assets
Investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares and warrants
Costs of issue
Net cash generated from financing activities
10
8
9
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
12
(893,655)
(232,392)
65,000
127,695
361,484
(27,452)
25,771
(20,015)
60,000
99,807
5,019
(190,205)
73,708
81,682
(361,172)
(102,381)
(380,324)
-
-
(20,905)
(449,049)
(850,278)
1,233,431
(62,900)
1,170,531
(40,919)
667,712
626,793
(325,239)
-
(56,285)
(56,225)
(433,494)
(871,243)
1,425,001
(71,684)
1,353,317
379,693
288,019
667,712
Non-cash transactions
Significant non cash transactions related to the purchase of investments of £315,000 (2016 - £134,600),
investments in subsidiaries of £64,043 (2016 - £nil) and consulting fees of £65,000 (2016 - £60,000).
Accruals includes capital items of £35,461 (2016 - £220,900).
23
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
Alba Mineral Resources plc is a public limited company incorporated and domiciled in England & Wales, whose
shares are publicly traded on the AIM market of the London Stock Exchange plc. The registered office address is
6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR. The consolidated financial statements
have been prepared on the historical cost basis, save for the revaluation of certain financial assets. The principal
accounting policies applied in the preparation of these financial statements are set out below. These policies have
been applied consistently to all the years presented, except as explained below.
Going concern
Based on financial projections prepared by the directors, the Group’s current cash resources are insufficient to
enable the Group to meet its recurring outgoings and projected exploration expenditure for the entirety of the next
twelve months. However, the directors have a reasonable expectation that the Group will continue to be able to
meet its commitments for the foreseeable future by raising funds when required from the equity capital markets.
The Company may also consider future joint venture funding arrangements in order to share the costs of the
development of its exploration assets, or to consider divesting of certain of its assets and realising cash proceeds in
that way in order to support the balance of its exploration and investment portfolio, though that is not currently the
Company’s preferred route.
In addition, these financial projections take no account of any revenues to be directly received by the Company as
a result of oil production at the Brockham oil field or any revenues which may be received by Horse Hill
Developments Limited (HHDL) as a result of production testing at Horse Hill, and which would reduce the
commitments of the shareholders of HHDL, including the Company.
The directors continue to adopt the going concern basis of accounting in preparing the financial statements, but
note that there is a material uncertainty over the ability of the Company to fund the recurring and projected
expenditure, including development of the Group’s exploration assets. If the Company is unable to raise necessary
funds, the ability of the Company to continue as a going concern would be in significant doubt and it may be unable
to realise its assets and discharge its liabilities in the normal course of business. In particular, the inability to fund
the continued development of the Group’s exploration assets may result in them becoming impaired and any failure
to contribute its share of future exploration and development activities in respect of the oil and gas investments
would result in the dilution of the Group’s interests in those assets.
Basis of accounting
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”), International Accounting Standards (“IAS”) and IFRS Interpretations Committee (“IFRIC”)
interpretations as adopted by the European Union.
Critical accounting estimates and judgements
The preparation of the financial statements in conformity with generally accepted accounting practice requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as
the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and
expenses during the reporting period. Actual outcomes could differ from those estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The areas of
judgement that have the most significant effect on the amounts recognised in the financial statements are as follows:
24
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Capitalisation and impairment assessment of exploration and evaluation costs - £937,306
The capitalisation and impairment assessment of exploration costs relating to the exploration and evaluation phase
requires management to make estimates and assumptions as to the future events and circumstances, especially in
relation to whether an economically viable extraction operation can be established. In making such judgements, the
directors take comfort from the findings from exploration activities undertaken, the fact the Group intends to
continue these activities and that the Company expects to be able to raise additional funding to enable it to continue
the exploration activities.
Such estimates are subject to change and following initial capitalisation, should it become apparent that recovery
of the expenditure is unlikely, the relevant capitalised amount will be written off to the income statement.
The licence for the Mauritania Uranium project expired in May 2015. In February 2016 the Group submitted its
application for a new licence, the application being for a smaller area than the previous licence, but to date the new
licence has not been awarded. Under Mauritanian law, the application process is lengthy, leading to the current
licence hiatus. While the directors are hopeful that the new licence will be granted in due course and that the Group
will be able to continue these exploration activities, given the continuing uncertainty regarding precisely when the
new licence will be granted and the length of time that has elapsed to date, the Directors have decided that the
prudent course of action is to impair the deferred exploration costs relating to this project of £569,218.
The balance of the Group’s deferred exploration costs relate to the projects in Greenland (ilmenite, graphite, iron
ore) and the Limerick base metals project.
Carrying value of investments - £3,619,465
The Group and company’s investment in Horse Hill Developments Limited is carried at fair value, as, in the
judgement of the directors, it has been possible to estimate a reliable fair value for the investment by reference to
recent share transactions where there has been no substantial variation in the range of values. Additionally, although
the investment is in the form of equity and a shareholder loan, the directors judge that the loan is in substance part
of the equity investment.
In prior years, the directors considered that it was not possible to determine a reliable value for the investment as
the range of reasonable fair value measurements was significant. This change in estimation technique has resulted
in a gain on investments in the year of £700,000.
Control over Mauritania Ventures Limited
The directors have to use judgement to assess whether they have control over Mauritania Ventures Limited, where
the Group owns a 50% economic interest. The directors have assessed that they have control over that company
and therefore it is accounted for as a subsidiary. (See also note 10).
25
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Impairment assessment of investment in and loans to each of Mauritania Ventures Limited (£nil), Aurum Mineral
Resources Ltd (£1,399,734), Obsidian Mining Limited (£737,503), White Eagle Resources Limited (£108,345) and
White Fox Resources Limited (£32,077) – company only
In preparing the parent company financial statements, the directors have to assess whether any, or all of the
company’s investments in and loans to each of Mauritania Ventures Limited, Aurum Mineral Resources Limited,
Obsidian Mining Limited, White Eagle Resources Limited and White Fox Resources Limited are impaired or not.
These companies have no source of funds other than their shareholders and the ability of the companies to repay
their inter-company debt and for the Company to gain value from its investments in the companies is dependent on
the future success of the companies’ exploration activities. In undertaking their impairment assessment, the
directors consider the outcome of their impairment assessment of the relevant licences. Following the directors’
decision to impairment the value of the exploration costs previously capitalised in respect of Mauritania, they also
considered the investment in and the loan to Mauritania Ventures Limited to be impaired and have provided against
these accordingly.
New standards and interpretations
The accounting policies adopted are consistent with those of the previous financial year. There are no new and
amended standards and interpretations that impact either the financial position, financial results, disclosures or
stated accounting policies of the Group.
At the date of authorisation of these financial statements the following amendments which have not been applied
in these financial statements were in issue and endorsed by the EU but not yet effective:
IFRS 9: Financial Instruments (effective 1 January 2018)
IFRS 15: Revenue from Contracts with Customers (effective 1 January 2018)
IFRS 16: Leases (effective 1 January 2019)
Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective 1 January 2017)
Amendments to IAS 7: Statement of Cash Flows Disclosure Initiative (effective 1 January 2017)
Amendments to IFRS 2: Classification and measurement of share-based payments
In addition, there are further amendments and standards which have been issued but not yet endorsed by the EU,
including:
Amendments to IAS 28: Investments in Associates and Joint Ventures
The directors do not anticipate the adoption of these amendments will have a material impact on the financial
statements in the period of initial application. Other amendments, standards and interpretations are in issue but they
are not relevant to the Group and as such they are not commented on.
26
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and companies
controlled by the Company, the Subsidiary Companies, drawn up to 30 November each year.
Control is recognised where the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during
the year are included in the consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, where appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the Group. All intra-group transactions, balances, income and expenses are
eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified
separately from the Group’s equity therein.
Non-controlling interests consist of the amounts of those interests at the date of the original business combination
and the minority’s share of changes in equity since the date of the combination.
Foreign currency
For the purposes of the consolidated financial statements, the results and financial position of each Group entity
are expressed in pounds sterling, which is the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the reporting date. Exchange differences arising are included in the profit or loss for the period.
For the purposes of preparing consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated
at the average exchange rates for the period. Gains and losses from exchange differences so arising are shown
through the Consolidated Statement of Changes in Equity.
Intangible assets: Deferred exploration and evaluation costs
Pre-licence costs are expensed in the period in which they are incurred. Expenditure on licence renewals and new
licence applications covering an area previously under licence are capitalised in accordance with the policy set out
below.
Once the legal right to explore has been acquired, exploration costs and evaluation costs arising are capitalised on
a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project.
Costs include appropriate technical and administrative expenses. If a project is successful, the related expenditures
will be reclassified as development and production assets and amortised over the estimated life of the commercial
reserves. Prior to this, no amortisation is recognised in respect of such costs. Where a licence is relinquished, a
project abandoned, or is considered to be of no further commercial value to the Company, the related costs will be
written off to administrative expense within profit or loss. Deferred exploration costs are carried at historical cost
less any impairment losses recognised.
27
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
1.
ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Where the Group has entered into a farm out agreement, the Group does not record any expenditure made by the
farmee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out
arrangements, but redesignates any costs previously capitalised in relation to the whole interest as relating to the
partial interest retained. Any cash consideration received directly from the farmee is credited against costs
previously capitalised in relation to the whole interest with any excess accounted for as a gain on disposal.
Where the Group enters into a farm in agreement the Group recognised all expenditure which it incurs under that
agreement, with the expenditure being either capitalised or expensed in accordance with the policy detailed above.
Intangible assets: Development and production assets
Development and production assets are accumulated into cost centres and represent the cost of developing the
commercial reserves and bringing them into production together with any previously deferred exploration and
evaluation.
On acquisition of development and production assets from a third party, the asset will be recognised in the financial
statements on signature of the sale and purchase agreement, subject to satisfaction of any substantive conditions
within the agreement.
Costs relating to each cost centre are depreciated on a unit of production method based on the commercial proven
reserves for that cost centre. Changes in reserve quantities and cost estimates are recognised prospectively. On
disposal of any part of a development and production asset, proceeds are credited to the Statement of
Comprehensive Income, less the percentage cost relating to the disposal.
A review is performed for any indication that the value of the development and production assets may be impaired.
Where there are such indications, an impairment test is carried out on the relevant cost centre. Additional depletion
is included within cost of sales within the Statement of Comprehensive Income if the capitalised costs of the cost
centre exceed the associated estimated future discounted cash flows of the related commercial oil and gas reserves.
Financial instruments
Investment in subsidiaries: Investment in subsidiaries are recognised initially at cost less any provision for
impairment.
Investments: Investments in unlisted equity instruments whose fair value cannot be reliably measured are
recognised initially at fair value and subsequently measured at cost. Investments in unlisted equity instruments
where a value can be reliably measured are recognised at fair value. Investments in listed equity instruments are
recognised initially and subsequently at fair value, and are classed as available for sale assets.
Trade and other receivables: Trade and other receivables are not interest bearing and are recognised initially at
fair value and subsequently measured at amortised cost using the effective interest method less provision for
impairment.
Cash and cash equivalents: Cash and cash equivalents include cash on hand and deposits held at call with banks.
Trade and other payables: Trade and other payables are not interest bearing and are recognised initially at fair
value and subsequently measured at amortised cost.
Financial liabilities: All financial liabilities are recognised initially at fair value and are subsequently measured at
amortised cost. There are no financial liabilities classified as being at fair value through profit or loss.
Share capital: The Company’s ordinary and deferred shares are classified as equity.
28
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
Warrants: Warrants are stated at their value, which is estimated using a binomial model (2016: Black Scholes
model).
Taxation
The charge for taxation is based on the profit or loss for the year and takes into account deferred tax. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting
date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable
profit or loss, and is accounted for using the liability method.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available
in the foreseeable future against which the temporary differences can be utilised.
2.
ANALYSIS OF SEGMENTAL INFORMATION
The Group currently only has one primary reporting business segment, exploration and development. The Group’s
primary business activities operate in four different geographical areas (and the Group has an investment in a fifth
area) and the exploration assets and capital expenditures can be presented on the basis of geographical segments.
Total assets
Republic of Ireland
Greenland
Mauritania
Australia
United Kingdom
Total segment assets
Capital expenditure
Republic of Ireland
Mauritania
Australia
Greenland
United Kingdom
2017
£
94,984
842,322
-
14,335
4,489,710
5,441,351
7,102
-
-
302,651
654,055
963,808
2016
£
88,059
539,720
569,217
56,285
3,156,815
4,410,096
36,762
397
56,285
489,671
642,284
1,225,399
The Board of the Company evaluate the business on a geographical basis. The administrative expenditure in the
income statement primarily relate to central costs. For 2017, the impairment charge relates to Mauritania and the
revaluation of investment to the United Kingdom.
29
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
3.
OPERATING PROFIT/(LOSS)
This is stated after charging/(crediting):
Impairment of intangible exploration asset
Auditor’s remuneration
- audit services
- other services
4.
DIRECTORS’ EMOLUMENTS
2017
£
569,218
2016
£
-
20,420
15,000
-
-
There were no employees during the period apart from the directors, who are the key management personnel. No
directors had benefits accruing under money purchase pension schemes.
Group and Company
Directors’ Remuneration
Fees
Salaries
Share option charge
Social security costs
Key management personnel remuneration
Average number of employees
Fees
2017
£
16,800
-
-
-
16,800
Salaries
2017
£
100,000
42,000
-
14,000
156,000
Total
2017
£
116,800
42,000
-
14,000
172,800
Fees
2016
£
26,740
-
3,975
-
30,715
Executive Directors
George Frangeskides
Michael Nott
Chade van Hatch
Manuel Lamboley
Total
2017
£
2016
£
16,800
156,000
172,800
120,614
17,343
30,715
94,000
124,715
88,927
9,905
310,757
223,547
3
3
Salaries
2016
£
48,000
36,000
4,000
6,000
Total
2016
£
74,740
36,000
7,975
6,000
94,000
124,715
Mr Frangeskides agreed to settle a total of £14,000 of the fees stated above by way of the issue of fully
paid ordinary shares in the Company. (In 2016, Mr Frangeskides agreed to settle £30,000 of fees and
salary by way of the issue of fully paid ordinary shares).
Note 22 gives details of other transactions with the directors.
30
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
4.
DIRECTORS’ EMOLUMENTS (continued)
During the year the company granted warrants and options to each of the directors as follows:
2017
No
George Frangeskides
Michael Nott
Manuel Lamboley
60,000,000
15,000,000
-
2016
No
20,000,000
20,000,000
5,000,000
The warrants issued to Mr Nott during the year ended 30 November 2017 have an exercise price of 0.4 pence per
share. Subject to the terms of the warrants, the warrants issued can be exercised at any time from the date of grant,
13 January 2017, until 27 March 2021.
The options awarded to Mr Frangeskides during the year ended 30 November 2017 were under the Company’s
new Enterprise Management Incentive plan (“EMI scheme”). Following adoption of the EMI scheme, the
remuneration committee awarded to George Frangeskides (Executive Chairman) 15 million share options vesting
the day following 13 January 2017 (“date of grant”), with a further 15 million share options vesting on each of the
dates falling 6, 12 and 18 months following the date of grant. These options have an exercise price of 0.4p and
expire on the tenth anniversary of grant if not exercised. They are subject to accelerated vesting in certain
circumstances, including pursuant to a change of control of the Company following a completed takeover offer.
The estimated value of the share based remuneration provided to directors in the year ended 30 November 2017
was £120,614 (2016: £88,927). This value is derived from a binomial valuation as described in note 15 (2016:
Black Scholes model). The warrants were issued when the share price was 0.36 pence per share and the warrants
were valued at between 0.18 pence and 0.28 pence per share depending on their vesting date. The warrant value is
high as a proportion of the market price due to the share price volatility.
The warrants issued during the prior year have an exercise price of 0.3 pence per share and can be exercised at any
time until 27 March 2021.
31
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
5.
INCOME TAXES
a) Analysis of charge in the period
United Kingdom corporation tax at 19.34% (2016: 20.00%)
Deferred taxation
b) Factors affecting tax charge for the period
2017
£
-
-
-
2016
£
-
-
-
The tax assessed on the loss on ordinary activities for the year differs from the standard rate of corporation tax in
the UK of 19.34% (2016: 20.00%). The differences are explained below:
(Loss)/profit on ordinary activities before tax
2017
£
2016
£
(518,343)
(425,562)
(Loss)/profit multiplied by standard rate of tax
(100,236)
(85,112)
Effects of:
Losses carried forward not recognised as deferred tax assets
100,236
-
85,112
-
A deferred tax asset has not been recognised in respect of timing differences relating to tax losses and accelerated
capital allowances, as there is insufficient evidence that the potential asset will be recovered. Given the lack of
funds available to the Group and the non-recognition of any asset, no full analysis of deferred tax asset has been
prepared. However, the aggregated losses in each of the Group companies, Alba Mineral Resources plc, Aurum
Mineral Resources Ltd, Mauritania Ventures Limited, Obsidian Mining Limited, White Eagle Resources Limited,
and White Fox Resources Limited, amounted to £3,795,120 before adjustments required by local tax rules and
excluding losses on intra-group transactions (2016: £3,309,246).
6.
COMPANY LOSS/PROFIT FOR THE YEAR
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and
has not included its own income statement and statement of comprehensive income in these financial statements.
The Company’s loss for the year amounted to £193,655 (2016: £232,392 loss).
7.
LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of £227,699 (2016:
£425,390 loss) by the weighted average number of shares of 1,949,148,404 (2016: 1,373,008,189) in issue during
the year. The diluted loss per share calculation is identical to that used for basic loss per share as warrants are not
dilutive due to the losses incurred during the current and prior periods.
32
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
8.
INTANGIBLE FIXED ASSETS
Group
Cost
At 1 December 2015
Exchange differences
Additions
At 30 November 2016
Exchange differences
Additions
As 30 November 2017
Amortisation
As at 1 December 2015 and 30 November 2016
Impairment charge for the year
As 30 November 2017
Net book value
At 30 November 2017
Exploration and
evaluation
£
662,874
7,463
526,433
Development
and production
£
-
-
187,125
Total
£
662,874
7,463
713,558
1,196,770
187,125
1,383,895
6
309,748
1,506,524
(569,218)
(569,218)
-
20,905
208,030
6
330,653
1,714,554
-
-
(569,218)
(569,218)
937,306
208,030
1,145,336
At 30 November 2016
1,196,770
187,125
1,383,895
The provision for impairment during the period was against the intangible fixed assets relating to the Mauritania
uranium project. A new uranium exploration licence was applied for in a February 2016 but has yet to be awarded.
The directors consider that due to the continuing uncertainty regarding precisely when the new licence will
be granted and the length of time that has elapsed to date, it is prudent to make a provision against the full
value of asset.
The Mauritania Uranium project is held by Mauritania Ventures Limited, a company which is 50% owned by the
Group. The consent of the holder of the other 50% of the shares must be obtained before the project asset can be
sold or otherwise transferred.
The group’s other intangible fixed assets relate to Amitsoq, the Greenland graphite project (£723,150), Thule, the
Greenland mineral sands project (£90,420), other Greenlandic projects (£28,753), the Limerick base metals project
(£94,984) and the Brockham oil field project (£208,030).
Company
Cost
At 1 December 2015
Additions
Exploration and
evaluation
£
50,000
-
Development
and production
£
-
187,125
Transfer to investment in subsidiaries
(50,000)
At 30 November 2016
Additions
At 30 November 2017
-
-
-
-
187,125
20,905
208,030
The company deferred exploration costs relate solely to the Brockham oil field.
33
Total
£
50,000
187,125
(50,000)
187,125
20,905
208,030
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
9.
INVESTMENTS
At 30 November 2015
Additions
At 30 November 2016
Additions
Revaluation
At 30 November 2017
£
1,838,222
448,093
2,286,315
633,150
700,000
3,619,465
The above investment represents an investment in 18.1% (2016 – 15%) of the issued share capital of Horse Hill
Developments Limited (“HHDL”) and an associated loan to that company. HHDL is an early stage private
company with no stock quote, but recent share transactions have been without substantial variation in the range of
prices and have allowed the directors to reliably estimate the fair value of the investment. Under the IFRS 7
valuation hierarchy this is a tier 2 valuation technique, with the observable inputs being the share prices arising on
recent purchase of HHDL shares. (To 30 November 2016, the directors considered that it was not possible to
determine a reliable value for the investment as the range of reasonable fair value measurements was significant
and the investment was stated at cost).
The directors’ current intention is to retain this investment for the foreseeable future. The registered office of HHDL
is: The Broadgate Tower, 8th Floor, 20 Primrose Street, London, EC2A 2EW.
10.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Company
At 30 November 2015
Additions
Transfer from intangible fixed assets
Foreign exchange movements
Provision for impairment
At 30 November 2016
Additions
Foreign exchange movements
Provision for impairment
At 30 November 2017
Investments
£
Loans
£
Total
£
282,483
249,150
50,000
-
-
1,162,524
1,445,007
286,090
-
190,205
(5,019)
535,240
50,000
190,205
(5,019)
581,633
1,633,800
2,215,433
(904)
-
(50,000)
530,729
355,271
27,452
(269,534)
1,746,989
354,367
27,452
(319,534)
2,277,718
During the period the Company made a provision for impairment of its investment in Mauritania Ventures Limited
and the associated intercompany loan. A new uranium exploration licence has been applied for in a prior period
but the directors considered that due to the continuing uncertainty regarding precisely when the new licence
will be granted and the length of time that has elapsed to date it would be prudent to make a provision
against the full value of the investment and the loan.
34
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
10.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)
At 30 November 2017 the Company held the following interests in subsidiary undertakings, which are included in
the consolidated financial statements and are unlisted.
Name of company
Aurum Mineral Resources Ltd
Mauritania Ventures Limited
Obsidian Mining Limited
White Eagle Resources Limited
White Fox Resources Limited
Dragonfire Mining Limited
Country of
incorporation
Ireland
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Proportion
held
100%
50%
90%
100%
51%
100%
Business
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
The address of the registered office of Aurum Mineral Resources Ltd is Suite No. 2, Unit No. 34 Kells Business
Park, Cavan Road, Kells, Co. Meath, Ireland. All the other companies have their registered office at 6th Floor, 60
Gracechurch Street, London EC3V 0HR.
Mauritania Ventures Limited has been treated as a subsidiary undertaking because the Company exercises dominant
influence over the investment by virtue of having the casting vote at Board meetings.
The additions to investments in the prior year relate to Obsidian Mining Limited. For accounting purposes, the
Group is considered to have assumed control of that company in the prior year, although the acquisition was legally
completed only after the Greenland authorities had given their regulatory approval in February 2017. The Group
has a put and call option over the 10% of the shares which it does not own.
Alba Mineral Resources Sweden AB was dissolved in January 2017.
11.
TRADE AND OTHER RECEIVABLES
Current
Other debtors
Prepayments and accrued income
The
Group
2017
£
22,796
12,480
35,276
The
Group
2016
£
10,428
4,833
15,261
The
Company
2017
The
Company
2016
£
22,796
12,480
35,276
£
10,428
4,833
15,261
The fair value of trade and other receivables approximates to their book value.
35
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
12.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
The fair value of cash at bank is the same as its carrying value.
13.
TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors
Accruals and deferred income
The
Group
2017
The
Group
2016
The
Company
2017
The
Company
2016
£
£
£
£
626,939 668,340
626,793
667,712
626,939 668,340
626,793
667,712
The
The
Group
Group
2016
2017
£
£
89,175
58,807
22,978
9,022
98,229 279,015
180,014 377,212
The
Company
2017
The
Company
2016
£
57,826
22,978
96,618
177,422
£
88,218
9,022
275,311
372,551
The fair value of trade and other payables approximates to their book value.
14.
FINANCIAL LIABILITIES
Financial Liabilities
Other borrowings
The
Group
2017
£
The
Group
2016
£
253,073 253,073
253,073 253,073
The
Company
2017
The
Company
2016
£
£
-
-
-
-
The loans outstanding are non-interest bearing with no fixed repayment term and are unsecured.
36
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
15.
CALLED UP SHARE CAPITAL
Allotted, called up and fully paid
Ordinary shares of 0.1 pence
Deferred shares of 0.9 pence
Total
2017
Number
of shares
2017
£
2016
Number
of shares
2016
£
2,248,614,935
93,070,100
2,341,685,035
2,248,615 1,817,071,600
93,070,100
3,086,246 1,910,141,700
837,631
1,817,072
837,631
2,654,703
On 27 May 2016 the Company adopted new Articles which do not specify authorised share capital. All issued
ordinary shares carry equal rights. The deferred shares do not carry any rights to vote or dividend rights. In addition,
holders of deferred shares will only be entitled to a payment on a return of capital or on a winding up of the
Company after each of the holders of the ordinary shares have received a payment of £1,000,000 on each such
share.
During the year the company issued ordinary shares as follows:
13 January 2017 – warrant exercise
27 February 2017 – partial consideration for acquisition of Obsidian Mining
Limited
2 August 2017 – warrant exercise
25 August 2017 – placing for cash
28 September 2017 – partial consideration for acquisition of Obsidian Mining
Limited, placing to Directors for cash, consulting fees settled in shares
29 November 2017 – partial consideration for acquisition of additional shares in
Horse Hill Developments Limited
Total
Number of
shares
51,143,650
Proceeds of
issue
£
153,431
14,655,839
5,000,000
266,250,000
50,000
15,000
1,065,000
19,760,750
84,043
74,733,096
431,543,335
315,000
1,682,474
The value of the shares issued to settle outstanding consulting fees is estimated to be the market price for the
services rendered.
Details of the shares issued (and warrants exercise) after the period end are given in note 23.
37
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
15.
CALLED UP SHARE CAPITAL (continued)
As at 30 November 2017 Alba had 173,000,000 warrants and options outstanding.
No. of warrants
15,000,0001
20,000,0001
2,000,000
51,000,0002
15,000,0003
60,000,0003
5,000,0003
5,000,0003
173,000,000
Exercise price (pence)
Final exercise date
Vested
0.3 pence
0.3 pence
0.3 pence
0.3 pence
0.4 pence
0.4 pence
18 September 2020
27 March 2021
28 May 2021
27 March 2021
27 March 2021
13 January 2027
0.6 pence
0.7 pence
22 Oct 2020
1 Nov 2019
Vested
Vested
Vested
Vested
Vested
Awarded under the EMI scheme –
see Note 4.
30,000,000 vested in 2017,
30,000,000 vesting in 2018
Vesting 2018
2,500,000 vested Dec 2017,
2,500,000 vesting 2018
As at 30 November 2016 Alba had 265,474,622 warrants outstanding.
No. of warrants
15,000,0001
20,000,0001
46,143,650
12,000,000
45,909,726
51,333,331
2,754,584
21,333,331
51,000,0002
265,474,622
Exercise price (pence)
Final exercise date
Vested
0.3 pence
0.3 pence
0.3 pence
0.3 pence
0.5 pence
0.5 pence
0.5 pence
0.5 pence
0.3 pence
18 September 2020
27 March 2021
27 March 2021
28 May 2021
22 April 2017
22 April 2017
22 April 2017
24 April 2017
27 March 2021
Vested
Vested
Vested
Vested
Vested
Vested
Vested
Vested
47,500,000 vested
3,500,000 vesting in 2017
1,2,3 These warrants fall within the scope of IFRS 2 “Share Based Payments” and were issued in 2015, 2016 and
2017 respectively. The fair value of the warrants issued in 2017 calculated using a binomial model was £120,614
(In the prior year a Black Scholes model was used with a fair value of warrants issued of £103,575). Within the
meaning of the IFRS 13 fair value hierarchies, this is a Level 2 valuation. It based on the Company’s share price
volatility over the period to the date of issue of the warrants, a risk free rate of 0.5% (2015: 0.5%) per annum, a
dividend yield of nil, the life of the options, the share price at the date of issue of the warrants and the strike prices
of the warrants. The volatility was derived from the quoted prices for the Company’s shares in the 18 month periods
prior to the issue of the respective warrants.
16.
NON-CONTROLLING INTERESTS
At 1 December 2015
Loss on ordinary activities after taxation
At 30 November 2016
Loss on ordinary activities after taxation
At 30 November 2017
38
£
26,598
(172)
26,426
(290,644)
(264,218)
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
17.
RESERVES
The following describes the nature and purpose of certain reserves within owners’ equity:
Share premium: Amounts subscribed for share capital in excess of nominal value less costs of issue.
Merger reserve: Amount in excess of nominal value on issue of shares in relation to business combinations.
Foreign currency reserve: Gains/losses arising on retranslating the net assets of the Group into pounds sterling.
Warrant reserve: Proceeds from the issue of extant warrants.
18.
CAPITAL COMMITMENTS
As at 30 November 2017, the Group / Company had committed to spend at least approximately £246,781 in the
coming year on its Greenland licences, being in approximate terms the minimum commitment required under the
licences.
The directors had also approved the acquisition of a 49 per cent interest in Gold Mines of Wales Limited
(“GMOW”), the ultimate owner of the Clogau Gold Project in Wales, for 83,333,333 Alba shares (valuing the total
consideration at approximately £316,667).
19.
CONTINGENT LIABILITIES
There were no contingent liabilities at 30 November 2017 (2016: £nil).
The Company / Group will be liable for 5% of the abandonment and reinstatement costs relating to the Brockham
Production licence. The liability which is expected will arise is not material to the Group or Company.
20.
FINANCIAL INSTRUMENTS
The Group’s financial instruments comprise investments, cash at bank and various items such as available for sale
assets, other debtors, loans and creditors. The Group has not entered into derivative transactions nor does it trade
financial instruments as a matter of policy.
Credit Risk
The Group’s credit risk arises primarily from cash at bank, other debtors and the risk the counterparty fails to
discharge its obligations. In 2017, other debtors included £9,900 (2016 - £nil) which was past due but not impaired.
The company’s credit risk primarily arises from intercompany debtors, which are considered to form part of the
company’s investment in the subsidiaries (see note 10) and cash at bank and other debtors, as per the Group. Should
the subsidiaries’ exploration activities not be successful, it is possible that these debtors may become irrecoverable.
39
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
20.
FINANCIAL INSTRUMENTS (continued)
Liquidity Risk
Liquidity risk arises from the management of cash funds and working capital. The risk is that the Group will fail to
meet its financial obligations as they fall due. The Group operates within the constraints of available funds and
cash flow projections are produced and regularly reviewed by management.
Interest rate risk profile of financial assets
The only financial assets (other than short term debtors) are cash at bank and in hand, which comprises money at
call. The interest earned in the year was negligible. The directors believe the fair value of the financial instruments
is not materially different to the book value.
Foreign currency risk
The Group has an Irish subsidiary, which can affect the Group’s sterling denominated reported results as a
consequence of movements in the sterling/euro exchange rates. The Group also incurs costs denominated in foreign
currencies (primarily Danish Krone) which gives rise to short term exchange risk. The Group does not currently
hedge against these exposures as they are deemed immaterial and there is no material exposure as at the year end
(2016 - £nil).
Market risk
Following the acquisition of the investment in Horse Hill Developments Limited (“HHDL”), the Group is exposed
to market risk in that the value of the investment would be expected to vary depending on the price of oil. A 10%
variation in the price of HHDL shares would result in a change in market value of the Group’s investment in HHDL
of £362,000. (For 2016, it was not possible to determine a reliable estimate of the fair value of the investment and
therefore it was not possible to assess the sensitivity to market risk).
The Group is also exposed to market risk arising from listed investments which are stated at their fair value.
Categories of financial instruments
Group
2017
£
Group Company Company
2017
2016
£
2016
£
£
Financial assets
Available for sale financial assets – at cost
Available for sale financial assets – at fair value
Loans and receivables
Financial liabilities
Financial liabilities held at amortised cost
- 2,286,315
- 2,286,315
56,285
10,428
3,656,596 2,353,028 3,656,596 2,353,028
56,285 3,633,800
22,796
10,428
3,633,800
22,796
433,086
630,286
177,422
372,551
433,086
630,286
177,422
372,551
Contractual liabilities of £253,073 (2016: £253,073; Company 2017: £nil, 2016: £nil) have no fixed terms for
repayment. Other contractual liabilities are either contractually overdue or due within one month.
40
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
21.
CAPITAL MANAGEMENT
The Group’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern
and develop its mining and exploration activities to provide returns for shareholders. The Group’s funding
comprises equity and debt. The directors consider the Company’s capital and reserves to be capital. When
considering the future capital requirements of the Group and the potential to fund specific project development via
debt, the directors consider the risk characteristics of all the underlying assets in assessing the optimal capital
structure.
22.
RELATED PARTY TRANSACTIONS
Company
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are disclosed in note 10. Details of transactions between the Company and other
related parties are disclosed below.
Group
Stirling Corporate Services Limited, a company which George Frangeskides, a director of the Company, controls,
charged the Group £14,652 (2016 - £10,800) for the provision of financial and administrative services. As at the
year end, £nil (2016 - £nil) was owed to Stirling Corporate Services Limited.
Aetos Consulting Limited, a company which George Frangeskides, a director of the Company, jointly controls,
charged the Group fees for consultancy services of £35,700 (2016 - £60,900). Of these fees, £18,900 are not
reported as director’s fees in note 4 as they represent work carried out specifically on the advancement of the
Company’s Greenland licences and have therefore been capitalised. As noted below, on 28 September 2017 accrued
fees of £30,000 were settled by way of 7,500,000 fully paid ordinary shares which were issued to Mr Frangeskides.
As at the year end £240 (2016 - £33,600) was owed to Aetos Consulting Limited.
Woodridge Associates, a business which Michael Nott, a director of the Company, controls, charged the Group
fees for consultancy services of £16,800 (2016 - £44,800). These fees are not reported as director’s fees in note 4
as they represent work carried out specifically on the advancement of the Company’s Amitsoq licence and have
therefore been capitalised. As noted below, on 28 September 2017 accrued fees of £30,000 were settled by way of
7,500,000 fully paid ordinary shares which were issued to Mr Nott. As at the year end, £13,920 (2016 – £22,400)
was due to Woodridge Associates.
On 28 September 2017 7,500,000 fully paid ordinary shares were issued to Mr Michael Nott, and 7,500,000 fully
paid ordinary shares were issued to Mr George Frangeskides, or to their respective nominees, in settlement of
accrued fees of £30,000 owed to each of them.
On 13 January 2017, the Company announced that it had introduced a new Enterprise Management Incentive plan
("EMI scheme"). See Note 4 for further details.
41
Alba Mineral Resources plc
NOTES TO THE FINANCIAL STATEMENTS (continued)
23.
EVENTS AFTER THE REPORTING PERIOD
On 4 December 2017 Alba announced that it has acquired a 49 per cent interest in Gold Mines of Wales Limited
(“GMOW”), the ultimate owner of the Clogau Gold Project in Wales, for 83,333,333 Alba shares (valuing the total
consideration at approximately £316,667 based on the Company’s closing share price on 1 December 2017).
On 9 February 2018 Alba announced that it had been granted an additional exploration licence in North-West
Greenland, securing land adjacent to its Inglefield land licence, prospective for a suite of high-value minerals and
metals.
On 23 March Alba announced that it had been advised by HHDL that all pre-commencement planning conditions
had been discharged in respect of planned extended flow tests.
On 29 March 2018 Alba announced that it had raised £750,000 (before expenses) through the issue of 250,000,000
ordinary shares at a price of 0.3 pence per share.
Also on 29 March 2018 Alba announced that the operator of the Brockham oil field had advised it that production
has resumed at the BR-X2Y well at Brockham. In addition, the Operator advised that it had submitted a
normalisation planning application Surrey County Council (“SCC”) for the continued surface activities of the
production plant required for well BR-X4 (and its inclusive component BR-X4Z). The Operator further advised
that it was awaiting SCC’s completion of its process. As at the date of publication of these accounts, we await a
further update from the Operator.
On 28 December 2017 2018, Alba reported the geochemical assays from the Amitsoq project in southern
Greenland. This included graphitic carbon content at the new Kalaaq discovery averaging 25.62% carbon, with a
maximum content of 29.0% carbon.
In March 2018 Alba announced that the Amitsoq Graphite licence had been renewed to Alba for a further five-year
period and that the Government of Greenland had granted a 12 month moratorium on the exploration expenditure
commitment attaching to the Amitsoq licence. Further metallurgical testwork confirmed the ability to produce a
marketable grade concentrate from Amitsoq graphite.
At Thule Black Sands, Alba announced on 13 March 2018 the completion of the compilation by GEUS, the
Geological Survey of Denmark and Greenland, of a georeferenced orthophoto and digital elevation model across
the project area.
In March 2018, Alba announced two senior oil and gas appointments. Sue Corrigan joined as Alba's Technical
Consultant - Oil & Gas. Ms Corrigan is a Geologist and Geoscientist with 40 years' industry experience in both
Exploration and Development geology. In addition, Feroz Sultan was appointed as Alba's Special Adviser - Oil &
Gas. Mr Feroz Sultan is a petroleum geologist with over 40 years of diverse experience in the management,
exploration, development and production of oil and gas.
42