ALTUS STRATEGIES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Company Registration No. 10746796 (England and Wales)
CONTENTS
Company Information
Key highlights
Chairman’s statement
Business overview
Chief Executive Officers’ statement
Strategic report
Key performance indicators
Principal risk and uncertainties
Corporate and social responsibility
Financial review
Review of operations by country
Corporate governance report
Directors' report
Directors’ remuneration report
Statement of directors’ responsibilities
Independent auditor's report
Independent auditor’s report in respect of
Canadian national instrument 52-107
Group statement of comprehensive income
Group statement of financial position
Company statement of financial position
Group statement of changes in equity
Company statement of changes in equity
Group statement of cash flows
Company statement of cash flows
Notes to the financial statements
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Company Information
Non-executive Chairman
David Netherway
Chief Executive Officer
Steven Poulton
Executive Director
Matthew Grainger
Non-executive Director
Robert Milroy
Non-executive Director
Michael Winn
Chief Financial Officer
David Miles
Secretary
Matthew Grainger
Company number
10746796
Registered office
Independent Auditor
Bankers
Orchard Centre
14 Station Road
Didcot
Oxfordshire
OX11 7LL
United Kingdom
PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
United Kingdom
HSBC Bank Plc
186 Broadway
Didcot
Oxfordshire
OX1 1BE
United Kingdom
Nominated Adviser & Broker
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
United Kingdom
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Solicitors
Registrar (UK)
Registrar (Canada)
PR Adviser
Gowling WLG (UK) LLP
4 More Place Riverside
London
SE1 2AU
United Kingdom
Michael Provenzano
Northwest Law Group
Suite 704, Box 35
595 Howe Street
Vancouver
British Columbia
V6C 2T5
Canada
Computershare Investor Services Plc
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
United Kingdom
Computershare Investor Services Inc.
510 Burrard St, 3rd Floor
Vancouver
British Columbia
V6C 3B9
Canada
Blytheweigh
4-5 Castle Court
London
EC3V 9DL
United Kingdom
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Key highlights
Corporate highlights
•
Completion of the Plan of Arrangement with Legend Gold Corp.
- Six advanced exploration licences in Mali
-
- New JV partner in ASX-listed Resolute Mining Ltd
- Shareholder base strengthened in North America
Four licences strategically adjacent to the Sadiola gold mine
• Dual listing of the Company’s shares on the TSX-V alongside AIM listing
•
• Discussions with potential Joint Venture partners across project portfolio
Agreement to vend Cameroon Bauxite JV into JV partner for equity plus royalty
Operational highlights
Potential VMS style copper and gold discovery at Daro in Ethiopia
•
• New copper and zinc focused exploration licences granted in Morocco
• Major artisanal gold workings discovered at the Zolowo licence in Liberia
• Grant of the Company’s first exploration licence in Côte d’Ivoire
•
• Drill targets defined at Lakanfla gold project in Mali
Additional high grade iron ore discovered at Bikoula licence in Cameroon
Financial highlights
•
•
•
Fundraise of £2.3m/C$4.1m (before expenses) in April 2018 with strong institutional
support
Cash outflow of £1.8m/C$3.1m from operating activities during the year
Cash and marketable securities of £1.6m/C$2.8m (cash balance of £0.7m/C$1.3m and
listed equity holdings of £0.9m/C$1.5m as at 31 December 2018
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Chairman’s Statement
Reflection on the year
2018 was a significant year for the Company. We materially expanded the firm’s assets and shareholder
base by way of our Plan of Arrangement with Legend Gold Corp, which was listed on the TSX Venture
exchange in Toronto (“TSX-V”). From a financial standpoint the deal brought intangible assets worth
£3.7 million on to our balance sheet and, critically, the deal expanded our portfolio of projects across
Africa, with six new and exceptionally prospective advanced gold licences in Mali, one of which was
already under a JV agreement with ASX-listed Resolute Mining Ltd. Shortly after this deal, Altus
completed a £2.3m/C$4.1m financing and successfully listed on the TSX-V. I am delighted to take the
opportunity here to welcome our new shareholders to our register and thank them for their continued
support.
Company vision and focus
The vision we are pursuing is to develop a portfolio of royalty income streams and minority interests in
mines across Africa, through the generation of exploration projects and advancing them with joint
venture partners. The portfolio continues to evolve with 17 projects now undergoing exploration activity
and a number of JV arrangements having been made or under discussion. The portfolio approach is
important to us, as it mitigates inherent exploration risk and geopolitical risk, and by partnering at the
advanced stages we reduce our own reliance on capital markets. Our focus remains on the vast and
prospective continent of Africa, as this is where projects can still be discovered and developed rapidly
and cost efficiently from surface.
Board
Our initial public offering on London’s AIM in August 2017 was a counter-cyclical move by the Company
and one which has proven to be pivotal. Within a few months the listing had acted as a springboard for
us to undertake our combination with Legend Gold, complete a financing and dual list on the TSX-V.
The remainder of 2018 has provided an opportunity for the Board to bed in, and get to grips with the
enlarged operations of the Company and its dual-listed status with the governance requirements in two
jurisdictions. As laid out in our Corporate Governance Report, the board members bring a range of
talents and a wealth of relevant multi-national experience to meet the challenges ahead, and I am
encouraged by the enthusiasm and dedication to the success of Altus that the Board has demonstrated.
Board focus
By the end of 2018 Altus was listed in two countries and conducting exploration activities in six more.
The board is keenly aware that the growing size and complexity of is operations means that it must
keep a sharp focus on good governance in all spheres of its activity, which involves keeping its assets in
good standing, preserving the value of shareholders’ interests, maintaining compliance with laws and
regulations, and upholding the highest standards in its conduct.
Looking forward
Altus is on track to become a specialist mining royalty company. What sets us apart is that we are
generating our own opportunities for future royalties, by making and monetising mineral discoveries.
The forthcoming year promises to be another exciting and busy time for the Altus team. A number of
the Company’s assets have been developed to the stage of readiness for drilling with JV partners, and I
have been greatly encouraged by the level of interest shown by third parties over recent months. I am
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confident that the team has the ability to secure advantageous agreements, and I look forward to seeing
their hard work continue to bear fruit.
David Netherway
Non-Executive Chairman
29 April 2019
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Business Overview
Our business at a glance
Altus is a project and royalty generator focused on mineral exploration in Africa. The Company is based
in the UK and dual-listed in the UK (AIM: ALS) and in Canada (TSX-V: ALTS). It identifies and acquires
geologically prospective exploration licences through its local African subsidiaries, makes discoveries
and seeks joint ventures with third parties to advance these into production. Altus seeks to retain cash-
generating royalty interests on each of its projects.
Project and royalty generator model
Our business model is to make and monetise mineral discoveries. We proactively seek joint venture
partners to finance the exploration and development of the projects we have generated, in return for a
share in their ownership and the payment of future royalties to Altus. Our goal is to create shareholder
value by participating in the potentially substantial and long term returns on capital that can be made
by making economic mineral discoveries.
Our business model
Risk diversification is at the heart of our philosophy, and we enact this by exploring for a variety of
minerals at multiple locations across several jurisdictions. At the end of 2018 the Group had a diversified
portfolio of seventeen projects, exploring for six different commodities across six countries.
This diversification means that the portfolio is constantly evolving: new licences are added, licences that
are not considered to be a good prospect are relinquished, those for which onsite surveying works and
office-based data and sample analysis indicate a potentially economic discovery can be made are
actively marketed, licences that are under JV partnerships will be drilled, and the successful of these will
result in mines being built and royalties accruing to Altus on the mineral assets produced.
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Our royalty generation pyramid
Altus generates projects by selectively acquiring mineral exploration licences and advancing projects
through the work of its team of geologists and analysts. At each level, any projects that prove to be
uneconomic are dropped. Successful projects progress up the pyramid toward advanced exploration
with JV partners and eventually the definition and monetisation of the resource. As each project matures
and develops Altus reduces its ownership in each project but retains a royalty-generating interest.
Focus on Africa
Altus is focused on Africa where, due to the relative lack of exploration using modern techniques,
economic mineral deposits can still be discovered cropping out at surface. According to a recent survey
by MinEx Consulting, 24% of global discoveries in the prior decade were found on the continent, despite
it being the recipient of only 14% of the global exploration budgets. The same survey reported that
deposits in Africa (excluding South Africa) are being discovered at average depths of just 9m, which is
much shallower than the average global depth of 78m; in Canada the average discovery depth is over
125m.
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A growing portfolio of assets across Africa
This opportunity to make discoveries across Africa without recourse to expensive subsurface
exploration, geophysical technologies or extensive drilling programmes, means that the Company can
potentially generate more value, at greater speed and with lower risk in Africa, than in almost any other
part of the world. Given the collective geographical, geological and operational expertise of our
management and advisory teams, we believe Altus is ideally positioned to exploit this opportunity.
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Chief Executive’s Review
“We are actively building a diversified mining royalty business in Africa. By generating our own
projects and inviting joint venture partners to participate financially in the next phases of
exploration and development, in return for a stake in each asset, we are creating a portfolio of
potentially significant future long term royalty income streams. Up front cash and equity
payments from our partners’ mean we can accelerate value creation, by generating new projects
to be fed into the royalty pipeline.”
Introduction
Altus is evolving from a project generator into a royalty company. Our portfolio of projects has been
steadily developing, and now with two projects under JV, and a range of discussions taking place
regarding our JV-ready projects we can see that the goal of our projects reaching the stage of income
generating royalties is closer than ever.
We recognise that the highest returns in the mining sector can be generated in the first instance by
making an economic discovery and that returns can be compounded by retaining long term royalty
interests on these, to generate the potential for continuous and zero cost income streams. We provide
our shareholders with exposure to both of these elements and, critically, without exposing them to the
financial and other material risks that are inherent in mineral exploration and mine building.
By adopting a portfolio approach we accelerate the discovery process as well as mitigate many of the
geological and geopolitical risks that are inherent to the mining sector. We stake or acquire prospective
targets and our exploration teams drive forward the most promising ones, while discarding those that
we do not believe will generate an economic discovery. Once we have made a potential discovery we
actively promote the opportunity to potential partners to finance the next stages of exploration and
ultimately take the asset into production. Our typical partner might be a large mining group or midcap,
seeking to strengthen their project pipeline; alternatively, it may be a junior company seeking a new
flagship asset.
This has been another very active year for Altus. On the corporate front we completed our Plan of
Arrangement with Legend Gold Corp., undertook a capital raise with a number of notable new
shareholders joining our register and secured a dual listing on the TSX-V. We also continued to apply
our royalty generation model, making mineral discoveries in Africa and entering discussions with
potential partners. This has all taken considerable organisation and co-ordination, and a great deal of
effort and dedication on behalf of the whole team. I take the opportunity here to thank them all for the
highly professional and diligent way in which they have helped to enact our strategy and achieve the
objectives of the Company during the year.
Strategy implementation
Our royalty generation strategy is validated as each of our projects progresses through the various
stages of development, from grant of licence through exploration to JV readiness, resource definition
and eventually mining. 2018 has been an encouraging year in this respect. We have seventeen projects
in our growing portfolio. The most advanced royalty asset in which Altus has an interest, is a 2.5% Net
Profit Interest on the southern portion of the Ndablama gold project in western Liberia, which is being
developed by AIM and TSE-listed Avesoro Resources. Ndablama forms part of a Mineral Development
Agreement which hosts the multi-million-ounce New Liberty gold mine. Two further Altus projects are
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under JV arrangements, one for gold in Mali with ASX-listed Resolute Mining and one for bauxite in
Cameroon with ASX-listed Canyon Resources. We have agreed with Canyon to terminate the JV and
vend the JV projects into Canyon for Canyon equity and a US$1.50/t royalty. After the end of the year,
Altus announced a Terms Sheet with ASX-listed Indiana Resources in respect of two of our gold projects
in Mali and a Terms Sheet with unlisted Australian company Corben Resource in respect of our gold
projects in Liberia and Cameroon.
During 2018, our team has been diligently analysing a range of technical datasets generating new
targets and undertaking field exploration, using geophysics as well as collecting soil, stream and rock
samples across key targets. This work has helped to advance the prospects across a number of our
licences. Notable successes have been the definition of drill targets at the strategically located Lakanfla
gold project in western Mali, and the identification of new copper and gold prospects at the Daro licence
in Ethiopia.
As well as advancing existing projects, the Company has sought to replenish its portfolio of licences.
During 2018 it was granted a new licence for gold exploration in eastern Côte d’Ivoire, three new licences
in Morocco for copper and zinc and, as at the end of the year, Altus had three further applications
pending grant – two in Côte d’Ivoire (one for gold and one for nickel-cobalt) and one in Ethiopia. The
geographical and commodity diversification reflects the Company’s intent to continue to expand the
scope of its portfolio.
Securing the six licences in Mali through the completion of the Plan of Arrangement with Legend clearly
demonstrated another strand of the Company’s strategy, which is to expand and develop our portfolio
not just though applications for new licences, but also through acquisitions and business combinations.
Market review
Our “market” is ultimately in the availability of JV and other strategic partners. Their access to funding
is an important consideration as they will advance our projects through drilling to the identification and,
if economic, the development of a resource. During the last year the level of enquiries coming into the
Company has noticeably increased. This has been true both for companies looking to enter into a JV
arrangement and for investors looking to participate in project equity. Australia and Canada are the
main active sources of such enquiries, but not exclusively so.
The broader commodity backdrop has been relatively muted. Gold, which, alongside copper is often
seen as a bell weather for the mining sector, was range bound between US$1,200 and US$1,350 during
the year. The correlation between the gold price and the share performance of gold mining stocks is
well documented and perhaps axiomatic. Unsurprisingly, the market for mining equities has been
equally range bound, with the GDX, an exchange-traded fund (ETF) for gold miners, trading in a similar
narrow range. There are a number of active factors, which, we believe, will support the price of gold
over the coming years. Highest among these would be continued central bank purchases, especially
from emerging market countries with growing economies wishing to diversify their reserves. This trend
also reflects a perceived risk of a global downturn and of a relatively weaker dollar in the year to come,
creating price inflation. A decade of uninterrupted growth, fuelled by excessively low interest rates
combined with loose monetary policy in many countries has created distortions in asset prices across
the globe. For these reasons, half of the Group’s portfolio of projects are in gold.
However, Altus is actively building a portfolio which is diversified by commodity to gain exposure to the
critical metals of the coming decade. The evolution of battery technology is reshaping the world to no
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less an extent than the advent of the combustion engine did at the end of the Nineteenth Century. It is
well known that there will be a vast and sustained increase in demand for specialist battery metals such
as cobalt, lithium and vanadium as the current worldwide research resolves to establish the best and
most cost-effective battery solution. We believe that copper will remain the primary beneficiary of an
increasingly electrified world. The International Copper Association has said that demand for copper for
use in electric vehicles alone is expected to increase from 0.18m tonnes to 1.7m tonnes per annum
between 2017 and 2027. In the macro-economy, this will create a set of drivers quite separate and, in
some ways, disconnected from the current inter-locking drivers of the gold price. As noted above, the
Company has a number of copper prospects in Ethiopia and Morocco and an application for
nickel/cobalt in Côte d’Ivoire.
As well as measures to increase battery capacity, solutions are also being engineered to increase energy
efficiency thereby requiring less energy consumption. Aluminium, the ore for which is called bauxite, is
a lightweight metal and this energy efficient property means we expect demand for the metal to
continue to increase in the years ahead. Our shareholding in ASX-listed Canyon Resources is also set to
increase when the JV termination and vend-in of our Birsok and Mandoum bauxite projects in central
Cameroon completes, which is anticipated to occur in the second quarter of 2019. On completion of
the termination of the JV, Altus will receive an initial 25 million shares in Canyon with a current market
value of approximately £2.9m/C$5.04m, and for vending in of the JV projects and grant of a mining
licence to Canyon, Altus will receive a further 5 million shares with a current market value of
approximately £0.6m/C$1.0m along with a $1.50/t royalty on the former JV projects. Altus currently
owns shares in Canyon with an approximate market value of £0.8m/C$1.4m which were received by
Altus along with a cash payment of A$150,000 as part of the original JV terms. Having undertaken less
than US$150,000 in generating the bauxite project, this series of transactions when complete, will
underscore the substantial returns that our business model can generate.
Funding
The Company’s listing on the TSX-V exchange in Toronto in June was a major development, and is
already significantly enhancing the Company’s ability to attract investors, as well as publicising its
projects to potential JV partners. The Canadian market is a global hub for mining stocks, and our
presence there greatly strengthens the Company as we grow our royalty generating business.
The Company’s proven ability to raise finance in April 2018 was set against a backdrop of broad investor
antipathy to resource stocks in general, with the lure of speculative marijuana equities, as well as
continued interest in block chain, crypto and other alternative tech plays absorbing substantial risk
capital. The wider markets have also seen the rise of algorithmic passive trading, which tends to seek
out lower risks and higher liquidity stocks. The drift down of the Company’s share price since our IPO
and dual listing, on relatively low trading volumes, does not, in the opinion of the directors, reflect the
enormous potential of the Company to deliver shareholder value, both through its current pipeline of
projects and its ability to continue to grow and monetise its portfolio.
With an aggregate shareholding of 36.17% of the Company, the financial interests of the board are
strongly aligned to those of all shareholders. In order to continue to ensure cash (which at 31 December
2018 stood at approximately £725,000/C$1,260,000) is spent on operational activities, a number of the
directors have elected to accrue some or all of their 2018 fees, salary and where applicable pension
entitlement. This was also the case in previous years. Approximately £268,000/C$466,000 is currently
being accrued in this form, to be paid at a later date in either cash or, subject to the necessary regulatory
approvals, in equity of the Company. Where permissible, the directors may also participate in future
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capital raises, which is a consistent and positive feature of the Altus board. Given the continued ‘bear
market’ conditions in the mining sector and the strong commitment of the directors, it is anticipated
that further such amounts will be accrued in 2019.
Altus Concert Party
The Company has agreed with the Takeover Panel Executive an amendment to the list of certain
shareholders of the Company who have previously been presumed to be acting in concert under the
UK Takeover Code (the “Concert Party”). The Board has concluded that Robert Milroy, Guy Pas and
Malcolm Burne shall no longer be considered to be members of the Concert Party. The Concert Party
therefore now consists of Steven Poulton, Susannah Poulton, Matthew Grainger, Anna Grainger, David
Netherway and Diane Rissik. These parties in aggregate hold interests in 45,048,100 Ordinary Shares of
1p each in the Company, equivalent to 25.32 per cent. of the Company's issued and voting share
capital. These individuals do not hold any options or warrants in the Company. Shareholders should
note that the Concert Party is free to increase its aggregated interest to 29.99 per cent. of the Company's
issued and voting share capital without incurring an obligation under Rule 9 of the Takeover Code.
Outlook
Altus has a solid and proven business model, a strong and entrepreneurial team, and has established a
formidable foundation for the year ahead. We have embraced the counter-cyclical nature of the
resource sector and are continuing to make discoveries and enter royalty generating transactions across
our growing portfolio. Our team has the essential vision, determination and energy to sustain the
incredibly strong progress we have made to date.
Steven Poulton
Chief Executive Officer
29 April 2019
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Strategic Report
KPIs
The Board use a mixture of financial and non-financial KPIs to help monitor the performance of the
Group. The Group is at a pre-revenue stage of development, which means that the main financial KPIs
relate to the management of cash and expenses. These are as follows.
Cash and cash equivalents
Exploration costs as a percentage of total operating costs
Capitalisation of exploration costs in the year *
2018
2017
£724,785
34%
£122,158
£523,344
23%**
£46,235
* Excluding assets acquired through the Plan of Arrangement with Legend Gold Corporation.
** Measurement of the KPI regarding exploration costs has been adjusted. In the 2017 annual report the denominator used was
the loss before taxation. This has been changed to operating costs, comprising exploration costs, administrative expenses, IPO
costs and costs related to the plan of arrangement with Legend. Under this measurement the percentage of total operating costs
represented by exploration costs for 2017 was re-stated from 30% to 23%. The increase from 23% to 32% in 2018 reflects the
growth in the Group’s exploration activities, while Administrative costs were reduced from £1.5m to £1.2m due to lower wage
costs.
The Group’s cash balance increased by £200,000 as it raised £2.3 million (C$4.1 million) (before
expenses) in April 2018, through the issue of 27,391,616 new units at C$0.15 per unit (with each unit
comprising one Ordinary share and one five year warrant to purchase one Ordinary share at C$0.30c).
The Company undertook its IPO on the London AIM market in August 2017, completed its plan of
arrangement with TSX-V listed Legend Gold Corporation (“Legend”) in January 2018 and completed its
dual listing on the TSX-V in Toronto in June 2018.
As well as a growth in expensed exploration costs, there was a 165% increase in the value of capitalised
costs in 2018. A third of this value related to the Legend exploration licences in Mali, and the majority
of the remaining two thirds related to the Group’s pre-existing portfolio of licences. Capitalised
expenses on newly granted licences were relatively modest.
Non-Financial KPIs
The Board monitors the following non-financial KPIs on a regular basis.
Portfolio size – projects in which Altus holds an interest
Indicates the scale of the Group’s operations
31 December 2018
31 December 2017
18 projects
14 projects
Single largest exposure
Indicates the diversification of risk within the Group’s portfolio
31 December 2018
31 December 2017
By Geography
Mali - 33%
Morocco – 36%
By Mineral
Gold – 56%
Gold – 29%, Copper – 29%
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Principal risks and uncertainties
Risk description and impact
Risk management strategy
The Group’s projects may not contain
economically recoverable volumes of minerals or
metals, due to insufficient quality or quantity.
Delays in the construction and commissioning of
mining projects or other technical difficulties
may make the deposits unattractive to exploit.
Risk is diversified by holding a portfolio of
projects. At every stage of the exploration
process, projects are rigorously reviewed, both
internally and by qualified third-party
consultants, to determine if the results justify
the next stage of exploration expenditure.
Exploration activities, particularly more advanced
activities such as drilling, carry a risk of local
environmental damage or other issues, such as
fuel spills, contamination of water courses, dust
creation and damage to agricultural land or wild
flora and fauna.
Exploration activity exposes the Group’s
employees to additional health and safety risks,
such as accessing sites, use of equipment, and
exposure to extreme weather or other
environmental hazards.
A reduction in global demand for gold, copper
or other metals could lead to a significant fall in
the value of the Group’s exploration assets and
the cash flow from any production, or even result
in the abandonment of a project should it prove
uneconomical to develop. Similarly, commodity
prices could fall in reaction to changes in
international economic trends, impacting the
revenue generated by projects in which the
Group holds an interest. This may have a
material adverse impact on the operating results
and financial condition of the Group.
The Group aims to comply with provisions of
PDAC’s E3+ guidance on responsible
exploration as applicable. It maintains its own
Environmental Management Plan, which is
regularly reviewed, and publicised to site-based
employees. This contains a set of actions for
each project based on a policy of Avoid,
Mitigate, Remedy.
The Group keeps the wellbeing of its employees
as the highest of its priorities. Employees must
be up to date with all recommended
vaccinations, FCO travel advice is followed at all
times, and regular first aid and other
operational training is provided.
Altus has adopted a counter-cyclical business
model which seeks to grow fastest during
economic downturns. It has structured itself as
a Company that can run extremely lean
operations to undertake early-stage
exploration. The Company does not expose
itself to significant long-term liabilities or
spending commitments, and works with funded
JV partners for the advanced stages of
exploration.
The successful exploration and development of
natural resources on any project will require
significant capital investment.
The Group may not be successful in procuring
the requisite funds on terms which are
acceptable to it (or at all) and, if such funding is
unavailable, the Group may be required to
reduce its level of exploration activity and divest
or relinquish its assets.
The Group intends to secure capital by bringing
in joint venture partnerships including
established mining groups and investors, and
through the issue of additional equity capital in
the Company. This strategy is evidenced
through Altus’ joint venture agreement with
Resolute Mining, a mid-tier gold producer
which is listed on the ASX, and the presence of
a number of leading natural resources sector
investors on the Company’s share register.
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The exploration licences and operations of the
Group are in jurisdictions outside the United
Kingdom, which subjects the Group to political
risk. Adverse impacts could include the
withdrawal or suspension of licences, and
cancellation or onerous changes to permits or
regulatory consents.
The Group is dependent upon a small executive
team and other key personnel. The loss of these
employees or the inability to attract additional
qualified personnel as the Group grows restrict
the ability of the Group to manage an expanded
portfolio of projects.
As a small, UK-based junior project and royalty
generator, Altus could struggle to attract JV
partners to advance its projects to mine-
readiness, and to create a long-term revenue
stream.
Brexit
Financial risks
Material financial risks are listed below. Financial
risks are also discussed in Note 24.
It will take some time for revenue streams from
active mines to positively impact Altus’ cashflow,
and until then, the Group will be reliant on
funding from shareholders.
The Group’s shareholder financing is
denominated in pounds sterling and Canadian
dollars. Its exploration funding is incurred in a
range of African currencies.
The Group makes every effort to ensure it has
robust commercial agreements covering its
activities. It maintains comprehensive
documentation covering its licence assets and
the board and management oversee the good
standing of these assets.
The Remuneration Committee reviews the
Company’s compensation package annually to
ensure that it remains competitive (see
Directors’ remuneration report, pages 36-41).
The Company maintains strong links with
industry bodies and training establishments to
ensure access to a wide pool of talent.
In the last two years Altus has listed on both the
AIM in the UK and the TSX-V in Canada,
building a shareholder base and an industry
reputation. Potential partners are engaged in
these markets and elsewhere, including the ASX
market in Australia. Altus actively markets its
portfolio through news releases and its website,
and networks with investors and partners at
conferences and industry events.
Altus does not expect to have any significant
exposure to the European market in the short
and medium terms.
The Group aims to maximise the opportunities
for converting projects into revenue-generating
assets by advancing the exploration of its
licences and actively marketing them to
potential partners, whist at the same time
maintaining a disciplined attitude to
expenditure and preserving its cash. The Group
also seeks joint ventures on its projects with
third parties, which can reduce the Group’s
reliance on shareholder funding.
The impact of foreign exchange is monitored to
inform the decision whether or not to hedge
currency exposure. Currently the Group does
not hedge as the impact is considered
immaterial (2018: £15,000 gain, 2017: £14,000
gain).
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Corporate and social responsibility
Sustainability and environmental protection
Altus is committed to conducting its business operations in a sustainable manner and strives
continuously to limit the impact of its activities on the natural environment and on the local communities
in the regions where it has operations. Altus is a mineral explorer and developer, not a mining company,
Therefore, the environmental impact directly associated with its activities is minimal. To ensure proper
environmental stewardship on its projects, Altus ensures that all areas it explores are properly
maintained, conserved and rehabilitated.
A central tenet of the Group’s policy is the Environmental Management Plan (EMP), which guides the
Group’s on-site activities from the planning stage through on-site operation to the return of sites to
local communities once activity has finished.
Many of the areas of operation are regions of subsistence farming, and Altus and its employees are
aware that the impact of operations may not be limited to nuisance or upset, but could have a serious
impact on the livelihoods of local people. As a result, the Group operates a number of policies to prevent
problems and to remediate those that cannot be avoided. Where arable or grazing land is affected,
rates of compensation are agreed with the local authorities before invasive activity begins. Meetings are
held with local stakeholder groups to explain the project, to listen to local concerns and to mitigate any
potential problems. At the other end of the project cycle, once activities have ceased, the Group arranges
for replanting of crops or the promotion of flora re-growth, and returns to monitor progress after six
months.
Community engagement
Altus is mindful that it has the capacity to have a positive impact in its areas of operation, many of which
are remote and offer little alternative opportunity to local people. It employs a range of local people
from trained geologists to administrative support and drivers. At the end of 2018 it employed 14 people
in 5 African countries. To some of the local people in the more rural sites, it offers the opportunity to
get involved in the exploration activity and to gain transferable skills such as operating geotechnical
equipment. Altus has also taken geology students from the University at Mekele in Ethiopia to visit its
exploration sites.
Human rights
Altus is committed to best-practice in socially and morally responsible exploration and in the
development of mineral resources for the benefit of all stakeholders. The activities of the Group are in
line with applicable laws on human rights.
Health & Safety
Altus takes the health and wellbeing of its employees extremely seriously and works continuously to
minimise the hazards encountered. A comprehensive health and safety programme is maintained
incorporating official guidelines, industry best practice, lessons from previous incidents and employee
suggestions.
There have been two road traffic accidents affecting the Group in the last two years, both involving third
party drivers and vehicles. In Cameroon in February 2018, a lorry contracted by Altus to carry rock
samples for the Company crashed, resulting in the deaths of five people at the scene. The Board of Altus
offered immediate assistance to the people affected. An accident occurred in Liberia at the end of 2017
16
involving a hired car and driver transporting Company employees; there were no injuries resulting from
this incident. While Altus could not have prevented these accidents, they starkly reiterated the
importance of high safety standards. Altus continues to review all of its standards regularly and to
stringently vet its suppliers and service providers.
Employees
Altus understands that its team is central to its future development and success. The aim of the Group
is to create an environment that will attract and retain staff, and motivate employees to maximise their
potential. The Company provides a fair remuneration package, and gives due consideration to requests
for flexible working arrangements. It aims to give employees exposure to wider aspects of the
Company’s operations. The Group promotes a culture of openness among its employees and welcomes
their input into the good running of its operations.
Altus has a long track record in recruiting and training promising geologists. Each year the Group
typically offers at least one MSc level project thesis to students of geology or mining geology. The
Group is also proud to provide internships for recent graduates, allowing them to gain flexible work
experience and if available the opportunity for a full-time role with the Group.
The Group welcomes diversity within its workforce and does not discriminate against its employees,
workers or job applicants on the grounds of age, gender, ethnicity, disability, nationality, race, religious
beliefs, or sexual orientation.
Financial review
The table below shows the breakdown of expenditure in 2018 between exploration costs (blue),
directors and administration team costs (gold) and overheads (grey). Site licences includes capitalised
licence fees and land rents.
17
Income
Income from recharging costs to JV partners reduced from £401,000 to £90,000 primarily as a result of
the discontinuation in the first quarter of the JV arrangement with JOGMEC on the Tigray-Afar licence
in northern Ethiopia. Recharged costs in 2018 related mainly to the JV arrangement with Canyon
Resources on the Birsok and Mandoum licences in central Cameroon. Other income in 2018 was derived
primarily from a fair value gain of £282,000 on the Group’s investment in Canyon Resources; this was
on top of a gain on this investment in 2017 of £129,000.
Expenses
Exploration costs increased from £556,000 to £631,000 (see note 6). This reflected an increase in the
number of licences incurring spend from nine in 2017 to nineteen in 2018, including the six additional
Mali licences incorporated from Legend’s portfolio. The Group’s exploration team did not increase in
number during the year, apart from the addition of former Legend employees. The pattern of spend
reflected a more even spread between projects, and a reduction in some areas as projects reached JV -
ready status. Cameroon was the highest area of spend in both years (2018: £146,000 and 2017:
£220,000). The Group’s newest area of operation, Côte d’Ivoire, incurred £44,000 of cost (2017: £nil).
By nature of spend, operations costs in Africa increased most significantly (34%), compared to an 11%
increase in local administrative expenses and an 11% decrease in in-country travel costs.
Administrative expenses in the Income Statement covers UK costs, including geologists and their travel
to Africa, as well as UK office overheads and group operations (see note 7). Overall these costs fell from
£1,497,000 to £1,221,000, a reduction of 18% (see also financial KPI’s). The main reduction was in
employee costs (see note 10), from £1,092,000 to £746,000, due to the exceptional bonuses in 2017
paid to directors and employees (2018: £1,500 and 2017: £301,000). The main increase in administrative
expenses was for legal and professional fees, from £140,000 in 2017 to £203,000, which reflected the
increased complexity of the Group since its listing on London’s AIM in August 2017, the Plan of
Arrangement with Legend in January 2018, the private placement completed in April 2018 and the dual
listing of the Company on Toronto’s TSX-V in June 2018.
IPO and acquisition related costs expensed in the Income Statement fell from £372,000 to £19,000, with
a vast portion of the costs for preparing the Plan of Arrangement with Legend being incurred in 2017.
The table below shows local costs in each location of the Group’s operations. Details of expenditure
are included in notes 5 to 14 to the Financial Statements.
18
£’000
Geologists
Executives
Non-exec.
Admin
Consultants
Site costs
Travel
Office
Legal & prof.
Other
Total
K
U
191
312
106
132
57
2
67
88
144
12
1,111
n
o
o
r
e
m
a
C
40
-
-
25
-
12
24
-
-
52
153
e
r
i
o
v
I
’
d
e
t
ô
C
-
-
-
-
-
2
28
-
-
21
51
a
i
p
o
h
t
E
i
26
-
-
20
-
28
42
-
1
28
145
a
d
a
n
a
C
-
-
-
-
-
-
-
-
71
-
71
a
i
r
e
b
i
L
37
-
-
-
-
17
34
-
-
33
121
i
l
a
M
14
-
-
37
-
11
9
-
(2)
57
126
o
c
c
o
r
o
M
20
-
-
26
-
13
16
-
1
17
93
Total
328
312
106
240
57
85
220
88
215
220
1,871
Assets and cash
The net assets of the Group jumped from £1,077,000 to £5,266,000 owing to the increase of £3,920,000
in intangible assets, £3,800,000 of which was derived from bringing the six gold exploration licences in
Mali on to the balance sheet. In addition, the value of investments increased due to the fair value gain
of £282,000 on the Group’s holding in Canyon Resources, and an increase in the cash balance of
£202,000 (see below); trade and other receivables dropped by £32,000 due to lower prepayments and
trade and other payables increased by £189,000 due to higher accruals and Legend liabilities taken on
by the Group.
The values of the intangible assets of the Group are reviewed at each reporting date (see note 16).
During 2018 impairments totalling £20,000 were made to two licences, Bella Yella in Liberia and Negash
in Ethiopia, in which the Group decided to discontinue its operations and relinquish the licences.
The cash balance of the Group increased from £523,000 to £725,000. The cash increase in the year of
£202,000 (2017: £107,000 increase) resulted from the proceeds of share and warrant issues of £2,258,000
offset against operating spend of £1,802,000 and investing spend of £270,000.
The fundraising announced in April 2018 was a non-brokered private placement of 27,391,616 units at
an issue price of C$0.15 with existing and new institutional and private investors. Each unit comprised
one share plus a warrant for the purchase of one additional share at a price of C$0.30, exercisable within
five years.
Based on the spending profile of 2018, the cash balance at the end of the year will be insufficient to
fund operations for the whole of 2019. The Group will continue to preserve cash but recognises that it
will be necessary to either, or a combination of, raise additional funding, sell its equity position in Canyon
or enter joint venture agreements which include cash pre-payments within the next twelve months. The
directors are confident, based on the experience of raising finance in each of the two previous years,
the liquidity profile of Canyon and the signing of two Letters of Intent for separate JVs with an ASX-
listed company and an unlisted Australian company after the end of the period, that the necessary
finance will be forthcoming, and have prepared the financial statements accordingly on a going concern
basis.
19
Review of operations by country
Operations in Cameroon
Projects:
Metals:
3
Gold, bauxite, iron ore
LABOUM (northern Cameroon, 189km², gold)
Laboum is located 600km northeast of the capital city of Yaoundé. The licence hosts a major Pan-African
age, regional shear zone which is up to 5km wide and which comprises highly prospective Birimian
metavolcanic and metasedimentary rocks. Results of a ground magnetic survey and regional soil
sampling programme completed by the Company have defined numerous anomalies that are
coincident with structural targets. Dilational and fold structures are considered to be excellent targets
for potentially economic gold deposits. Rock chip sampling produced grades of up to 24.50g/t Au,
16.15g/t Au from quartz veins and 6.86g/t Au from sheared and silicified metasediments.
Exploration in 2018 defined the Rey prospect that hosts numerous artisanal alluvial gold workings over
a 1km strike length of the shear zone with exposure of mylonite, diorite and felsic intrusives. This
discovery extends the prospective zone over the shear zone to 18km.
After the end of the year, on 24 April 2019 Altus signed a Terms Sheet for a royalty and JV agreement
with Corben Resources (“Corben”), an unlisted Australian company, whereby Corben can earn up to a
100% interest in the project. Details of the agreement are available on the Company’s website
(www.altus-strategies.com/news, entry dated April 24 2019).
BIRSOK (Birsok & Mandoum licences, central Cameroon, 372km², bauxite)
The licences are located 370km northeast of the capital city of Yaoundé. From 2013 to October 2018
they were under a joint venture with ASX-listed Canyon Resources Ltd. The project is contiguous with
Canyon’s Minim-Martap potentially world class bauxite project. In October 2018, Altus announced that
the project would be vended to Canyon for equity and a royalty. Details of the agreement with Canyon
are available on the Group’s website (www.altus-strategies.com/news, entries dated Oct 11, 2018 and
Feb11, 2019). Completion of the agreement is expected in Q2 2019.
BIKOULA (Bikoula & Ndjele licences, southern Cameroon, 400km², iron ore)
Bikoula is located 150km south of the capital city of Yaoundé. The licence is situated on the western
geological strike of the Nkout iron ore deposit and 160km west of the Mbalam iron ore deposit. The
licences are adjacent to the road linking to the deep-water port at Kribi and are 30km north of the
proposed trans-Cameroon east-west iron ore rail line.
The Group has defined a maiden JORC-compliant Inferred Mineral Resource of 46 Mt at 44% Fe (not in
accordance with NI43-101), from less than 25% of the 17km long Libi Hills prospect. To date 48 drill
holes have been completed at Bikoula. During 2018, Altus pitted a large airborne magnetic anomaly at
Nkout North. This work discovered further supergene haematite within reddish clayey soils. The Group
consider this prospect and the undrilled remainder of the Libi Hills prospect represent excellent targets
for the definition of further grade iron ore resources. Altus is seeking a partner to advance the project
with an enlarged pitting programme, followed by further resource definition drilling.
20
Operations in Morocco
Projects:
Metals:
4
Copper, lead, zinc, silver, gold
AGDZ (central Morocco, 60km², copper-silver)
Agdz comprises four contiguous permits in the Anti-Atlas Mountains, 350km south of the capital city
Rabat and 14km from the Bouskour copper mine which is operated by the Moroccan state mining group,
Managem.
Altus has carried out geological mapping, surface outcrop sampling, reconnaissance trenching and
ground magnetic surveys. This work has defined strongly mineralised and altered zones and a clear
structural context. Three main prospects have been identified to date at Makarn, Amzwaro and
Minière from which rock-chip samples have returned assay results up to 26.5 % Cu and 448 g/t Ag and
an initial rock-chip channel sample returned 1.25 % Cu and 96 g/t Ag over 9.3m, with grades up to 2.26
% Cu and 223 g/t Ag. Rock-chip and spoil samples from the Minière prospect, which hosts multiple
underground workings that exploit a series of sub-parallel alteration zones, have returned 13.0 % Cu,
6.0 % Cu and 5.0 % Cu. Mapped alteration in the Makarn prospect is analogous to that of the Bouskour
mine over a 0.5km strike length mapped to date.
TAKZIM (central Morocco, 72km², copper-zinc)
Takzim comprises five permits located 35km northeast of the city of Marrakech and 7km east of the
historical Bir-n-Hass copper mine. Altus conducted soil sampling over a 1.6km² area proximal to a
historical excavation that returned 2.22% Zn from outcrop sampling. Results have identified a coherent
600m x 150m Zn-Pb anomaly along strike. Outcrop sampling of narrow haematite-rich nodules and
lenses within these veins returned highly anomalous Co with grades up to 0.15% Co and 0.14% Co.
Future work at Takzim is aimed at uncovering the extent of the anomaly and defining potential targets.
ZAER (central Morocco, 96km², copper)
Zaer comprises six permits located 80km south of the city of Rabat in the Hercynian Massif, which
contains three large granitic plutons that have been intruded into a sequence of sediments. The region
hosts active and historical mines for copper, tin, tungsten, lead and zinc. Zaer is strategically located
covering a 20km strike length of metamorphic aureole along a granite-metasediment contact.
AMMAS (central Morocco, 32km², VMS)
Ammas is comprised of two permits, located 30km south of the city of Marrakech. The project is 3km
southeast and along strike of Managem’s Hajjar Zn-Pb-Cu VMS mine. The Hajjar mine exploits a number
of buried and folded massive sulphide lenses.
A letter of intent, signed with Raptor Resources Ltd in September 2018 to earn up to a 100% interest on
Moroccan projects, was subsequently terminated by mutual consent in February 2019. Altus continues
to advance discussions with other third parties.
Other projects in Morocco
In 2018 the Group relinquished the Oulmes, Ment, Tamatert and Ouarzazate licences in Morocco as
after initial exploration work these licences were not considered likely to host an economic deposit.
21
Operations in Mali
Projects:
Metals:
6
Gold
KORALI SUD (western Mali, 83km², gold)
Korali Sud (“Diba”) is located in the Kayes region of western Mali, approximately 450km northwest of
the capital city of Bamako. The project is 13km southwest of the Sadiola gold mine, which is operated
by AngloGold Ashanti (JSE: ANG, NYSE: AU, ASX: AGG), IAMGOLD (TSX: IMG, NYSE: IAG) and the Malian
government. Both Sadiola and Korali Sud are situated on the Senegal-Malian shear corridor within the
world renowned ‘Kenieba window’.
Korali Sud hosts the Diba historical resource (see Table 1 below), as prepared for Legend by AMEC
Americas Limited (“Technical Report and Mineral Resource Estimate Diba Badiazila Gold Property Mali,
West Africa”, 30 June 2013) and filed on SEDAR by Legend on 20 September 2013. The resource
comprises stacked lenses which dip approximately 35-40 degrees ESE within the oxide zone.
Table 1: Diba project mineral resource
Category
Tonnes (kt)
Au Grade (g/t)
Au Contained (koz)
Indicated
Inferred
6,348
720
1.35
1.40
275.2
32.5
Notes: Applying a 0.5g/t cut-off grade and a US$1,200/oz gold price as reported in 2013 NI 43-101
technical report.
Historical drill results from the Diba prospect (unverified by the Group) include 12m at 20.66g/t Au and
32m at 2.06g/t Au. Diba has a potentially low mining strip ratio with relatively limited overburden and
a high proportion of the potential ore is in the oxide zone. Deeper drilling at Diba targeting the sulphide
zone has intersected 1.32g/t Au over 45m (from 93m). The sulphide zone remains open at depth.
Oxide gold mineralisation at Diba is mainly found in saprolite which is within 50m of the surface, across
a compact 1,200m² area drilled to date. The deposit is controlled by a number of structures with gold
occurring as fine grained disseminations and localised high grade calcite-quartz veinlets.
Altus has defined multiple targets for follow up exploration and drilling which have the potential to
increase the historical resource.
LAKANFLA (western Mali, 24km², gold)
Lakanfla is located in the Kayes region of western Mali, approximately 450km northwest of the capital
city of Bamako. The project is 5km east of Korali Sud and 6.5km from (and considered to be geologically
analogous to) the karst-type FE3 and FE4 open pits that form part of the Sadiola gold mine. It is also
considered to be geologically analogous to the Yatela karst-type gold deposit, which was mined
between 2001 and 2015, located 35km to the northwest.
The project hosts a significant number of active and historical artisanal gold workings which are
coincident with major geochemical and gravity anomalies surrounding a granodiorite intrusion.
Historical drilling (unverified by the Group) has returned encouraging intersections including 9.78g/t Au
over 12m and 5.20g/t Au over 16m. Historical drilling targeted breccia mineralisation of the granodiorite,
and intersected low grade gold mineralisation in limestones, voids and loose sands at depth, features
22
which are indicative of karst. A low gravity geophysical anomaly and corresponding surface slumps
features, are also considered to be significant indicators. The karst targets remain to be drill tested. The
next phase of work at Lakanfla is expected to include drill testing.
Subsequent to the reporting period, on 7th February 2019 the Company signed a joint venture term
sheet with ASX-listed Indiana Resources (“Indiana”, ASX: IDA), whereby Indiana may earn up to 85% of
the Lakanfla and Tabakorole gold projects. The due diligence process is underway at the time of writing.
Details of the agreement are available at the Group’s website (www.altus-strategies.com/news, entry
dated Feb 7, 2019).
TABAKOROLE (southern Mali, 100km², gold)
Tabakorole is located 280km south of the capital city of Bamako and sits on the Massagui Belt, which
hosts the Morila gold mine operated by Barrick. Exploration to date has identified a 2.7km long shear
zone which is up to 200m wide and hosts a historical mineral resource (Table 2). Historical drilling
(unverified by the Group) has returned encouraging intersections including 2.02g/t Au over 18m.
Table 2: Tabakorole project historical mineral resource
Oxide
Sulphide
Category
Indicated
Inferred
Indicated
Inferred
Tonnes (t)
1,040,000
960,000
6,840,000
9,590,000
Grade (g/t Au)
1.01
1.114
0.94
1.03
Metal (Oz Au)
34,000
35,000
207,000
318,000
During 2018 the Group undertook pitting and sampling. The results indicate the potential for a parallel
mineralised trend. The next phase of work at Tabakorole is expected to include scoping studies and
resource definition drilling, along with testing of further targets.
Tabakorole was included in the term sheet signed with Indiana (see Lakanfla above).
DJELIMANGARA (western Mali, 55km², gold)
Djelimangara is located in the Kayes region of western Mali, approximately 450km northwest of the
capital city of Bamako. The project is 3km southeast from Korali Sud, and comprises four priority
prospects: Sourounkoto, Kamana, Woyanda and Manankoto. These are characterised by gold-in-soil
anomalies of up to 2.5km in length, coincident with hard rock gold workings in fine metasediments.
Historical drilling (unverified by the Group) has reportedly returned encouraging intersections including
1.34g/t Au over 30m.
The next phase of work is expected to include infill termite mound sampling, channel sampling of
artisanal workings, trenching and infill auger sampling, to generate priority drill targets. Altus is seeking
a JV partner to undertake auger drilling over priority targets to refine trench and drill targets.
SEBESSOUNKOTO SUD (western Mali, 29km², gold)
Sebessounkoto is located in the Kayes region of western Mali, approximately 450km northwest of the
capital city of Bamako. The project is 15km south east of the Diba project. Historical trenching
undertaken by Barrick (formerly Randgold Resources), reportedly returned up to 0.68g/t Au over 61m.
During 2018 the Group defined the Soa gold prospect covering a 2.7km long gold-in-soil anomaly,
identified from mapping artisanal workings, and sampling spoil and termite mounds. Spoil samples
returned up to 5.18g/t Au, 3.98g/t Au and 2.4g/t Au.
23
Artisanal mining has focused on saprolite along a brittle-ductile shear zone typically associated with a
stockworks of ‘smoky quartz’ veins. A review of the historical VTEM data has identified a 6.3km long
anomaly parallel to the Soa prospect. Altus is seeking a JV partner to undertake auger drilling over
priority targets to refine trench and drill targets.
PITIANGOMA EST (southern Mali, 106km², gold)
Pitiangoma Est is located 300km southeast of the capital city of Bamako. The licence is subject to a joint
venture with ASX-listed Resolute Mining Limited (“Resolute”) and is located on the Syama shear zone,
15km from the Tabakoroni deposit and 40km from the Syama gold mine (both owned by Resolute).
Resolute can earn up to a 70% interest in the project by funding US$3million in exploration and
completing a feasibility study. Thereafter Altus may elect to co-fund its 30% interest on a pro rata basis,
or exchange its interest for a 2% Net Smelter Return royalty.
Prior to the Resolute JV, exploration included airborne geophysics (VTEM), RC drilling (2,160m) and
diamond drilling (6,450m). Resolute has reportedly completed 110 air core drill holes for a total of
4,869m and a gradient array IP survey focussed on the Misseni Prospect, and this has reportedly been
followed up by a 7-hole (3,167m) RC drilling programme in 2017. Altus has not verified the historical
drilling data at the project.
Operations in Ethiopia
Projects:
Metals:
2
Copper, gold, silver
DARO (northern Ethiopia, 412km², copper-gold)
Daro is located approximately 95km west of the Company’s Tigray-Afar Cu-Ag project, 570km north
of Ethiopia’s capital, Addis Ababa. Granted in October 2017, the project targets potential Volcanogenic
Massive Sulphide (“VMS”) copper and gold deposits. It is situated in the Neo-Proterozoic Nakfa Terrane,
which hosts a number of significant VMS base metal and gold deposits and mines.
Extensive prospecting and regional mapping has identified key geological markers for a VMS deposit
type setting. These include the presence of bimodal volcanics, extensive chert horizons and associated
metasediments, which conform to an ophiolite complex of ancient oceanic crust and seafloor sediments.
During 2018 Altus defined four priority prospects at Keren, Teklil, Wedihazo and Simret. The Keren
prospect strikes for 2km with grab and outcrop samples returning up to 37g/t Au and 10.35g/t Au. At
the 2.5km long Teklil prospect, located within an ophiolite complex, rock chip and grab samples have
returned 24% Cu, 6.51g/t Au and 203g/t Ag. Rock chip and grab sample results at the 0.5km long
Wedihazo prospect, have returned up to 22.3% Cu and 0.24g/t Au. At the Simret prospect, exploration
results have returned up to 944g/t Ag, 3.55g/t Au and 2.72% Pb and discovered Au-Ag-Cu-Pb-Zn
bearing quartz veins and gossanous float.
Altus is actively seeking JV partners for Daro to conduct trenching and a geophysical gravity survey with
the aim of defining targets for a follow up maiden drill programme.
TIGRAY-AFAR (northern Ethiopia, 242km2, copper-silver)
Tigray-Afar is located approximately 95km east of the Company’s Daro Cu-Au project, 580km north of
Addis Ababa. An evaluation of previous exploration data, has identified a potential sediment hosted
24
copper target within a 5km long VTEM conductor. The zone hosts gossans at surface which are
interpreted to overlay a potential copper sulphide target which has yet to be drill tested. The next steps
for the project will be to conduct a 2,000m 5-hole programme to test the presence of sedimentary
hosted copper mineralisation. Altus is actively seeking JV partners for Tigray-Afar.
Operations in Liberia
Projects:
Metals:
1
Gold
ZOLOWO (western Liberia, 466km², gold)
Zolowo is located 190km northeast of the capital city of Monrovia. The licence targets a significant 33km
long Archaean-age greenstone belt on the West African Craton. Results from 2018 sampling of in situ
quartz veins and spoil from artisanal workings returned encouraging grades up to 30.70g/t Au, 9.10g/t
Au, 8.8g/t Au, 4.3g/t Au and 2.95g/t Au. The next phase of work will include systematic soil and trenching
programme.
Zolowo was included in the Terms Sheet signed with Corben Resources (see Operations in Cameroon,
Laboum project, on page 20).
Other projects in Liberia
In 2018 the Group relinquished the Bella Yella gold project as the scale and continuity of potential gold
bearing structures was not considered sufficient to attract a JV partner.
Operations in Côte d’Ivoire
Projects:
Metals:
1 (+ 2 applications pending)
Gold, nickel, cobalt
PRIKRO (southwest Côte d’Ivoire, 370km², gold)
Prikro is located 240km southeast of the capital city of Abidjan. The project targets a favourable folded
and sheared Birimian-aged greenstone sequence intruded by felsic plutons, and hosts historical Au, Cu,
Zn and Mo mineral occurrences. The next phase of work will include prospecting, mapping and termite
sampling.
Cautionary note regarding historical data
Readers are cautioned that data on the Mali licences in this written disclosure is historical exploration
data that has not been verified by a Qualified Person. Not all historical samples are available and Altus
does not have complete information on the quality assurance or quality control measures taken in
connection with the exploration results, or other exploration or testing details regarding these results.
The potential tonnages and grades described in this disclosure are conceptual in nature and are based
on previous drill results that defined the approximate length, thickness, depth and grade of the portion
of the historical resource estimate. There has been insufficient exploration to define current resources
and the Company cautions that there is a risk further exploration will not result in the delineation of
current mineral resources. The historical data should therefore not be relied upon until the Company
can confirm them.
25
Corporate Governance Report
Introduction
Since the implementation of changes to the London Stock Exchange AIM rules in September 2018 Altus
has formally adopted the QCA Corporate Governance Code, and applies the ten principles of the QCA
Code as set out in the statement below and detailed in this report.
Section 19 of the Corporate Finance Manual issued by the TSX-V requires only that the corporate
governance practices and processes they adopt be appropriate. Therefore, since its listing on the TSX-
V, the Group has continued to follow the same practices that it adopted upon listing on AIM in London
in 2017.
The Group’s AIM Compliance Code, dating from its listing, is published on the Company’s website at
it
https://www.altus-strategies.com/corporate/corporate-governance/ and
published its Corporate Governance Statement.
in September 2018
Details of the Group’s response to the framework laid down by the QCA are contained within this report
and other sections of the Annual Report and Financial Statements as follows.
Corporate governance principle
Strategy and business model
Reference
Business Overview
Shareholder needs and expectations
Corporate Governance Report
Responsibilities to stakeholders
Strategic Report
Risk management
Composition of the Board
Corporate Governance Report
Strategic Report
Financial Statements note 24
Corporate Governance Report
Board experience, skills and capabilities
Corporate Governance Report
Board performance evaluation
Corporate culture
Governance structures
Corporate Governance Report
Corporate Governance Report
Corporate Governance Report
Communication with shareholders/stakeholders
Corporate Governance Report
Page(s)
6-8
16-17
14-15
78-79
Statement of Corporate Governance
The Board of Directors is responsible for the management of the Group on behalf of its shareholders.
The objective of the Group is to create long term value for shareholders, and the Board is responsible
for delivering that objective through its governance of the Company and its subsidiaries. The Directors
have overall responsibility for the corporate governance of the Group and recognise the importance of
the highest standards of behaviour and accountability.
Several aspects of the business in its current guise offer particular challenges to the Board in respect of
its approach to corporate governance, in particular:
• Complexity of operation in relation to size
The Group’s current activities include managing licence assets, entering JV and royalty
arrangements, transferring licences and companies and managing a group structure across 10
jurisdictions, all with a team of about 30 employees and consultants.
26
•
Expansion of operations
During 2018, Altus increased its areas of project operation from four to six countries, adding
Mali and Côte d’Ivoire, as well as activities in Canada associated with its TSX-V dual listing.
• Areas of operation
The focus of Altus’ exploration and the location of all of its intangible assets is Africa. Of the six
countries in which it currently has project operations, only one (Morocco) appears inside the
top 100-ranked countries in the World Bank’s international index of ease of doing business
(May 2018).
• Becoming a listed company
In quick succession the Company has listed in London and, 10 months later, in Toronto. This
opportunity has brought with it responsibilities to shareholders predominantly in Europe and
North America, and obligations for compliance with two regulatory regimes.
The Board is mindful that a strong corporate culture has a fundamental impact on the development of
the Company’s strategy, and is an essential tool in delivering that strategy, as well as in judging risk,
meeting challenges and dealing with external stakeholders.
The Board seeks to foster a culture of openness, respect, frequent communication and shared
responsibility. To do this it promotes interaction between the Board and senior management, employees
in various locations, shareholders and partners. Members of the Board make themselves accessible and
willing to act as a sounding board or a source of guidance, and by example encourage the permeation
of this culture throughout the management and wider team, both in the UK and Africa.
The effect of this open culture is to encourage dialogue at all levels, and to provide an environment in
which all employees can have the confidence to raise issues and offer solutions without fear of
recrimination or censure. With openness comes shared responsibility, as management is not viewed as
a closed shop where all decisions are taken. Instead, employees are expected to act on issues, in
discussion with relevant parties, rather than leave their resolution to someone else.
In the development and implementation of strategy this enables free and frank discussion of options
and their relative merits. It encourages all employees to highlight risks, and facilitates timely discussion
of issues and challenges, as well as swift and well-considered responses and actions. The values that
bind the team together extend to its dealings with external stakeholders, encouraging engagement with
shareholders, project partners and local communities in areas of exploration, and displaying a respect
and sense of responsibility that fosters mutual co-operation.
Board Composition
The Group’s Board of Directors comprises a Non-executive Chairman, a Chief Executive Officer, one
Executive Director and two further Non-executive Directors. The Group’s business is directed by the
Board and is managed on a day-to-day basis by the Chief Executive Officer and Executive Director, who
are based at the Company’s registered offices in Didcot, United Kingdom. The Group’s Chief Financial
Officer, who is not a director or an employee of the Company, is based in Vancouver, Canada. The
Chairman and both Non-executive Directors are classified as independent by the Toronto Stock
Exchange.
The articles of association provide that each director retires and stands for re-election at the AGM every
three years. All new directors appointed since the previous AGM are required to stand for election. In
27
2018 all directors served for the whole of the year except for Non-executive Director Michael Winn, who
was appointed on 30 January 2018.
The Board members combine a broad range of skills and expertise in the fields of geology and
mineralisation, strategy, finance and corporate governance.
Position
Appointment date
David
Netherway
Non-executive
Chairman
21-May-17
Steven
Poulton
Chief
Executive
28-Apr-17
Matthew
Grainger
Executive
28-Apr-17
Robert
Milroy
Non-
executive
21-May-17
Michael
Winn
Non-
executive
30-Jan-18
Status
Independent
Audit Committee
Remuneration
Committee
Member
Member
Not
independent
-
-
Not
independent
-
-
Independent
Independent
Chair
Chair
Member
Member
David Netherway
Non-Executive Chairman
David is a mining engineer with over 40 years of experience in the mining industry. David was involved
in the construction and development of the New Liberty, Iduapriem, Siguiri, Samira Hill and Kiniero gold
mines in West Africa and has mining experience in Africa, Australia, China, Canada, India and the Former
Soviet Union. David served as the CEO of Shield Mining until its takeover by Gryphon Minerals, prior to
that he was the CEO of Toronto listed Afcan Mining Corporation, a China focused gold mining company
that was sold to Eldorado Gold in 2005. He was also the Chairman of Afferro Mining which was acquired
by IMIC in 2013. David has held senior management positions in a number of mining companies
including Golden Shamrock Mines, Ashanti Goldfields and Semafo Inc. He is a former director of Altus
Resource Capital and Altus Global Gold. Mr. Netherway is currently the non-executive Chairman of Kilo
Goldmines [TSX: KGL] and of Canyon Resources [ASX: CAY] which is Altus’ partner in the Birsok and
Mandoum Project and he is a non-executive director of Avesoro Resources (formerly Aureus Mining)
[TSX/AIM: ASO] and of Kore Potash plc [ASX, AIM & JSE: KP2].
Steven Poulton
Chief Executive Officer
Steven is the Chief Executive and co-founder of Altus Strategies and a director of its exploration
subsidiaries. He holds an Honours degree in Geology from Southampton University and a Master's
degree in Mining Geology from the Camborne School of Mines. He started his career with Mano River
in 1998, joining the board in 2007. In 2002 he co-founded and was Chief Executive of Ariana Resources,
a gold producer in Turkey which listed on AIM in 2005 [AIM: AAU]. In 2004 he founded and was interim
Chairman of African Aura Resources which listed on the TSX-V in 2008 and which through its merger
with Mano River in 2009 created African Aura Mining. In 2011 African Aura Mining was divested into
Afferro Mining, which was acquired by IMIC in 2013 for approximately US$200m, and west African gold
producer Avesoro Resources (formerly Aureus Mining) [TSX/AIM: ASO]. In 2007 he was a founding non-
executive director of west Africa focused diamond development company Stellar Diamonds. Stellar
listed on AIM by way of a reverse takeover of West African Diamonds in 2010 and was acquired by
Newfield Resources [ASX:NWF] in 2018. In 2008 Altus co-founded and Steven was joint Investment
Manager to Altus Resource Capital, a five year closed-ended and long-only investment fund, focused
on junior resource equities. Altus Resource Capital listed on the LSE in 2009 and by 2011 had
28
approximately US$150m of assets under management. He is a director of Aegis Asset Management and
a co-founder of industry networking groups 'The Oxford Mining Club' and 'Resource IQ'. He is a Fellow
of the Geological Society of London, a Fellow of the Institute of Materials, Minerals and Mining and a
member of the Association of Mining Analysts.
Matthew Grainger
Executive Director
Matthew is an Executive Director and co-founder of Altus Strategies and a director of its exploration
subsidiaries. He holds an Honours degree in Earth Science from Anglia Ruskin University and a Master's
degree in Mining Geology from the Camborne School of Mines. Matthew joined Cambridge Mineral
Resources in 1999 and in 2002 he co-founded Ariana Resources which listed on AIM in 2005 [AIM: AAU].
In 2006 he joined African Aura Resources as Chief Operating Officer which listed on the TSX-V in 2008
and, through its merger with Mano River in 2009, created African Aura Mining, which in 2011 was
divested into Afferro Mining which was acquired by IMIC in 2013 and gold producer Avesoro Resources
(formerly Aureus Mining) [TSE/AIM: ASO]. Matthew is a director of Aegis Holdings and a co-founder of
industry networking groups The Oxford Mining Club and Resource IQ.
Robert Milroy
Non-Executive Director
Robert is Chairman of Milroy Capital Ltd a family investment company that manages various private
equity investments in natural resources, engineering, renewable energy and commercial real estate. He
has over 40 years of operational experience either as an owner or senior manager in the investment,
mining and petroleum industries. He was a founding and Managing Director of the Corazon Capital
Group; a Guernsey regulated investment management and stockbroking company for 14 years until its
takeover by Canaccord Genuity in 2010. In addition, he was the Managing Director of Eagle Drilling, a
drilling firm that specialised in hard rock core drilling in Central and Western Africa. Currently he is a
Non-Executive Director of the Energy Venture Funds III, IV, V and Chairman of the Zeropex Group Ltd a
water engineering firm. Previously he was a Non-Executive Director of Altus Resource Capital, Altus
Global Gold and Genuity Energy a UK onshore oil and gas exploration firm. Robert is also a noted
speaker and financial author, having written the Standard & Poor's Guides to Offshore Investment
Funds. Robert graduated with a Bachelor of Commerce (Honours) from the University of Manitoba in
1971. He is a Member of the Association of Mining Analysts, Chartered Institute for Securities &
Investment, Petroleum Exploration Society of Great Britain and Institute of Directors.
Michael D. Winn
Non-Executive Director
Michael was the Chairman and CEO at Legend Gold Corp. a TSX-V listed company which was acquired
by Altus in January 2018. Michael is President of Seabord Capital Corp. which provides investment
analysis and financial services to companies operating in the energy and mining sectors. Michael is also
President of Seabord Services Corp., a Canadian company providing management and regulatory
services to private & public mining companies. He worked as an analyst for Global Resource Investments
Ltd. from 1993 to 1997 where he specialized in the evaluation of emerging oil and gas and mining
companies, and has worked in the oil and gas industry since 1983 and the mining industry since 1992.
Michael is currently a director and officer of several TSX-V and NYSE listed companies operating in
Canada, Latin America, Europe and Africa. He holds a B.S. in Geology from the University of Southern
California.
29
David Miles
Chief Financial Officer
Mr Miles is a Chartered Professional Accountant with a BSc in Geology who has over 20 years’ experience
in a large multinational corporate environment, primarily with Cominco Ltd. While with Cominco, he
held various positions in corporate finance including Exploration Controller, responsible for the financial
reporting of the corporation's eight international exploration subsidiaries as well as reporting for
Canadian based exploration. From 2002 to 2004, David was the corporate controller for Quest Capital
Corp. (formerly Viceroy Resource Corporation). David is currently the CFO of TSX-V listed Lara
Exploration Ltd. and was formerly the CFO of Legend Gold Corp. a TSX-V listed company which was
acquired by Altus in January 2018. David was also formerly the CFO at the following TSX-V listed
companies: Reservoir Minerals Inc. Revelo Resources Corp., Colombian Mines Corporation, Esperanza
Resources Corp., Nevgold Resource Corp., Inca Pacific Resources Corp, Eurasian Minerals Inc., Sanu
Resources Ltd., Prospector Consolidated Resources Inc., Standard Uranium Inc. and Alexco Resource
Corp.
Segregation of duties
The responsibilities of the Chairman include providing leadership to the Board, the efficient organisation
and conduct of the Board’s function, setting the Board’s agenda, briefing all directors in relation to
issues arising at Board meetings and ensuring that adequate time is available for discussion of all agenda
items. The Chairman is also responsible for effective shareholder communication, arranging Board
performance evaluation, promoting a culture of openness and debate by facilitating the effective
contribution to the Board of non-executive directors in particular, and for ensuring constructive and
respectful relations between the executive and non-executive directors and between the Board and
senior management.
The executive directors co-ordinate the day-to-day running of the Group, and are responsible for
making recommendations to the Board regarding short and medium-term budgets, and targets,
strategies and objectives for the Group.
The Company makes available independent professional and legal advice to all directors, to ensure they
are able to discharge their duties. In addition, all Board members have access to the services of the
Company Secretary, who is responsible for ensuring compliance with all Board procedures.
Function of the Board and its Committees
The Board is responsible for approving the Group strategy and policies, for safeguarding the assets of
the Group, and is the ultimate decision-making body of the Group in all matters except those that are
reserved for specific shareholder approval.
The Board generally meets on a quarterly basis with additional meetings as and when required. Through
these meetings it provides control, guidance and oversight in reference to those matters reserved for
its decision. This includes:
- approval of the budget and business plan
- major capital expenditure
- acquisitions and disposals
- risk management policies
- approval of the financial statements
30
The Board delegates certain aspects of its responsibilities to the Board committees which have terms of
reference as listed below.
Audit Committee
The Audit Committee comprises Robert Milroy, David Netherway and Michael Winn and is chaired by
Robert Milroy. It meets at least twice a year. The committee has responsibility for ensuring the integrity
of the financial statements, and that the financial performance of the Company is properly measured
and reported by overseeing the production of annual and interim accounts and results announcements,
and confirming any changes to accounting policies.
The Audit Committee has unrestricted access to the Company’s external auditor in London, PKF
Littlejohn LLP. It reviews reports from the auditor, including recommendations regarding accounting
and other internal controls. It advises the Board with regard to the appointment of the auditor and
monitors the extent of non-audit services undertaken.
The committee monitors the effectiveness of internal controls and risk management systems on behalf
of the Board (see “Risk Management” section later in this report).
Remuneration Committee
The Remuneration Committee comprises Robert Milroy, David Netherway and Michael Winn and is
chaired by Robert Milroy. It meets at least once a year. The committee has responsibility for determining
the Group’s remuneration policies, and, within these terms, for making recommendations to the Board
on the individual remuneration packages of the Company’s Chief Executive, Chairman and the Executive
and Non-executive Directors. This includes salary, bonus and incentive payments, and awards of shares
and share options. Decisions regarding remuneration of the Group’s employees are delegated to the
Group’s management, subject to approval of the annual budget and interim forecasts by the Board. The
committee may consult with the Chief Executive as appropriate. No Director may be involved in any
discussions relating to his remuneration.
Nomination Committee
Given the size of the Board and the long-term stability of the management team, the Board has not yet
established a separate Nomination Committee. The Board is collectively responsible for reviewing the
structure, size and composition (including skills, knowledge and experience) of itself and its committees,
and for considering appointments of additional and replacement directors.
Meeting attendance
Attendance at the meetings of the Board and committee meetings during the year is set out below.
The denominator is the number of meetings the director was eligible to attend. Michael Winn was
appointed to the Board on 30 January 2018.
David Netherway
Steven Poulton
Matthew Grainger
Robert Milroy
Michael Winn
Board
Audit Committee
11/11
11/11
10/11
10/11
7/8
4/5
n/a
n/a
5/5
4/5
Remuneration
Committee
1/1
n/a
n/a
1/1
1/1
31
Responsibilities of the Board
Internal controls
The Board acknowledges its responsibility for the Group’s system of internal controls and procedures
for the purpose of protecting shareholders’ interests and safeguarding of the Group’s assets. This covers
operations, financial and risk management and regulatory compliance. Such systems are designed to
manage, rather than eliminate, the risk of failure to achieve business objectives; any system can provide
only reasonable, and not absolute, assurance against material misstatement or loss. In adopting its
controls and procedures, the Board takes into consideration their appropriateness to the Group, given
its size, complexity, stage of development, regulatory environment (AIM and TSX-V) and areas of
operation.
In at least one of the meetings of the Audit Committee each year the Group’s internal controls and
procedures are reviewed for effectiveness, and amended, updated and expanded as deemed necessary.
The Board ensures that its controls are applied as consistently as possible across its subsidiary
companies in the UK and overseas.
By far the most significant assets of the Group are its exploration licences. The Board reviews the
standing of the licences each quarter with respect to the fulfilment of local requirements to submit
renewals, reports and other documentation, to pay fees and taxes, and to undertake certain levels of
exploration.
Risk Management
The Board considers risk assessment to be important in achieving its strategic objectives. There is a
process of evaluation of performance targets through regular reviews by senior management of
forecasts, project milestones, budgets and timelines. In identifying potential risks, the Board looks at:
Inherent risk of mining prospects
-
- Macroeconomic environment, particularly with regard to the gold price
-
Financing environment
- Operational environment
The Board has concluded that given the size and level of development of the Group it is currently not
appropriate to establish an internal audit function, although it will keep this option under review.
Anti-bribery and anti-corruption
The Company has implemented an anti-bribery and anti-corruption policy and also implemented
appropriate procedures to ensure that the Board, employees and consultants of the Group comply with
the UK Bribery Act 2010.
Financial information
The Group’s management has adopted internal controls to provide reasonable assurance regarding the
reliability of financial information, both for internal financial control, and for the preparation of
published financial statements. These controls are set out in a framework document entitled ‘Financial
Position and Prospects Procedures’. The controls are reviewed regularly throughout the year.
Management accounts are produced on a monthly basis, results are reviewed against an annual budget
and periodic reforecasts, and significant variances are reported.
32
The financial statements for 2018 have been reviewed by the Audit Committee in consultation with the
Group’s auditor, PKF Littlejohn LLP. Particular attention was paid to the Group’s cash position,
presentation of the accounts on a going concern basis and access to future funding, and to support for
the value of the Group’s intangible assets as represented by its capitalised licence costs.
The Audit Committee regularly reviews the provision of non-audit services from its auditors. It is satisfied
that the provision of non-audit services by PKF Littlejohn LLP is compatible with the general standard
of independence for auditors and does not give rise to any conflict of interest.
Share dealing code
The Company has adopted a share dealing code for the Directors and applicable employees to ensure
compliance with the AIM rules relating to dealings in the Company’s securities and with the Market
Abuse Regulations as applied to AIM-listed companies.
Relations with shareholders
The Board is accountable to the Company’s shareholders and as such it is important for the Board to
appreciate the aspirations of shareholders and equally that the shareholders understand how the
actions of the Board and short-term financial performance relate to the achievement of the Group’s
longer-term goals.
The Board is committed to effective communication with the shareholders of the Company. Formal
communication is provided through the publication of the Annual Report and quarterly operational
updates and financial results. In addition, news releases are issued throughout the year and the
Company maintains a website (www.altus-strategies.com) on which press releases, corporate
presentations and financial information are available to view. Shareholders and other interested parties
can subscribe to receive notification of news updates and other documents from the Company via email.
Enquiries from individual shareholders on matters relating to the business of the Company are
welcomed. Executive Directors meet and hold calls with major shareholders to discuss the progress of
the Company and provide periodic feedback to the Board following meetings with shareholders. This
includes travelling to Canada and the US to meet North American-based shareholders.
The Board welcomes the attendance of shareholders at the Annual General Meeting and the Executive
Directors are happy to answer shareholders’ questions.
By order of the Board
David Netherway
Chairman
29 April 2019
33
Directors’ Report
The directors present their annual report and financial statements for the year ended 31 December
2018.
Company
Altus Strategies plc is the parent company of group. It is a public limited company listed on London’s
AIM and Toronto’s TSX-V and incorporated and registered in the United Kingdom. The registered office
address is The Orchard Centre, 14 Station Road, Didcot, Oxfordshire, OX11 7LL, United Kingdom.
Principal activity
The principal activity of the Group and Company is that of a project and royalty generator in the field
of mineral exploration. An overview of the business model is included on pages 6-8, and a detailed
review of the Group’s activities, together with expected future developments and objectives of the
Group, is provided within the Strategic Report on pages 13-25.
Results and dividends
The results for the year are set out in the Group Statement of Comprehensive income.
No ordinary dividends were paid during the year (2017: £Nil). The directors do not recommend payment
of a final dividend.
Directors
The directors who, unless otherwise indicated, held office during the year and up to the date of signature
of the financial statements were as follows.
David Netherway (Non-executive Chairman)
Steven Poulton (Chief Executive Officer)
Matthew Grainger (Executive Director)
Robert Milroy (Non-executive Director)
Michael Winn (Non-executive Director - appointed 30 January 2018)
Share Capital
Details of the share capital and movements in share capital during the year are disclosed in note 27 to
the financial statements. During the year no share options were issued to directors.
Substantial shareholdings
The Directors are aware of the following substantial interests or holdings in 3% or more of the
Company’s ordinary called up share capital as at 26 April 2019.
Major shareholders
(* indicates Director of the Company)
Steven Poulton*
Michael Winn*
Exploration Capital Partners 2012 Limited Partnership
David Netherway*
Matthew Grainger*
Euro Pacific Gold Fund
Exploration Capital Partners 2014 Limited Partnership
Creditforce Limited
Number of shares
25,150,000
18,719,898
17,458,000
10,750,600
9,147,500
6,680,000
6,000,000
6,000,000
% of issued
capital
14.14%
10.52%
9.81%
6.04%
5.14%
3.75%
3.37%
3.37%
34
Company’s listing
The Company’s ordinary shares have been trading on AIM in London since 10 August 2017 and on
TSX-V in Toronto since 6 June 2018.
Going Concern and availability of finance
The Directors have a reasonable expectation that the Group and Company will be able to access
adequate financial resources to continue in operational existence for the foreseeable future and,
therefore, they continue to adopt the going concern basis in the preparation of the annual report and
financial statements. Further details on the Directors’ assumptions are included in the statement on
going concern in note 1 of the financial statements.
Website publication
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Group’s website (www.altus-strategies.com) and for ensuring the annual
report and the financial statements are made available on its website. Financial statements are published
on the website in accordance with UK legislation governing the preparation and dissemination of
financial statements, which may vary from legislation in other jurisdictions. The Group is compliant with
AIM Rule 26 regarding the Group’s website.
Principal Risks and uncertainties
The principal risks and uncertainties of the Group are outlined in the Strategic Report on pages 13-15.
Share dealing
The Company has adopted a share dealing code for the Directors and relevant employees in accordance
with the AIM Rules and Market Abuse Regulations and takes proper steps to ensure their compliance.
Details of this code are set out in the Corporate Governance Report on pages 26 to 33.
Directors and their interests
The Directors who served during the year, together with their directly beneficial interests in the shares
of the Company are as follows.
David Netherway1
Steven Poulton2
Matthew Grainger3
Robert Milroy4
Michael Winn
31 December 2018
10,750,600
25,150,000
9,147,500
575,000
17,969,898
6.04%
14.14%
5.14%
0.32%
10.52%
31 December 2017
10,750,600
24,354,569
8,747,500
250,000
-
9.98%
22.62%
8.12%
0.23%
-
1. Includes 1,333,400 Ordinary Shares held by Diane Rissik
2. Includes 1,600,000 Ordinary Shares held by Susannah Poulton
3. Includes 720,000 Ordinary Shares held by Anna Grainger
4. Held through Milroy Capital Limited a company controlled by Robert Milroy
Future developments
The Group will continue to execute its project and royalty generator business model during 2019. Its
activities are expected to include:
-
-
undertaking costed mineral exploration programmes across the Group’s portfolio of projects;
entering and furthering discussions and agreements with third parties for new joint ventures
and royalty deals on the Group’s projects; and
considering potential project, royalty and company acquisition opportunities.
-
35
Suppliers & Contractors
The Group has a prompt payment policy and seeks to ensure that all liabilities are settled within the
supplier’s terms. Through fair dealings the Group aims to cultivate the goodwill of its contractors,
consultants and suppliers.
Key performance indicators (KPIs)
Information on the Group’s KPIs is included in the Strategic Report on page 13.
Financial risk management
In common with all other businesses, the Group is exposed to a variety of financial risks that arise from
its area of operations. These include the effect of changes in foreign currency exchange rates, funding
risk, credit risk and liquidity risk. The Group has a risk management programme in place that seeks to
limit the adverse effects on the financial performance of the Group. The Group does not use derivative
financial instruments to manage foreign currency risk and, as such, no hedge accounting is applied.
Financial risks are detailed in the Principal risks and uncertainties section of the Strategic Report on
pages 13-15 and in note 24 of the financial statements.
Events after the reporting date
The events after the reporting date are set out in note 31 to the Financial Statements.
Directors’ and Officers’ Indemnity Insurance
The Group maintains Directors and Officers insurance, and its provision for qualifying third-party
indemnity for the benefit of its Directors and Officers was in place throughout the year and remained
in place at the reporting date.
Annual General Meeting
The Annual General Meeting of the Company will be held at the Company’s offices of the Company on
Thursday 27 June 2019.
Auditor
PKF Littlejohn LLP has indicated its willingness to continue in office as the Group’s auditor. A resolution
proposing that they be re-appointed will be put forward at the Annual General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no
relevant audit information of which the company’s auditor is unaware. Additionally, the Directors
individually have taken all the steps that they ought to have taken as directors in order to make
themselves aware of any relevant audit information and to establish that the company’s auditor is aware
of that information.
On behalf of the board,
Steven Poulton
Chief Executive Officer
29 April 2019
36
Directors’ Remuneration Report
Remuneration Committee
The Remuneration Committee comprises Robert Milroy, David Netherway and Michael Winn and is
chaired by Robert Milroy. It meets at least once a year. Further details are included in the Corporate
Governance Report on pages 30-31. Due to the parent company’s listing on AIM it is not required to
comply with the following regulations, and has therefore excluded certain disclosures required by these
regulations.
- Report Regulations 2013
- UKLA Listing Rules
-
the disclosure provisions under schedule 8 to SI 2008/410 of the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
Remuneration policy for Executive and Non-executive Directors
The remuneration policy for executive directors is designed to provide a competitive package, to reward
good performance and to align the directors’ interests with those of shareholders. The package includes
basic salary (which may be partly deferred and paid in shares), bonus and company pension
contributions in line with Group policy, as well as share options, although during 2018 no share options
were held by or granted to any director. Remuneration packages are reviewed annually. Bonuses for
executive directors in 2018 were set at 75% of basic salary and linked to a number of KPI targets. As
these KPIs were not met in the year, no bonuses were paid in respect of the reporting period.
Non-executive Directors receive only basic fees and do not receive bonuses or company pension
contributions. They are included in the policy on share options although during 2018 no options were
held, granted or exercised.
Contracted and deferred remuneration
In each year directors may choose to defer some of their remuneration, whether this is salary or
company pension contributions, until such time as the Company has either the headroom to be able to
allot further shares to its directors, or has the liquid resources available to be able to settle the deferred
amounts in cash. Deferred remuneration is recorded in the accounts by way of an accrual. At the end of
2017 an insufficient accrual had been recorded in respect of all the remuneration which had been
deferred up to that point. A correction was made to the accounts during 2018, which means that the
charge for the year appears higher than the salary or fees due for the year, and higher than the cash
amount that has actually been received by the directors.
The cost of directors’ remuneration recorded in the accounts in 2018 was £413,803, comprising £401,483
for salaries and fees and £11,670 for pension contributions.
Of this figure, £323,083 was in respect of the financial year 2018, made up of £300,833 for salaries and
fees and £22,250 for pensions. The remainder was a correction in respect of prior years.
Of the remuneration payable for 2018, £185,825 was paid in cash (£183,500 salaries and £2,325 pension),
and no remuneration was settled in equity. £137,258 was deferred and remained outstanding at the
reporting date. The total value of deferred remuneration for 2018 and prior years at the end of the year
was £268,070.
37
The table below is a reconciliation of remuneration payable for 2018, accrual adjustments for prior years
and the charge in the accounts in the year as recorded in note 11 to the financial statements.
Salary / Fees
Contracted salary/fees
2018
Deferred salary under
accrued in 2017
Prepayment of 2017 salary
released in 2018
Charge in the year
Pensions
Contracted pensions 2018
Release in 2018 of over
accrued 2017 pension
Charge in the year
David
Netherway
£
Steven
Poulton
£
Matthew
Grainger
£
Robert
Milroy
£
Michael
Winn
£
Total
£
35,000
122,500
100,000
25,000
18,333
300,833
2,083
59,179
13,667
13,541
12,500
-
-
-
-
-
88,470
12,500
49,583
181,679
113,667
38,541
18,333
401,803
-
-
-
12,250
(8,255)
10,000
(2,325)
3,995
7,675
-
-
-
-
-
-
22,250
(10,580)
11,670
Remuneration payable for the three years 2016 – 2018
Remuneration payable to the directors of Altus per the for the last three years, comprising salary or fees,
bonus and pension contributions is in the table below.
Payable:
Salary/fees
Bonus
Pension
Total
David
Netherway
£
35,000
29,166
25,000
-
-
18,285
-
-
-
35,000
29,166
43,285
Steven
Poulton
£
Matthew
Grainger
£
122,500
86,250
90,000
-
74,503
-
12,250
8,625
9,000
134,750
169,378
99,000
100,000
86,250
90,000
-
150,502
-
10,000
8,625
9,000
110,000
245,377
99,000
Robert
Milroy
£
25,000
20,833
-
-
-
-
-
-
-
25,000
20,833
-
Michael
Winn
£
18,333
-
-
-
-
-
-
-
-
18,333
-
-
Total
£
300,833
222,499
205,000
-
225,005
-
22,250
17,250
18,000
323,083
464,754
241,285
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
38
Remuneration paid during the three years 2016 – 2018
Remuneration actually paid to directors (prior to the applicable deductions of tax or national insurance), either in cash or equity, for the last three years was as
follows.
David Netherway
Chairman
Cash
£
Equity
£
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
-
-
-
18,285
-
-
-
-
75,000
18,285
Received:
Salary/fees
Bonus
Pension
Total
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
Steven Poulton
CEO
Matthew Grainger
Executive
Cash
£
97,500
37,500
57,750
-
31,378
-
-
-
-
97,500
68,878
57,750
Equity
£
-
72,500
-
-
-
-
-
-
-
-
72,500
£
Cash
£
86,000
-
68,083 33,750
-
80,400
-
-
-
128,940
-
-
-
-
-
40,200
-
-
-
86,000
237,223 33,750
-
80,400
Robert Milroy Michael Winn
Non-executive Non-executive
Equity
Equity Cash
£
£
£
£
Equity Cash
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity received in respect of salary/fees in 2017 by David Netherway: £75,000 comprising 600,000 shares at a price of 12.5p
Equity received in respect of salary/fees in 2017 by Steven Poulton: £72,500 comprising 580,000 shares at a price of 12.5p
Equity received in respect of salary/fees in 2017 by Matthew Grainger: £33,750 comprising 270,000 shares at a price of 12.5p
Equity received in respect of bonus in 2016 by David Netherway: £18,285 comprising 1,150 shares at a price of £15.90
Total
Cash
£
183,500
105,583
138,150
-
160,318
-
-
40,200
-
183,500
306,101
138,150
Equity
£
Total
£
- 183,500
181,250 286,833
- 138,150
-
-
- 160,318
18,285
18,285
-
-
40,200
-
-
-
- 183,500
181,250 487,351
18,285 156,435
39
Deferred remuneration for the three years 2016 – 2018
Remuneration that directors elect to defer in respect of the three years 2016-2018, and which formed
the balance of deferred remuneration at the end of the year is as follows.
Deferred:
Salary/fees
Bonus
Pension
Total
David
Netherway
£
35,000
4,166
-
-
-
-
-
35,000
4,166
-
-
39,166
Steven
Poulton
£
25,000
28,750
43,125
12,250
8,625
9,000
20,250
37,250
80,500
9,000
20,250
147,000
Matthew
Grainger
£
14,000
13,667
21,562
7,675
-
-
-
21,675
35,229
-
-
56,904
Robert
Milroy
£
25,000
20,833
-
-
-
-
-
25,000
20,833
-
-
45,833
Michael
Winn
£
18,333
-
-
-
-
-
-
18,333
-
-
-
18,333
Total
£
117,333
67,416
64,687
19,925
8,625
9,000
20,250
137,258
140,728
9,000
20,250
268,070
2018
2017
2017
2018
2017
2016
Prior
2018
2017
2016
Prior
Total
Purchase of Company shares by directors
In addition to deferring remuneration, the directors of the Company have used their own income to
purchase shares in the Company; these purchases in 2017-2018 were as follows.
David
Netherway
Chairman
Steven
Poulton
CEO
Robert
Matthew
Grainger
Milroy
Executive Non-exec. Non-exec.
Michael
Winn
Total
2018
Value £
Shares
Average price p
2017
Value £
Shares
Average price p
Total
Value £
Shares
Average price p
-
-
-
25,613
795,431
3.22
15,055
400,000
3.76
41,479
1,114,000
3.72
163,084
2,056,800
7.93
101,518
3,017,800
3.36
41,479
1,114,000
3.72
188,697
2,852,231
6.62
116,573
3,417,800
3.41
11,798
325,000
3.63
31,250
250,000
12.50
43,048
575,000
7.49
-
-
-
-
-
-
-
-
-
52,465
1,520,431
3.45
337,331
6,438,600
5.24
389,796
7,959,031
4.90
Service period
Both executive directors have service contracts with the Group with notice periods of three months. No
director has a service agreement with a notice period in excess of three months.
40
Share options
Prior to listing on AIM, Altus Strategies Ltd (now a wholly-owned subsidiary, Altus Exploration
Management Limited) had previously issued Enterprise Management Incentive (“EMI”) and non-EMI
share options to directors, employees and external associates. All of the issued and outstanding share
options were either exercised or cancelled prior to the AIM listing. At 1 January 2018 there were no
options outstanding, either EMI or non-EMI. During 2018 the Company had no share option scheme in
place; no options were in existence during the year or outstanding at the reporting date.
By order of the Board
Robert Milroy
Chairman of the Remuneration Committee
29 April 2019
41
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that
law the Directors have prepared the Group and Parent Company financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under
company law the directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or
loss of the Group and Parent Company for that period. The Directors are also required to prepare
financial statements in accordance with the rules of the London Stock Exchange for companies trading
securities on the Alternative Investment Market and in accordance with the rules of the Toronto Stock
Exchange.
In preparing these financial statements, the directors are required to:
•
•
•
•
select suitable accounting policies and apply them consistently
state whether applicable IFRSs as adopted by the European Union have been followed for the
Group and Parent Company financial statements, subject to any material departures disclosed
and explained in the financial statements
make judgements and accounting estimates that are reasonable and prudent
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group and Parent Company will continue in business
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s and Parent Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Parent Company and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and Parent Company 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 the financial statements may differ from legislation in other
jurisdictions.
The Company is compliant with AIM Rule 26 regarding the Company’s website.
On behalf of the board
Steven Poulton
Chief Executive Officer
29 April 2019
42
Independent Auditor’s Report
Opinion
We have audited the financial statements of Altus Strategies plc (the parent company) and its subsidiaries (the
group) for the year ended 31 December 2018 which comprise the Group Statement of Comprehensive Income,
the Group and Parent Company Statement of Financial Position, the Group and Parent Company Statement of
Changes in Equity, the Group and Parent Company Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies. The financial reporting framework that has
been applied in 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.
In our opinion:
•
•
•
•
The financial statements give a true and fair view of the state of the group’s and of the parent company's
affairs as at 31 December 2018 and of the group’s and parent company’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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the directors' use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
Our application of materiality
The materiality applied to the Group financial statements was £180,000, based on thresholds for net assets
and the loss before tax. The performance materiality was £126,000.
43
An overview of the scope of the audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the
financial statements. In particular, we looked at areas involving significant accounting estimates and judgement
by the directors and considered future events that are inherently uncertain. We also addressed the risk of
management override of internal controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
The accounting records of the parent company and all subsidiary undertakings are centrally located and audited
by us based upon Group materiality or risk to the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current year and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the following key audit matters and set out our findings:
Key Audit Matter
Valuation and recoverability of exploration
assets and, for the parent company, amounts
due from subsidiary and related undertakings
(refer notes 16,18 and 20).
The carrying value of intangible assets as at 31
December 2018 is £4,071,870 which comprises
costs associated with exploration licenses and
projects
in Africa. The carrying value of
investments in subsidiaries, together with intra-
group receivables was £7,287,035 as at 31
December 2018.
How the scope of our audit responded to the
key audit matter
We reviewed the Group’s exploration licences
and permits to confirm good title and standing.
For licences which had expired and are in the
process of renewal, we assessed the relevant
factors, in conjunction with discussions with
management,
likelihood of
renewal.
regarding
the
We reviewed the terms and status of the joint
venture agreements in place, in conjunction with
the accounting treatment adopted under the
terms of those agreements.
These carrying values are tested annually for
impairment. There is a risk that the carrying
their direct
impaired given
values
dependence on early stage exploration projects.
are
The early stage projects were reviewed for
indicators of impairment in accordance with IFRS
6. We discussed with management the scope of
their future budgeted and planned expenditure
on the licence area.
recoverability of amounts due
from
related undertakings were
the underlying
to
reference
The
subsidiary and
assessed by
exploration projects.
44
Other information
The other information comprises the information included in the Annual Report, other than the Group and
Parent Company’s financial statements and our auditor’s report thereon. The directors are responsible for the
other information. Our opinion on the Group and Parent Company financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
•
•
the information given in the Strategic Report and the Directors' Report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Parent Company and 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.
45
Responsibilities of directors
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the
preparation of the Group and Parent Company 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 Group and Parent Company financial statements, the directors are responsible for assessing
the Group and Parent company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor)
for and on behalf of PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
29 April 2019
46
Independent Auditor’s Report in respect of
Canadian National Instrument 52-107
Opinion
We have audited the financial statements of Altus Strategies plc and its subsidiaries (the “group”) for the year ended
31 December 2018 which comprise the Group Statement of Comprehensive Income, the Group Statement of
Financial Position, the Group Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as
issued by the International Accounting Standards Board (“IAASB”).
In our opinion:
•
•
the group financial statements present fairly, in all material respects, the financial position of the group as
at 31 December 2018 and 31 December 2017 and its financial performance and its cash flows for the years
then ended; and
the group financial statements have been properly prepared in accordance with IFRSs as issued by the
IAASB.
Basis for Opinion:
We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by IAASB and
applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group in accordance with the International
Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the
ethical requirements that are relevant to our audit of the group financial statements in the UK, and we have fulfilled
our other ethical responsibilities in accordance with these requirements and the IESBA code. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs require us to report
to you where:
•
•
the directors' use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current year and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
47
We have determined the following key audit matters and set out our findings:
Key Audit Matter
Valuation and recoverability of exploration
assets and, for the parent company, amounts
due from subsidiary and related undertakings
(refer notes 16,18 and 20).
The carrying value of intangible assets as at 31
December 2018 is £4,071,870 which comprises
costs associated with exploration licenses and
in Africa. The carrying value of
projects
investments in subsidiaries, together with intra-
group receivables was £7,287,035 as at 31
December 2018.
How the scope of our audit responded to the
key audit matter
We reviewed the Group’s exploration licences
and permits to confirm good title and standing.
For licences which had expired and are in the
process of renewal, we assessed the relevant
factors, in conjunction with discussions with
management,
likelihood of
renewal.
regarding
the
We reviewed the terms and status of the joint
venture agreements in place, in conjunction with
the accounting treatment adopted under the
terms of those agreements.
These carrying values are tested annually for
impairment. There is a risk that the carrying
their direct
impaired given
values
dependence on early stage exploration projects.
are
The early stage projects were reviewed for
indicators of impairment in accordance with IFRS
6. We discussed with management the scope of
their future budgeted and planned expenditure
on the licence area.
recoverability of amounts due
from
related undertakings were
the underlying
to
reference
The
subsidiary and
assessed by
exploration projects.
Other information
The other information comprises the information included in the annual report and the management discussion
and analysis, 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 we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
48
Responsibilities of management
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
IFRSs, and for such internal control as management determines 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.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
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 International Standards on Auditing (ISAs) 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.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the group’s financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Directors.
•
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report.
However, future events or conditions may cause the group and the parent company to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation (i.e. gives a true and fair view).
•
• Are required to report on consolidated financial statements, obtain sufficient appropriate audit evidence
regarding the financial information of the entities or business activities within the group to express an
opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for the audit opinion.
49
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the current year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The partner in charge of the audit resulting in this independent auditors’ report is David Thompson.
David Thompson (Engagement Partner)
for and on behalf of PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
29 April 2019
50
ALTUS STRATEGIES PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Company Registration No. 10746796
Continuing operations
Management fees and costs
recovered from joint venture partners
Exploration costs expensed
Administrative expenses
IPO and acquisition related costs
Loss from operations
Investment income
Other operating income
Fair value gain on investments
Loss before taxation
Income tax
Loss for the year
Exchange differences on retranslation
of net assets of subsidiaries
Total comprehensive loss for the year
Notes
4
6
7
12
13
14
Loss for the year attributable to:
- Owners of the parent company
- Non-controlling interest
Total comprehensive income for the year attributable to:
- Owners of the parent company
- Non-controlling interest
2018
£
89,678
(630,902)
(1,221,110)
(19,284)
(1,781,618)
62
1,977
282,227
(1,497,352)
-
(1,497,352)
(76,992)
(1,574,344)
2017
£
401,228
(556,447)
(1,497,498)
(371,753)
(2,024,470)
61
33,588
129,142
(1,861,679)
(1,126)
(1,862,805)
-
(1,862,805)
(1,494,863)
(2,489)
(1,497,352)
(1,860,145)
(2,660)
(1,862,805)
(1,571,855)
(2,489)
(1,574,344)
(1,860,145)
(2,660)
(1,862,805)
Earnings per share (pence) attributable to the
owners of the parent
Basic earnings per share
15
(0.90)
(1.84)
The notes on pages 58-83 form part of these financial statements.
51
ALTUS STRATEGIES PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Company Registration No. 10746796
Notes
16
17
18
20
21
22
27
27
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Provisions
Total liabilities
Net current assets
Net assets
Equity
Share capital
Share premium
Translation reserve
Other reserves
Retained earnings
Total equity attributable to owners of
the parent
Non-controlling interest
Total equity
2018
£
4,071,870
7,932
883,763
4,963,565
79,292
724,785
804,077
5,767,642
(486,934)
(15,000)
(501,934)
302,143
5,265,708
1,777,827
6,018,822
(76,992)
5,770,070
(8,151,527)
5,338,200
(72,492)
5,265,708
2017
£
151,875
2,386
601,536
755,797
110,669
523,344
634,013
1,389,810
(298,055)
(15,000)
(313,055)
320,958
1,076,755
1,076,808
999,000
-
5,727,614
(6,656,664)
1,146,758
(70,003)
1,076,755
The notes on pages 58-83 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 29 April 2019 and
are signed on its behalf by:
Steven Poulton
Chief Executive Officer
52
ALTUS STRATEGIES PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Company Registration No. 10746796
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net current assets
Net assets
Equity
Called up share capital
Share premium
Other reserves
Retained earnings
Total equity
Notes
2018
£
2017
£
18
20
21
27
27
4,608,930
965,808
2,705,706
37,544
2,743,250
7,352,180
(117,033)
(117,033)
2,626,217
7,235,147
1,777,827
6,018,822
42,456
(603,958)
7,235,147
527,913
291,087
819,000
1,784,808
(91,662)
(91,662)
727,338
1,693,146
1,076,808
999,000
-
(382,662)
1,693,146
As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own statement of
comprehensive income and related notes. The Company’s loss for the year was £221,296 (2017: £382,662).
The notes on pages 58-83 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 29 April 2019 and
are signed on its behalf by:
Steven Poulton
Chief Executive Officer
53
ALTUS STRATEGIES PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Balance at 1 January 2017
Year ended 31 December 2017
Loss and total comprehensive income
for the year
Issue of share capital
Issue of warrants
Capital reorganisation
Share options exercised
Total transactions with owners,
recognised directly in equity
Balance at 31 December 2017
Year ended 31 December 2018
Loss for the year
Other comprehensive loss for the year
Total comprehensive income for the
year
Issue of share capital
Share issue costs
Issue of warrants
Warrants exercised
Total transactions with owners,
recognised directly in equity
Balance at 31 December 2018
27
27
Notes
Share
capital
£
104,526
Share
premium
account
£
5,770,590
-
127,200
-
845,082
-
-
1,901,106
-
(6,672,696)
-
972,282
1,076,808
(4,771,590)
999,000
Translation
reserve
-
-
-
-
-
-
-
-
Other
reserves
£
(92,323)
Retained
earnings
£
(4,807,839)
Total
equity
£
974,954
Non-
controlling
interest
£
(67,343)
Total
£
907,611
-
-
3,643
5,827,614
(11,320)
(1,860,145)
-
-
-
11,320
(1,860,145)
2,028,306
3,643
-
-
(2,660)
-
-
-
-
(1,862,805)
2,028,306
3,643
-
-
5,819,937
5,727,614
11,320
(6,656,664)
2,031,949
1,146,758
-
(70,003)
2,031,949
1,076,755
-
-
-
-
-
684,519
-
-
16,500
-
5,103,396
(146,274)
-
62,700
-
(76,992)
(76,992)
-
-
-
-
-
-
(1,494,863)
-
(1,494,863)
(76,992)
(2,489)
-
(1,497,352)
(76,992)
-
-
-
42,456
-
(1,494,863)
-
-
-
-
(1,571,855)
5,787,915
(146,274)
42,456
79,200
(2,489)
-
-
-
-
(1,574,344)
5,787,915
(146,274)
42,456
79,200
701,019
1,777,827
5,019,822
6,018,822
-
(76,992)
42,456
5,770,070
-
(8,151,527)
5,763,297
5,338,200
-
(72,492)
5,763,297
5,265,708
The notes on pages 58-83 form part of these financial statements.
54
ALTUS STRATEGIES PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Share
capital
£
Share
premium
account
£
Other
reserves
£
Retained
earnings
£
Total
£
Notes
-
-
-
(382,662)
(382,662)
27
1,076,808
1,076,808
999,000
999,000
-
-
- 2,075,808
- 2,075,808
Year ended 31 December 2017
Loss and total comprehensive
income for the year
Issue of share capital
Total transactions with owners,
recognised directly in equity
Balance at 31 December 2017
1,076,808
999,000
-
(382,662) 1,693,146
Year ended 31 December 2018
Loss and total comprehensive
income for the year
Issue of share capital
Share issue costs
Issue of warrants
Exercise of warrants
Total transactions with owners,
recognised directly in equity
-
-
-
(221,296)
(221,296)
27
684,519
-
-
16,500
701,019
-
5,103,396
(146,274) -
42,456
-
42,456
-
62,700
5,019,822
- 5,787,915
(146,274)
-
42,456
-
-
79,200
- 5,763,297
Balance at 31 December 2018
1,777,827
6,018,822
42,456
(603,958) 7,235,147
The notes on pages 58-83 form part of these financial statements.
55
ALTUS STRATEGIES PLC
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Cash flows from operating activities
Loss from operations
Other operating income
Less: movement in depreciation
Less: impairment of intangible assets
Foreign exchange on foreign operations
Equity-settled share based payments
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash outflow used in operating activities
Investing activities
Cash acquired on purchase of subsidiary
Purchase of intangible assets
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Net proceeds from the issue of shares and warrants
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange movements on cash and cash equivalents
Cash and cash equivalents at end of the year
2018
£
(1,781,618)
1,977
7,331
20,529
(77,082)
-
34,712
7,453
(1,786,698)
13,222
(270,534)
(12,876)
62
(270,126)
2,258,175
2,258,175
201,351
523,344
90
724,785
2017
£
(2,024,470)
33,588
1,413
-
351,981
143,809
(29,826)
(1,523,505)
-
(1,734)
(46,235)
61
(47,908)
1,678,843
1,678,843
107,430
415,914
-
523,344
Significant non- cash transactions
On 31 January 2018, the Company acquired 100% of the trade and assets of Legend Gold Corp. by way of a Plan of
Arrangement through the issue of equity in the Company. See note 8 for further details.
During the year, the Company issued warrants to consultants as consideration for the raising of funds in the year.
These have been treated as a share based payment and further detail is included in note 26.
The notes on pages 58-83 form part of these financial statements.
56
ALTUS STRATEGIES PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Cash flows from operating activities
Loss on ordinary activities
Foreign exchange
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
(Increase)/decrease in intercompany balances
Net cash used in operating activities
Investing activities
Purchase of investments
Net cash used in investing activities
Financing activities
Proceeds from the issue of shares
Net cash generated from financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
2018
£
(221,296)
-
283
14,676
(2,167,381)
(2,373,718)
(138,000)
(138,000)
2,258,175
2,258,175
(253,543)
291,087
37,544
2017
£
(382,662)
40
(17,189)
91,622
(510,724)
(818,913)
-
-
1,110,000
1,110,000
291,087
-
291,087
Significant non- cash transactions
On 31 January 2018, the Company acquired 100% of the trade and assets of Legend Gold Corp. by way of a Plan of
Arrangement through the issue of equity in the Company. See note 8 for further details.
During the year, the Company issued warrants to consultants as consideration for the raising of funds in the year.
These have been treated as a share based payment and further detail is included in note 26.
The notes on pages 58-83 form part of these financial statements.
57
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
Company information
Altus Strategies plc is a public company limited by shares and incorporated in England and Wales. The
registered office is 14 Station Road, Didcot, Oxfordshire, OX11 7LL, United Kingdom. The Group consists of
Altus Strategies plc and all of its subsidiaries, as listed in note 19.
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRS interpretations committee (IFRS IC) interpretations as adopted for use in the
European Union and with IFRS and their interpretations issued by the IASB. The consolidated financial
statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS, (except as otherwise stated).
The financial statements have been prepared on the historical cost basis, as modified by the valuation of
financial assets at fair value through profit or loss. The principal accounting policies adopted are set out
below.
The financial statements are prepared in British Pounds Sterling (£), which is the functional currency of the
Company. Monetary amounts in these financial statements are rounded to the nearest whole pound.
As permitted by section 408 of the Companies Act 2006, the Company has not presented its own statement
of comprehensive income and related notes. The Company’s loss for the year was £221,296 (2017:
£382,662).
Basis of consolidation
The consolidated financial statements comprise the financial statements of Altus Strategies plc and its
subsidiaries as at 31 December 2018. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group.
Altus Strategies plc was incorporated on 28 April 2017. On 14 June 2017, Altus Strategies plc acquired the
entire share capital of Altus Exploration Management Limited by way of a share for share exchange. The
transaction was treated as a group reconstruction and accounted for using the reverse merger accounting
method. Accordingly, the financial information for the prior year (2017) has been presented as if Altus
Exploration Management Limited was owned by Altus Strategies plc throughout the entire prior year.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Specifically, the
Group controls and investee if, and only if, the Group has:
•
•
•
power over the investee (i.e. existing rights that give it the current ability to direct the
relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its future
Generally, there is a presumption that a majority of the voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting rights or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has the power over an
investee, including:
•
•
•
The contractual arrangements with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
58
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
1 Accounting policies (continued)
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated financial statements from the date the Group gains control until the date the Group ceases to
control the subsidiary.
During the year, the Company acquired 100% of the trade and assets of Legend Gold Corporation.
Management concluded that the transaction did not meet the criteria of a purchase of an entity and as such
was accounted for as an asset acquisition and not a business combination under IFRS 3. See note 8 for further
detail.
“Joint ventures” as referred to in the financial statements refer to agreements with exploration partners and
not joint ventures as defined within IFRS 11.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of
the parent company of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance.
All inter- group assets and liabilities, equity income, expense and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Going concern
The Directors have at the time of approving the financial statements, a reasonable expectation that the
Group and Company have adequate resources to continue in operational existence for the foreseeable
future. In common with many junior resource investment and exploration companies, the Group and
Company raise funds in discrete tranches from existing shareholders and /or new investors. The Directors
and management are using funds for the evaluation of resource investment and exploration opportunities.
The Company expects that it will have to raise additional funds to provide sufficient working capital through
the next financial year by equity placings or the sale of its equity position in Canyon Resources Limited. Thus,
they continue to adopt the going concern basis of accounting in preparing the financial statements.
Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so, to
provide further understanding of the financial performance of the Group. They are material items of income
of expense that have been shown separately due to the significance of their nature or amount. IPO and
acquisition related costs are included as exceptional items in profit or loss.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when
an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS
when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that
the Group uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially
changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It
requires specific disclosures about fair value measurements and disclosures of fair values, some of which
replace existing disclosure requirements in other standards.
59
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
1 Accounting policies (continued)
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the
dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses
arising on translation are included in the Statement of Comprehensive Income for the period.
2
Adoption of new and revised standards and changes in accounting policies
New and amended standards adopted by the Group and Company
The Group and Company have applied the following standards and amendments for the first time for its
annual reporting period commencing 1 January 2018:
IFRS 9 Financial Instruments;
IFRS 15 Revenue from Contracts with Customers;
•
•
• Classification and Measurement of Share-based Payment Transactions – Amendments to IFRS 2; and
• Annual Improvements 2014-2016 Cycle.
IFRS 15 became effective as at 1 January 2018. The revenue in the Group is derived from management
charges with group entities and joint-venture partners. There is no material impact on the financial
statements as a result of the transition to IFRS 15.
IFRS 9 became effective as at 1 January 2019. The effective of the transition to IFRS 9 is detailed in note 23.
Other than as described above, there has been no material impact on the financial statements as a result of
the adoption of the new and amended standards.
New and revised IFRSs in issue but not yet effective
The Group and Company have not applied the following new and revised Standards and Interpretations that
have been issued but are not yet effective:
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
IAS 28 (Amendments) Long-term interests in Associates and Joint Ventures
•
•
•
• Annual Improvements to IFRS Standards 2015-2017 Cycle
• Amendments to IFRS 3: Business Combinations
• Amendments to IAS 1 and IAS 8: Definition of material
*subject to EU endorsement
Effective date for
annual
periods beginning
on or after
1 January 2019
1 January 2019
1 January 2019
1 January 2019
* 1 January 2020
*1 January 2020
The Group is evaluating the impact of the new and amended standards above. The directors believe that
these new and amended standards are not expected to have a material impact on the Group and Company's
results or shareholders' funds. The Group and Company expect that the adoption of IFRS 16 will have no
material impact on the financial statements as the Group and Company have no material lease agreements.
60
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
3
4
Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates
will seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are shown in the following notes.
Impairment of deferred exploration costs
Share based payments
Fair value estimation on acquisition
Note 16
Note 26
Note 8
Segmental analysis
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, which is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Board of Directors.
At the current stage of the Group’s development, management considers there to be one income segment,
which is the recovery of exploration expenses and associated management costs from joint venture
partners. Income attributable to this segment in 2018 was £89,678 (2017: £401,228). All of this income was
associated with the Group’s activities in Africa.
Group
Management fees and costs recovered from joint
venture partners
Loss from operations
Reportable segment assets
Reportable segment liabilities
Management fees and costs recovered from joint
venture partners
Loss from operations
Reportable segment assets
Reportable segment liabilities
5
Operating loss
Operating loss for the year is stated after
Exchange losses/(gains)
Exploration and development costs (note 6)
IPO and acquisition related costs
Depreciation
Share-based payments
Operating lease charges
UK
2017
£
-
Africa
2017
£
401,228
Total
2017
£
401,228
(1,829,925)
(194,545)
(2,024,470)
1,075,825
(241,062)
313,985
(71,993)
1,389,810
(313,055)
2018
£
40,678
2018
£
49,000
2018
£
89,678
(1,143,365)
(638,253)
(1,781,618)
1,565,829
(441,477)
4,201,813
(60,547)
5,767,642
(501,934)
2018
£
(25,726)
630,902
19,284
7,331
12,854
38,222
2017
£
(14,318)
556,447
371,753
1,413
3,643
350,846
61
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
6
Exploration and development costs
The Group’s costs derived from its operations in countries in which it holds licences are detailed below.
Location and licence
Cameroon
Bikoula
Birsok
Laboum
Mandoum
Ndjele
Cameroon - general
Ethiopia
Daro
Tigray-Afar
Ethiopia - general
Côte D’Ivoire
Prikro
Zenoula
Côte d’Ivoire - general
Liberia
Zolowo
Liberia - general
Mali
Diba (Korali Sud)
Djelimangara
Lakanfla
Sebessounkoto Sud
Tabakorole
Mali - general
Morocco
Agdz
Ammas
Takzim
Zaer
Morocco - general
Other
Total
Administrative
expenses
2018
£
Operational
expenses
2018
£
Travel
expenses
2018
£
296
502
25,877
103
37
76,779
6,147
1,325
54,328
2,329
41
19,623
17,796
17,158
176
196
391
401
548
90,424
1,836
-
18
-
60,826
16,017
393,174
7,700
-
12,427
61
442
11,304
43,837
271
2,345
9,850
1,298
4,227
39,337
1,958
5,388
125
2,818
1,766
2,586
6,111
2,860
1,843
10,810
176
2,369
25
171,934
6,075
-
2,810
-
-
1,552
9,412
50
4,877
1,766
222
4,676
19,349
38
-
-
-
-
552
7,138
327
82
1,521
14
5,333
-
65,794
Total
2018
£
14,071
502
41,114
164
479
89,635
59,396
1,646
61,550
13,945
1,561
28,526
76,482
19,154
5,564
321
3,209
2,167
3,686
103,673
5,023
1,925
12,349
190
68,528
16,042
630,902
62
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
6
Exploration and development costs (continued)
Location and licence
Cameroon
Laboum
Birsok & Mandoum
Bikoula & Ndjele
Cameroon - general
Ethiopia
Tigray-Afar
Ethiopia – general
Liberia
Bella Yella
Zolowo
Liberia – general
Morocco
Agdz
Takzim
Morocco – general
Other
Total
Administrative
expenses
2017
£
Operational
expenses
2017
£
Travel
expenses
2017
£
63,390
1,032
1,715
68,989
24,281
79,788
9,418
23,564
153
47,803
189
3,162
(345)
44,508
4,405
4,575
-
-
33,151
-
1,692
970
16,379
7,345
24
-
-
Total
2017
£
144,344
1,221
6,569
69,614
85,168
91,538
14,017
23,564
153
447
457
77,262
4,275
354,771
7,975
571
10,524
4,479
127,846
6,615
38
3,899
3,717
73,830
15,037
1,066
91,685
12,471
556,447
7
Administrative expenses
Administrative expenses include the following balances.
Group
Employee costs (note 10)
Consultants and contractors
Costs incurred on behalf of joint venture partners
Legal and professional expenses
Travel expenses
Premises and office expenses
Exchange gains
Depreciation of property, plant and equipment
Impairment of licence
Other expenses
2018
£
746,022
56,808
7,988
203,250
84,151
88,826
(25,726)
7,331
20,529
31,931
1,221,110
2017
£
1,091,773
-
195,196
140,045
29,079
-
(14,318)
1,413
-
54,310
1,497,498
63
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
8
Plan of Arrangement with Legend Gold Corporation
On 30 January 2018, Altus acquired all of the outstanding shares of LGN Holdings (BVI) Inc. (“Legend”),
a 100% subsidiary of Legend Gold Corporation. A summary of the purchase price allocation for the
Legend acquisition is as follows.
Purchase Price
Legend common shares outstanding as at January 30, 2018
Exchange Ratio
Altus common shares issued to Legend shareholders
Fair value of Altus common share, in GBP on January 30, 2018
Fair value of Altus common shares issued, in GBP
Fair value of outstanding Legend warrants exchanged for Altus warrants
Altus transaction costs
Preliminary Purchase Price
Purchase Price Allocation
Cash and cash equivalents
Receivables
Intangible assets
Property and equipment
Trade and other payables
Notes payable
Total identifiable net assets
13,686,752
3.0
41,060,256
£0.085
£3,490,122
£100,000
£138,000
£3,728,122
£
13,223
3,534
3,890,657
2,133
(140,249)
(41,176)
3,728,122
The value of the Altus ordinary shares was calculated based on the issuance of 41,060,256 shares at a
price per share of £0.085 which was the closing Altus share price on 30 January 2018.
The replacement of Legend’s warrants has been valued using the Black-Scholes option pricing model. The
assumptions used in the Black-Scholes option pricing model are as follows.
Weighted average
Share price on issue
Exercise price of warrants
Risk free rate
Expected life (years)
Expected volatility
Dividend rate
Warrants
£0.085
£0.048
0.60%
1.42
100%
0.00%
At the time of acquisition Altus had only recently become a public company and therefore did not have
much trading history on which to base volatility. A volatility of 100% has been assumed for the purposes
of this calculation. The fair value of the replacement warrants is based on the outstanding 2,888,618
warrants outstanding adjusted for the Share Exchange Ratio of 3.0 of Altus common shares per Legend
warrant. The fair value per common share of Altus is the closing price on the Alternative Investment
Market (“AIM”) on January 30, 2018 and the foreign exchange rate of 1.7396 is the closing GBP to CAD
exchange rate published by the Bank of England on January 30, 2018.
64
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
8
Acquisition of Legend Gold Corporation (continued)
During the year warrants valued at £85,000 using the fair value model at acquisition were exercised. The
value of the investment has been adjusted by this value on exercise. At 31 December 2018 a further
£15,000 of warrants remained to be exercised.
The transaction has been treated as an asset acquisition by Altus and therefore estimated transaction
costs attributable to the acquisition totalling £138,000 have been included in the preliminary purchase
price. The transaction costs are mainly legal expenses.
Under IFRS 3, a business must have three elements: inputs, processes and outputs. Legend was an early
stage exploration company and had no mineral reserves and no plan to develop a mine. Legend did have
title to mineral properties, but these could not be considered inputs because of their early stage of
development. Legend had no processes to produce outputs. Legend had not completed a feasibility study
or a preliminary economic assessment on any of its properties and had no infrastructure or assets that
could produce outputs. There was also no management or personnel within the Company that had any
experience or expertise in mine development, mining, construction of mill equipment or in milling
processes. Therefore, Management’s conclusion was that the transaction was an asset acquisition and
not a business acquisition.
9
Auditor’s remuneration
Fees payable to the company’s auditor for the financial year were as follows.
For audit services
Audit of the financial statements of the group and company
2018
£
21,500
2017
£
20,500
10
Employees
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs
are required to be recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services
are received.
Termination benefits are recognised immediately as an expense when the Group is demonstrably
committed to terminate the employment of an employee or to provide termination benefits.
The average number of employees of the Group during the year was as follows. Altus Strategies plc has no
employees and incurs no remuneration costs.
Group
Directors
Employees (excluding consultants and associates)
2018
Number
5
23
27
2017
Number
4
20
24
65
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
10
Employees (continued)
Of the employees, 8 are employed in the UK and 15 are employed in four countries in Africa. Remuneration
of African-contracted employees is included in Exploration Costs. Remuneration of Directors and UK-
contracted employees comprised the following costs.
Group
Wages and salaries
Bonuses
Social security costs
Pension costs
Other costs
2018
£
660,469
1,500
49,877
25,420
8,756
746,022
2017
£
623,038
300,967
94,617
73,151
-
1,091,773
11
Directors’ remuneration
Details of directors’ remuneration are included in the Directors’ Remuneration Report on pages 37-41. As
noted in the report, the 2018 salaries figure includes additional accruals for fees relating to prior years.
Further, each director has elected to defer some or all of their fees/salary, and remuneration has been
paid to directors in cash and equity.
Directors’ remuneration recorded in the year was as follows.
Fees/salaries
Bonuses
Pensions
Total
2018
2017
2018
2017
2018
2017
2018
2017
£
£
49,583
38,541
18,333
12,500
13,542
-
£
-
-
-
£
-
-
-
£
-
-
-
£
-
-
-
£
£
49,583
38,541
18,333
12,500
13,542
-
181,679
113,667
401,803
56,500
72,583
155,125
-
31,379
- 128,940
- 160,319
3,995
7,675
11,670
4,469
44,669
49,138
185,674
92,348
121,342 246,192
413,473 364,582
Non-executive
directors
David Netherway
Robert Milroy
Michael Winn
Executive directors
Steven Poulton
Matthew Grainger
Total
During 2018 retirement benefits accrued under defined contribution schemes for 2 directors (2017: 2
directors).
12
Finance income
Group
Interest on bank deposits
2018
£
62
2018
£
61
66
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
13
Other gains and losses
See note 18 for accounting policy and detail of financial assets held at fair value through profit or loss.
Group
Fair value gains/(losses) on financial assets at fair value
through profit or loss
2018
£
2017
£
282,227
129,142
14
Income tax
Income tax represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax is based on taxable profit or loss for the year. Taxable profit or loss differs from net profit or
loss as reported in the Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. Current tax is calculated using tax rates that have been enacted or substantively enacted by
the reporting end date.
Deferred tax
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 balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when
it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in
equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to
offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by
the same tax authority.
Current tax for the year is as follows.
Group
Foreign current tax on profit for the current year
Current tax for the year for the Company was £nil (2017: £nil).
2018
£
-
2017
£
1,126
67
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
14
Income tax (continued)
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profits/ (losses) of the consolidated entities as follows.
Group
Loss before taxation
Expected tax charge based on the standard rate of corporation tax in
the UK of 19% (2017: 19.25%)
Tax effect of:
- Expenses not deductible for tax purposes
- Impairment not deductible for tax purposes
%)
- Unutilised tax losses for which no deferred tax asset is recognised
- Utilised tax losses brought forward
- Permanent capital allowances in excess of depreciation
- Effect of overseas tax rates
Tax expense for the year
2018
£
(1,497,352)
2017
£
(1,861,679)
(284,497)
(358,373)
42,581
3,900
238,016
-
-
-
-
104,823
-
253,216
243
91
1,126
1,126
The Group has tax losses of approximately £1,331,000 (2017: £1,089,000) available to carry forward against
future taxable profits. No deferred tax asset has been recognised in view of the uncertainty over the timing
of future taxable profits against which the losses may be offset.
Earnings per share
The basic loss per share is calculated by dividing the loss attributable to owners of the parent company by
the weighted average number of ordinary shares in issue during the year. Dilution is represented by a
number of warrants outstanding, which at the end of the year numbered 28,603,477. No diluted earnings
per share is presented as the loss-making nature means the warrants are anti-dilutive.
Loss attributable to owners (£)
Weighted average number of ordinary shares in issue
Basic loss per share (pence)
2018
(1,494,863)
166,350,683
(0.90)
2017
(1,860,145)
100,929,581
(1.84)
Intangible assets
Expenditure on exploration activities is written off against profits in the year in which it is incurred.
Identifiable development expenditure is capitalised to the extent that the technical, commercial and
financial feasibility can be demonstrated. Amortisation is recognised so as to write off the cost or valuation
of assets less their residual values over their useful lives on the following basis.
Deferred exploration costs: Not amortised
Deferred exploration costs comprise exploration licence fees capitalised in accordance with IFRS 6
“Exploration for and Evaluation of Mineral Resources.” Licences are initially measured at cost.
Management tests quarterly whether deferred exploration costs require impairment. Each exploration
project is subject to a quarterly review either by a consultant or senior Company geologist to determine if
the exploration results returned to date warrant further exploration expenditure and have the potential to
result in an economic discovery. This review takes into consideration
68
15
16
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
16
Intangible assets (continued)
long-term metal prices, anticipated resource volumes and grades, permitting and infrastructure, external
factors affecting the project, as well as the likelihood of on-going funding from current or potential joint
venture partners. In the event that a project does not represent an economic exploration target and results
indicate that there is no additional upside, or that future funding from joint venture partners is unlikely, a
decision will be made to discontinue exploration. A further review of the recommendations of the
consultant or senior Company Geologist is then performed by management.
Group
Mali
Korali Sud (Diba)
Lakanfla
Djelimangara
Sebessounkoto Sud
Tabakorole
Pitiangoma Est
Adjustment on
exercise of warrants
Cameroon
Laboum
Bikoula
Ndjele
Birsok
Mandoum
Ethiopia
Tigray-Afar
Daro
Negash
Morocco
Agdz
Takzim
Zaer
Ivory Coast
Prikro
Toura (application)
Liberia
Zolowo
Bella Yella
At
1 January
2018 Additions
Additions
through
acquisition of
subsidiary
Disposals &
impairment
FX adjust-
ments
-
-
-
-
-
-
-
7,078
13,982
-
13,955
6,965
-
1,361,729
583,598
389,066
389,066
583,598
583,598
-
(85,000)
22,203
17,419
2,054
44,130
29,375
14,406
-
331
1,759
-
-
-
-
15,840
17,711
4,273
21,000
9,835
1,346
-
-
2,947
616
-
1,474
1,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(331)
-
-
-
-
-
4,701
1,653
1,410
949
1,884
2,114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 31
December
2018
1,373,508
599,233
390,476
403,970
592,447
585,712
(85,000)
38,043
35,130
6,327
65,130
39,210
15,752
-
-
4,706
616
-
1,474
1,338
-
20,198
151,875
3,798
-
122,158
-
-
3,805,655
-
(20,198)
(20,529)
-
-
12,711
3,798
-
4,071,870
69
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
16
Intangible assets (continued)
Group
Cost
At 1 January 2017
Additions
Disposals
At 31 December 2017
Amortisation and impairment
At 1 January 2017
Disposals
At 31 December 2017
Carrying amount
At 31 December 2016
At 31 December 2017
Deferred exploration costs
£
105,640
46,235
-
151,875
-
-
-
Total
£
105,640
46,235
-
151,875
-
-
-
105,640
151,875
105,640
151,875
17
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or
valuation, net of depreciation and any impairment losses. Depreciation is recognised so as to write off the
cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
Computers
Plant and Machinery
Motor vehicles
4 years straight line
2 years straight line
4 years straight line
2 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale
proceeds and the carrying value of the asset, and is recognised in profit or loss.
Impairment of non-current assets
At each reporting end date, the Group reviews the carrying amounts of its non-current assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
70
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
17
Property, plant and equipment (continued)
Group
Cost
At 1 January 2018
Acquisition of subsidiary
Additions
Disposals
At 31 December 2018
Amortisation and impairment
At 1 January 2018
Acquisition of subsidiary
Charge in the year
Disposals
At 31 December 2018
Carrying amount
At 31 December 2017
At 31 December 2018
Cost
At 1 January 2017
Additions
Disposals
At 31 December 2017
Amortisation and impairment
At 1 January 2017
Charge in the year
Disposals
At 31 December 2017
Carrying amount
At 31 December 2016
At 31 December 2017
Plant and
machinery
Fixtures,
fittings and
equipment
Computer
equipment
Motor
vehicles
Total
£
240
-
555
-
795
240
-
90
-
330
£
£
£
£
4,359
40,769
-
(179)
44,949
3,022
40,769
507
(179)
44,119
22,612
-
12,321
(10,890)
24,043
21,563
-
6,734
(10,891)
17,406
23,140
54,553
-
-
77,693
23,140
54,553
-
-
77,693
50,351
95,322
12,876
(11,069)
147,480
47,965
95,322
7,331
(11,070)
139,548
-
465
1,337
830
1,049
1,0491,049
6,637
-
-
2,386
7,932
£
240
-
-
240
240
-
-
240
£
£
£
£
3,832
527
-
4,359
2,497
525
-
3,022
21,405
1,207
-
22,612
20,675
888
-
21,563
23,140
-
-
23,140
23,140
-
-
23,140
48,617
1,734
-
50,351
46,552
1,413
-
47,965
2,065
2,386
-
-
1,335
1,337
730
-
-
1,049
1,049
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a revaluation increase.
71
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
18
Investments
The Group holds both financial assets at amortised cost and financial assets at fair value through profit and
loss. See note 23 for further information on the accounting policies applied to financial assets.
The Company’s investments in subsidiary are held at fair value. As there is no active market, fair value is
considered to be amortised cost less impairments.
Investments carried at fair value through profit or loss comprise listed equity shares (Level 1). The fair value
of these equity shares is determined by reference to published price quotations in an active market.
Investments in subsidiaries
Investments carried at fair value
2018
£
-
883,763
883,763
Group
2017
£
-
601,536
601,536
2018
£
4,608,930
-
4,608,930
Company
2017
£
965,808
-
-
965,808
965,808
19
Subsidiaries
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and
subsequently measured at cost less any accumulated impairment losses. The investments are assessed for
impairment at each reporting date and any impairment losses or reversals of impairment losses are
recognised immediately in profit or loss.
In 2017, the Company undertook a capital reorganisation by way of a share for share exchange with the
shareholders of Altus Strategies Limited. Subsequent to the exchange Altus Strategies Limited became a
100% subsidiary of the Company and was renamed Altus Exploration Management Limited.
Altus Strategies plc has direct investments in the following subsidiary undertakings.
Name of undertaking
Incorporated %
Principal activity
Altus Exploration Management Limited1
Legend Holdings (BVI) Inv11
UK
BVI
Holding
100.00
100.00
Business support
services
Holding company
Altus Strategies plc is the ultimate parent but not the immediate parent of the following subsidiary
undertakings.
Name of undertaking
Aeos Gold Limited1
Auramin Limited1
Aluvance Limited1
Alures Mining Limited1
Altau Resources Limited1
Aterian Resources Limited1
Oxford Mining Club Limited1
Altau Resources Limited2
Aucam SA5
Valnord SA5
Incorporated
UK
UK
UK
UK
UK
UK
UK
Ethiopia
Cameroon
Cameroon
% Holding Principal activity
100.00 Gold exploration
99.00 Gold exploration
97.26
Iron ore exploration
100.00 Bauxite exploration
100.00 Copper exploration
100.00 Mineral exploration
50.00 Events
100.00 Copper exploration
Iron ore exploration
97.26
99.00 Gold exploration
72
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
Mining & Exploration Services Limited6
Azru Resources SARL AU8
AuCrest Sarl4
Etruscan Resources Mali SARL12
Legend Gold Mali SARL12
LGC Exploration Mali SARL12
LGC Piti SARL12
Liberia
Morocco
Ivory Coast
Mali
Mali
Mali
Mali
99.00 Gold exploration
100.00 Copper exploration
100.00 Gold exploration
100.00 Gold exploration
100.00 Gold exploration
100.00 Gold exploration
100.00 Gold exploration
The registered office addresses applying to the tables in this note are as follows.
Registered office addresses.
1 14 Station Road, Didcot, Oxfordshire OX11 7LL, United Kingdom
2 Bole Sub-City, Kebele 08/09, House No. 811/A, P.O.Box 2633, Addis Ababa, Ethiopia
3 Suite 24, First Floor, Eden Plaza, Eden Island, Victoria, PO Box 438, Mahé, Seychelles
4 Cocody Les Deux Plateux, Rue des Jardins, Residence Aziz, Porte B, 20 BP 725 Abidjan 20, Ivory Coast
5 BP: 5405 Bastos, Dernier poteau, Yaoundé, Cameroon
6 PO Box 10-3218, 1000 Monrovia 10, Liberia
7 Appt 9, IMM 18, Rue Jbel Tazekka, Agdal, Rabat, 10090, Morocco
8 46, Avenue Oqba, Appt No. 2, Agdal, Rabat, Morocco
9 2, Berthan Macauley Street, Freetown, Sierra Leone
10 Quartier Diguel Nord, N’Djamena, Chad
11 MMG Trust (BVI) Corp, Pasea Estate, Road Town, Tortola, British Virgin Islands
12 Porte 608, Rue 136, Korofina Nord, Bamako, Mali
The following are dormant subsidiaries.
Name of undertaking
Aeos Resources Limited3
Altaucam Resources Limited3
Altau Holdings Limited3
Avance African Group Limited3
Aucam Resources Limited3
Inland Exploration Limited3
Westcoast Exploration Limited3
Mansion Resources Limited3
Altar Resources Limited3
Eagle Resources Limited3
Enigma Resources Limited3
Atlas Minerals3
Atlantic Minerals3
Alboran Minerals3
Addax Minerals3
Akkari Minerals3
Aures Minerals3
Azilal Minerals3
Altus Diamonds3
Avanor SARL4
Avanex SARL4
Bauxex SA5
Af Resources SARL AU7
Adrar Resources SARL AU7
Altus Mining (SL)9
Incoporated
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Seychelles
Ivory Coast
Ivory Coast
Cameroon
Morocco
Morocco
Sierra Leone
% Holding Principal activity
100.00 Dormant
100.00 Dormant
100.00 Dormant
97.26 Dormant
97.26 Dormant
100.00 Dormant
100.00 Dormant
99.00 Dormant
99.00 Dormant
99.00 Dormant
99.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
97.26 Dormant
97.26 Dormant
97.26 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
73
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
Apalex Sarl4
Aza Minerals Sarl7
Akassori10
Legend Mali Holdings (BVI) Inc
Legend Mali (BVI) II Inc
Legend Mali (BVI) III Inc
Legend Mali (BVI) IV Inc
Legend Mali (BVI) V Inc
Legend Mali (BVI) VI Inc
LGC Kayes SARL
Ivory Coast
Morocco
Chad
BVI
BVI
BVI
BVI
BVI
BVI
Mali
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
100.00 Dormant
20
Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30 days and are therefore all classified as
current. Trade receivables are recognised initially at the amount of consideration that is unconditional,
unless they contain significant financing components, in which case they are recognised at fair value. The
group holds the trade receivables with the objective of collecting the contractual cash flows, and so it
measures them subsequently at amortised cost using the effective interest method.
Trade receivables
VAT recoverable
Amounts due from group
undertakings
Amounts due from related parties
Prepayments
Other receivables
Group
2018
£
-
22,048
2017
£
1,051
32,754
Company
2018
£
-
10,695
2017
£
-
2,485
-
30,037
27,204
3
79,292
-
2,678,105
510,724
31,468
45,392
4
110,669
-
16,906
-
2,705,706
-
14,704
-
527,913
Trade receivables - credit risk
All trade receivables are denominated in £ sterling and are fully performing.
Fair value of trade receivables
The directors consider that the carrying amount of trade and other receivables is approximately equal to
their fair value.
No significant receivable balances are impaired at the reporting end date.
74
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
21
Trade and other payables
Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using
the effective interest method.
Trade payables
Accruals and deferred income
Other payables
Group
2018
£
109,615
291,582
85,737
486,934
2017
£
78,000
189,070
30,985
298,055
Company
2018
£
34,477
17,154
65,402
117,033
2017
£
56,012
29,400
6,250
91,662
22
Provisions
Provisions are recognised when the Group or Company has a legal or constructive present obligation as a
result of a past event and it is probable that the Group or Company will be required to settle that obligation,
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the reporting end date, taking into account the risks and uncertainties surrounding
the obligation. Where a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.
Provisions
Group
2018
£
15,000
2017
£
15,000
Company
2018
£
-
2017
£
-
All provisions are expected to be settled within 12 months of the reporting date.
A provision has been recognised in accordance with IAS 37 in respect of the company's obligation to its
landlord for dilapidations on the expiry of its lease. The provision has been recognised because there is an
obligation at the reporting date as a result of an onerous contract, where outflow is probable to settle the
obligation and a reliable estimate can be made.
23
Financial instruments
The Group’s financial instruments, and their respective accounting policies are as follows.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities.
Financial assets
Financial assets are recognised in the statement of financial position when the Group or Company becomes
party to the contractual provisions of the instrument.
75
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
23
Financial instruments (continued)
Financial assets are classified into specified categories. The classification depends on the nature and
purpose of the financial assets and is determined at the time of recognition. Financial assets are measured
at either amortised cost of at fair value through profit or loss.
Financial assets at fair value through profit or loss are classified as current assets if expected to be settled
within 12 months, otherwise they are classified as non-current.
Trade receivables, loans and other receivables that have fixed or determinable payments that are not
quoted in an active market are held at amortised cost. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. The Group’s and Company’s loans and
receivables comprise trade and other receivables and cash and cash equivalents.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial. The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating the interest income over the relevant period. The
effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected
life of the debt instrument to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of
impairment at each reporting end date. For loans and receivables, the amount of the loss is measured as
the difference between the asset’s carrying amount and the present value of estimated future cash flows.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership to another
entity.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other
financial liabilities.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability to the net
carrying amount on initial recognition.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged,
cancelled, or they expire.
76
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
23
Financial instruments (continued)
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
On 1 January 2018, the Group adopted all of the requirements of IFRS 9 – Financial Instruments. IFRS 9
uses a single approach to determine whether a financial asset is classified and measured at amortised cost
or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity
manages its financial instruments and the contractual cash flow characteristics of the financial asset. Most
of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward
in IFRS 9, therefore the Group’s accounting policy with respect to financial liabilities is unchanged.
The Group completed an assessment of its financial assets and liabilities as at 1 January 2018. The following
table shows the original classification of the Group and Company’s financial instruments under IAS 39 and
the new classification under IFRS 9.
Financial Assets and Liabilities
Financial assets
Cash and cash equivalents
Trade and other receivables
Equity investments
Financial liabilities
Trade and other payables
Original Classification – IAS 39
New Classification – IFRS 9
Loans and other receivables
Loans and other receivables
Fair value through Profit or Loss
Amortised cost
Amortised cost
Fair value through Profit or Loss
Amortised cost
Amortised cost
The adoption of IFRS 9 did not result in any changes to the Group and Company’s financial statements. The
Group’s financial assets are recorded as follows.
Group
Investments
Cash and cash equivalents
Trade and other receivables
2018
Assets at
amortised cost
£
-
724,785
52,089
776,874
2018
Assets at
FVPL
£
883,763
-
-
883,763
2017
Assets at
amortised cost
£
-
523,344
65,277
588,621
The Company’s financial assets are recorded as follows.
Company
Investments
Cash and cash equivalents
Trade and other receivables
2018
Assets at
amortised cost
£
-
37,544
2,688,801
2,726,345
2018
Assets at
FVPL
£
4,608,930
-
-
4,608,930
2017
Assets at
amortised cost
£
-
291,087
513,020
804,107
2017
Assets at
FVPL
£
601,536
-
-
601,356
2017
Assets at
FVPL
£
965,808
-
-
965,808
77
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
23
Financial instruments (continued)
The Group and Company have the following financial liabilities.
Group
Trade and other payables
Company
Trade and other payables
2018
Liabilities at
amortised cost
£
195,352
2017
Liabilities at
amortised cost
£
108,985
£
99,878
£
62,262
24
Financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk, price risk and interest
rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Groups financial performance. There has
been no change in the Group’s risk management programme from previous years.
Market risk
The Group’s activities potentially expose it to market risks, which is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise
from open positions in interest rate and foreign currency risk, all of which are exposed to general and
specific market movements and changes in the level of volatility of market rates or prices such as interest
rates and foreign exchange rates.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from holding cash in
various currencies. The Group's functional currency is pound sterling, and major purchases are transacted
in pounds sterling, US dollars, West African francs, Ethiopian birr, Moroccan dirham and the Liberian dollar.
The Group’s head office expenditures are mainly incurred in pounds sterling and the majority of its
exploration costs are incurred in the local African currencies. The Group believes the foreign exchange risk
derived from currency fluctuations is not significant to its financial performance, and therefore does not
consider it necessary to actively manage foreign exchange risk. For the year ended 31 December 2018, the
Group had an exchange gain of £25,726 (2017: £14,318) which was not material to its operations.
Commodity price risk
The Group’s principal activity is the exploration for economic mineral deposits in Africa. The Group is
therefore exposed to commodity price risks in the valuation of base minerals, which may impact the
commercial viability of the licences it holds or impact the raising of future financing. The Group therefore
maintains a diversified portfolio of licences in order to mitigate the risk of changes in the prices of individual
base metals.
Credit risk
Credit risk is the risk of suffering financial loss should the Group’s customers, clients or counterparties fail
to fulfil their contractual obligations to the Group. The Group’s core business is the exploration for
economic mineral deposits in Africa and therefore the majority of expenditure is incurred in cash. The
Group therefore only has significant exposure on its cash and cash equivalents. The Group mitigates this
risk by depositing surplus cash with financial institutions with acceptable credit ratings. The carrying value
of financial assets approximates their fair value and the maximum exposure as at the Statement of Financial
Position date is outlined in the following table.
78
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
24
Financial risk management (continued)
Group
Trade receivables
Other receivables
VAT recoverable
Amounts due from related parties
Prepayments
Cash and cash equivalents
2018
£
-
3
22,048
30,037
27,204
724,785
804,077
2017
£
1,051
4
32,754
31,468
45,392
523,342
634,011
Interest rate risk
Interest rate risk is the possibility that changes in interest rates will result in higher financing costs or
reduced income from the Group’s interest-bearing financial assets and liabilities. The Group is primarily
financed through equity and interest rate risk arising on interest income is immaterial. The Group therefore
does not currently consider it necessary to actively manage interest rate risk.
Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial
liabilities when they fall due. Prudent liquidity risk management is achieved by maintaining sufficient cash
balances and the availability of funding through an adequate amount of committed credit facilities. The
Group manages liquidity by maintaining sufficient cash with banks to meet its changing commitments. The
Group’s objective is to ensure that there are sufficient committed financial resources to meet its current
obligations and its future business requirements for a minimum of twelve months. At present the Group
does not make use of any credit or debit facilities.
The table below presents the cash flows payable by the Group under remaining contractual maturities at
the Statement of Financial Position date. The amounts disclosed in the table are the contractual
undiscounted cash flows. The carrying values of financial liabilities approximates their fair values.
2018
Trade payables
Other payables
Accruals and deferred income
Provisions
2017
Trade payables
Other payables
Accruals and deferred income
Provisions
Up to 3
months
£
109,615
31,203
291,582
-
432,400
Up to 3
months
£
78,000
30,985
189,070
15,000
313,055
3 to 12
months
£
-
32,603
-
-
32,603
3 to 12
months
£
-
-
-
-
-
Over 12
months
£
-
21,931
-
15,000
36,931
Over 12
months
£
-
-
-
-
-
Total
£
109,615
85,737
291,582
15,000
501,934
Total
£
78,000
30,985
189,070
15,000
313,055
79
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
25
26
Retirement benefit schemes
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
For those employees that pay into a Self-Invested Personal Pension scheme (SIPP) the Company matches
their contributions up to an agreed salary percentage. At 31 December 2018 unpaid employer’s pension
liabilities stood at £74,557 (2017: £78,906) of which £57,800 was for Executive Directors (2017: £35,550).
Defined contribution scheme
Charge for the year
2018
£
25,420
2017
£
3,198
Share based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the
fair value of the equity instruments granted using the Black Scholes model. The fair value determined at
the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares
that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are
subsequently modified, the fair value of the share-based payment under the original terms and conditions
and under the modified terms and conditions are both determined at the date of the modification. Any
excess of the modified fair value over the original fair value is recognised over the remaining vesting period
in addition to the grant date fair value of the original share-based payment. The share-based payment
expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an
acceleration of vesting and the amount that would have been recognised over the remaining vesting period
is recognised immediately.
Equity instrument movements in the year
No shares were allotted to directors or employees in settlement of services during the year (2017:
1,192,814 shares), and there was no charge to the income statement in this regard (2017: £149,102).
The Company does not currently operate a share option scheme either for directors or employees. Of the
schemes previously in operation there were no options outstanding at 31 December 2018. No expense
was recorded in the year in respect of share options schemes (2017: £3,643).
During the year, the Company issued 911,861 warrants to consultants as consideration for raising equity
finance as part of the private placing in the year. The fair value of the warrants issued as compensation for
the finder’s fees was determined using the Black Scholes option pricing model. The assumptions used in
the valuation are as follows:
Share price on issue
Exercise price of share warrants
Volatility
Duration
Risk free rate
Dividend rate
Assumption
8.00p
12.50p
75%
3 years
0.89%
0.00%
The fair value of £27,455 (2017: £Nil) was recognised as a deduction from share premium during the year.
80
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
26
Share based payments (continued)
On 30 January 2018 the Company acquired the trade and assets of Legend Gold Corporation (“Legend”), in
respect of which it issued 41,060,256 Ordinary shares. Under the terms of the acquisition, the Company
agreed to honour outstanding warrants for Ordinary shares of Legend at a ratio of 3:1 for Ordinary shares
of Altus Strategies plc. Further detail is included in note 8. During the year 1,650,000 new Ordinary shares
were issued in respect of the exercise of the Legend warrants.
On 18 April the Company announced that it had listed on the TSX Venture Exchange and had placed
27,391,616 new Ordinary shares. Each new share entitled the subscriber to one Ordinary share purchase
warrant, exercisable to purchase one Ordinary share for five years at an exercise price of C$0.30. These
warrants have not been valued using the Black Scholes model as the shares were attached to a share in the
Company and the full value paid has been attributed to the share and recognised in share premium.
The details of the warrants issued during the year are as follows.
Grant date
Expiry date
30 January 2018
08 September 2019
18 April 2018
18 April 2023
18 April 2018
18 April 2021
Shares
Exercise price
in £ per share
2018
2017
0.048
0.167
0.125
0.158
1,950,000
27,391,616
911,681
30,253,477
-
-
-
-
2018
2017
Outstanding as at 1 January
Granted
Expired
Exercised
Number
110,000
30,253,477
(110,000)
(1,650,000)
Outstanding as at 31 December
28,603,477
Exercisable at 31 December
28,603,477
Weighted
average
exercise price
(£)
0.100
0.158
0.100
0.048
0.164
0.164
Weighted
average
exercise price
(£)
-
0.100
-
-
0.100
0.100
Number
-
110,000
-
-
110,000
110,000
The weighted average remaining life of the warrants outstanding is 4.2 years.
27
Share capital and share premium
Share capital and share premium include ordinary shares in Altus Strategies plc issued to shareholders and
warrants and options that have been exercised.
81
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
27
Share capital and share premium (continued)
Company
At 1 January 2017
Issue of new shares
Capital reorganization
At 31 December 2017
Issue of new shares
Share issue costs
Exercise of warrants
At 31 December 2018
* All shares have been issued, authorized and fully paid
Number of shares*
96,580,814
11,100,000
-
107,680,814
68,451,872
-
1,650,000
177,782,686
Ordinary
share capital
£
104,526
127,200
845,082
1,076,808
684,519
-
16,500
1,777,827
Share
premium
£
5,770,590
1,901,106
(6,672,696)
999,000
5,103,396
(146,274)
62,700
6,018,822
29
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessees. All other leases are classified as operating leases. Rentals payable
under operating leases, less any lease incentives received, are charged to income on a straight-line basis
over the term of the relevant lease except where another more systematic basis is more representative of
the time pattern in which economic benefits from the lease asset are consumed.
At the reporting date the group had outstanding commitments for future minimum lease payments under
non-cancellable operating leases, which fall due as follows.
Group
Within one year
Between 2 and 5 years
2018
£
4,519
-
4,519
2017
£
2,441
-
2,441
30
Related party transactions
For detail on directors’ remuneration in the year see the Directors’ Remuneration Report on pages 37-41
and note 11.
Seabord Services Corp. (“Seabord”) is a management services company that provides to the Group the
services of its Chief Financial Officer, David Miles, and his administrative support team. Seabord provided
similar services to Legend Gold Corp. before its acquisition by the Group in January 2018. One non-
executive director of the Group is also a director of Seabord. The value of services provided by Seabord in
the year was £21,295 (2017: not related). The amount payable to Seabord at the end of the year was
£44,775 (2017: nil).
Canyon Resources Ltd (“Canyon”) is a joint venture partner of the Group in respect of the Birsok and
Mandoum project in Cameroon. One non-executive director of the Group is also a director of Canyon. The
value of services provided to Canyon during the year was £18,580 (2017: £33,262).
The Aegis group of companies (“Aegis”) comprises Aegis Holdings Ltd, Aegis Asset Management Ltd, Aegis
Asterion Ltd and Aegis Exploration Management Ltd, and shares three directors with the Group (Aegis
Exploration Management Ltd only two directors). The value of costs recharged to Aegis during the year was
£482 (2017: nil).
82
ALTUS STRATEGIES PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2018
31
Subsequent events
Termination of agreement with Raptor Resources
On 1 February 2019 the Company announced the termination of its agreement with Raptor Resources Ltd,
which had been signed in September 2018. The agreement envisaged Raptor earning a 100% interest in
Atlantic Resources Ltd a wholly owned subsidiary of Aterian Resources Ltd, the Company’s wholly owned
Moroccan focused exploration subsidiary.
Share issues
On 1 February 2019 the Company announced its intention to issue 2,116,973 shares to two consultants.
Drill sites identified and prospect defined in Mali
On 4 February 2019 the Company announced that it has defined a series of drill targets to test the
potential of expanding the Diba gold project (“Diba”). Diba is strategically located 13km south of the
multi million-ounce Sadiola gold mine in the world-renowned Kenieba Window gold belt in the west of
Mali.
A further announcement was made on 9 April 2019 with respect to the definition of drill targets at another
of the Company’s Mali licences, the Tabakorole gold project (“Tabakorole”) in the south of the country.
Tabakorole is located on the Massagui gold belt, approximately 100km southwest of the multi-million
ounce Morila gold mine.
On 17 April 2019 the definition of a further significant prospect at the Diba project was announced.
Mali joint venture
On 5 February 2019 the Company signed a non-binding term sheet with Indiana Resources Ltd (“Indiana”)
for a joint venture. Subject to entering a definitive agreement, Indiana will have the option to earn up to
an 85% interest in Legend Mali (BVI) II Inc. (“Legend”), a wholly-owned subsidiary of the Company. Legend
holds a 100% interest in the Lakanfla and Tabakorole gold projects located in western and southern Mali
respectively. Indiana may earn its interest by funding the exploration and development of the Projects. The
term sheet is subject to exclusivity provisions for 60 days following signing. On 13 March 2019, the due
diligence period was extended for a further 30 days to 6 May 2019.
Termination of JV and sale of bauxite joint venture
On 11 February 2019 the Company announced that it had terminated its joint venture agreement with
Canyon Resources Limited (“Canyon”), which had been in place since December 2013, and had sold the
subsidiary (Aucam Resources SA Ltd, “Aucam”) that held the two licences that were the subject of the JV
(Birsok and Mandoum) to Canyon. Consideration due to the Company is 25 million Canyon shares in
respect of the JV termination, and 5 million Canyon shares in respect of the sale of Aucam, the latter
consideration being dependent on the execution of a mining convention on Canyon’s Minim Martap
project.
Royalty and JV agreement on Liberia and Cameroon projects
On 24 April 2019 the Company signed a non-binding term sheet with Corben Resources (“Corben”) covering
two gold projects: the Zolowo project in Liberia will be transferred to Corben in return for cash, equity and
a Net Smelter Return royalty subject to resource definition; the Laboum project in Cameroon will be put
into a JV in which Corben can earn up to a 100% interest by funding exploration and development of the
project.
83