AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2013
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CHAIRMAN’S STATEMENT
Dear Shareholder:
It is with pleasure that I take this opportunity to update shareholders of Amur Minerals Corporation (the
“Company”) on the Company’s successful performance during 2013.
Exploration of our Kun-Manie nickel copper sulphide project in the Russian Far East continues to be the
primary focus of the Company. This effort included drilling and delineating mineralisation at the Kubuk
anomaly, resulting in a fifth deposit being identified and contributing to a substantial increase in the
resources. The Company has also updated the resource estimates at its other four drilled deposits yielding
a substantial increase in mineralised tonnage and contained nickel and copper which could substantially
improve the economic potential of the project.
2013 Highlights
Final analytical results of the 2012 drilling programme at Gorny were received in early 2013 and
confirmed that Gorny is the fourth deposit discovered at Kun-Manie. Gorny may be a continuation
of the Maly Kurumkon/Flangovy deposit located approximately 1.5 kilometres to the west;
The 2013 drilling programme and analytical results confirmed that Kubuk is the fifth deposit
discovered along the Kurumkon trend, with an estimated 20.6 million tonnes of mineralisation
averaging 0.58% nickel and 0.16% copper. This equates to 118,900 tonnes of nickel and 32,900
tonnes of copper;
As a result of the drilling at Kun-Manie since the last resource update in 2007, Amur was able to
increase the JORC mineral resource inventory for the project. Within the five distinct deposits
located along the Kurumkon trend, the global resource nearly doubled the estimated contained
nickel from 341,000 tonnes to 650,600 tonnes, whilst contained copper has increased from 95,500
tonnes to 178,400 tonnes;
Subsequent to administrative changes within the licencing system in late 2012, Rosnedra notified
the Company of the requisite one-time fee of 24.6 million Roubles (approximately US$751,000) to
convert a portion of the exploration licence which contains all drilled resources and the Kubuk area
to a mining licence. Concurrent with the notification in May 2013, the Company updated time
sensitive documents relating to changes in the administrative structure of the Company to
Rosnedra for use in the decision on awarding the mining licence;
In April 2013 the Lanstead Capital LLP March 2011 placing was fully settled with total proceeds of
US$2.3 million. During 2013 the Company received 12 settlements of the February 2012 Lanstead
placing totalling US$2.0 million;
The Company completed an additional fund raising in July 2013 with Lanstead for US$7.9 million
(£5.2 million) of which proceeds of US$1.0 million have been received by 31 December 2013.
Additionally, at this time a further US$200,000 was placed with institutional investors; and
The Company is debt free with cash in the bank of US$2.4million as at 31 December 2013, up from
US$2.0 million at 31 December 2012.
1
Exploration
During the early part of 2013 the Company received the final analytical results of the drilling programme at
Gorny which was completed in late 2012. The 2012 programme consisted of nine holes totalling 1,484
metres. A total of 18 mineralised intervals averaging 6.4 metres thick were encountered. The average
combined intercept thickness per hole is 12.8 metres with average grades of 0.45% nickel and 0.13%
copper. Drilling confirmed that Gorny is the fourth deposit discovered at Kun-Manie and could be a
continuation of the Maly Kurumkon/Flangovy deposit located approximately 1.5 kilometres to the west.
Exploration at Gorny has not defined the limits of the mineralisation.
Further analytical results were also received in late Q1 2013 for the 2012 step-out drilling programme at
Ikenskoe and consisted of ten holes totalling 1,212 metres which were drilled immediately south and
adjacent to the Ikenskoe deposit in an area identified as Sobolevsky. A total of 122.5 metres of nickel and
copper mineralisation were intersected in six of the ten holes with average grades of 0.89% nickel and
0.22% copper over an average interval thickness of 17.5 metres.
The 2012 drill results along with all other drill data collected since 2007 were forwarded to SRK Consulting
(UK) Ltd (“SRK”) early in 2013 for the purposes of updating the 2007 JORC resource estimate. The updated
resource is discussed in the section below.
The 2013 drilling programme commenced at Kubuk in May 2013, which is one of the largest undrilled
anomalies within the exploration licence. The anomaly at Kubuk is 2.5 kilometres in length and was defined
using a combination of trenching, soil geochemical and geophysical surveys. Initial drilling, consisting of 12
drill holes with a total of 1,813 metres, showed all holes intercepting disseminated sulphide mineralisation
that typically host nickel and copper. The average total intersected mineralised thickness was 28 metres
with the average discrete interval intercept being 13.4 metres. The results were better than expected and
with these highly positive results, the decision was taken to double the planned drill programme at Kubuk
from 2,500 metres and 5,000 metres.
At the end of the field season the Company had completed 32 holes at Kubuk totalling 6,000 metres,
successfully defining a fifth deposit to be a minimum of 900 metres in length and up to 400 metres in the
dip direction. The analytical results from Alex Stewart Laboratories defined an Inferred resource of 20.6
million tonnes of mineralisation with an average nickel grade of 0.58% and an average copper grade of
0.16%, equating to approximately 118,900 tonnes of contained nickel and 32,900 tonnes of copper. Kubuk
represents an open cast mineable target.
2
Substantial potential to increase the size of the Kubuk deposit remains as drilling has not defined the limits
of the mineralisation to the east nor in the down dip direction. Trenching undertaken in the 2011 and 2012
field seasons that are one and a half kilometres to the east of the last drill holes indicate that mineralisation
is exposed in outcrops which could well be the same structure drilled during this field season.
3
Resource Estimate
The Company contracted SRK Consulting (UK) (‘SRK”) to update the JORC compliant mineral resource
estimate. The previous estimate had been completed in 2007 by SRK. The update includes the five
deposits: Gorny, Maly Kurumkon/Flangovy, Vodorazdelny, Ikenskoe/Sobolevsky and Kubuk. All deposits
lie within the area for which the Company has applied for the mining licence.
The new study was initiated in the first half of 2013 and results produced substantial increases in the global
resource at Kun-Manie. The expansion in resources was primarily due to step out drilling conducted at Maly
Kurumkon in an immediately adjacent area called Flangovy, the drilling at the newly defined Gorny deposit
and the identification of Kubuk as an additional deposit.
Kubuk: Drilling was initiated for the first time during the 2013 field season. The present drill
configuration and results on this deposit indicate that step out drilling could expand the size of this
deposit in the dip direction and up to one kilometre to the east where trenching has exposed
mineralisation. The resources within Kubuk are presently classified as Inferred resources. A total
of 20.6 million tonnes of mineralisation are estimated to be present containing an average nickel
grade of 0.58% and an average copper grade of 0.16%, equating to approximately 118,900 tonnes
of contained nickel and 32,900 tonnes of copper.
Gorny: Before 2013, no resource had been reported to be present at Gorny. This deposit was
discovered after the 2007 pre-feasibility study was completed by SRK. All resources contained
within this deposit are classified as Inferred and there is potential to expand its size as the limits of
mineralisation have not yet been defined to the east, west or down dip.
Maly Kurumkon / Flangovy: In-fill and step out drilling immediately to the east of Maly Kurumkon
has been completed since 2007. The in-fill drill efforts at Maly Kurumkon have converted a portion
of the previously Inferred resources to the higher confidence resource category of Indicated. The
Indicated resource now stands at 21.8 million tonnes averaging 0.58% nickel and 0.16% copper.
This represents an increase of more than 45% to the Maly Kurumkon Indicated resource category
from 2007.
Vodorazdelny: Infill drilling and extensive trenching resulted in the definition of Measured resources
for a portion of this deposit which was previously all classified as Indicated. The total resource now
stands at 5.6 million tonnes having an average grade of 0.64% nickel and 0.17% copper. The
deposit has been drilled on a sufficient density resulting in all resources being classified as
Measured and Indicated. The potential for expansion of the resource in this area is limited.
Ikenskoe/Sobolevsky: Infill drilling and step out drilling to the south have resulted in a substantial
conversion of Indicated resources to Measured resources. This infill drilling has now defined the
Measured resource to be 14.9 million tonnes, up from 3.7 million tonnes as defined in 2007. Step
out drilling to the south has identified a higher grade area of Inferred resources. This deposit now
contained 177,700 tonnes of nickel and 43,800 tonnes of copper. Potential for expansion exists as
mineralisation remains open at depth and to the east toward Kubuk.
In addition to the step out drilling programme, the infill drilling efforts since 2007 have resulted in a
substantial conversion of the 2007 Indicated Mineral Resource to Measured Resources. This represents a
substantial increase in the confidence in the estimated tonnages and grades drilled at Kun-Manie. The new
study also confirms that the geometries of the mineralised bodies are highly conducive to the lower cost,
open cast mining methods.
The substantial increases in resource and higher metallurgical recoveries resulting from the 2012 SGS
Minerals metallurgical test work should positively impact the cash flow models last updated in late 2007 by
SRK. The Company is presently updating the operating costs of the 2007 pre-feasibility study to further
define and update the cut-off grades of each deposit. This will be followed by optimisation and design
studies and the preparation of more detailed production schedules. The study will also look at alternative
power generation options, transport design considerations and the potential of producing near final market
product on site.
4
JORC Resource Estimate – 31 December 2013
(zero cut off grade)
Ni
%
-
-
-
0.58
0.58
-
-
-
0.31
0.31
0.52
0.39
0.47
0.62
0.52
0.57
0.66
0.64
-
0.64
-
0.58
0.58
0.54
0.56
0.52
0.55
0.54
0.54
0.54
Ni
t
-
-
-
118,900
118,900
-
-
-
23,900
23,900
77,100
29,800
106,900
70,800
177,700
4,700
31,200
35,900
-
35,900
-
126,100
126,100
168,100
294,200
81,800
187,100
268,900
391700
650,600
Cu
%
-
-
-
0.16
0.16
-
-
-
0.09
0.09
0.13
0.10
0.12
0.14
0.13
0.17
0.17
0.17
-
0.17
-
0.16
0.16
0.16
0.16
0.13
0.15
0.14
0.15
0.15
Cu
t
-
-
-
32,900
32,900
-
-
-
7,000
7,000
19,700
7,800
27,500
16,300
43,800
1,400
8,200
9,600
-
9,600
-
34,900
34,900
50,200
85,100
21,100
50,900
72,000
106,400
178,400
Pt
g/t
-
-
-
0.1
0.1
-
-
-
0.2
0.2
0.2
0.1
0.2
0.2
0.2
0.3
0.1
0.1
-
0.1
-
0.1
0.1
0.1
0.1
0.2
0.1
0.1
0.1
0.1
Pt
kg
-
-
-
3,000
3,000
-
-
-
1,600
1,600
2,700
1,100
3,800
2,300
6,100
200
600
800
-
800
-
2,400
2,400
3,000
5,400
2,900
4,100
7,000
9,900
16,900
Pd
g/t
-
-
-
0.1
0.1
-
-
-
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.3
0.1
0.1
-
0.1
-
0.1
0.1
0.1
0.1
0.2
0.1
0.1
0.1
0.1
Pd
kg
-
-
-
2,400
2,400
-
-
-
1,900
1,900
3,000
1,300
4,300
2,500
6,800
200
600
800
-
800
-
3,000
3,000
3,100
6,100
3,200
4,900
8,100
9,900
18,000
Tonnage
Mt
-
-
-
20.6
20.6
-
-
-
7.6
7.6
14.9
7.7
22.6
11.5
34.1
0.8
4.8
5.6
-
5.6
-
21.8
21.8
31.1
52.9
15.8
34.2
50.1
70.7
120.8
Orebody
Kubuk
Measured
Indicated
Subtotal
Inferred
Total
Gorny
Measured
Indicated
Subtotal
Inferred
Total
Ikenskoe
Measured
Indicated
Subtotal
Inferred
Total
Vodorazdelny
Measured
Indicated
Subtotal
Inferred
Total
Maly Krumkon
Measured
Indicated
Subtotal
Inferred
Total
Total Measured
Total Indicated
Subtotal
Total Inferred
Grand Total
Licences
The Company submitted its application for the exploration licence extension at Kun-Manie in May 2012 with
the result that a two year extension was granted in November 2012 extending its right to explore to 31
December 2014. Exploration requirements within the exploration licence for 2013 and 2014 have been
successfully completed.
In May 2013, Rosnedra notified the Company that a one-time fee of RUR24.6 million (approximately
US$751,000) will be due upon granting of the mining licence. The fee is payable 30 days after the final
registration and award of the mining licence. To advance the licensing process, various Russian agencies
were provided with updated information as of May 2013, specifically including administrative staff changes
at the executive level and a new share registry since the original submission of the application for the mining
licence is older than 18 months. These updated reports from the various agencies will be used to establish
the terms and conditions of the mining licence. Three of the four agencies have completed report updates.
Once all documentation is available, Rosnedra will provide a summary of the Company’s application for
use by Rosnedra’s parent agency, the Ministry of Natural Resources. The Ministry of Natural Resources is
vested to provide a submission to the Presidential Commission for a final grant of the mining licence. The
Presidential Commission typically meets a minimum of twice per annum.
5
Financial Overview
The Company remained debt free throughout 2013 with cash reserves of US$2.392 million as at 31
December 2013.
During the first half of the year the Company received the last four settlements from the Lanstead Capital
LLP (“Lanstead”) financing agreement entered into during March 2011, totalling US$356,000. This brought
this financing agreement to completion with total receipts from all 24 settlements of US$2.3 million.
In addition, the Company’s financing agreement with Lanstead entered into with Lanstead in February 2012
received 12 settlements with proceeds of US$2.0 million during the year. The remaining settlements, which
when valued at the 31 December 2013 share price of 6.93p, will provide expected proceeds of an additional
US$2.4 million.
In July 2013, the Company entered into a further placing for US$7.7 million (£5.0 million) by placing 71.7
million new shares at a placing price of 7.25p per share. The Company received US$1.5 million from
Lanstead immediately upon completion of the placing with the remaining US$6.2 million subject to an equity
price mechanism. During the year the Company received one settlement with proceeds of US$43,000. The
remaining settlements when valued at the 31 December 2013 share price, will provide expected proceeds
of US$5.7 million.
Also in July 2013, an additional US$200,000 was placed with institutional investors.
Outlook
Looking to the remainder of an exciting 2014, the Company will continue to be very busy. The key tasks
looking forward include the award of the mining licence and an update on the 2007 pre-feasibility study.
The updated resources and pending reserve update have demonstrated the continuing progress made by
the Company which has only been possible through the on-going dedication of the Amur and Kun-Manie
staff. Their hard work has advanced the Kun-Manie project another step closer to a production decision.
The Company will continue to work on the mining licence award.
Over the last months and into the foreseeable future, the Company will continue to work on advancing Kun-
Manie on several fronts. These can be broadly divided into three areas. These are the on-going activities
on site, assessment and development of an updated operating plan for Kun-Manie and obtaining the mining
licence.
In March 2014, we completed the ice road construction and restock of Kun-Manie. This effort included the
transport of heavy spares which cannot be helicoptered to the site, fuel and staff needed to complete the
field plan for 2014. This year’s field plan is related to our exploration requirements where reclamation of
areas that have been proven to be barren of mineral are reclaimed. This effort is focused on those areas
external to the applied for mining (production) licence area. Concurrent with reclamation, we are
constructing in fill drill sites targeting the conversion of Inferred resources to Indicated resources. Presently,
no drilling is planned for this season unless the mining licence is awarded and there are favourable weather
conditions allowing for drilling to be undertaken. This decision to not drill at this time has been undertaken
as the current resource inventory is substantial and capable of sustaining the planned operation.
Since the 2007 issuance of the SRK Consulting Ltd Pre-feasibility Study, we have been able to report
continual success on the project. This has included resource expansion and the discovery of two new
deposits. SGS Minerals Ltd has reported that we can recover higher amounts of all of the contained metals
at Kun-Manie. The reduction of the royalty tax in early production years and the removal of the net profits
tax for the first five years of production are highly beneficial to the Company. Globally, all of these are
adding value to the project.
With all the positive considerations, we implemented a comprehensive review of the technical and economic
parameters of the project. This is being led by Mr. AEJ Swanson, our resident COO in Khabarovsk. His 46
years of experience within the mining industry have been invaluable in our update to the project. Work has
been on-going since early this year and we can report that operating and capital costs have been updated
to reflect Q1 2014 costs. These higher costs are being utilised to update an internally compiled document
for the Company. A comprehensive redesign of potential operation is underway and nearing completion.
We look forward to releasing the new design, results and plans for advancing Kun-Manie.
6
As stated in our section on licencing, we continue to co-ordinate with Russian authorities on obtaining the
production licence and have employed Russian fluent Mr. Randolph Lewis based full time in Moscow. This
is providing us with a constant presence allowing for immediate and rapid response to questions and
queries from the ministries responsible for issuance of the licence. His proven track record of more than 10
years in Russia and having obtained a mining licence for another Russian junior explorer is a positive
addition supporting Mr. Robin Young. With this increased presence the Company has further increased its
contacts and support to be adding further to those of our CEO. This is obviously a high priority activity for
the Company and the Board is optimistic that the Company will receive its mining licence.
Mr. Robert W. Schafer
Non Executive Chairman
27 June 2014
7
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013
The Directors present their annual report and the audited financial statements for the year ended 31
December 2013.
PRINCIPAL ACTIVITIES AND REVIEW OF BUSINESS
The Group’s principal activity during the year was that of mineral exploration and development. A full review
of the activity of the business and of future prospects is contained in the Chairman’s Statement which
accompanies these financial statements.
RESULTS AND DIVIDENDS
The results for the year are disclosed in the Statement of Comprehensive Income on page 16. The Directors
do not recommend payment of a dividend for the year (2012: nil).
DIRECTORS
The number of Directors as at 31 December 2013 was 3 (2012: 3). Details of Directors remuneration and
other interests are detailed in note 16.
LISTING
The Company’s ordinary shares have been traded on London’s Alternative Investment Market (AIM) since
15 March 2006. SP Angel Corporate Finance LLP is the Company’s Nominated Adviser and Broker. The
share price at 31 December 2013 was 6.93p.
GOING CONCERN
The Group operates as a natural resources exploration and development company. To date, the Group has
not earned significant revenues and is considered to be in the exploration and development stage. The
Directors anticipate that a mining licence will eventually be granted for the Kun-Manie deposit, but cannot
estimate a date for commercial production to commence.
The Directors have prepared a cash flow projection for period to July 2015 which indicates that the Group
is sufficiently funded by its current financial resources, which comprise cash and derivative financial
assets, for the next 12 months. The Directors therefore consider the Group to be a going concern and have
prepared the financial statements on that basis.
PRINCIPAL RISKS AND UNCERTAINTIES
The management of the Group’s business and the execution of its strategy are subject to a number of risks.
Risks are formally reviewed by the Board and appropriate processes put in place to monitor and mitigate
them. If more than one event occurs, the overall impact of such events may compound the possible adverse
effects on the Group.
The key financial risks affecting the Group are set out in note 19 to the financial statements. The key
operating risks affecting the Group are set out below.
The Group’s licences
The Group’s activities are dependent upon the grant and renewal of appropriate licences, permits and
regulatory consents. The Group’s primary exploration licence was extended in November 2012 and is
currently valid until 31 December 2014. The licence contains a range of obligations which at present have
all been met. Failure to comply with the terms of the licence, or negotiating appropriate amendments to
licence agreements could result in penalties being levied or the suspension or revocation of the licence.
The Company utilises the legal services of Norton Rose Fulbright in Moscow. All documentation and filings
are reviewed by Norton Rose Fulbright to ensure that communications, filings and any other required
contacts maintain conformity with the regulatory agencies of the Russian Federation.
8
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013
Project development risks
Resource estimates are based upon the interpretation of geological data. Project feasibility studies derive
estimates of operating costs based upon anticipated tonnage and grades of ore to be mined and processed,
the configuration of the ore body, expected recovery rates and other factors. As a result, actual operating
costs and economic returns may differ from those currently estimated.
The scale of the project mandates that all work should be conducted by Russian experienced, independent
and internationally recognised companies in all areas of proposed and actual project development. Any
internally generated studies are held confidentially within the Company until an independent and qualified
group, company or experts have reviewed, commented and confirm the results of Company work.
Project work must be undertaken by Russian Federation approved agencies prior to the approval of any
study, preproduction, construction and operational approvals are granted. The Company adheres to these
regulatory statutes.
Reserve and resource estimates
Reserve and resource estimates may require revision based on actual production experience. The volume
and grade of reserves mined and processed and recovery rates achieved may vary from those anticipated
and a decline in the market price of metals may render reserves containing relatively lower grades of nickel
and copper mineralisation uneconomic.
Resources and reserves are independently calculated by internationally recognised organisations to JORC
standards. Information related to the calculation of such estimates is based on reports from external
companies experienced in metallurgical and processing work as well as the evaluation of long term metal
pricing where the Company utilises information provided by external organisations. As the Company is not
in production at this time, actual production results cannot be utilised to verify predicted resources and
reserves.
The Russian Federation requires a separate assessment of reserves and does not recognise resources
which are not contained within a mine plan based on a Russian certified study calculated by a qualified
agency or organisation. Final reserve numbers are audited by the State Commission on Mineral Reserves
who is responsible for tracking and certifying all reserve estimates within the Russian Federation.
Environmental issues
The Group’s operations are subject to environmental regulation, including environmental impact
assessments and permitting. Russian environmental legislation comprises numerous federal and regional
regulations which are not fully harmonised and may not be consistently interpreted.
The Company utilises Equator Principle standards with regard to its monitoring and maintenance of
environmental protection. These standards are among the highest in the world and implementation of such
standards is required when international financing of a project is undertaken. By utilising the highest level
of standard, the Company meets both Russian and International standards.
On an internal Russian Federation basis, the Company is inspected on an annual basis to ensure that the
Company is performing and maintaining protection of the environment. The Company employs three
individuals to ensure that all work is done to and ultimately approved by the appropriate Russian authorities
and organisations.
Nickel price volatility
The net present value of the Group’s capitalised exploration assets is directly related to the long-term price
of nickel. The market price of nickel is volatile and is affected by numerous factors which are beyond the
Company’s control. These factors include world production levels, international economic trends, currency
exchange fluctuations and industrial demand.
9
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013
The Company regularly reviews expected nickel and copper prices from internationally recognised expert
sources and assesses the economic viability of its project based upon long term trends and surveys
compiled by several resource groups specialised in long term price projection. Nickel and copper price
sensitivity is built into the Company’s economic models. Presently, the long term project price for nickel in
2013 USD is $9.50 per pound and is $2.75 per pound for copper and is based on a consensus survey of
approximately 20 specialised banking institutions. All study work currently utilises prices of $7.50 and $1.50
for nickel and copper respectively.
Political and economic risks
The Group’s assets are located in Russia which is still undergoing a substantial transformation from a
centrally controlled command economy to a market-driven economy. In addition, in view of the legal and
regulatory regime in Russia, legal inconsistencies may arise.
The Company utilises its Moscow based legal representatives of Norton Rose Fulbright and conducts
periodic meetings to review changes in the legal and regulatory regime. The updates are typically
undertaken on a 60 day basis. In addition, the Company is a member of the Mining Advisory Council which
consistently works with Russian authorities to assist in the understanding of regulatory constraints and
assists in the modification of legislation designed to clarify inconsistencies in legislation and interpretation
of the law.
The regulatory environment
The Group’s activities are subject to extensive federal and regional laws and regulations governing various
matters, including licensing, production, taxes, mine safety, labour standards, occupational health and
safety and environmental protections. Amendments to current laws and regulations governing operations
and activities of mining companies or more stringent implementation or interpretation of these laws and
regulations could have a material adverse impact on the Group, cause a reduction in levels of production
and delay or prevent the development or expansion of the Group’s properties in Russia.
The Company utilises its Moscow legal team of Norton Rose Fulbright to monitor changes to the regulatory
system. In addition, the Mining Advisory Council also participates in reviews and working with the
governmental groups responsible for regulatory control and the authoring of new legislation. Proactively,
the Company assesses the potential impact of any proposed modifications and is dynamically changing
Company policies and approaches to match the Russian regulatory environment. Often planning and work
is completed in advance of changes when they are identifiable and could impact exploration and operations.
Taxation
Russian tax legislation has been subject to frequent change and some of the laws relating to taxes to which
the Group is subject are relatively new. The government’s implementation of such legislation, and the
courts’ interpretation thereof, has been often unclear or non-existent, with few precedents established.
Differing opinions regarding legal interpretation may exist both among and within government ministries
and organisations and various local inspectorates. The introduction of new tax provisions may affect the
Group’s overall tax efficiency and may result in significant additional tax liability.
The Company continually assesses the tax regime and utilised experienced local staff and state agencies
in submission of taxes at all levels. This includes personal taxes, social taxes and any other taxes that the
Company must pay on behalf of its employees. These documents and approaches are reviewed by the tax
authorities on an annual basis and modifications are undertaken as required.
It is important to note that the Russian Government has approved regulations exempting profits tax on
organisations that intend to construct projects wherein the capital expenditure exceeds 5.0 million USD.
The waiver is implemented and the Company currently utilises the current rate of 20% for conservative
reasons. With the new structure set into the tax code, the Company could have a 10 year tax holiday on
its operation and plans to update future results reflecting the newly implemented regulations.
10
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013
Russia’s physical infrastructure
Some of Russia’s physical infrastructure is in poor condition. This may disrupt the transportation of supplies,
add to costs and interrupt operations, with a potentially material adverse effect on the Group’s business.
The Company’s project is remotely located and will need to construct an access road of about 350
kilometres from the Baikal Amur rail line. As the Company and potentially other organisations work in the
greenfield area where limited access and power is present, the Company’s position is that we will have to
construct roads and potentially a power line to the site on a standalone basis. Planning is done on a worst
case basis and assumes nothing is available. Using this basis, costing related to infrastructure is not as
relevant. In the Company’s case, roads do already exist in the area but will require substantial upgrading.
DONATIONS
The Company has not made any charitable or political donations during the year (2012: nil).
AUDITORS
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware
of any information needed by the Company's auditors for the purposes of their audit and to establish that
the auditors are aware of that information. The Directors are not aware of any relevant audit information of
which the auditors are unaware.
BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be
proposed at the annual general meeting.
Approved by the Board of Directors and signed on behalf of the Board on 27 June 2014.
Robert W. Schafer
Chairman
27 June 2014
11
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2013
The Directors are responsible for preparing the Directors' report and the financial statements for the Group.
The Directors have prepared the financial statements for each financial year which give a true and fair view
of the state of affairs of the Group and of the profit or loss of the Group for that year.
The Directors have chosen to use the International Financial Reporting Standards as adopted by the
European Union (IFRS) in preparing the Group‘s financial statements.
The Directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the group, for safeguarding the assets, for taking reasonable
steps for the prevention and detection of fraud and other irregularities and for the preparation of financial
statements.
International Accounting Standards requires that financial statements present fairly for each financial year
the Company’s financial position, financial performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting
Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all
circumstances, a fair presentation will be achieved by compliance with all applicable International Financial
Reporting Standards. 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.
A fair presentation also requires the Directors to:
consistently select and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
make judgements and accounting estimates that are reasonable and prudent;
provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
state that the group has complied with IFRS as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
The Directors are responsible for ensuring the annual report and the financial statements are made
available on a website, in addition to being mailed to shareholders, financial statements are published on
the Company's website in accordance with legislation in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial statements contained therein.
Robin Young
Director
27 June 2014
Brian Savage
Director
27 June 2014
12
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
REPORT OF THE INDEPENDENT AUDITORS
To the members of Amur Minerals Corporation
We have audited the financial statements of Amur Minerals Corporation for the year ended 31 December
2013 which comprise the consolidated statement of financial position, the consolidated statement of
comprehensive income, the consolidated statement of cash flows, the consolidated statement of
changes in equity, and the related notes. The financial reporting framework that has been applied in
their preparation is International Financial Reporting Standards (IFRS) as adopted by the European
Union.
This report is made solely to the Company’s members, as a body in accordance with our engagement
letter dated 27 March 2014. 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.
Directors’ responsibility for the financial statements
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for
the preparation and fair presentation of the financial statements in accordance with IFRS as adopted by
the European Union 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.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing (as issued by the
International Federation of Accountants (IFAC)). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgement, including the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers the internal control relevant to the entity’s preparation and fair
presentation of financial statements in order to design appropriate audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion on financial statements
In our opinion:
the financial statements present fairly, in all material respects, the financial position of the Group
as at 31 December 2013 and its financial performance and its cash flows for the year then
ended; and
have been prepared in accordance with IFRS as adopted by the European Union.
13
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
REPORT OF THE INDEPENDENT AUDITORS
Emphasis of matter – grant of mining licence
In forming our opinion on the financial statements, which is not modified, we have considered the
adequacy of the disclosures in note 1 to the financial statements concerning the outcome of the licence
application at Kun-Manie. Since acquiring the licence in 2004 the Group has met all of the requirements
of the exploration licence and applied for a mining licence in 2010. The realisation of the historic costs
incurred to date in the exploration assets is dependent upon the successful application for a mining
licence which has not yet been granted. The ultimate outcome of this matter cannot presently be
determined.
Opinion on other matters
We read the other information contained in annual report and consider the implications for our report if
we become aware of any apparent misstatements or material inconsistencies with the financial
statements. The other information comprises the Directors’ report. In our opinion the information given
in the Directors’ report for the financial year for which the financial statements are prepared is consistent
with the financial statements.
BDO LLP
Chartered Accountants
55 Baker Street
London W1U 7EU
United Kingdom
Date: 27 June 2014
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
14
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Notes
31 December 2013
31 December 2012
NON-CURRENT ASSETS
Capitalised exploration costs
Property, plant and equipment
Total non-current assets
CURRENT ASSETS
Other receivables
Inventories
Derivative financial asset
Cash and cash equivalents
Total current assets
Total assets
5
5
9
7
8
CURRENT LIABILITIES
Trade and other payables
6
Total current liabilities
CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS OF
THE PARENT
Share capital
Share premium
Share options reserve
Retained deficit
Foreign currency translation
11
11
11
11
11
reserve
Total equity
Total liabilities and equity
18,318
637
18,955
188
269
8,225
2,392
11,074
30,029
123
123
48,949
6,473
2,086
(23,802)
(3,800)
29,906
30,029
17,084
844
17,928
330
224
5,787
2,048
8,389
26,317
119
119
40,902
6,613
1,256
(20,135)
(2,438)
26,198
26,317
The financial statements were approved and authorised for issue by the Board of Directors on 27 June
2014 and were signed on its behalf by:
Robin Young
Brian Savage
The accompanying notes on pages 19 to 37 form an integral part of these financial statements.
15
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Note
Year ended 31
December
2013
Year ended 31
December
2012
Administrative expenses
13
(2,539)
(1,750)
Loss from operations
(2,539)
(1,750)
Finance expense
Fair value movement on derivative
financial assets
14
8
(1,141)
(151)
(1,813)
(435)
Loss before tax
(3,831)
(3,998)
Taxation 10
-
-
Loss for the year attributable to
owners of the parent
(3,831)
(3,998)
Other Comprehensive income:
Exchange differences on translation of
foreign operations
Other comprehensive income for the
year, net of tax
Total comprehensive income for the
year attributable to owners of the
parent
(1,362)
629
(1,362)
629
(5,193)
(3,369)
Loss per share: basic & diluted
15
US$(0.009)
US$(0.012)
The accompanying notes on pages 19 to 37 form an integral part of these financial statements.
16
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Cash flow from operating activities:
Payments to suppliers and employees
Net cash used in operating activities
Cash flow from investing activities:
Payments for property, plant and equipment
Payments for capitalised expenditure
Net cash used in investing activities
Cash flow from financing activities:
Proceeds from issue of equity shares (net of issue costs)
Settlement of derivative financial asset
Finance expense
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Foreign exchange effects
Cash and cash equivalents at the end of the year
Note
Year
ended
31 December
2013
Year
ended
31 December
2012
(1,556)
(1,556)
(70)
(2,245)
(2,315)
1,832
3,551
(1,141)
4,242
5
5
8
14
(1,190)
(1,190)
(693)
(2,789)
(3,482)
533
3,445
(1,813)
2,165
371
(2,507)
2,048
(27)
2,392
4,436
119
2,048
The accompanying notes on pages 19 to 37 form an integral part of these financial statements.
17
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Share
capital
Share
premium
account
Share
Options
Reserve
Retained
deficit
Foreign
Currency
Translation
Reserve
Total
Balance at 31 December 2011
32,265
7,071
1,604
(16,686)
(3,067)
21,187
(3,998)
-
(3,998)
-
629
629
(3,998)
629
(3,369)
Balance at 31 December 2012
40,902
6,613
1,256
(20,135)
(2,438)
26,198
(3,831)
-
(3,831)
Loss for the year
Other comprehensive income for
the year
Total comprehensive income
-
-
-
Shares issued
8,637
Share options expired in the
period
Equity settled share based
payments
Costs associated with issue of
share capital
-
-
-
Loss for the year
Other comprehensive income for
the year
Total comprehensive income
-
-
-
Shares issued
8,047
Share options expired in the
period
Equity settled share based
payments
Equity settled share based
payments associated with issue of
shares
Costs associated with issue of
share capital
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(549)
549
201
(458)
-
-
(3,831)
-
(164)
164
871
(123)
123
(17)
-
-
-
-
-
-
-
-
-
-
-
8,637
-
201
(458)
(1,362)
(1,362)
-
-
-
-
-
(1,362)
(5,193)
8,047
-
871
-
(17)
Balance at 31 December 2013
48,949
6,473
2,086
(23,802)
(3,800)
29,906
The accompanying notes on pages 19 to 37 form an integral part of these financial statements.
18
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
1. GENERAL
Amur Minerals Corporation (“Company”) is incorporated under the British Virgin Islands Business
Companies Act 2004. The Company and its subsidiaries (“Group”) locates, evaluates, acquires, explores
and develops mineral properties and projects in the Russian Far East.
The Company’s registered office is located at Kingston Chambers, P.O. Box 173, Road Town, Tortola,
British Virgin Islands. The average number of employees for the Group for the period to 31 December
2013 was 42 (2012: 49 employees).
The Company is the 100% owner of a Cypriot company called Irosta Trading Limited (“Irosta”). Irosta holds
100% of the shares in ZAO Kun-Manie (“Kun-Manie”), which holds the Group’s mineral licences.
The Group includes the following companies as at 31 December 2013 and 31 December 2012:
Amur Minerals Corporation
Irosta Trading Limited
ZAO Kun – Manie
Country of
Incorporation
British Virgin Islands Parent Company Investment Holding Company
Investment Holding Company
Exploration & mining Company
Percentage
Holding
Principal
Activities
Cyprus
Russia
100%
100%
The Group’s principal place of business is in the Russian Federation.
The Group's principal asset is Kun-Manie exploration licence, which was originally issued in 2004 to
explore for nickel, copper and associated elements initially until 31 December 2008. The Group
subsequently received further three 2-year extensions of the exploration licence with the final extension
expiring on 31 December 2014.
The State Committee of Reserves has approved Russian classification C1 + C2 reserves of 203,900 tons
of nickel at Kun-Manie in December 2008. Subsequently the Group received a Certificate of Discovery
and in June 2014 Amurnedra, the local licencing authority, completed its review of the Group's
exploration works on its Kun-Manie Project and issued a Protocol confirming that the current exploration
phase of the Kun-Manie Project is now complete.
This Protocol is key to the conversion of a Federally Strategic Project held as an exploration licence to
that of a production licence and allows for removal of unwanted areas wherein mineralisation has not
been discovered. ZAO Kun-Manie has applied for a 20-year mining licence at Kun-Manie and a decision
from the authorities is pending.
While significant progress has been made in obtaining the mining licence covering 36 square kilometres
and Directors are confident that the full production permit will be granted, at present the final outcome
remains uncertain.
In December 2007 SRK Consulting completed an independent pre-feasibility assessment of the
Vodorazdelny, Ikenskoe and Maly Krumkon areas of the Kun-Manie licence, based on the analytical results
from the exploration data set for all holes and trenches that had been completed over the exploration life of
the project, inclusive of the work undertaken and results obtained during the 2006 exploration field season
for Vodorazdelny and Ikenskoe and 2007 for Maly Krumkon. SRK Consulting is a global entity specialising
in the assessment of mining resources. SRK reports a net present value for the project using a discount
rate of 10% of US$84 million.
2. BASIS OF PREPARATION
a) Statement of compliance
The financial statements have been presented in thousands of United States Dollars and prepared in
accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).
The principal accounting policies adopted in the preparation of the financial statements are set out in note
3 to these financial statements. The policies have been consistently applied to all the years presented,
unless otherwise stated.
19
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
b) Going concern
These consolidated annual financial statements are prepared on a going concern basis.
The Group operates as a natural resources exploration and development company. To date, the Group has
not earned significant revenues and is considered to be in the exploration and development stage. The
Directors anticipate that a mining licence will eventually be granted for the Kun-Manie deposit, but cannot
estimate a date for commercial production to commence.
The Directors have prepared a cash flow projection for period to July 2015 which indicates that the Group
is sufficiently funded by its current financial resources, which comprise cash and derivative financial
assets, for the next 12 months. The Directors therefore consider the Group to be a going concern and have
prepared the financial statements on that basis.
c) Basis of consolidation
The consolidated financial statements of the Group include the accounts of Amur Minerals Corporation and
its subsidiaries. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date on which control ceases.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset
transferred. The accounting policies and financial year ends of its subsidiaries are consistent with those
applied by the Company. These consolidated financial statements include accounts of the Company and
its subsidiaries as set out in note 1.
The Company’s Russian subsidiary maintains its books and records in accordance with accounting
principles and practices mandated by Russian Accounting Regulations. These records have been adjusted
to comply with IFRS for the purposes of preparing these consolidated financial statements.
3. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below.
The policies have been consistently applied to all the years presented, unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and factors that are believed to be reasonable under the circumstances, the results of which
form the basis of making judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates. The areas involving a higher
degree of judgement or complexity, or where assumptions and estimates are significant to the consolidated
financial statements, are disclosed in this note in section (n).
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision only affects that period,
or in the period of revision and future periods if the revision affects both current and future periods. The
estimates and underlying assumptions are reviewed on an ongoing basis.
A number of new and revised standards and amendments to existing standards were applicable from 1
January 2013. The adoption of these amendments did not have a material impact on the Group’s financial
statements for the year ended 31 December 2013.
20
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Standards, amendments and interpretations, which are effective for reporting periods beginning after the
date of these financial statements which have not been adopted early:
Standard
Description
Effective date
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
IFRS 10
IFRS 11
IFRS 12
IAS 27 (Amendment 2011) Separate Financial Statements
IAS 28 (Amendment 2011)
IAS 32 (Amendment)
IAS 36 (Amendment)
Investments in Associates and Joint Ventures
Offsetting Financial Assets and Financial Liabilities
Recoverable amounts disclosures for non-financial
assets
Novation of Derivatives andContinuation of Hedge
Accounting
Financial Instruments
Defined Benefit Plans: Employee Contributions
Interpretation of IAS 37 Provisions, Contingent
Liabilities and Contingent Assets on the Accounting
for levies imposed by governments.
2010-2012 Cycle
2011-2013 Cycle
IAS 39 (Amendment)
IFRS 9*
IAS 19 (Amendment)
IFRIC 21
Annual Improvements to
IFRSs
Annual Improvements to
IFRSs
1 Jan 2014
1 Jan 2014
1 Jan 2014
1 Jan 2014
1 Jan 2014
1 Jan 2014
1 Jan 2014
1 Jan 2014
To be confirmed
1 Jul 2014*
1 Jan 2014*
1 Jul 2014*
1 Jul 2014*
All the amendments and interpretations are not expected to materially affect the Group’s reporting or
reported numbers.
* Not yet endorsed by European Union.
a) Functional and presentation currency
Items included in the financial information of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (the functional currency). The
consolidated financial information is presented in US dollars ($), which is the functional and presentation
currency of the Company. The functional currency of the Group’s operating subsidiary is the Russian
Rouble. The exchange rate on 31 December 2013 was $1:RUB 32.77 (2012: $1:RUB 30.44), with the
average rates applied to transactions during the year of $1:RUB 31.82 (2012: $1:RUB 30.99).
In preparing the financial statement of the individual entities, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the date
of the transaction. At each reporting date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date.
Exchange differences arising on the settlement and on the retranslation of monetary items are included in
profit or loss for the period.
On consolidation, the results of overseas operations are translated into US Dollars at rates approximating
to those when the transactions took place. All assets and liabilities of overseas operations are translated at
the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at
opening rate and the results of overseas operations at actual rate are recognised directly in equity (the
"foreign exchange reserve").
Exchange differences recognised in profit or loss of group entities' separate financial statements on the
translation of long-term monetary items forming part of the Group's net investment in the overseas operation
concerned are reclassified to other comprehensive income and accumulated in the foreign exchange
reserve on consolidation.
21
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange
reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of
comprehensive income as part of the profit or loss on disposal.
b) Segmental Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision makers. The chief operating decision makers have been identified as the Chief
Executive Officer, Chief Financial Officer and the other executive and non-executive Board Members.
The operating results of each of these segments are regularly reviewed by the Group’s chief operating
decision makers in order to make decisions about the allocation of resources and to assess their
performance.
The accounting policies of these segments are in line with those set out in these notes.
c) Exploration and evaluation assets
When the Group incurs expenditure on mining properties that have not reached the stage of commercial
production, the costs of acquiring the rights to such mineral properties and related exploration and
evaluation costs, including directly attributable employment costs, are deferred where the expected
recovery of costs is considered probable by the successful exploitation or sale of the asset. General
overheads are expensed immediately. Depreciation on fixed assets used on exploration and evaluation
projects is charged to deferred costs whilst the projects are in progress.
Where a feasibility study indicates that the future recovery of costs is not probable, full provision is made in
respect of any deferred costs. Where mining properties are abandoned, deferred expenditure is written off
in full.
Deferred exploration and evaluation costs are assessed at each reporting date to determine whether there
are indicators that the asset may be impaired. If any such indicator exists, a review for impairment is
conducted by estimating the recoverable amount by reference to the net present value of expected future
cash flows of the relevant income generating unit or disposal value if higher. If the recoverable amount is
less than the carrying value of an asset, an impairment loss is recognised.
Individual mining properties are considered to be separate cash generating units for this purpose, except
where they would be operated together as a single mining business.
The amounts shown as deferred exploration and evaluation expenditure represent costs incurred and do
not necessarily reflect present or future values.
d) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is provided on
all property, plant and equipment at rates calculated to write off the cost or valuation of each asset on a
straight-line basis over its expected useful life as follows:
Motor vehicles
Office and computer equipment
Heavy machinery
Useful life (years)
2
3-8
5-7
The costs of maintenance, repairs and replacement of minor items of property, plant and equipment are
charged to profit or loss.
e)
Inventories
Inventories are stated at the lower of cost and net realisable value and comprise mainly fuel, materials and
spare parts. Costs comprise all costs of purchase and other costs incurred in bringing the inventories to
their present location and condition.
22
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
f) Leased Assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset are retained by
the lessor (an “operating lease”), the total rentals payable under the lease are charged to profit or loss on
a straight-line basis over the lease term.
g)
Income taxes
Income tax expense represents the sum of the tax currently payable and deferred tax. Taxable profit differs
from net profit as reported due to income tax effects of permanent and temporary differences. Non-profit
based taxes are included within administrative expenses.
Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Temporary differences relating
to initial recognition of assets or liabilities that affect neither accounting nor taxable profit are not provided
for. The amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the
reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the deductible temporary differences can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
h) Costs associated with the issue of share capital
Costs which are directly attributable to the issue of new shares, net of any taxes, are set off against share
premium.
i) Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at
the fair value of the equity instrument at the grant date. Fair value is measured by use of the Black-Scholes
model. The expected life used in the model has been adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioural considerations. Further details on
how the fair value of equity-settled share-based transactions has been determined can be found in Note
12.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the
goods and services received, except where the fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
j) Financial Assets
The Group classifies its financial assets into one of the categories discussed below, depending on the
purpose for which the asset was acquired. The Group has not classified any of its assets as held to maturity.
Loans and Receivables
Other receivables: - these assets are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are initially measured at fair value and subsequently carried
at amortised cost, using the effective interest rate method, less any provision for impairment. If the need
for impairment of a receivable arises, the value of provision, representing the expected loss from not being
able to recover such a receivable, is recognised in administrative expenses.
23
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Cash and cash equivalents: - these assets comprise cash, short term deposits and investments in money
market funds. Short term deposits comprise deposits made for varying periods of between one day and
three months.
Fair value through profit or loss
This category comprises only Lanstead derivative (note 8) which is carried in the statement of financial
position at fair value with changes in fair value recognised in profit or loss. The Group does not have any
assets held for trading nor does it voluntarily classify any financial assets as being at fair value through
profit or loss.
k) Financial Liabilities
The Group’s financial liabilities only comprise other financial liabilities which include trade payables and
other short-term monetary liabilities. These are initially measured at fair value and subsequently recognised
at amortised cost using effective interest rate method.
l) Fair value measurement hierarchy
The Group classifies its financial assets and financial liabilities measured at fair value using a fair value
hierarchy that reflects the significance of the inputs used in making the fair value measurement (note 19).
The fair value hierarchy has the following levels:
a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
b)
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices) (level 2);
Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
c)
The level in the fair value hierarchy within the financial asset or financial liability is determined on the basis
of the lowest level input that is significant to the fair value measurement.
m) Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the
definition of a financial liability. The ordinary shares are classified as equity instruments.
n) Critical accounting estimates, assumptions and judgements
The preparation of financial statements requires management to make estimates and assumptions
concerning the future, which by definition will seldom result in actual results that match the accounting
estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within next financial year are discussed below:
Accounting estimates and assumptions
i.
Recoverability of the exploration and evaluation assets
The most significant assumption in the preparation of these financial statements relates to the
recoverability of capitalised exploration costs included in non-current assets.
The recoverability of the amounts shown in the Group statement of financial position in relation to
deferred exploration and evaluation expenditure are dependent upon the discovery of economically
recoverable reserves, continuation of the Group’s interests in the underlying mining claims, the
political, economic and legislative stability of the regions in which the Group operates, compliance
with the terms of the relevant mineral rights licences, the Group’s ability to obtain the necessary
financing to fulfil its obligations as they arise and upon future profitable production or proceeds from
the disposal of properties.
24
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Management have prepared a cash flow forecast, estimating costs of development of the mine and
net profits once the mine has been put into operation. The main amounts and estimates required
in calculating the future cash flows are:
Development costs to date of operations
Future sale price of metals extracted
Amount of reserves available for extraction
Based on the cash flow forecast prepared, there is no impairment of the capitalised expenditure to
date. However, the exploration is still at an early stage and a change in any of the above areas
could result in a significant impact on the estimated future cash flows.
ii.
Russian business environment
The accompanying financial statements reflect management's assessment of the impact of the
Russian business environment on the operations and the financial position of the Group. The future
business environment may differ from management's assessment. The impact of such differences
on the operations and the financial position of the Group may be significant.
Accounting judgements
i.
Share-based payments
The Company makes equity-settled share-based payments to certain Group employees and
advisers. Equity-settled share-based payments are measured at fair value using a Black-Scholes
valuation model at the date of grant based on certain assumptions. Those assumptions are
described in the notes to the accounts and include, among others, expected, volatility, expected
life of the options and number of options expected to vest. More details including carrying values
are disclosed in note 12 to the accounts.
ii.
Valuation of derivative financial asset
The Company and Lanstead Capital L.P. have entered into an equity swap agreement in respect
of the share placings as detailed in note 8 for which consideration will be received on a monthly
basis over 24 months period. The amount to be received each month is dependent on the
Company’s share price at the end of each month. The Directors have made assumptions in their
financial statements about the quantum of the funds receivable at the yearend however there is
significant uncertainty underlying these assumptions due to the unpredictable nature of the share
prices.
25
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
4.
SEGMENT REPORTING
The Group has one reportable segment being Kun-Manie which is involved in the exploration for minerals
within the Kun-Manie licence areas in Russia.
The operating results of this segment is regularly reviewed by the Group's chief operating decision makers
in order to make decisions about the allocation of resources and assess the performance.
As the Group has no revenue, the following is an analysis of the Group’s results from continuing operations
by reportable segment.
Reportable information as at 31 December 2013
Corporate
(Unallocated)
Kun-Manie
Total
Administrative expenses
Finance income
Finance expense
Fair value (loss)/gain on derivative financial asset
Taxation
Loss for the year
Non-current assets
Inventories
Derivative financial asset
Trade and other receivables
Cash and cash equivalents
Segment assets
Trade and other payables
Segment liabilities
Segment net assets
Property, plant and equipment capital expenditure
Exploration capital expenditure
Reportable information as at 31 December 2012
(2,111)
-
(1,141)
(151)
-
(3,403)
1,010
-
8,225
23
2,263
11,521
(83)
(83)
11,438
-
-
(428)
-
-
-
-
(428)
17,945
269
-
165
129
18,508
(40)
(40)
18,468
70
2,245
(2,539)
-
(1,141)
(151)
-
(3,831)
18,955
269
8,225
188
2,392
30,029
(123)
(123)
29,906
70
2,245
Corporate
(Unallocated)
Kun-Manie
Total
Administrative expenses
Finance income
Finance expense
Fair value (loss)/gain on derivative financial asset
Taxation
Loss for the year
Non-current assets
Inventories
Derivative financial asset
Trade and other receivables
Cash and cash equivalents
Segment assets
Trade and other payables
Segment liabilities
Segment net assets
Property, plant and equipment capital expenditure
Exploration capital expenditure
(1,422)
-
(1,813)
(435)
-
(3,670)
870
-
5,787
59
1,927
8,643
(87)
(87)
8,556
-
-
(328)
-
-
-
-
(328)
17,058
224
-
271
121
17,674
(32)
(32)
17,642
693
2,782
(1,750)
-
(1,813)
(435)
-
(3,998)
17,928
224
5,787
330
2,048
26,317
(119)
(119)
26,198
693
2,782
26
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
The accounting policies of the reportable segment are the same as the Group’s accounting policies
described in note 3. Segment loss represents the loss incurred by the segment without allocation of central
administration costs and Directors’ salaries and finance income or costs. This is the measure reported to
the chief operating decision makers for the purposes of resource allocation and assessment of segment
performance.
5.
CAPITALISED EXPLORATION COSTS AND PROPERTY, PLANT AND EQUIPMENT
Vehicles and office &
computer equipment
Exploration and
evaluation assets
Total
Cost:
At 1 January 2012
Additions
Foreign exchange differences
At 31 December 2012
Additions
Foreign exchange differences
At 31 December 2013
Accumulated depreciation:
At 1 January 2012
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2012
Charge for the year
Foreign exchange differences
At 31 December 2013
Net book value:
At 31 December 2013
At 31 December 2012
At 1 January 2012
1,070
693
57
1,820
70
(129)
1,761
670
270
-
36
976
232
(84)
1,124
637
844
400
13,503
2,789
792
17,084
2,245
(1,011)
18,318
-
-
-
-
-
-
-
-
-
18,318
17,084
13,503
14,573
3,482
849
18,904
2,315
(1,140)
20,079
670
270
-
36
976
232
(84)
1,124
18,955
17,928
13,903
Exploration and evaluation costs
Exploration and evaluation assets relate to the Group’s mineral exploration licence, Kun-Manie. During the
year US$1,068,000 (2012: US$1,282,000) of salaries and wages and US$237,000 (2012: US$268,000) of
depreciation were capitalised to the exploration and evaluation asset.
In September 2010 the Kun-Manie exploration licence was extended until 31 December 2012. In November
2012 the Group received a further extension of the exploration licence until 31 December 2014.
An application for a mining licence has been made in relation to the primary target area of the Krumkon
Trend.
The carrying value of the exploration and evaluation assets is considered with reference to the reserve
and resource estimates and their valuation which was independently assessed on 13 December 2007
updated for changes in commodity prices. The resource estimates were updated on 9 December 2013,
with the 2014 programme consisting of activities to update the reserve estimates.
27
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
VAT Receivable
The capitalised exploration and evaluation costs include VAT receivable of US$538,000 (2012:
US$538,000).
6.
TRADE AND OTHER PAYABLES
31 December 2013
31 December 2012
Accruals and other payables
123
123
7.
INVENTORIES
Fuel
Other materials and supplies
31 December 2013
31 December 2012
73
196
269
119
119
91
133
224
8.
DERIVATIVE FINANCIAL ASSET
31 December 2013
31 December 2012
Derivative financial asset
8,225
8,225
5,787
5,787
The Company enters into financing agreements with Lanstead Capital L.P (“Lanstead”) which include an
equity swap price mechanism for 75% of the shares issued. All of the voting rights are transferred on the
date of the transaction with the consideration received over a 24 month period. The actual consideration
receivable will vary to the extent that the actual share price is greater or lower than the reference point. As
the consideration is variable depending upon the Company’s share price, the agreement is treated as a
derivative financial asset and re-valued through the income statement with reference to the Company’s
share price.
Number of unpaid shares
outstanding at 31 December 2011
Inception of new instruments
Number of shares paid up
Number of unpaid shares
outstanding at 31 December 2012
Inception of new instruments
Number of shares paid up
Number of unpaid shares
outstanding at 31 December 2013
Actual
share
price
9.75p
Lanstead 2
Lanstead 3
Lanstead 4
Total
13,281,250
-
8p
-
(10,156,250)
45,525,000
(7,587,500)
-
-
-
13,281,250
45,525,000
(17,743,750)
8.725p
9.67p
3,125,000
-
(3,125,000)
37,937,500
-
(16,675,000)
-
51,724,139
(1,000,000)
41,062,500
51,724,139
(20,800,000)
6.93p
-
21,626,500
50,724,139
71,986,639
28
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Value of derivative at 31 December 2011
Inception of new instruments
Cash received during the year
Finance expense (note 14)
Loss on revaluation at 31 December 2012
Value of derivative at 31 December 2012
Inception of new instruments
Cash received during the year
Finance expense (note 14)
Gain/(loss) on revaluation at 31 December 2013
Value of derivative at 31 December 2013
Lanstead
2
2,001
-
(1,028)
(1,128)
595
440
-
(285)
(367)
212
-
Lanstead
3
Lanstead
4
Total
-
7,666
(604)
(685)
(1,030)
5,347
-
(2,081)
(658)
(179)
2,429
-
-
-
-
-
-
6,140
(44)
(116)
(184)
5,796
2,001
7,666
(1,632)
(1,813)
(435)
5,787
6,140
(2,410)
(1,141)
(151)
8,225
9.
OTHER RECEIVABLES
VAT receivable
Other receivables
31 December 2013
31 December 2012
62
126
188
55
275
330
Other receivables represent prepayments and annual fees paid in advance under the normal course of
business.
10.
TAXATION
Current tax – BVI Corporation tax
Current tax - Russian Corporation tax
Current tax charge
Factors affecting tax charge for the year:
Group loss on ordinary activities before tax
Tax charge at the BVI corporation tax rate of 0% (2012: 0%)
Effects of:
Difference in overseas tax rate
Non-deductible expenses
Enhanced tax deductions
Tax losses carried forward for offset against profits of future periods
Total tax charge for the year
31 December
2013
-
-
-
31 December
2012
-
-
-
(3,831)
(3,831)
-
304
(39)
80
(345)
-
(3,998)
(3,998)
-
230
(77)
40
(193)
-
During the exploration and development stages, the Group will accumulate tax losses which may be carried
forward. As at 31 December 2013, the subsidiary in Russia had tax losses carried forward at average rate
of US$7,136,000 (2012: US$5,409,000) which are available for use over a 10-year period. Of the total
available Russian subsidiaries’ tax credits, US$1,727,000 will be available until 31 December 2023,
US$1,190,000 will be available until 31 December 2022, US$2,382,000 will be available until 31 December
2021, US$746,000 will be available until 31 December 2020, US$642,000 will be available until 31
December 2019 and US$449,000 will be available until 31 December 2018.
29
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
The tax losses arising in the current and prior periods will reduce the Group’s tax liability in the future and
give rise to deferred tax assets. The Directors believe that it would not be prudent to recognise such tax
assets before such time as the Group generates taxable income. Hence, no tax asset has been
recognised.
11.
SHARE CAPITAL AND RESERVES
1 January 2012
Issue of shares
Issue
Price
Authorised
Capital
500,000,000
Issued and
fully paid up
278,575,179
Share Capital
US$
32,264,615
6 February 2012
Lanstead 3
8p
60,700,000
6,070,000
7,665,682
28 February 2012
Institutional Investors
8p
7,810,000
971,564
31 December 2012
22 April 2013
Directors
25 July 2013
Lanstead 4
7.68p
7.25p
1,000,000,000
353,155,179
375,463
40,901,861
43,830
68,965,518
5,896,551
7,675,000
25 July 2013
Institutional Investors 7.25p
2,758,623
327,460
31 December 2013
1,000,000,000
431,151,334
48,948,651
On the 6 February 2012, the Company raised £4.9 million (US$7.7 million) through the issue of 60.7 million
new shares at a placing price of 8p per share (note 8). Further 6.07 million new shares in February 2012
were issued to satisfy commissions of the fund raising.
On the 28 February 2012, the Company raised £624,800 (US$971,500) through the issue of 7.8 million
new shares at a placing price of 8p per share to private investors.
On the 22 April 2013 the Board of Directors opted to use a portion of their Directors’ fees and salary to
purchase 375,463 new ordinary shares at the price of 7.68 pence based on the 19 April 2013 closing price,
the last trading day prior to the purchase.
On the 25 July 2013, the Company raised £5.2 million (US$8 million) through the issue of 71.1 million new
shares at a placing price of 8p per share. A further 5.9 million new shares were issued to satisfy
commissions of the fund raising.
All of these shares have been admitted to the AIM market of the London Stock Exchange plc.
Group reserves comprise the following:
Share capital
Amounts subscribed for share capital at proceeds received.
Share premium account
The share premium account represents the amounts received by the Company on the issue of its shares
which was in excess of the nominal value of the terms of the shares prior to the shares being changed to
having no par value.
Share options reserve
The balance held in the share options reserve relates to the fair value of the share options that have been
charged to the profit or loss since adoption of IFRS 2.
30
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Foreign currency translation reserve
The foreign currency translation reserve includes movements that relate to the retranslation of the
subsidiaries whose functional currencies are not the US$.
Retained deficit
Cumulative net gains and losses recognised in the statement of comprehensive income less any amounts
reflected directly in other reserves.
12.
SHARE BASED PAYMENTS
a) Options Granted
During the period ended 31 December 2013 a total of 2,294,500 previously outstanding and fully vested
options expired resulting in a reclassification of US$164,000 in the Options Reserve (2012: US$549,000).
During 2013 a total of 18.2 million new options were granted to key management and personnel at a value
of US$871,000 (2012: nil).
As of 31 December 2013 the following options and warrants were outstanding:
Grant Date
Expiry Date
5 March 2008
2 July 2008
18 April 2011
23 April 2013
5 March 2013
2 July 2013
18 April 2016
23 April2018
Number of
shares as at
1 January
2013
700,000
300,000
10,360,000
-
11,360,000
New shares
granted
during the
year
-
-
-
18,200,000
18,200,000
Share
expired
during the
year
(700,000)
(300,000)
(220,000)
(1,074,500)
(2,294,500)
Number of
shares as at
31 December
2013
-
-
10,140,000
17,125,500
27,265,500
The fair value of the new options is estimated at the grant date using a Black-Scholes model, taking into
account the terms and conditions on which the options were granted. The fair value is based on the
following assumptions:
Share Price
Exercise price
Expected volatility
Option life
Expected dividends
Risk free rate
7.3p
8.7p
86%
5 years
0
1.25%
The current price is the price at which the shares can be sold in an arm’s length transaction between
knowledgeable, willing parties and is based on the mid-market price on the grant date. The expected
volatility is based on the historic performance of Amur Minerals shares on the Alternative Investment Market
of the London Stock Exchange. The option life represents the period over which the options granted are
expected to be outstanding and is equal to the contractual life of the options. The risk-free interest rate
used is equal to the yield available on the principal portion of UK government issued Gilt Strips with a life
similar to the expected term of the options at the date of measurement.
There are no market conditions associated with the share option grants. The total expense recognised in
the profit and loss during the year arising from outstanding options is US$871,000 (2012: US$201,000).
31
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
b) Shares for services
As stated in notes 8 and 11, during the year the Company issued 5.9 million (2012: 6.0 million) new shares
to Lanstead in settlement of their commissions. The shares were valued at the face value of amounts
payable under contracts for services, or the net amount of commission owed for share placings.
Shares issued
Value of share issued US$ ‘000
31 December 2013
5,896,551
668
31 December 2012
6,070,000
784
13.
ADMINISTRATIVE EXPENSES
Salaries, wages and Directors’ fees
Travel and subsistence expenses
Professional fees
Investor relations
Foreign exchange differences
Share options grant
Other administrative expenses
14.
FINANCE EXPENSE
Foreign exchange loss
Finance expense on Lanstead swap
arrangement (note 8)
31 December 2013
31 December 2012
837
202
314
146
(49)
871
218
2,539
806
194
370
164
(93)
201
108
1,750
31 December 2013
31 December 2012
(4)
1,145
1,141
10
1,803
1,813
15.
PROFIT/(LOSS) PER SHARE
Basic and diluted loss per share are calculated and set out below. The effects of warrants and share
options outstanding at the year ends are anti-dilutive and the total of 27.2 million (2012: 11.4 million) of
potential ordinary shares have therefore been excluded from the following calculations:
31 December 2013
31 December 2012
Net loss for the year
Weighted average number of shares used in the
calculation of basic loss per share
(3,831)
(3,998)
387,227,252
345,146,217
Basic and diluted loss per share
US$(0.009)
US$(0.012)
32
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
16.
DIRECTORS REMUNERATION
The aggregate remuneration of the Directors of the Company was as follows:
Executive Directors
Robin Young
Non-Executive Directors
Robert Schafer
Brian Savage
Basic
Salary
Fees
Year Ended 31
December 2013
Year ended 31
December 2012
253
-
-
253
-
47
40
87
253
47
40
340
238
40
35
313
The following tables show the beneficial interests of the Directors who held office at the end of the year in
the ordinary shares of the Company and the interests of the Directors in share options:
Shares
Robert W. Schafer
Robin J. Young
Brian C. Savage
Shares held at 1
January 2013
146,969
1,587,160
93,749
Additions
103,653
184,176
87,634
Disposals Shares held at 31
December 2013
250,622
1,771,336
181,383
-
-
-
Options
Robert W. Schafer
Robert W. Schafer
Robin J. Young
Robin J. Young
Brian C. Savage
Brian C. Savage
Exercise
Price
£0.12675
($0.20)
£0.087
($0.14)
£0.12675
($0.20)
£0.087
($0.14)
£0.12675
($0.20)
£0.087
($0.14)
Options
held at
1 January
2013
2,400,000
-
3,600,000
-
1,600,000
-
Options
expired/lapsed
during the year
-
-
-
-
-
-
Options
granted
during the
year
-
1,950,000
-
7,800,000
-
1,950,000
Normal
exercise
dates
Options
held at
31
December
2013
2,400,000 18.04.11
to
18.04.16
1,950,000 23.04.11
To
23.04.18
3,600,000 18.04.11
to
18.04.16
7,800,000 23.04.11
To
23.04.18
1,600,000 18.04.11
to
18.04.16
1,950,000 23.04.11
To
23.04.18
$ exercise prices are shown for indicative purposes only, calculated at 31 December 2013 exchange rates.
17.
COMMITMENTS
Operating lease commitments
The Group leases various offices and other buildings under cancellable operating lease agreements. The
leases have varying terms, and renewal rights and are immaterial to the Group.
Capital commitments
There were no material contracted commitments for capital purchases as at 31 December 2013 (2012: Nil).
On 24 May 2013 the Company received formal notification that Rosnedra has completed the calculation of
the one-time payment of 24.6 million Roubles (approximately US$751,000) to convert a portion of its
33
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
exploration licence to a mining licence. This amount is payable within 30 days of the formal grant of the
licence.
18.
RELATED PARTIES
For the purposes of these financial statements, entities are considered to be related if one party has the
ability to control the other party or exercise significant influence over the other party in making financial
or operational decisions as defined by IAS 24 "Related Party Disclosures". In addition, other parties are
considered to be related if they are under common control. In considering each possible related party
relationship, attention is directed to the substance of the relationship, not merely the legal form.
Details of transactions between the Group and related parties are disclosed below.
Compensation of Key Management Personnel
Key management personnel are considered to be the Directors and senior management of the Group
Salaries and fees
Share-based payment
19.
FINANCIAL INSTRUMENTS
31 December 2013
31 December 2012
517
611
1,128
511
-
511
Financial instruments
The Group is exposed to risks that arise from its use of financial instruments. The main purpose of these
financial instruments is to raise and utilise finance in the Group’s operations.
The principal financial instruments used by the Group are as follows:
Loans and receivables at amortised costs
Cash and cash equivalents and other receivables
Financial assets at fair value through profit or loss
Derivative financial asset
Financial liabilities held at amortised costs
Trade and other payables
31 December 2013
31 December 2012
2,518
8,225
123
2,323
5,787
119
The main risks arising from the Group’s financial instruments are interest risk, liquidity risk and currency
risk. The Directors review and agree policies for managing these risks and these are summarised below.
Liquidity risk
The Group manages its operations through equity and seeks to manage financial risk to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Management
monitors rolling forecasts of the Group’s and Company's liquidity reserve. The review consists of
considering the liquidity of local markets, projecting cash flows and the level of liquid assets to meet these.
Management raises additional capital financing when the review indicates this to be necessary.
34
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
The contractual maturities of the Group’s financial liabilities are shown in the table below:
Group
2013
Carrying amount
Contractual cash
flows
6 months or less
Trade and other payables
123
123
123
123
123
123
Group
2012
Carrying amount
Contractual cash
flows
6 months or less
Trade and other payables
119
119
119
119
119
119
Credit risk
The credit risk on liquid funds is limited because the counterparties are banks with credit ratings assigned
by international credit rating agencies.
The Group’s maximum exposure to credit risk by class of individual financial instrument is shown in the
table below:
Group
2013
2012
Carrying
value
Maximum
exposure
Carrying
value
Maximum
exposure
Other receivables
Cash and cash equivalents
Derivative financial asset
126
2,392
8,225
10,743
126
2,392
8,225
10,743
275
2,048
5,787
8,110
275
2,048
5,787
8,110
Fair values
The fair values of the Group’s cash in banks, prepayments and accounts payable are considered equal to
the book value as they are all short term.
The derivative financial asset is measured subsequent to initial recognition at fair value by reference to the
Company’s share price and grouped into Levels 1 to 3 based on the degree to which the fair value is
observable
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
35
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
Level 2 fair value measurements at 31 December 2013
Opening balance
Additions
Repayment
Net gains/(losses) recognised in income statement
Closing balance
Derivative financial asset
31 December 2013
5,787
6,140
(3,551)
(151)
8,225
31 December 2012
2,001
7,666
(3,445)
(435)
5,787
As the consideration is variable depending upon the Company’s share price, the derivative financial asset
is revalued through the income statement with reference to the Company’s closing share price. The
valuation methodology and inputs are described in note 8.
Interest rate risk
The Group finances its operations through equity financing to alleviate the interest rate risk. The interest
rate exposure of the financial assets of the Group as at 31 December 2013 related wholly to floating interest
rates in respect of cash at bank. Cash at bank in interest bearing accounts was held in demand accounts
with one-month maturities throughout the year. This policy was unchanged from 2012.
The Group is exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with
banks. The cash balances maintained by the Group are managed in order to ensure that the maximum
level of interest is received for the available funds but without affecting working capital flexibility.
The Group is not currently exposed to cash flow interest rate risk on borrowings as it has no debt or fixed
rate finance leases. No subsidiary of the Group is permitted to enter into any borrowing facility or lease
agreement without the Company’s prior consent.
Currency risk
The Group undertakes certain transactions denominated in foreign currencies hence exposures to
exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy
parameters by holding bank deposits in Russian Roubles, US Dollars and Pound Sterling (GBP).
Management reviews its currency risk exposure periodically and hedges part of its exposure to the US
dollar by buying and holding on deposit GBP. The Group also hold Roubles in order to cover a proportion
of anticipated Rouble expenditures. As at 31 December 2013 the Group had on deposit approximately
US$2,189,000 in GBP (2012: US$1,854,000) and US$171,000 in Rouble (2012: US$118,000) bank
accounts.
An analysis of the Group’s holdings of financial instruments in various currencies at the year end is as
follows:
Cash and cash equivalents
Derivative financial asset
Payables and accruals
Net Exposure
Cash and cash equivalents
Derivative financial asset
Payables and accruals
Net Exposure
31 December 2013
Denominated in
USD
RUR
GBP
32
-
(3)
29
171
-
(40)
131
2,189
8,225
(80)
10,334
31 December 2012
Denominated in
USD
RUR
GBP
76
-
(13)
63
118
-
(32)
86
1,854
5,787
(74)
7,567
36
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
(Amounts in ‘000s US Dollars)
The main financial risk faced by the Group relates to currency risk exposure due to its Rouble based costs
for exploration works. The Company’s functional currency and financing is the USD, and therefore if the
Rouble strengthens its positions against the USD, this has a negative impact on the Group. Given the
unpredictability in currency exchange rates movement, this exposure can give rise to a material change
(either favourable or unfavourable) in the future.
The following table details the Group’s sensitivity to a 10% increase and decrease in the USD against the
Russian rouble and sterling. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 10% change in foreign
currency rates. A positive number below indicates an increase in profit and other equity where the USD
strengthens 10% against the relevant currency. For a 10% weakening of the USD against the relevant
currency, there would be an equal and opposite impact on the profit and other equity, and the balances
below would be negative.
Rouble Impact
2013 2012
Sterling Impact
2012
2013
Profit or loss
17
12
219
185
In the Directors’ opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk
as the year end exposure does not reflect the exposure during the year. Rouble denominated expenditures
is seasonal with higher volumes in the second and third quarters of the financial year.
20.
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital (i.e. share capital, share premium and retained deficit) are
to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other shareholders.
The principal strategy of the Group to maintain the capital structure is to issue new shares.
The Group currently does not have any borrowings and none is planned in the next twelve months.
21.
EVENTS AFTER THE REPORTING DATE
Settlement of Lanstead 4 value payment
In January 2014 the Company settled the outstanding value payment for the 25 July 2013 placing with
Lanstead. Under the agreement the Company had a value payment obligation of 1,000,000 new shares
within 12 months of the placing, or to pay the placing price equivalent of £75,000. The Board opted to pay
the placing price value.
37