AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CHAIRMAN’S STATEMENT
Dear Shareholder,
I am pleased to be able to present this update of Amur Minerals Corporation (the “Company”) to
shareholders in what was a significant year for the Company with the issuance of the “Detailed Exploration
and Production Licence” (the “Production Licence”) on our Kun-Manie sulphide nickel copper project.
Occuring in our 10th year since the Company listed on AIM, our successful acquisition of 100% of the
production rights of the project has been the result of a decade of hard work and dedication by our staff.
We have also defined a Blueprint for the compilation of a Definitive Feasibility Study (“DFS”) for
development of the 20 year Production Licence for our world class nickel copper sulphide project.
In these 10 years we have seen many challenges ranging from successful identification of additional
resources bringing our total contained nickel equivalent to nearly a million tonnes whilst working our way
through the often chaotic markets and an ever changing Russian regulatory environment. In recent years,
the mining sector’s prominence on the Alternative Investment Market (“AIM”) and commodity markets have
declined and the period has been fraught with economic uncertainty creating a highly constrained funding
environment for the junior miners. With this setting, we have remained highly focused and successful in
discovering one of the largest nickel copper sulphide deposits, obtaining the rights to extract 100% of the
contained metals from a Russian strategic deposit, identified various technical and financial options to
optimise what could lead to our becoming one of the top 10 nickel miners in the world, and still have highly
prospective undrilled ground within our production licence area. All of this has been attained through the
support of all shareholders that have taken a long-term investment perspective.
2015 Highlights
Obtaining a Production Licence with the right to recover 100% of the contained metals
Obtaining a water allotment licence to support the processing of ore
Completed nearly 6,000 metres of diamond core drilling
Compiled resource updates at four of our five deposits resulting in a substantial expansion of the
global resource statement
Completed internal evaluations and trade off studies leading to the development of a Blueprint
setting a path to the completion of a DFS
Acquisition of Capital Equipment to allow for a more rapid advance of our field work
Company remains debt free and has established a funding source allowing us to fast track Kun-
Manie
Licencing
On 22 May 2015, the Ministry of Natural Resources and Rosnedra issued the Production Licence covering
a 36 square kilometre licence area at Kun-Manie which is valid until 1 July 2035. The Production Licence
was registered with the State Geological Fund in June 2015 and a one-time payment of 23.6 million Roubles
made, granting our wholly owned subsidiary ZAO Kun-Manie 100% of the production rights for all
economically recoverable metals including nickel, copper, cobalt, platinum, palladium, gold and silver.
Being a strategic deposit, the 100% grant was a substantial accomplishment as production licences for
strategic deposits typically allow for a foreign company to hold no more than 25% of the production rights.
This was quickly followed by approval of the Company’s project development plan for the continued detailed
exploration and development of Kun-Manie. Our dedicated staff had prepared a comprehensive package
of documents and were ready to complete the submission as soon as the Production Licence was
registered which allowed the Company sufficient time to undertake a planned 6,000 metre drill season in
2015. The drill effort was focused on our largest deposit known as Maly Kurumkon / Flangovy (“MKF”).
Additionally, in May 2015 the Company obtained a 112 square kilometre water allotment adjacent to the
planned mill site area located to the south of our Production Licence. Examination of the allotment area has
been commenced as a part of the 2016 field season and will consist of various geophysical surveys and
the identification of water well drill sites to identify the sources from which water can be drawn to process
1
ore and to provide potable water for nearly 1,000 onsite employees once production is brought on line.
The Far East and Baikal Region Development Fund (the “Fund”)
Looking to the long-term funding requirements related to the need for infrastructure development to support
the Kun-Manie project, in August 2015 the Company signed a Financial Advisory agreement with the Fund
which allows us to work in partnership with the Fund in attracting financing from within the Russian
Federation, Republic of India and the Peoples Republic of China. Our collaboration with the Fund is a major
step forward for the Company and confirms the Russian Government’s commitment to generating growth
and business opportunities in the Russian Far East and we are pleased to be an integral part of this
development programme. The Fund is a lead institution in funding infrastructure development of key
cornerstone projects in the Far East.
2015 Field Season
We planned and prepared for drilling of up to 6,000 metres at the MKF deposit with the primary objective
being the infill drilling of a large block of Inferred ore located in the eastern area of the deposit called
Flangovy. The intent was to convert Inferred resources to that of the Indicated category thereby increasing
the potential reserve base suitable for the determination of JORC compatible reserve statements. A second
and substantial objective of the programme included the completion of two step holes to confirm that the
Flangovy deposit extended beyond the last known limits of mineralisation. Both goals were successfully
accomplished and verified with the final analytical results being derived by Alex Stewart Laboratories
reported in Q4 2015 and Q1 2016.
During the 2015 season 19 infill and 2 step out holes were completed with a total of 5,821 metres being
diamond core drilled. The infill programme doubled the drilling density at Flangovy and as it required fewer
metres than was expected this allowed us the opportunity to undertake additional infill drilling in the Maly
Kurumkon area of the deposit for the purpose of confirming the continuity along strike of the previously
defined 60 metre thick lense of mineralisation. The step out holes extended the mineralisation at Flangovy
by an additional 400 metres to the east of the previously determined ore limits. The potential for further
expansion of the resource eastward remains open and represents a substantial target for future exploration
drilling.
By doubling the density of the drill spacing and step out expansion, the MKF resource was expanded from
52.9 million ore tonnes containing 294,200 nickel tonnes and 85,100 tonnes of copper to that of 90.6 million
tonnes of ore containing 366,600 tonnes of nickel and 109,900 tonnes of copper. Nearly 78% of this newly
defined resource is now classified as an Indicated resource which was double that defined prior to the
completion of the 2015 drill programme. In addition, a thick, continuous, and high grade (+0.75% nickel)
mineralised core was identified to extend over a distance of 1,700 metres. The presence of the structure
has provided us with the opportunity to mine higher grade ores than previously considered possible and to
increase production of higher grade ores earlier in the production cycle of the mine life.
SGS Minerals Metallurgical Test Work
During the year, we also had the opportunity to compile additional metallurgical test work samples for
establishing grade recovery curves previously not available. Six samples each from the deposits Kubuk
and Flangovy were collected covering various grade intervals to determine the variability of the metallurgical
recoveries of the contained metals based on increasing grade content. The results of this work have been
received from SGS Minerals (“SGS”). The final combined results for previous work and the newly acquired
results will provide additional key information and significantly assist in the development of the mine
production schedule to generate the best concentrate for the recovery of the metal.
Internal Evaluation and Blueprint
During the first half of the year an ‘Operational Blueprint’ was developed internally which looked at an
optimised mining, processing and transport conceptual design, providing for a fully integrated operation
that will produce a substantially improved financial assessment for Kun-Manie. By doing so, a series of
trade off studies were identified wherein each step of the proposed operation could be optimised. In June
2015, the Operational Blueprint and the associated economic evaluation were completed and presented
as a Preliminary Economic Assessment (“PEA”). It was from this evaluation and its accompanying trade
off analyses that provided us with a benchmark plan for the DFS which serves as our planning document
for the compilation of the final configuration of the mine site operation, development of road and power
infrastructure and the potential construction of our own furnace to generate an intermediate Low Grade
2
Matte (“LGM”) for direct sale into the three largest nickel consumptive Asian countries including China,
India and Korea.
Resource Inventory Update
In a post 2015 event, the Company contracted SRK Consulting (UK) Ltd (“SRK”) to update the resource
statement for MKF using a modified resource calculation method reflecting two mineralised geological
environments suited to allow for both open pit and underground mining considerations and trade off
analyses between the two mining alternatives. As a result, low grade (0.20% nickel cutoff grade) and high
grade (0.5% nickel cutoff grade) domains were successfully identified and modelled separately. This
method will allow us to develop an appropriate mine reserve statement in the near future including both
open pit and underground production scenarios. Being the largest deposit in our five deposit inventory,
reserve definition will begin with MKF wherein an optimised production schedule to be generated as an
integral part of the DFS.
The successful implementation of the newly defined estimation process implemented initially at MKF, lead
the Company to investigate the potential successful application of the method for use at the deposits of
Ikenskoe / Sobolevsky (“Iken”) and Kubuk. Results allowed us to identify the presence of the two unique
mineral domains. Results derived in the Q2 2016 process resulted in a substantial refinement to the
resource models and related statements which should allow for the development of a reserve that will be
more reflective of a combined open pit / underground producing mine and suitable for use in the
development of a DFS mine reserve and optimised production schedule. The current resource statements
by deposit follow in the table below and it is noted that the total contained nickel presently stands at 740,100
tonnes with copper being 212,900 tonnes. By-product platinum and palladium total 20.6 tonnes and 21.7
tonnes, respectively. In combination, the nickel equivalent is nearly a million tonnes placing it among the
world’s largest nickel sulphide deposits.
3
Orebody
Tonnage
Mt
0
3.7
3.7
22.0
25.7
0
0
0
7.6
7.6
17.6
11.8
29.4
5.9
35.3
0.8
4.8
5.6
0
5.6
0
68.4
68.4
22.2
90.6
Measured
Indicated
Subtotal
Inferred
Total
Measured
Indicated
Subtotal
Inferred
Total
Measured
Indicated
Subtotal
Inferred
Total
Measured
Indicated
Subtotal
Inferred
Total
Measured
Indicated
Subtotal
Inferred
Total
Measured
Indicated
Sub-total
Inferred
Grand Total
18.3
88.7
107.1
57.7
164.8
Vodorazdelny (Single 0.20% Geological Domain – Open Cast Target Only)
JORC Resource Estimate – April 2016
(zero cutoff grade)
Ni
t
Cu
%
Cu
t
Kubuk (Two Geological Domain Model)
0
28,500
28,500
104,500
133,000
0
0.17
0.17
0.15
0.15
0
7,300
7,300
32,100
39,400
Pt
g/t
0
0.1
0.1
0.1
0.1
Gorny (Single 0.20% Geological Domain Model)
0
0
0
23,900
23,900
0
0
0
0.09
0.09
0
0
0
7,000
7,000
0
0
0
0.2
0.2
Ni
%
0
0.76
0.76
0.47
0.52
0
0
0
0.31
0.31
Ikenskoe / Sobolevsky (Two Geological Domain Model –)
0.51
0.39
0.46
0.78
0.51
88,600
46,000
134,600
46,100
180,700
0.14
0.1
0.12
0.19
0.13
24,200
11,400
35,600
11,400
47,000
0.18
0.14
0.16
0.17
0.17
Pt
kg
0
700
700
3,100
3,800
0
0
0
1,600
1,600
3,200
1,700
4,900
1,000
5,900
0.57
0.66
0.64
0
0.64
4,700
31,200
35,900
0
35,900
0.17
0.17
0.17
0
0.17
1,400
8,200
9,600
0
9,600
0.3
0.1
0.1
0
0.1
Maly Krumkon / Flangovy (Two Geological Domain Model)
0
0.42
0.42
0.37
0.40
0.51
0.44
0.45
0.44
0.45
0
285,200
285,200
81,400
366,600
0
0.12
0.12
0.12
0.12
0
84,200
84,200
25,700
109,900
Global Total Resource
93,300
390,900
484,200
255,900
0.14
0.12
0.13
0.13
25,600
111,100
136,700
76,200
740,100
0.13
212,900
Numbers may not be precise due to rounding.
0
0.1
0.1
0.1
0.1
0.19
0.11
0.12
0.13
0.12
200
600
800
0
800
0
6,600
6,600
1,900
8,500
3,400
9,600
13,000
7,700
20,700
4
Pd
g/t
0
0.1
0.1
0.1
0.1
0
0
0
0.2
0.2
0.20
0.17
0.19
0.21
0.19
0.3
0.1
0.1
0
0.14
0
0.1
0.1
0.1
0.1
0.20
0.11
0.13
0.14
0.13
Pd
kg
0
700
700
2,700
3,400
0
0
0
1,900
1,900
3,500
2,000
5,500
1,200
6,700
200
600
800
0
800
0
6,900
6,900
2,000
8,900
3,700
10,200
13,900
7,800
21,700
Capital Purchases
Towards the year end and after the award of the Production Licence and approval of the Project Plan, we
took the decision to invest in an additional new drill rig and other mobile fleet so that we could significantly
increase our drilling capacity and onsite activities during the 2016 and 2017 field seasons. This was
intended to enable us to undertake combined field season activities of resource definition, bulk metallurgical
sample collection and definition of the hydrological scheme to support the processing of our ores for
inclusion of the DFS.
We took delivery of a Boart Longyear LF-90, two Caterpillar D9Rs dozers and a Caterpillar 329D excavator
in late Q4 2015 and early Q1 2016. These were then transported to the project site over the winter ice road
opened in March 2016 with the new equipment arriving on site in early April 2016. I would like to express
my great thanks to the personnel who undertook the 2016 ice road construction and delivery hauls, as this
was a particularly challenging undertaking as it encompassed the largest movement of equipment and
stocks to site that we have ever undertaken, and the mild winter meant that the ice road was open for a
shorter than usual time.
Typically the field season runs from early June to early November with drilling dependent upon the
availability of free flowing water dictating when we can initiate and complete drilling for the year. The
unseasonably warm winter has allowed us to begin our 2016 field activities and drilling nearly a month
earlier than normal.
Financial Overview
The Company remained debt free throughout 2015 with cash reserves of US$9.6 million as at 31 December
2015.
In October 2015, we completed the Lanstead financing agreement that was entered into in July 2013. This
agreement provided 24 settlements for a total of US$11.2 million. During the year 21 settlements were
finalised totaling US$10.8 million.
In December 2015, the Company entered into a financing agreement with Crede CG III Limited (“Crede”)
for £12.5 million with attached warrants spread over 5 subscription events of £2.5 million each at 90 day
intervals. The first subscription event took place in December 2015. The financing agreement with Crede
has enabled the Company to fully finance the DFS at the outset avoiding the need to come back to market
for further funding whilst the DFS is in progress. The Crede financing also ensures the Company is on a
sound financial footing should it become involved in discussions or negotiations with potential long-term
partners. Whilst the Board appreciates that there will be significant dilution to existing shareholders as a
result of the Crede financing, we believe it is in the best interests of all stakeholders that your Company is
well financed to enable the Kun-Manie Project to reach its full potential. Other sources of finance were
considered by the Board, but dismissed due to the high cost of funding in relation to the amount being
raised and/or uncertainty over the level of funding that could be achieved.
The Company incurred an operating loss of US$0.7 million (2014: US$1.36 million). Administration costs
for the year were $4.1 million (2014: US$2.4 million) with much of the increase comprising of US$1.1 million
of non-cash charge for options grant. Finance Income of US$3.4 million for the year was earned from the
Lanstead financing agreement completed in October 2015. Also during the year, the Company spent
US$2.7 million on capital equipment and exploration expenses.
Outlook
We go into 2016 squarely focused on the next major milestone, the DFS, which we expect to complete by
the end of 2017. The DFS is a large and important undertaking and its development will consume
considerable time and management focus.
The 2016 field programme contains work key to the completion of the DFS and includes the completion of
15,000 metres of drilling, which consists of two objectives. The first, and an important 2016 deliverable for
the DFS, is to generate a large representative metallurgical sample from the MKF deposit for use in the
process design of the ore treatment facilities and furnace design to generate a LGM. The second objective
is to convert existing Inferred resources at MKF to Indicated to further expand the potential reserve
expansion. Lastly, the Company will compile information to define the source and quantity of industrial
5
water available to process the ores. This will enable us to define the locations for test wells scheduled for
drilling in 2017.
Other DFS related tasks are planned to commence during 2016 and cover several disciplines related to off-
Production Licence area activities. These include infrastructure assessment and design for power and
access road work, metallurgical work for plant and flowsheet design, evaluation of final concentrate
composition, development of the design of the furnace to generate a LGM, the development of a
comprehensive mine reserves, schedule and operational plan and finally the environmental impact
assessment. These activities are closely interlinked and will require our undivided attention.
Lastly, the Company extends its appreciation and thanks to long-term shareholders that have supported
the Company to this point and into the future. Personally, I also wish to thank all parties that have been a
part of the team that has brought us to this exhilarating point. Congratulations and thanks go to our
dedicated and skilled staff, the Russian authorities that were key to processing the Production Licence, our
contractors, the UK support staff and the Amur management team.
Mr. Robert W. Schafer
Non Executive Chairman
28 June 2016
6
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
The Directors present their annual report and the audited financial statements for the year ended 31
December 2015.
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 15. The Directors
do not recommend payment of a dividend for the year (2014: nil).
DIRECTORS
The number of Directors as at 31 December 2015 was 3 (2014: 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 2015 was 7.8p.
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 stage. In May 2015 the 20 year
‘Detailed Exploration and Production Licence’ was issued to the Company’s wholly owned subsidiary, ZAO
Kun-Maine. The production licence expires on 1 July 2035.
The Directors have prepared a cash flow projection for period to December 2017 which indicates that the
Group is sufficiently funded by its current financial resources and future committed equity financing from
Crede for the next 12 months given the level of contractual commitments. 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
In May 2015 the Russian Prime Minister approved the Company’s ‘Detailed Exploration and Mine
Production Licence’ for its Kun-Maine nickel copper sulphide deposit. The licence area covers 36 square
kilometres and valid until 1 July 2035. The licence grants the Company’s wholly owned subsidiary ZAO
Kun-Maine the rights to recover all value from the mineral defined to be present at Kun-Maine.
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.
7
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
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
suitably qualified individuals to ensure that all work is done to the highest standards 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.
8
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
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
2015 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 $2.75
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 utilise 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.
9
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
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 approximately 320
kilometres from the Baikal Amur rail line to the project site. The Company's position is that they will have to
construct access road to a standard suitable to support the operation on a year round basis. This includes
the ability to restock consumables and fuel at site. The fuel transported to the project site will support the
mobile equipment fleet (mining fleet included) as well as to fuel on site power generation using diesel fueled
generator sets which will preclude the need to construct a power line to the site. Planning is done on a
worst case basis and assumes nothing is available over more than half the distance and substantial
upgrades to existing pioneer roads located along the western half of the planned road route will be required.
DONATIONS
The Company has not made any charitable or political donations during the year (2014: 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 28 June 2016.
Robert W. Schafer
Chairman
28 June 2016
10
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2015
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;
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; and
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
28 June 2016
Brian Savage
Director
28 June 2016
11
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
2015 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 19 January 2016. 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 2015 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.
12
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
REPORT OF THE INDEPENDENT AUDITORS
Opinion on other matters
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: 28 June 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
13
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
Notes
31 December 2015
31 December 2014
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
CURRENT LIABILITIES
Trade and other payables
Derivative financial liability
Total current liabilities
NON-CURRENT LIABILITIES
Rehabilitation provision
Total non-current liabilities
CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS OF
THE PARENT
Share capital
Share premium
Share options reserve
Retained deficit
Foreign currency translation
reserve
Total equity
Total liabilities and equity
5
5
9
7
8
6
12
11
11
11
11
11
11,513
649
12,162
1,230
512
-
9,613
11,355
23,517
539
370
909
139
139
54,093
5,648
3,907
(25,869)
(15,310)
22,469
23,517
11,783
252
12,035
83
237
7,381
1,389
9,090
21,125
407
-
407
-
-
48,949
6,473
2,306
(25,163)
(11,847)
20,718
21,125
The financial statements were approved and authorised for issue by the Board of Directors on 28 June
2016 and were signed on its behalf by:
Robin Young
Brian Savage
The accompanying notes on pages 18 to 38 form an integral part of these financial statements.
14
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
Note
Year ended 31
December
2015
Year ended 31
December
2014
Administrative expenses
13
(4,114)
(2,358)
Loss from operations
(4,114)
(2,358)
Finance income/ (expense)
Fair value movement on derivative
financial assets
14
8
Loss before tax
Taxation 10
Loss for the year attributable to
owners of the parent
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
2,224
1,184
(706)
-
(706)
(161)
1,158
(1,361)
-
(1,361)
(3,463)
(8,047)
(3,463)
(8,047)
(4,169)
(9,408)
Loss per share: basic & diluted
15
US$(0.002)
US$(0.003)
The items in the above statement are derived from continuing operations.
The accompanying notes on pages 18 to 38 form an integral part of these financial statements.
15
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
Note
Year
ended
31 December
2015
Year
ended
31 December
2014
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)
Cash received from derivative financial asset
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
5
5
8
(3,090)
(3,090)
(610)
(2,141)
(2,751)
3,618
10,789
14,407
8,566
1,389
(342)
9,613
(1,960)
(1,960)
-
(748)
(748)
-
1,841
1,841
(867)
2,392
(136)
1,389
The accompanying notes on pages 18 to 38 form an integral part of these financial statements.
16
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
Share
capital
Share
premium
account
Share
Options
Reserve
Retained
deficit
Foreign
Currency
Translation
Reserve
Total
Balance at 31 December 2013
48,949
6,473
2,086
(23,802)
(3,800)
29,906
Loss for the year
Other comprehensive income for
the year
Total comprehensive income
Equity settled share based
payments
Equity settled share based
payments associated with issue of
shares
-
-
-
-
-
-
-
-
-
-
-
-
-
344
(124)
(1,361)
-
(1,361)
-
(1,361)
(8,047)
(8,047)
-
-
-
-
(8,047)
(9,408)
344
(124)
Balance as 31 December 2014
48,949
6,473
2,306
(25,163)
(11,847)
20,718
Loss for the year
Other comprehensive income for
the year
Total comprehensive income
Shares Issued
Equity settled share based
payments
Exercise of options
Costs associated with issue of
share capital
-
-
-
4,887
-
257
-
54,093
-
-
-
-
-
-
(825)
5,648
-
-
-
-
1,691
(90)
-
(706)
-
(706)
-
(706)
(3,463)
(3,463)
-
-
-
-
-
-
-
-
(3,463)
(4,169)
4,887
1,691
167
(825)
3,907
(25,869)
(15,310)
22,469
The accompanying notes on pages 18 to 38 form an integral part of these financial statements.
17
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(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
2015 was 40 (2014: 21 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 2015 and 31 December 2014:
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 the Kun-Manie production licence, which was issued in May 2015. The
licence is valid until 1 July 2035 and allows the Company’s subsidiary, ZAO Kun-Maine, to recover all
revenues from 100% of the mined metal that specifically includes nickel, copper, cobalt, platinum palladium,
gold and silver. The Company’s management are evaluating the project with a view of determining an
appropriate model for the development and ultimate exploitation of the project.
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.
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 stage. In May 2015 the 20 year
‘Detailed Exploration and Production Licence’ was issued to the Company’s wholly owned subsidiary, ZAO
Kun-Maine. The production licence expires on 1 July 2035.
The Directors have prepared a cash flow projection for period to December 2017 which indicates that the
Group is sufficiently funded by its current financial resources and the future committed equity financing from
Crede for the next 12 months given the level of contractual commitments. 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.
18
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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.
A number of new and revised standards and amendments to existing standards were applicable from 1
January 2015. The adoption of these amendments did not have a material impact on the Group’s financial
statements for the year ended 31 December 2015.
Any standards and interpretations that have been issued but are not yet effective, and that are available for
early application, have not been applied by the Group in these financial statements. The Group does not
expect other pronouncements to have a material impact upon the Group's primary statements and
disclosure requirements.
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 2015 was $1:RUB 73.29 (2014: $1:RUB 56.45), with the
average rates applied to transactions during the year of $1:RUB 61.13 (2014: $1:RUB 38.49).
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.
19
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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.
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
All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a
project are written off as incurred.
All costs associated with mineral exploration and investments are capitalised on a project by project basis,
pending determination of the feasibility of the project. Costs incurred include appropriate technical and
administrative expenses. If an exploration project is successful and the project is determined to be
commercially viable, the related costs will be transferred to mining assets and amortised over the estimated
life of the mineral reserves on a unit of production basis.
Where a project is relinquished, abandoned, or is considered to be of no further commercial value to the
Group, the related costs are written off.
Impairment reviews performed under IFRS 6 are carried out on a project by project basis, with each project
representing a potential single cash generating unit. An impairment review is undertaken when indicators
of impairment arise; typically when one of the following circumstances applies:
i.
ii.
iii.
iv.
sufficient data exists that render the resource uneconomic and unlikely to be developed
title to the asset is compromised
budgeted or planned expenditure is not expected in the foreseeable future
insufficient discovery of commercially viable resources leading to the discontinuation of activities.
20
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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.
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.
21
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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.
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 classifies its financial liabilities into one of two categories, depending on the purpose for which
the liability was acquired, and its policy for each category is as follows:
Fair value through profit or loss
This category comprises only warrants instruments classified as derivative financial liability. They are
carried in the consolidated statement of financial position at fair value with changes in fair value recognised
in the consolidated statement of comprehensive income. Other than these derivative financial instruments,
the Group does not have any liabilities held for trading nor has it designated any other financial liabilities
as being at fair value through profit or loss.
Other financial liabilities
This category comprises 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)
22
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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 judgements
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 directors have
assessed whether there are any indicators of impairment in respect of exploration and evaluation costs.
In making this assessment they have considered resource estimates, future processing capacity, the
forward market and longer term price outlook for nickel.
Management’s estimates of these factors are subject to risk and uncertainties affecting the recoverability
of the exploration and evaluation costs. Any changes to these estimates may result in the recognition of
an impairment charge with a corresponding reduction in the carrying value of such assets. After
consideration of the above factors, the Directors do not consider that there are any indicators that
exploration and evaluation costs are impaired at the year end.
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.
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 estimates and assumptions
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.
23
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
ii.
Valuation of derivative financial asset
The Company and Lanstead Capital L.P. had 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 amounts received each month were 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 year end however there is significant
uncertainty underlying these assumptions due to the unpredictable nature of the share prices.
iii.
Valuation of derivative financial liability
The company granted warrants instruments to Crede CG III as part of an equity subscription
agreement. The warrants are exchangeable into a variable number of new ordinary shares. The
Directors have estimated the fair value of the warrants using Monte-Carlo simulation, as described
in note 12c. This produces a distribution of possible outcome based on variety of different
probabilities applied to simulated future share price which inevitably involves a degree of judgement
and the actual outcome is likely to vary.
24
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(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 2015
Corporate
(Unallocated)
Kun-Manie
Total
Administrative expenses
Finance income
Finance expense
Fair value gain on derivative financial asset
Taxation
Loss for the year
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Segment assets
Trade and other payables
Derivative financial liability
Rehabilitation provision
Segment liabilities
Segment net assets
Property, plant and equipment capital expenditure
Exploration capital expenditure
Reportable information as at 31 December 2014
(3,915)
2,224
-
1,184
-
(507)
-
-
75
8,261
8,336
(262)
(370)
-
(632)
7,705
-
-
(199)
-
-
-
-
(199)
12,162
512
1,155
1,352
15,181
(277)
-
(139)
(416)
14,765
569
2,192
(4,114)
2,224
-
1,184
-
(706)
12,162
512
1,230
9,613
23,517
(539)
(370)
(139)
(1,048)
22,469
569
2,192
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
(1,897)
-
(161)
1,158
-
(900)
-
-
7,381
30
1,279
8,690
(382)
(382)
9,377
-
-
(461)
-
-
-
-
(461)
12,035
237
-
53
110
12,435
(25)
(25)
11,341
(1)
726
(2,358)
-
(161)
1,158
-
(1,361)
12,035
237
7,381
83
1,389
21,125
(407)
(407)
20,718
(1)
726
25
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(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 2014
Additions
Foreign exchange differences
At 31 December 2014
Additions
Foreign exchange differences
At 31 December 2015
Accumulated depreciation:
At 1 January 2014
Charge for the year
Foreign exchange differences
At 31 December 2014
Charge for the year
Foreign exchange differences
At 31 December 2015
Net book value:
At 31 December 2015
At 31 December 2014
At 1 January 2014
1,761
(1)
(739)
1,021
569
(235)
1,355
1,124
118
(473)
769
114
(177)
706
649
252
637
18,318
726
(7,261)
11,783
2,192
(2,462)
11,513
-
-
-
-
-
-
-
11,513
11,783
18,318
20,079
725
(8,000)
12,804
2,761
(2,697)
12,868
1,124
118
(473)
769
114
(177)
706
12,162
12,035
18,955
Exploration and evaluation costs
Exploration and evaluation assets relate to the Group’s mineral exploration licence, Kun-Manie. During the
year US$721,000 (2014: US$344,000) of salaries and wages and US$114,000 (2014: US$118,000) of
depreciation were capitalised to the exploration and evaluation asset. A share based payment cost of
US$439,000 (2014: nil) was also capitalised and during the year US$323,000 for the one-off payment for
the grant of the mining licence was capitalised.
26
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
6.
TRADE AND OTHER PAYABLES
Accruals and other payables
539
539
31 December 2015
31 December 2014
7.
INVENTORIES
Fuel
Other materials and supplies
31 December 2015
31 December 2014
60
452
512
407
407
59
178
237
8.
DERIVATIVE FINANCIAL ASSET
31 December 2015
31 December 2014
Derivative financial asset
-
-
7,381
7,381
The Company entered 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 was variable depending upon the Company’s share price, the agreement was 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 2013
Inception of new instruments
Number of shares paid up
Number of unpaid shares
outstanding at 31 December 2014
Inception of new instruments
Number of shares paid up
Number of unpaid shares
outstanding at 31 December 2015
Actual
share
price
6.93p
10.5p
-
Lanstead 3
Lanstead 4
Total
21,262,500
-
(21,262,500)
50,724,139
-
(5,465,516)
71,986,639
-
(26,728,016)
-
-
-
-
45,258,623
-
(45,258,623)
45,258,623
-
(45,258,623)
-
-
27
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
Value of derivative at 31 December 2013
Inception of new instruments
Cash received during the year
Finance expense (note 14)
Gain/(loss) on revaluation at 31 December 2014
Value of derivative at 31 December 2014
Inception of new instruments
Cash received during the year
Finance income (note 14)
Gain on revaluation
Value of derivative at 31 December 2015
Lanstead
3
2,429
-
(1,390)
52
(1,091)
-
-
-
-
-
-
Lanstead
4
5,796
-
(451)
(213)
2,249
7,381
-
(10,789)
2,224
1,184
-
Total
8,225
-
(1,841)
(161)
1,158
7,381
-
(10,789)
2,224
1,184
-
9.
OTHER RECEIVABLES
VAT receivable
Other receivables
31 December 2015
31 December 2014
267
963
1,230
9
74
83
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% (2014: 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
2015
-
-
-
31 December
2014
-
-
-
(706)
(706)
-
(219)
(762)
303
678
-
(1,361)
(1,361)
-
333
(207)
675
(801)
-
During the exploration and development stages, the Group will accumulate tax losses which may be carried
forward. As of 31 December 2015, the subsidiary in Russia had tax losses carried forward of:
Tax losses carried forward
31 December
2015
7,884
31 December
2014
9,118
Potential deferred tax asset at 20%
1,577
1,824
28
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
The tax losses of the subsidiary in Russia are available for use over a 10-year period. The total Russian
subsidiary tax losses are available as follows:
Date Tax Losses Available To:
Available
Tax Losses
31 December 2018
31 December 2019
31 December 2020
31 December 2021
31 December 2022
31 December 2023
31 December 2024
31 December 2025
180
265
320
1,201
408
750
3,899
861
7,884
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 2014
31 December 2014
Issue of shares
Issue
Price
Authorised
Capital
1,000,000,000
Issued and
fully paid up
431,151,334
Share Capital
US$
48,948,651
1,000,000,000
431,151,334
48,948,651
7 January 2015
Directors
Service Providers
10.25p
10.25p
27 July 2015
Directors / Executive 17.00p
17.00p
Service Provider
1,035,955
2,000,000
359,200
2,000,000
160,340
309,550
95,260
530,402
13 August 2015
Employee options
11.00p
976,400
257,137
14 December 2015 Crede CG III Ltd
11.00p
22,727,273
3,792,000
31 December 2015
1,000,000,000
460,250,162
54,093,340
On the 7 January 2015, the Company raised £311,000 (US$470,000) through the issue of 3 million new
shares at a placing price of 10.25p per share to the Board of Directors, Executive staff and other service
providers in lieu of compensation for services provided.
On the 27 July 2015, the Company raised £401,000 (US$626,000) through the issue of 2.4 million new
shares at a placing price of 17p per share to the CEO, Executive staff and other service providers in lieu of
compensation for services provided.
On the 13 August 2015, the Company raised £165,000 (US$257,000) through the issue of 1 million new
shares at a placing price of 11p per share to Russian employees who exercised options.
On 14 December 2015, the Company raised £2.5 million (US$3.8 million) through the issue of 22.7 million
new shares at a placing price of 11p per share.
All of these shares have been admitted to the AIM market of the London Stock Exchange plc.
29
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
There were no shares issued during 2014.
Group reserves comprise the following:
Share capital
Amounts subscribed for share capital at proceeds received.
Share premium account
The share premium account represents the amounts received by the Company on the issue of its shares
which was in excess of the nominal value of the terms of the shares prior to the shares being changed to
having no par value, presently utilised for share issue costs.
Share options reserve
The balance held in the share options reserve relates to the fair value of the share options that have been
charged to the profit or loss since adoption of IFRS 2.
Foreign currency translation reserve
The foreign currency translation reserve includes movements that relate to the retranslation of the
subsidiaries whose functional currencies are not the US$.
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 year ended 31 December 2015 12,607,000 new options were granted to key management and
personnel (2014: nil).
As of 31 December 2015 the following options and weighted average exercise prices were outstanding:
At 1 January 2014
Expired during year
Granted during year
Outstanding as at 31 December 2014
Exercised during year
Granted during year
Outstanding as at 31 December 2015
Exercisable as at 31 December 2015
Exercisable as at 31 December 2014
Number of share
options
27,265,500
Weighted Average
exercise price (pence)
10.2
-
-
27,265,500
(976,400)
12,607,000
38,896,100
30,491,433
21,630,333
-
-
10.2
11.0
26.25
15.4
12.4
10.6
30
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
The fair value of the options issued in the year was 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 was
based on the following assumptions:
Share Price
Exercise price
Expected volatility
Option life
Expected dividends
Risk free rate
16p
26.25p
97%
5 years
0
1.49%
The share price was 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 was 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 was 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 charge arising from
outstanding options for the year was US$1,578,000 (2014: US$344,000), out of which US$439,000 (2014:
nil) was capitalised within E&E assets and related to the vesting of options issued in the year.
b) Shares for services
As stated in note 11, during the year the Company issued 5.4 million new shares (2014: nil).
Shares issued
Value of share issued US$ ‘000
c) Warrants
31 December 2015
5,395,155
1,096
31 December 2014
-
-
During the year ended 31 December 2015 17,045,455 new warrants, at a subscription price of 14.3 pence,
were granted to Crede CG III Limited as part of an equity subscription agreement entered into on 14
December 2015, note 11.
Under the terms of the subscription agreement 3 warrants were issued for every 4 subscription shares with
a 5 year exercise period. Each warrant gives the warrant holder the right to subscribe to either:
- One ordinary share, for each warrant, at a price per ordinary share equal to subscription price; or
If the share price is below the subscription price, a number of ordinary shares calculated by dividing
-
the aggregate Black-Scholes value of the warrants by the closing share price, at a price of 1 pence.
The company has the right to call the warrants at any time the share price is trading at a 25% premium to
the subscription price of the warrants.
As the warrants are exchangeable into variable number of shares, their fair values on the grant date and
the reporting date were determined using a Monte-Carlo simulation. For each iteration of the simulation,
the simulated share price was analysed to determine the warrants value. The fair value was based on the
following assumptions:
Share Price
Expected volatility
Option life
Expected dividends
Risk free rate
7.78p
85%
4.96 years
0
1.38%
31
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
The fair value of the warrants on the date of grant and at the yearend was US$370,000, note 19. On initial
recognition the warrants’ cost was deducted from equity as it represents the cost of the shares issued to
Crede CG III as part of the equity subscription agreement. Subsequent changes in the fair value of the
warrants are recognised through profit or loss.
13.
ADMINISTRATIVE EXPENSES
Salaries, wages and Directors’ fees
Travel and subsistence expenses
Professional fees
Investor relations
Foreign exchange differences
Share options
Group auditor remuneration
Other administrative expenses
14.
FINANCE INCOME / EXPENSE
Foreign exchange (gain)/loss
Finance (income)/expense on Lanstead
swap arrangement (note 8)
31 December 2015
31 December 2014
1,023
211
619
685
13
1,139
89
335
4,114
1,016
213
215
242
62
344
90
176
2,358
31 December 2015
31 December 2014
(90)
(2,134)
(2,224)
6
155
161
15.
LOSS PER SHARE
Basic and diluted loss per share are calculated and set out below. The effects of warrants and share
options outstanding at the year ends are anti-dilutive and the total of 56.6 million (2014: 27.2 million) of
potential ordinary shares have therefore been excluded from the following calculations:
31 December 2015
31 December 2014
Net loss for the year
Weighted average number of shares used in the
calculation of basic loss per share
(706)
(1,361)
436,576,884
431,151,344
Basic and diluted loss per share
US$(0.002)
US$(0.003)
32
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
16.
DIRECTORS REMUNERATION
The aggregate remuneration of the Directors of the Company was as follows:
Salary
31 December 2015
Fees
Share
Based
Payment
31 December 2014
Total
Salary
Fees
Total
Share
Based
Payment
297
-
466
763
209
-
52
261
-
-
297
57
49
106
94
79
639
151
128
1,042
-
-
209
23
19
42
29
25
106
52
44
357
Executive
Directors
Robin Young
Non-Executive
Directors
Robert Schafer
Brian Savage
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 held at 1 January 2014
Robin Young
1,771,336
Robert Schafer
250,622
Brian Savage
181,383
Additions
-
Shares held at 31 December 2014
1,771,336
Additions
534,732
Shares held at 31 December 2015
2,306,068
-
250,622
187,627
438,249
-
181,383
158,630
340,013
Options held
Exercise
Price
£0.12675
($0.19)
£0.087
($0.13)
Exercise
Dates
18.04.11 to
18.04.16
23.04.13 to
23.04.18
Robin
Young
3,600,000
Robert
Schafer
2,400,000
Brian
Savage
1,600,000
7,800,000
1,950,000
1,950,000
As at 1 December 2014
Options Expires/Lapsed
Options Granted
11,400,000
4,350,000
3,550,000
-
-
-
£0.2625
($0.39)
27.07.15 to
27.07.20
3,301,000
748,000
635,000
As at 31 December 2015
14,701,000
5,098,000
4,185,000
$ exercise prices are shown for indicative purposes only, calculated at 31 December 2015 exchange rates.
33
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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 2015 (2014: nil).
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 2015
31 December 2014
838
1,253
2,091
722
265
987
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
Financial liabilities at fair value through profit and loss
Derivative financial liability (note 12)
31 December 2015
31 December 2014
9,658
-
539
370
1,463
7,381
407
-
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.
34
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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 cash flow forecasts of the Group and Company to ensure that the sufficient funds are
available to meet the Group’s and Company’s commitments. 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.
The contractual maturities of the Group’s financial liabilities are shown in the table below:
Group
2015
Carrying amount
Contractual cash
flows
6 months or less
Trade and other payables
539
539
539
539
539
539
Group
2014
Carrying amount
Contractual cash
flows
6 months or less
Trade and other payables
407
407
407
407
407
407
Credit risk
The principle financials assets of the Company are bank balances and derivative financial assets. The
credit risk on liquid funds is limited because the counterparties are banks with credit ratings assigned by
international credit rating agencies. The derivative financial asset is described in note 8. At 31 December
2015 and 31 December 2014 no element of the derivative financial asset was past due.
The Group’s maximum exposure to credit risk by class of individual financial instrument is shown in the
table below:
Group
2015
2014
Carrying
value
Maximum
exposure
Carrying
value
Maximum
exposure
Other receivables
Cash and cash equivalents
Derivative financial asset
45
9,613
-
9,658
45
9,613
-
9,658
74
1,389
7,381
8,844
74
1,389
7,381
8,844
Fair values
The fair values of the Group’s financial assets and liabilities are considered equal to the book value as they
are all short term.
The Group measures the fair value of its financial assets and liabilities in the statement of financial position
in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three
levels based on the significance of inputs used in measuring the fair value of the financial assets and
liabilities. The fair value hierarchy has the following levels:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities.
35
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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).
Level 2 fair value measurements at 31 December 2015
Opening balance
Additions
Repayment
Net gains recognised in income statement
Closing balance
Derivative financial asset
31 December 2015
7,381
-
(10,789)
3,408
-
31 December 2014
8,225
-
(1,841)
997
7,381
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.
Level 3 fair value measurements at 31 December 2015
Warrant instruments measured at fair value through the profit or loss have been deemed to be Level 3
liabilities under the fair value hierarchy as fair valued measured of these liabilities are not based on
observable market data.
Opening balance
Additions
Net gains recognised in income statement
Closing balance
Derivative financial liability
31 December 2015
-
370
-
370
31 December 2014
-
-
-
-
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 2015 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 2014.
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).
36
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
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 2015 the Group had on deposit approximately
US$8,216,000 in GBP (2014: US$1,168,000) and US$19,000 in Rouble (2014: US$11,000) bank accounts.
An analysis of the Group’s net monetary assets and liabilities by functional currency of the underlying
companies at the year-end is as follows:
Currency of net monetary asset/liability
US Dollar
Sterling
Russian Rouble
Total
Functional Currency
US Dollars
31 December
2015
US$
Russian Rouble
31 December
2015
US$
Total
31 December
2015
US$
1,346
8,032
9,378
(259)
(259)
1,346
8,032
(259)
9,119
The table above indicates that the Company’s primary exposure is to exchange rate movements between
UK Pound Sterling and the US Dollar. The table below shows the impact of changes in exchange rates on
the result and financial position of the Company.
Sterling 10% weakening of the US Dollar
Sterling 10% strengthening of the US Dollar
Rouble 20% weakening of the US Dollar
Rouble 20% strengthening of the US Dollar
US$
675
(960)
65
(43)
In the Directors’ opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk
as the year end exposure reflects only the impact on the year-end balance sheet of changes in exchange
rates and does not reflect the exposure on on-going and future expenditure. 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. Historically the company has issued share capital to provide funds for
the exploration programmes. The need for further finance is kept under review by the Board through review
of cash flow forecasts and further finance, from equity or debt, will be considered for future exploration and
development work.
21.
EVENTS AFTER THE REPORTING DATE
On 1 March 2016 the Company, pursuant to the subscription agreement entered into with Crede CG III Ltd
on 14 December 2015, converted all 17,045,455 warrants held by Crede using the Black-Scholes valuation
method applicable to the agreement, for 22,033,235 new Ordinary Shares.
On 4 March 2016 the Company signed a non-binding Heads of Terms Agreement with the Russian
Government’s Far East and Baikal Region Development Fund. The agreement expresses the intentions of
Fund and the Company to expand their collaboration on funding Kun-Manie.
37
AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts in ‘000s US Dollars)
On 17 March 2016 the Company, pursuant to the subscription agreement entered into with Crede CG III
Ltd on 14 December 2015 allotted 32,679,739 new Ordinary Shares at a price of 7.65 pence per share to
raise £2.5 million before expenses. The Company also issued warrants over 24,509,805 ordinary shares.
On 20 June 2016 the Company, pursuant to the subscription agreement entered into with Crede CG III Ltd
on 14 December 2015 allotted 64,102,565 new Ordinary Shares at a price of 3.9 pence per share to raise
£2.5 million before expenses. The Company also issued warrants over 48,076,924 ordinary shares.
38