AMUR MINERALS CORPORATION
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
AMUR MINERALS CORPORATION
CORPORATE DIRECTORY
Directors
Registered office
Auditors
Nominated adviser and broker
Legal advisers
Solicitors
Mr B Savage
Mr R Young
Mr R Schafer
Mr P Gazzard
Mr L Naumovski
Kingston Chambers
P.O. Box 173
Road Town
Tortola
British Virgin Islands
BDO LLP
55 Baker Street
London
United Kingdom
W1U 7EU
S. P. Angel Corporate Finance LLP
Prince Fredrick House
35 – 39 Maddox Street
London
United Kingdom
W1S 2PP
Maples and Calder
PO Box 173
Sea Meadow House
Road Town
Tortola
British Virgin Islands
Norton Rose Fulbright (Central Europe) LLP
White Square Office Centre
Butyrsky Val St. 10, Bldg. A
Moscow 125047
Russian Federation
Field Fisher Waterhouse LLP
Riverbank House
2 Swan Lane
London
United Kingdom
EC4R 3TT
AMUR MINERALS CORPORATION
CONTENTS
Chairman's statement
Page
1 - 6
Chief Executive Officer's operational summary
7 - 17
Directors' report
18 - 19
Statement of Directors' responsibilities
20
Operating risks and uncertainties
21 - 23
Independent auditors' report
Consolidated statement of financial position
Consolidated income statement
24
25
26
Consolidated statement of other comprehensive income
27
Consolidated statement of cash flows
Consolidated statement of changes in equity
28
29
Notes to the financial statements
30 - 56
AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT
Dear Shareholder,
With pleasure, I present Amur Minerals Corporation’s (the “Company” or “Amur”) financial results, our most
recent and current operating agenda and the results of the 2016 advancements and developments on
progressing our wholly owned Kun-Manie nickel copper sulphide deposit toward production. Located in the Far
East of Russia near the largest three international nickel consuming markets of China, Korea and Japan, we
entered 2016 in a financially stable position on the back of having been granted the Detailed Exploration and
Production Licence in the middle of 2015.
Strongly positioned in Q1 2016, Amur implemented an aggressive programme targeting its completion on or
about 1 January 2018. The programme was designed to develop a comprehensive project implementation plan
to be defined at a Definitive Feasibility Study (“DFS”) level. The resultant report is to be used to identify and
implement funding alternatives for the construction and development of Kun-Manie, with the potential to be one
of the world’s top 10 annual nickel production operations.
Key accomplishments of our programme are summarised herein. Detailed information and a summary of our
numerous successes over the course of 2016 have been outlined by Mr Robin Young, our Chief Executive
Officer following my report to shareholders.
Operational Programme
Entering 2016 in a solid financial position having arranged financing in the amount of 12.5 million Sterling (US$
18.75 million), we set out an aggressive two-year plan to move the project forward toward the completion of a
Definitive Feasibility Study (“DFS”). This plan was developed and initiated at the beginning of 2016 targeting its
completion on 1 January 2018. The major objectives of the two-year plan included the following:
2016 Drill Programme: All drilling for 2016 and into the foreseeable future is to be focused on
upgrading Inferred resources to that of Indicated allowing for inclusion in the definition of a Mining Ore
Reserve. Areas of newly identified resources will be immediately infill drilled on drill spacing suitable for
designation of Indicated resources. Mineral Resource Estimates (“MRE”) are to be completed in
accordance with JORC (2012) reporting standards.
Mineral Resource Estimates: Post the completion of the 2016 drill season, newly reported Mineral
Resource Estimates (“MRE”) were expected to be compiled using a cut-off grade (“COG”) of 0.4%
nickel. The increase in the COG allows the Company to evaluate resources likely to be mined at lower
nickel prices whilst simultaneously permitting us to identifying the preferred mining method. The MRE
was to be constructed in a manner allowing the Company to define a preferred mining approach
(comprised of open pit or underground production methods).
Mining Ore Reserve (“MOR”): The MOR estimates are to be based on audited operating costs and
externally derived metallurgical test work specific to each deposit. Mining is planned using open pit and
underground approaches. Hence, the MOR will be defined based on the mining approach that produces
the highest net operating profit per ore tonne. Based on typical construction loan financing structures
which range from 5 to 7 years, the Company targeted the identification of a MOR inventory of 60 million
tonnes representing a 10 year production period. The 60 million tonne selection represents
approximately 1.5 times a typical project finance loan life period which is typically required by funding
source which ensures a company’s ability to repay a loan covering the preproduction construction period
and start up requirements. Identification of the MOR is to be completed in accordance with JORC
(2012) standards.
Metallurgical Test Work: The definition of the final metallurgical flowsheet and plant design is a critical
step in defining the economic potential of Kun-Manie. Numerous options are available to the Company
and require careful consideration to provide an optimal plant design. These options to be included in the
design in the metallurgical test programme included consideration of potential commercial smelter off
take agreements, the ability to generate multiple concentrate streams for off take options by commodity,
the potential of generating a separate concentrate(s) for streaming by-product metals and determination
of a concentrate which could be treated at a company owned furnace allowing for low grade matte
generation.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
To fully evaluate the alternatives, a staged process was defined thus allowing for the results of each
stage to be used to refine each ensuing metallurgical assessment phase. The first phase consisted of
the completion of bench scale test work to define maiden grade recovery curves at Kubuk (“KUB”) and
the Flangovy area of Maly Kurumkon / Flangovy (“MKF”). The comprehensive set of grade recovery
curves defining metallurgical recoveries and preliminary slag forming composition of the concentrate by
deposit, each deposit could be ranked by its metallurgical response and would enable confirmation that
MKF remained the priority deposit at which the proposed mining operation would begin. Moving from
bench scale work to larger scale production style testing which is more accurate and reflective of
production, a representative sample from existing core is to be selected and processed allowing for a
more accurate and definitive evaluation of the metallurgical responses of the ore than would be defined
by the less accurate bench scale grade recovery work. The final phase of test work on concentrate
production is to be implemented using a substantially larger representative sample allowing for the
evaluation of the various potential options described above and derivation of the final plant flowsheet
and plant design.
Large Scale Metallurgical Test Work: Follow on pyrometallurgical test work on the concentrate derived
from the large scale metallurgical test work will be undertaken. The results will allow the Company to
fully evaluate the flowsheet, technical and economic potential of an owner operated furnace converting
all or at least a substantial portion of the concentrate to a low grade matte for sale to the international
market.
Site Ancillary Facilities: Development of site ancillary facilities is necessary to ensure the full
implementation of the final selected design for the Kun-Manie operation. This is planned for definition
as a later stage component since the final MOR and plant design will impact the scale and cost of these
components. These components include power generation on site, fuel and tank farms to support
power generation and mining operations, tailing handling and placement, housing and employee support
and operation’s administration and facilities.
Road Access: A major component to the success of the operation will be the completion of an
estimated 320-kilometre long access road linking the project site to the Baikal Amur (“BAM”) rail line.
This road will allow for resupply and support of the mine and for the transport of concentrate to the BAM
rail line where a support facility will be built. Representing approximately 30% of the initial capital cost
(US$ 160 million), design and construction of the access road is key to the successful implementation of
the project. A four-phase approach has been defined. The first stage was the selection of the better of
three preliminary existing routes to be completed by qualified road construction specialists during which
preliminary assessment of the route and access to road construction materials would be evaluated. The
selection of the route, topographic and hydrological maps were to be compiled along the selected road
corridor for use in the next phase. The second phase is comprised of a desktop design using the
available digital information to select a more specific route which will be field verified and any necessary
adjustments to the final route could be identified and included reducing geological and or hydrological
hazards. The third phase is comprised of the detailed engineering including the acquisition of detailed
geotechnical and hydrological information for road and bridge designs, finalisation of the road design
and related bridge and water crossing design. The final stage is the construction of the road.
Ulak Support Faclility: The final major component of the Kun-Manie operation is the design and
construction of an Ulak based support facility. Located immediately adjacent the BAM rail line, a support
facility is planned allowing for the delivery of supplies and material to the mine along the 320 kilometre
access road. Also included is a concentrate storage facility from which concentrate can be shipped to
the international markets or delivered into the company owned concentrate treatment facility from which
a low grade matte can be generated.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
Progress and Milestones
Substantial progress set out in related our 1 January 2016 planned programme has been made over the course
of 2016 and into Q1 of 2017. To highlight our major accomplishments, I note the following:
Record drill productivities have been attained with a total of 19,785 metres having been completed at
MKF during the 2016 season. The drill cost per metre of US$ 40 was the lowest ever recorded during a
field season and includes drilling, labour, fuel, consumables and analytical results.
A newly compiled MRE for RungePincockMinarco (“RPM”) reported 10 February 2017, substantially
upgraded the 1 January 2016 reportable MRE. Drilling during 2016 confirmed continuous mineralised
higher grade structures to be present and the MRE was modelled based on a 0.4% nickel COG. The
current Kun-Manie MRE averages a nickel equivalent grade of 1.03% within a 101.3 million tonne
resource. Containing approximately 1.05 million tonnes of nickel equivalent metal, the nickel equivalent
tonnage has been increased by 22.5% from 853 thousand nickel equivalent tonnes. It is also noted that
the configuration and thicknesses of the mineralisation are conducive to both open pit and underground
mining.
An increase of over 118% in the Measured and Indicated nickel equivalent tonnage has been identified
based on the highly successful 2016 drill programme at MKF. Successful infill drilling of areas
previously identified as Inferred resource and the application of drilling all newly discovered
mineralisation at a spacing allowing for the new resource to be assigned to the Indicated category is the
reason for such a large expansion of the Measured and Indicated resource. The global Measured and
Indicated nickel equivalent tonnage was increased from 383,200 tonnes to 836,300 tonnes. The near
450,000 tonne nickel equivalent expansion of Measured and Indicated resource alone is larger than
many nickel sulphide companies report within their total resource inventory. The average nickel
equivalent grade was also increased from 0.72% to 1.03% (an increase of 43%). On a mineralised
tonnage basis, the Measured and Indicated resource contains 80 million ore tonnes which can be used
in the definition of an MOR.
As noted, the shift in drilling for Measured and Indicated has been highly successful and positioned the
Company to consider various funding options. Based on the adoption of drilling for reserve approach,
the Measured and Indicated resource inventory now totals more than 80 million nickel equivalent tonnes
for inclusion in the definition of the MOR. This component of the resource indicates the potential to
define the MOR of 10 to 13 years at a nominal production rate of 6.0 million tonnes per year (it is
assumed that approximately 85% of the Measured and Indicated resource will be converted to MOR).
Successful conversion of this portion of the resource to reserve is likely to cover the payback period of a
construction loan. Such loans typically range from five to seven years and financial institutions
underwriting such loans prefer to fund an operation that has an MOR equal to 150% planned for
processing over the life of the loan. The 2017 drill programme will be targeting a 10.9 million tonne
Inferred resource at KUB as well as resource expansion down dip, to the east and to the west. Drilling
is also planned at IKEN focused on resource expansion. The Company plans to infill drill any newly
discovered mineralisation for inclusion in the Indicated resource category.
In an RPM mining trade off study for MKF conducted in late 2016 and reported in Q1 2017, a first stage
analysis of the mineable potential of MKF was completed. The study confirmed the Company’s
conclusion that both open pit and underground production are viable and the combination would result in
improved economics as opposed to open pit mining only. Using the 10 May 2016 study, compiled by
SRK Consulting (UK) Ltd (“SRK”), RPM identified the mining potential to consist of a diluted mineable
reserve totaling 44.5 million tonnes (approximately 7.5 years of mine production) averaging 0.75% nickel
and 0.19% copper along the 2,100 metre long deposit model (excluding the 900 metre extension
identified by the 2016 drill results). The total tonnes of mined nickel were projected to be in the order of
332,200 with copper totaling 83,500 copper tonnes. More than 87% of plus 0.4% COG resource from
the total 2,100 metre long deposit (including Inferred) was identified to be suitable for mining.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
Based on the highly supportive and confirmatory work, the Company will have an independent and
qualified consulting group derive a MOR at four deposits based on deposit specific operating costs per
tonne, metallurgical recoveries of the recovered metals and the selection of the appropriate mining
method(s) for each deposit. In addition, rock slope stability for open pit consideration, underground
support requirements and hydrological considerations will be included in the definition of the MOR.
Work by SGS Minerals (“SGS”) has confirmed metallurgical recoveries vary by deposit based on whole
core and grade recovery curve determination. Across all deposits, metallurgical recovery increases with
increasing grade. For MKF, Gipronickel Institute (“Gipro”) (a subsidiary of Norilsk Nickel) also completed
a large scale bulk metallurgical test on a near half-tonne bulk sample having an average grade of 0.70%
nickel and 0.19% copper. Metallurgical recoveries for both nickel and copper will exceed 80%. Having
established that higher recoveries increase with increasing mined grade and that MKF mining potential
study is projected to extract an average nickel grade of 0.75%, it is anticipated metallurgical recovery
could be higher. However, use of the current 80% recoveries for nickel and copper at MKF will provide a
degree of conservatism in future evaluations. A larger scale bulk metallurgical sample comprised of 7.4
tonnes of core from MKF will be processed to allow for the determination of the process flowsheet and
plant design from which the sulphide concentrate will be generated. The metallurgical test work
programme for this sample will assess various alternatives including the potential to generate multiple
concentrate products for consideration in off take agreements and the specific design of a furnace for a
company owned concentrate treatment facility capable of producing a low grade matte.
Ground based geophysics completed near the proposed processing plant site has identified potential
sources of water for industrial use in the treatment of ore. A drill programme is planned for the 2017
season to define the amount of water available from underground sources. Additional geophysical work
is planned for this season in the western area of the hydrological licence.
Selection of the preliminary access road route was completed during the year and detailed topographic
and hydrological maps have been compiled allowing for the next stage of the road design process to be
implemented. A specific route will be selected, examined and adjusted as necessary to allow for
detailed engineering, design and construction. This is a major component of the project and nearly a
third of the initial capital expenditure of Kun-Manie is projected for this critical component to the
successful completion of the project.
As indicated above, the Company has made significant progress over the course of 2016, some of which have
been reported as post 2016 events. We have identified the presence of much higher grades available to mining,
substantially increased our Measured and Indicated resource, confirmed that our future MOR will likely be
substantially higher in grade than previously planned, that our MOR will likely be of sufficient size and grade to
allow for project financing and begun to establish key metallurgical results for the treatment and eventual sale of
concentrate and or low grade matte for the Kun-Manie ores. These are all important achievements allowing for
the continued advancing of the project toward a final project design and decision to initiate production. Our
aggressive plan to advance the project has already shown substantial and multiple benefits and we shall
continue to proceed with our Q1 2016 programme.
A great deal of work remains to be accomplished to attain our final object of the decision to place Kun-Manie into
production and to fund the construction of the project.
The above accomplishments would not have been possible without the full support, success and dedication of
our ZAO Kun-Manie staff headed by our General Director Mr Anatoly Velma. We are already benefitting from
our Russian team’s activities in 2017 as they have once again fully set up the Company to complete another field
season of drilling and onsite engineering activities with the transport of new record tonnages over our winter ice
road.
For additional information and a more in-depth review of our 2016 results, our Chief Executive Officer, Mr Robin
Young has provided significant detail on the successes of 2016 presented below.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
Funding of Activities
The aggressive two-year programme was established on the basis of the Crede CG III Ltd. (“Crede”) placing in
the total amount of £12.5 million (US$ 18.75 million) to be delivered to the Company in five tranches at 90 day
intervals. As at year end 2015, the Company reported available cash to be £6.4 million (US$ 9.6 million).
Entering the year, four of the five £2.5 million (US$ 3.75 million) tranches remained to be settled providing an
additional £10.0 million (US$ 15.0 million) during 2016. Given the 1 January 2016 cash position and scheduled
delivery of an addition £10.0 million (US$ 15.0 million) via the Crede placing, a total projected cash position of
£16.4 million (US$ 24.6 million) was available covering the two-year period of 2016 and 2017.
The budget to implement the aggressive two-year programme was estimated to require £13.3 million (US$ 20.0
million) leaving approximately £3.0 million (US$ 4.5 million) for coverage of the Group’s administrative costs
covering the two-year period. With a defined budget and funding commitments to cover the DFS programme,
the Company established a fast track plan to attain the DFS and implemented it in very early Q1 2016.
Two significant events occurred during 2016 which are now beginning to impact the compilation of the
aggressive DFS plan. Firstly, on 23 June 2016, the UK voted to exit the European Union. This resulted in a
substantial and rapid devaluation of the Pound Sterling reducing the cash available to the programme by 20%.
Secondly, shareholders opted to discontinue the final two Crede tranches totalling £5.0 million (US$ 7.5 million).
The combination of these two events has resulted in a shortfall of approximately £7.8 million (US$ 9 .8 million) for
completion of the DFS.
In response to these events, the Company has revisited all working relationships and initiated cost cutting
measures by utilising a larger component of qualified Russian companies, entered negotiations with Chinese
companies to reduce anticipated higher costs associated with western companies and undertaken substantial
portions of the DFS work internally under the direction of independent qualified organisations that are a part of
the DFS compilation plan. Presently, we will continue to advance the work on the DFS as aggressively as
possible and are identifying specific aspects of the DFS which are not as critical to the determination of the
economic viability of the project.
Financial Overview
The Company remained debt free throughout the period with cash reserves of US$ 8.2 million as at 31
December 2016.
In March 2016 and June 2016, the Company completed tranches 2 and 3 of the financing agreement entered
into with Crede CG III Ltd (“Crede”) in 14 December 2015 providing a further £5 million of funding. This is in
addition to the £2.5 million provided in December 2015.
As part of the Crede financing agreement the Company issued 17m warrants in December 2015 and a further
24.5 million warrants for tranche 2 in March 2016 and 48 million warrants for tranche 3 in June 2016. During the
period all 17 million warrants of tranche 1 and 10m warrants of tranche 2 were exercised leaving 62.5 million
warrants outstanding as at 31 December 2016. In accordance with financial reporting requirements, the fair
valuation of these remaining warrants as at 31 December 2016 is US$ 3.3 million which must be reported as a
financial liability at fair value through the profit and loss on the statement of financial position. After the year end,
the remaining 14m of tranche 2 warrants were exercised on 28 April 2017.
In total the Company has spent US$2.3 million on capital equipment during the period (US$0.6 million for the
same period in 2015) and US$3.5 million on exploration costs (19,785 metres drilled) (US$2.2 million in the
same period in 2015) (5,821 meters).
The Company incurred an operating loss of US$5.77 million (2015: US$0.7 million). Administration costs for the
year were US$3.8 million (2015: US$4.1 million) of which US$1.4 million was attributable to Net Foreign
Exchange losses. Employee costs, including Directors Fees, were US$1.1 million (2015: US$1.0 million) due to
the strengthening of the Russian Rouble and the addition of Mr. Gazzard to the Company’s board. There was no
financial income earned for the year (2015: US$2.2 million) as the Company had successfully completed the
financing agreement with Lanstead Capital L.P in October 2015.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
Key Non-Executive Board Additions
To assist us with meeting the new challenges that await us in 2017 and into the future, we brought two new non-
executive directors to the Board – Mr Paul Gazzard and Mr Ljupco Naumovski. These strategic appointments
add addition experience and further strengthen the Board providing an increased breadth and depth of
knowledge and experience which is essential in moving the Company forward.
On behalf of the board
Mr R Schafer
Non-Executive Chairman
16 June 2017
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY
With pleasure, I present a detailed and comprehensive technical summary of our activities completed during
year under review. As we began our move from an exploration based company into a preproduction scenario,
2016 was an extremely busy and successful year.
2016 – A Field Season of Records and First Accomplishments
The 2015 and 2016 field seasons were focused on resource expansion and the upgrade of Inferred resource to
that of Indicated at MKF, our largest deposit. In addition, engineering field work required for inclusion in the
planned operational design of the Kun-Manie nickel copper sulphide project was undertaken.
As a result of an early start to the field season (5 May 2016) and additional drilling capacity, the Company
completed a record number of drill meters (19,785 metres) than the originally planned 15,000 metres of drilling
at the MKF deposit. Infill and step out drilling as well as the acquisition of a bulk metallurgical sample were
successfully completed resulting in a substantial expansion and upgrade of the Mineral Resource Estimate
(“MRE”).
Globally, our accomplishments over the 2016 drill season included the following:
A record tonnage of 500 tonnes of supplies, fuel, materials and newly purchased earthmoving
equipment (including the newly purchased capital equipment) was transported over the Q1 2016 winter
ice road in preparation for the season.
Two newly purchased Caterpillar D9R dozers increased our total dozer fleet to five allowing for
construction of 13.3 kilometres of drill roads and 82 drill pads. The acquisition of a Caterpillar 320D2L
excavator substantially enhanced the ability for road construction in challenging areas of steep relief.
The purchase of a new Boart Longyear LF-90 diamond core rig doubled our drilling capacity bringing our
rig total to two. The LF-90 also provided us with the increased capability to drill deeper targets which
our single LF-70 was not capable of reaching.
During the 2016 season, a record total of 19,785 metres were drilled within 83 holes. This total was
nearly triple our previous historical high of 7,201.9 metres completed in 2012 and nearly 5,000 metres
more than planned for the 2016 season. Project wide drilled metres now total 58,084.3.
A total of 63 holes expanded the MKF known mineralised limits of the resource with ore intersections
averaging 0.73% nickel and 0.21% copper based on a COG of 0.2% nickel. Typical thicknesses of the
mineralisation averaged 13.3 metres per mineral interval. Using the newly defined COG of 0.4% nickel,
continuous mineable thicknesses were clearly identified in step out and infill drilling throughout the MKF
deposit. Having an average interval thickness of 10.5 metres and averaging 0.88% nickel and 0.24%
copper, these structures were determined to contain more than 75% of the MKF drill identified metal.
At the end of the drilling season, 31 October 2016, the length of MKF had been expanded by 40% (900
metres) bringing MKF’s total continuous length to 3,000 metres. At the eastern end, the final row of drill
holes contain ore grade mineralisation indicating that potential resource expansion remains to the east
possibly linking the MKF deposit to the Gorny deposit. Successful drilling in this area could result in
linking MKF and Gorny providing for a total continuous orebody length of more than 5,000 metres.
The current drill spacing along the entire 3,000 metre length of the MKF deposit has been completed at
a spacing suitable for the majority of the MKF JORC resource to be classified as Indicated resource
which is suitable for use in the determination of Mining Ore Reserve (“MOR”) along its entire drill defined
length.
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
A total of 21 drill holes were completed to acquire a bulk metallurgical sample totalling 7.4 tonnes for use
in the determination of process plant flow sheet design and engineering as well as the completion of
subsequent pyrometallurgical test work for the design of a flowsheet and the engineering of a furnace
for the construction of an owner operated concentrate treatment facility to generate a low grade matte.
Substantial resource expansion remains to be drill tested. This includes a 500 metre long segment
between the eastern limit of MKF and Gorny. Successful drilling would result in the merge of MKF and
Gorny creating a single deposit approaching nearly 5,000 metres in length. The second largest target is
located between IKEN and KUB and immediately to the east of KUB. The total untested target is nearly
3,500. Successful drilling of these targets would link IKEN and KUB creating a single deposit
approaching a total length of 5,500 metres.
Geophysical surveys were completed in the vicinity of the planned processing plant location for the
identification of subsurface water sources for use in processing of the ore and to identify potable water
sources to support a 1,000 staff operation. Specific water well locations were identified and are planned
for drilling during the 2017 field season.
Based out of the Kun-Manie site, a ground survey undertaken by a qualified road design engineer was
completed identifying the preferred of three routes proposed for the 320 kilometre long access road.
Begun in late 2016 and completed in Q2 2017, a four kilometre wide corridor from Kun-Manie to the
Ulak rail station located on the Baikal Amur (“BAM”) rail line has been topographically and hydrologically
mapped to further allow for design of the access road.
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
Substantial Mineral Resource Expansion
The JORC (2012) RPM independently derived MRE has been considerably increased over that reportable as of
1 January 2016 (compiled by SRK 8 April 2015). As of 10 February 2017, the MRE within the four largest
deposits located at Kun-Manie is now estimated to contain 101.3 million tonnes of mineralisation. Using a 0.4%
nickel only cut-off grade (“COG”), the average nickel equivalent grade is estimated to be 1.03% containing a total
of 1.04 million nickel equivalent tonnes have been drill defined in all JORC resource categories. The substantial
expansion of the MRE is the result of a combination of the 2015 and 2016 highly successful infill and step out
drill programmes completed on our largest deposit, MKF. Major increases to the MRE since 1 January 2016
include the following:
An increase of 22.5% in the total nickel equivalent tonnes from 854,300 tonnes to 1,046,900 tonnes has
been derived for all JORC resource categories. The average nickel equivalent grade has increased by
45% from 0.71% to 1.03%.
The combined Measured and Indicated JORC resource represents 80% (81.2 million tonnes) of the
global MRE. The total nickel equivalent tonnage for these resources has been increased by 118% from
383,200 tonnes to 836,300 tonnes. The average nickel equivalent grade of the Measured and Indicated
categories was increased by 43% from 0.72% to 1.03%. The Measured and Indicated JORC resource
is the source from which a MOR estimate and production schedule are defined.
The newly derived MRE using a 0.4% nickel COG, allows for determination of open pit and underground
production considerations and the optimisation of mine production based on a comparison of operating
profit per tonne of ore by mining method.
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
Current (10 February 2017) Kun-Manie Mineral Resource Estimate
The 10 February 2017 MRE is stated in accordance with JORC (2012) standards which are based on drill
identified mineral that has the potential to become a MOR. During 2016, the Company contracted RPM to
independently update Amur’s MRE for its four largest deposits at Kun-Manie for the determination of an MOR
that can be open pit and or underground mined. The updated MRE allows the Company to compile an
optimised a mine production plan and schedule including all drill information through year end 2016. This will
incorporate both open pit mining of near surface ores and mining subsequently transitioning into the
underground mining of deeper ores and ores located immediately adjacent the open pit production areas.
As a first step reporting MRE statements in compliance with JORC standards and as RPM is the company of
record for reporting MRE’s on behalf of Amur, RPM completed a JORC mandatory site visit in August 2016
during which a comprehensive audit of the Company’s field procedures, sample preparation methods, quality
control and analytical results were reviewed in detail. RPM confirmed that Amur utilises industry standard
procedures and exploration information is suitable for the compilation of JORC (2012) compliant resource
estimation.
The JORC 10 February 2017 MRE inventory exceeds 101 million resource tonnes averaging 1.03% nickel
equivalent grade. Untested expansion not included in the current MRE remains at MKF toward the Gorny
deposit, between the Ikenskoe / Sobolevsky (“IKEN”) and Kubuk (“KUB”) covering an untested length of 3,000
metres and to the east of Kubuk having a target length of 1.0 kilometre. By deposit and resource category, the
inventory is distributed as follows:
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
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AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
Key observations include the following:
The thicknesses of the MRE resource zones range from a minimum of 3.0 metres to more than 60
metres and represent mineable thicknesses for both open pit and underground production methods.
The global Kun-Manie MRE is now defined to be comprised of 101.3 million mineralised tonnes having a
nickel equivalent (“Ni Eq”) grade of 1.03%. Containing more than 1.0 million nickel equivalent tonnes,
the nickel equivalent grade has been increased by 38% from the 1 January 2016 MRE 0.74% Ni Eq
grade.
By commodity, the global average grade of nickel is 0.76% (an increase of 40% from 0.54%), copper is
0.20% (an increase of 33% from 0.15%), cobalt is 0.015%, platinum is 0.17 g/t and palladium is 0.18 g/t.
Approximately 85% of the metal value is attributable to the combination of nickel and copper. The
remaining 15% is attributable to cobalt, platinum and palladium. Minor gold and silver is also present
and have not been estimated or reported.
The Company focuses on drilling resources possessing a high probability of being converted to that of a
MOR. Presently, approximately 80% (81.2 million tonnes) is classified as Measured and Indicated
resource. Averaging 1.03% nickel equivalent, a total of 836,300 nickel equivalent tonnes are contained
within the Measured and Indicated resource which is targeted for MOR definition.
The majority of the resource increase is the result of the highly successful MKF drill programmes of
2015 and 2016. MKF now contains 60.9 million mineralised tonnes having an average 1.05% nickel
equivalent grade containing a total of 639,300 nickel equivalent tonnes. From 1 January 2016, the total
contained nickel equivalent tonnage (all resource categories) within MKF has been increased by 61%.
It is anticipated that the MKF deposit will be the deposit from which production will be initiated. This
deposit has been drilled at a spacing allowing for the majority of the mineralisation to be classified as
Indicated. The total Indicated MRE (convertible to MOR) for MKF now stands at 57.7 million tonnes of
ore averaging 1.05% nickel equivalent containing 602,500 nickel equivalent tonnes. MKF contains 69%
of the Measured and Indicated resource presently identified at Kun-Manie and its easternmost
mineralised limits are not yet fully defined.
- 13 -
AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
Mining Potential
Using the 10 May 2016 MRE for MKF, RPM conducted a mining trade off study intended to verify the Company’s
conclusions that open pit and underground mining would result in a more optimal economic result. In late 2016
and prior to completion of the 2016 drill season and MRE update of 10 February 2017, it was confirmed by RPM
that a combined open pit and underground operation was appropriate for consideration at MKF and that similar
results could be derived at IKEN and KUB. Using all resource categories including Inferred, RPM identified that
MKF could produce the following mining potential:
A potential open pit and underground diluted mineable reserve totaling 44.5 million tonnes averaging
0.75% nickel and 0.19% copper along the 2,100 metre long deposit model (excluding the 900 metre
extension identified by the 2016 drill results). The total tonnes of mined nickel were projected to be in
the order of 332,200 with copper totaling 83,500 recovered copper tonnes. Based on a COG of 0.2%
nickel, more than 87% of the total 2,100 metre long resource was considered to be mineable by the
combination of open pit and underground mining.
Open pit production from MKF would be derived from three small open pits extracting the near surface
ore within the western area of MKF. From these pits, production was projected to be 12.85 million ore
tonnes averaging 0.63% nickel and 0.18% copper per ore tonne. A total of 43.7 million tonnes of waste
resulted in a stripping ratio of 3.4 tonnes of waste per mined ore tonne. A total of 29% of production
would be derived by open pit mining.
Using an underground long hole retreat mining method and West Australia mining costs which are
anticipated to be substantially higher than Russian production costs, a total of 31.7 million tonnes of ore
were indicated for production and the average mined ore grades are projected to be in the order of
0.79% nickel and 0.19% copper. The underground production component from MKF was estimated to
represent 71% of the mining total.
The RPM mining trade of study on MKF represents a substantial upgrade over the Company’s
Preliminary Economic Analysis (“PEA”) wherein a total of 45.5 million tonnes of ore were projected to be
mined at an average grade of 0.53% nickel (approximately 241,000 nickel tonnes) and 0.15% copper
(approximately 69,300 tonnes). The newly defined RPM mining potential recovers an additional 91,000
tonnes of nickel (38% increase) and an additional 14,200 tonnes of copper (20% increase). The
additional metal is derived from increased mining grades as the PEA and RPM studies indicate nearly
the same projected mineable tonnage.
MKF Production
Parameters
PEA Study
(1 January 2016 MRE)
RPM Study
(10 May 2016 MRE)
Total mineable reserves
Total tonnes of mineable
nickel
Average nickel grade
Total tonnes of mineable
copper
Average copper grade
Underground production
Open pit production
45.5 million tonnes
241,000 tonnes
44.5 million tonnes
332,200 tonnes
0.53%
69,300 tonnes
0.75%
83,500 tonnes
0.15%
28.1 million tonnes
17.4 million tonnes
0.19%
31.7 million tonnes
12.9 million tonnes
- 14 -
AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
- 15 -
AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
The indicative results for the MKF mining trade off study are considered to be conservative. The RPM
analysis did not include any of the 2016 drill results which have substantially increased the resource size
and grade. In addition, the majority of the MKF resource is now considered to be Indicated by JORC
category and is considered to be suitable for inclusion in the estimation of the MOR. Finally, the RPM
analysis utilised West Australia mining costs and not Russian based unit costs which are substantially
lower and could further expand the mining potential by lowering the COG in the underground resource
category.
The RPM study confirms the Company’s conclusion that underground mining is likely viable and
represents a substantial basis for identification of higher grade ores suitable for generating greater
operating profits per ore tonne. The planned compilation of the MOR will include similar trade off
studies for the deposits of MKF, IKEN, and KUB. The newly defined models of 10 February 2017 will be
utilised for determination of the MOR based on audited operating costs.
Metallurgical Advances
During 2016, SGS completed bench scale test work on a series for samples from KUB and Flangovy to define
the final set of grade recovery curves for each of these two deposits at Kun-Manie. Results confirmed:
The comprehensive results confirmed that metallurgical recoveries increase with increasing grades at all
deposits. Not being optimised tests, the results were considered to be conservative but suitable for use
in the determination of potential recoveries.
As defined by SGS Minerals, recoveries generally decrease from west to east and vary by deposit due
to the nickel silica (which is unrecoverable nickel) content.
Globally, the grade recovery curves indicated a single concentrate would contain from 8.8% to 12.0%
combined nickel and copper. Nickel recoveries would vary from 61% to 83% with copper recoveries
varying from 77% to 91%. The recoveries are dependent on the grade of the ore delivered to the mill.
Higher grade nickel and copper ores display higher recoveries. Recoveries of by-product metal will
range from 50% to 65% for cobalt, platinum and palladium.
The MRE update indicates that higher grades will be mined than originally anticipated on 1 January
2016 which will have higher recoveries.
As bench scale test work is based on smaller samples and is often not fully optimised, the Company undertook
the first large scale metallurgical test of the MKF ores. Completed by Gipronickel Institute (“Gipro”), a subsidiary
of Norilsk Nickel, a 443.9 kilogramme bulk sample averaging 0.70% for nickel and 0.17% for copper was tested.
Results indicated the following:
Metallurgical recoveries of 80.6% for nickel, 83.8% for copper, 61.4% for cobalt, 59.6% for platinum,
82.3% for palladium, 63.7% for gold and 70.5% for silver were identified.
The Gipro results are more reflective of the actual production process.
The final concentrate grades were projected to be 8.58% for nickel, 2.10% for copper, 0.15% for cobalt,
1.26 g/t for platinum, 1.91 g/t for palladium, 0.6 g/t for gold, and 7.82 g/t for silver.
An improved mass pull of less than 7% was identified. The Gipro mass pull indicates that a total of
394,000 tonnes of concentrate will be generated from 6.0 million mined ore tonnes. This is a reduction
from the previously identified 420,000 tonnes of concentrate and could result in a potential savings to
the initial capital expenditure related to the construction of the concentrate treatment facility where a low
grade matte is to be produced. Additional reduction in the transport fleet may be possible as the total
concentrate tonnage is approximately 26,000 fewer tonnes than previously planned for transport from
the mine to our Ulak station along the BAM rail line.
- 16 -
AMUR MINERALS CORPORATION
CHIEF EXECUTIVE OFFICER'S OPERATIONAL SUMMARY (CONTINUED)
During 2016, a 7.4 tonne bulk metallurgical sample collected by core drilling was obtained for the next phase of
metallurgical test work. From this sample, multiple analyses will be conducted to determine the final flow sheet
design and engineering of the process plant. Metal recoveries and the composition of the concentrate will be
determined to allow for determination of the quality of the concentrate and its impact on any commercial off take
agreements that may be established. In addition, the pyrometallurgical characteristics of the concentrate must
be defined for use in the evaluation and design of a company owned furnace intended to generate a low grade
matte.
Hydrological Assessment
During 2016, the first phase of work was completed to identify subsurface water sources for use in the treatment
of ore during processing. Geophysical surveys were completed in the vicinity of the planned processing plant
location for the identification of subsurface water sources for use in processing of the ore and to identify potable
water sources to support a 1,000 staff operation. Specific water well locations were identified and are planned
for drilling during the 2017 field season. In addition, the acquisition of field data was completed during the winter
season to establish the amount of available water from the Maya River located to the south of the planned plant
location. Potable water sources will also be drilled during 2017 which will be required by site personnel once
operations are begun.
Access Road
During the 2016 field season, three previously identified access road routes were inspected in the field by a
qualified road engineer allowing for identification of the preferred access road route. Totalling approximately 320
kilometres in length, selection of the preferred preliminary route also included the identification of potential
sources of road construction materials. A four kilometre wide corridor centred on the anticipated route has been
topographically mapped including detailed information of river and stream drainages necessary for bridge and
water crossing design work.
Staged work is planned for the finalisation of the road route, its design and detailed cost to construct. The first
phase it the identification of the route followed by a field inspection wherein geological and hydrological hazards
will be identified allowing for final route designation and preliminary costing for capital expenditures and
operating costs. This work will be followed by the acquisition of geotechnical and hydrological data gathering
allowing for a final detailed design to be completed including the road and bridging requirements. The road will
be classified as a Technical Road (gravel surfaced) having an 8 to 10 metre operating surface. As this is a
Technical Road it will be owned and maintained by the Company.
This is an infrastructure project and therefore is considered to suitable for financing via the Far East and Baikal
Region Development Fund (“FEDF”). Such funding of similar infrastructure projects has historically been
implemented through low interest loans. It is also important to note that the Company is also considering the
use of UK based bridges and should the total cost of the road (or major sections) exceed 20%, additional low
interest funding may also be available via the UK Export Finance and Department of International Trade
(“UKEF”). The Company is in discussions with FEDF and the UKEF regarding potential funding assistance.
Outlook
The 2017 field programme includes 10,000 metres of planned resource drilling at KUB and 5,000 metres of
planned resource drilling at IKEN. Sufficient supplies for 20,000 metres have been delivered to the project site.
The objectives at KUB is the conversion of a 10.9 million tonne Inferred resource block to Indicated, step drilling
and the acquisition of metallurgical bulk sample. For IKEN the it is planned undertake step out drilling in the
direction of KUB and to also collect a bulk metallurgical sample.
Mr R Young
Chief Executive Officer
16 June 2017
- 17 -
AMUR MINERALS CORPORATION
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
The Directors present their annual report and financial statements for the year ended 31 December 2016.
Principal activities
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 set out on page 26.
No ordinary dividends were paid. The Directors do not recommend payment of a final dividend.
Directors
The Directors who held office during the year and up to the date of signature of the financial statements were as
follows:
Mr B Savage
Mr R Young
Mr R Schafer
Mr P Gazzard
Mr L Naumovski
(Appointed 19 September 2016)
(Appointed 2 January 2017)
Details of Directors remuneration and other interests are detailed in note 21.
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 2016 was 10.23p.
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-Manie.
The production licence expires on 1 July 2035.
The Directors have prepared cash flow projections to December 2018 which indicates that the Group has
sufficient funds to cover its recurring expenditure, budgeted exploration programmes and capital commitments.
Should any unforeseen cash demands arise the Directors consider that further funds could be raised or action
could be taken to reduce the cost base in a timely fashion. The Directors therefore consider that it is appropriate
to prepare the financial statements on a going concern basis.
Donations
The Group has not made any charitable or political donations during the year (2015: US$nil).
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 22. The key operating risks affecting the Group are
set out on pages 21 - 23.
- 18 -
AMUR MINERALS CORPORATION
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
Auditors
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.
Statement of disclosure to auditors
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit
information of which the Company’s auditors are unaware. Additionally, the Directors individually have taken all
the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant
audit information and to establish that the Company’s auditors are aware of that information.
Approved by the Board of Directors and signed on behalf of the Board by:
Mr R Schafer
Director
16 June 2017
- 19 -
AMUR MINERALS CORPORATION
STATEMENT OF DIRECTORS' RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2016
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.
Mr B Savage
Director
16 June 2017
Mr R Young
Director
16 June 2017
- 20 -
AMUR MINERALS CORPORATION
OPERATING RISKS AND UNCERTAINTIES
Set out below are the key operating risks and uncertainties affecting the Group.
The Group’s licences
In May 2015 the Russian Prime Minister approved the Company’s ‘Detailed Exploration and Mine Production
Licence’ for its Kun-Manie 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-Manie the rights to
recover all value from the mineral defined to be present at Kun-Manie.
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.
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.
- 21 -
AMUR MINERALS CORPORATION
OPERATING RISKS AND UNCERTAINTIES (CONTINUED)
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 Principles standards with regard to its monitoring and maintenance of
environmental protection. Equator Principles is a risk management framework, widely adopted by financial
institutions, for determining, assessing and managing environmental and social risk in projects. 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.
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 forecast price for nickel is $8.00 per pound and is
$2.85 per pound for copper. 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.
- 22 -
AMUR MINERALS CORPORATION
OPERATING RISKS AND UNCERTAINTIES (CONTINUED)
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 utilises 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.
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 fuelled 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.
- 23 -
AMUR MINERALS CORPORATION
INDEPENDENT AUDITORS' REPORT
TO THE DIRECTORS OF AMUR MINERALS CORPORATION
We have audited the financial statements of Amur Mineral Corporation for the year ended 31 December 2016
which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
This report is made solely to the Company’s Directors, as a body, in accordance with the terms of our
engagement. 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.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to
the Company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the
financial statements. In addition, we read all the financial and non-financial information in financial statements
to identify material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s affairs as at 31 December
2016 and of the Group’s loss for the year then ended; and
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union.
BDO LLP
Chartered Accountants
55 Baker Street
London
United Kingdom
W1U 7EU
19 June 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
- 24 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Notes
2016
US$'000
2015
US$'000
5
6
7
8
11
13
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Current assets
Inventories
Other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Derivative financial liabilities
Net current assets
Non-current liabilities
Rehabilitation provision
Total liabilities
Net assets
Equity
Share capital
Share premium
Foreign currency translation reserve
Share options reserve
Retained deficit
14,15
14
14
14
14
Total equity
17,167
2,736
19,903
756
768
8,199
9,723
29,626
416
3,295
3,711
6,012
166
3,877
25,749
60,293
4,904
(12,427)
3,575
(30,596)
25,749
11,513
649
12,162
512
1,230
9,613
11,355
23,517
539
370
909
10,446
139
1,048
22,469
54,093
5,648
(15,310)
3,907
(25,869)
22,469
The financial statements were approved by the Board of directors and authorised for issue on 16 June 2017
and were signed on its behalf by:
Mr B Savage
Director
Mr R Young
Director
The accompanying notes on pages 30 - 56 form an integral part of these financial statements.
- 25 -
AMUR MINERALS CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016
Administrative expenses
Operating loss
Finance income
Fair value movements on derivative financial
instruments
Loss before taxation
Income tax expense
Loss for the year attributable to owners of
the parent
Notes
17
18
13,10
19
2016
US$'000
2015
US$'000
(3,768)
(3,768)
4
(2,007)
(5,771)
-
(5,771)
(4,114)
(4,114)
2,224
1,184
(706)
-
(706)
Loss per share
Basic and diluted
20
US$(0.011)
US$(0.002)
The items in the above statement are derived from continuing operations.
The accompanying notes on pages 30 - 56 form an integral part of these financial statements.
- 26 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Loss for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Total other comprehensive income for the
year
Total comprehensive income for the year
attributable to owners of the parent
2016
US$'000
(5,771)
2,883
2,883
(2,888)
2015
US$'000
(706)
(3,463)
(3,463)
(4,169)
The accompanying notes on pages 30 - 56 form an integral part of these financial statements.
- 27 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes
US$'000
US$'000
US$'000
US$'000
2016
2015
Cash flows from operating activities
Payments to suppliers and employees
Net cash outflow from operating
activities
Cash flow from investing activities
Payments for exploration expenditure
Payments for property, plant and
equipment
Interest received
(2,210)
(3,090)
(2,210)
(3,090)
(2,863)
(1,670)
4
(2,141)
(610)
-
Net cash used in investing activities
(4,529)
(2,751)
Cash flow from financing activities
Proceeds from issue of shares (net of
issue costs)
Cash received from settlement of
derivative financial asset
Net cash generated from financing
activities
Net (decrease)/increase in cash and
cash equivalents
Cash and cash equivalents at beginning of
year
Effect of foreign exchange rates
Cash and cash equivalents at end of year
6,589
-
3,618
10,789
6,589
(150)
9,613
(1,264)
8,199
14,407
8,566
1,389
(342)
9,613
The accompanying notes on pages 30 - 56 form an integral part of these financial statements.
- 28 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Share
capital
Share
premium
US$'000 US$'000
Share
options
reserve
Foreign
currency
translation
reserve
US$'000 US$'000 US$'000
Retained
deficit
Total
US$'000
Balance at 1 January 2015
48,949
6,473
(11,847)
2,306
(25,163)
20,718
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of share capital
Equity settled share based payments
Costs associated with issue of share capital
Exercise of options
-
-
-
4,887
-
-
257
-
-
-
-
-
(825)
-
-
(3,463)
(3,463)
-
-
-
-
-
-
-
-
1,691
-
(90)
(706)
-
(706)
-
-
-
-
(706)
(3,463)
(4,169)
4,887
1,691
(825)
167
Balance at 31 December 2015
54,093
5,648
(15,310)
3,907
(25,869)
22,469
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Issue of share capital
Equity settled share based payments
Costs associated with issue of share capital
Exercise of options
Options expired
-
-
-
6,185
-
-
15
-
-
-
-
-
-
(744)
-
-
-
2,883
2,883
-
-
-
-
-
-
-
-
-
712
-
(14)
(1,030)
(5,771)
-
(5,771)
-
-
-
14
1,030
(5,771)
2,883
(2,888)
6,185
712
(744)
15
-
Balance at 31 December 2016
60,293
4,904
(12,427)
3,575
(30,596)
25,749
The accompanying notes on pages 30 - 56 form an integral part of these financial statements.
- 29 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
1
General information
Amur Minerals Corporation is incorporated under the British Virgin Islands Business Companies Act 2004.
The registered office is Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands.
The Company and its subsidiaries (“Group”) locates, evaluates, acquires, explores and develops mineral
properties and projects in the Russian Far East.
The Company is the 100% owner of Irosta Trading Limited (“Irosta”), an investment holding company
incorporated and registered in Cyprus. Irosta holds 100% of the shares in ZAO Kun-Manie (“Kun-Manie”),
an exploration and mining company incorporated and registered in Russia, which holds the Group’s mineral
licences.
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-Manie, 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
Significant accounting policies
2.1 Basis of preparation
The financial statements have been presented in thousands of United States Dollars and prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
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 note 3.
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.
- 30 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
2
Significant accounting policies
(Continued)
2.2 Changes in accounting policies and disclosures
There were no new standards or interpretations effective for the first time for periods beginning on or after 1
January 2016 that had a significant effect on the Goup’s financial statements.
A number of new standards, amendments and interpretations are effective for annual period beginning after
1 January 2016, and have not yet been applied in preparing these consolidated financial statements. None
of these is expected to have a significant effect on the consolidated financial statements of the Group,
except for:
for
financial assets: amortised cost,
IFRS 9 'Financial instruments' addresses the classification, measurement and recognition of financial assets
and financial liabilities. IFRS 9 retains but simplifies the mixed measurement model and establishes three
through other
primary measurement categories
comprehensive income and fair value through profit or loss. The basis of classification depends on the
entity's business model and contractual cash flow characteristics of the financial asset. It replaces the
guidance in IAS 39 that relates to the classification and measurement of financial instruments and introduces
a new expected credit losses model that replaces the incurred loss impairment model used under IAS 39.
For financial liabilities there are no changes to classification and measurement except for the recognition of
changes in own credit risk in other comprehensive income, for liabilities designated at fair value through
profit or loss. The standard is effective for accounting periods beginning on or after 1 January 2018. The
Group is yet to assess IFRS 9's full impact.
fair value
The Group have also considered the impact of IFRS 15 'Revenue from contracts with customers' and IFRS
16 'Leases' which are effective for periods beginning on or after 1 January 2017 and 1 January 2019
respectively, and does not consider these standards to have a significant impact on the Group on the basis
that it does not yet generate revenue and does not have material operating leases.
2.3 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-Manie. The production licence expires on 1 July 2035.
The Directors have prepared cash flow projections to December 2018 which indicates that the Group has
sufficient funds to cover its recurring expenditure, budgeted exploration programmes and capital
commitments. Should any unforeseen cash demands arise the Directors consider that further funds could be
raised or action could be taken to reduce the cost base in a timely fashion. The Directors therefore consider
that it is appropriate to prepare the financial statements on a going concern basis.
- 31 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
2
Significant accounting policies
(Continued)
2.4 Basis of consolidation
The consolidated financial statements of the Group include the accounts of Amur Minerals Corporation and
its subsidiaries. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date on which control ceases.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset
transferred.
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.
Accounting policies of other subsidiaries are consistent with those applied by the Company and the Group.
2.5 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 (US$), which is the functional and
presentation currency of the Company. The functional currency of the Group’s operating subsidiary is the
Russian Rouble (RUB).
The exchange rate on 31 December 2016 was US$1:RUB 61.23 (2015: US$1:RUB 73.29), with the average
rates applied to transactions during the year of US$1:RUB 66.91 (2015: US$1:RUB 61.13).
In preparing the financial statement of the individual entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the date of the
transaction. At each reporting date, monetary items denominated in foreign currencies are retranslated at the
rates prevailing on the reporting date.
Exchange differences arising on the settlement and on the retranslation of monetary items are included in
profit or loss for the period.
On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to
those when the transactions took place. All assets and liabilities of overseas operations are translated at the
rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at
opening rate and the results of overseas operations at actual rate are recognised directly in equity (the
"foreign exchange reserve").
Exchange differences recognised in profit or loss of group entities' separate financial statements on the
translation of long-term monetary items forming part of the Group's net investment in the overseas operation
concerned are reclassified to other comprehensive income and accumulated in the foreign exchange
reserve on consolidation.
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 income
statement as part of the profit or loss on disposal.
- 32 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
2
Significant accounting policies
(Continued)
2.6 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.
2.7 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 expenses
as well as administrative costs closely associated with finding specific mineral resources such as
remuneration of employees directly evolved in evaluating technical feasibility or depreciation of property,
plant and equipment used for the evaluation and exploration works.
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 'Exploration for and evaluation of mineral resources' 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:
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.
- 33 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
2
Significant accounting policies
(Continued)
2.8 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of
depreciation and any impairment losses.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost of each
asset on a straight-line basis over its expected useful life as follows:
Office and computer equipment
Heavy machinery
Motor vehicles
3 to 8 years
5 to 7 years
2 years
The costs of maintenance, repairs and replacement of minor items of property, plant and equipment are
charged to profit or loss for the period.
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely independent cash inflows (CGUs). Prior
impairments are reviewed for possible reversal at each reporting date.
2.9 Inventory
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.
2.10 Cash and cash equivalents
Cash and cash equivalents 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.
2.11 Financial assets
The Group classifies its financial assets as loans and receivables and at fair value through profit or loss. The
Group has not classified any of its assets as held to maturity or available for sale.
Financial assets at fair value through profit or loss
This category comprises derivative financial assets carried at fair value with changes in fair value recognised
in the consolidated statement of comprehensive income within the finance income or expense line. Other
than derivative financial instruments which are not designated as hedging instruments, the Group does not
have any assets held for trading nor does it voluntary classify any financial assets as being at fair value
through profit or loss.
Loans and receivables
Loans and other receivables 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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially all the risks and rewards of ownership to another
entity.
- 34 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
2
Significant accounting policies
(Continued)
2.12 Financial liabilities
The Group classifies its financial liabilities into one of two categories discussed blow, depending on the
purpose for which the liability was acquired.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss comprise 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 income statement. 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
Other financial liabilities comprise 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the Group's obligations are discharged,
cancelled, or they expire.
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 (notes 10
and 13). The fair value hierarchy has the following levels:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
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).
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.
2.13 Equity instruments
Financial instruments issued by the Company 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.
Equity instruments issued by the Company are recorded at the proceeds received. Costs which are directly
attributable to the issue of new shares, net of any taxes, are set off against share premium.
- 35 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
2
Significant accounting policies
(Continued)
2.14 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance
sheet date in the countries where the Company and its subsidiaries operate. 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
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.
2.15 Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of
grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-
market vesting conditions are taken into account by adjusting the number of equity instruments expected to
vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions
are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a
charge is made irrespective of whether market vesting conditions are satisfied. The cumulative expense is
not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not
satisfied.
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 16.
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.
2.16 Leases
Where substantially all of the risks and rewards incidental to ownership of a lease 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.
- 36 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
3
Critical accounting estimates 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:
Critical judgements
Recoverability of the exploration and evaluation assets
The most significant judgement 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.
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.
Key sources of estimation uncertainty
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 16 to the accounts.
Valuation of derivative financial liabilities
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 13. 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.
- 37 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
4
Segmental 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. All Group's non-current assets are located 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 2016
Corporate
(Unallocated)
US$'000
Kun-Manie
Total
US$'000
US$'000
Administrative expenses
Finance income
Fair value gain on derivative financial asset
(3,406)
4
(2,007)
(362)
-
-
(3,768)
4
(2,007)
Loss for the year
(5,409)
(362)
(5,771)
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Segment assets
Trade and other payables
Derivative financial liabilities
Rehabilitation provision
-
-
27
8,054
8,081
(206)
(3,295)
-
19,903
756
741
145
19,903
756
768
8,199
21,545
29,626
(210)
-
(166)
(416)
(3,295)
(166)
Segment liabilities
(3,501)
(376)
(3,877)
Segment net assets
4,580
21,169
25,749
Capital expenditure
Property, plant and equipment
Exploration and evaluation
-
-
2,344
3,487
2,344
3,487
- 38 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
4
Segmental reporting
(Continued)
Reportable information as at 31 December 2015
Administrative expenses
Finance income
Fair value gain on derivative financial asset
Loss for the year
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Segment assets
Trade and other payables
Derivative financial liabilities
Rehabilitation provision
Segment liabilities
Corporate
(Unallocated)
US$'000
Kun-Manie
Total
US$'000
US$'000
(3,915)
2,224
1,184
(507)
-
-
75
8,261
8,336
(262)
(370)
-
(632)
(199)
-
-
(199)
12,162
512
1,155
1,352
(4,114)
2,224
1,184
(706)
12,162
512
1,230
9,613
15,181
23,517
(277)
-
(139)
(539)
(370)
(139)
(416)
(1,048)
Segment net assets
7,704
14,765
22,469
Capital expenditure:
Property, plant and equipment
Exploration and evaluation
-
-
569
2,192
569
2,192
The accounting policies of the reportable segment are the same as the Group’s accounting policies
described in note 2.
Segment loss represents the loss incurred by the segment without allocation of central administration costs
and Directors’ salaries and finance income or costs. This is the measure reported to the chief operating
decision makers for the purposes of resource allocation and assessment of segment performance.
- 39 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
5
Exploration and evaluation assets
Exploration and evaluation assets
US$'000
Cost
At 1 January 2015
Additions
Foreign currency adjustments
At 31 December 2015
Additions
Foreign currency adjustments
At 31 December 2016
Accumulated depreciation
At 31 December 2015
Charge for the year
Foreign currency adjustments
At 31 December 2016
Carrying amount
At 31 December 2016
At 31 December 2015
At 1 January 2015
11,783
2,192
(2,462)
11,513
3,487
2,167
17,167
-
-
-
-
17,167
11,513
11,783
Exploration and evaluation assets relate to the Group’s mineral exploration licence, Kun-Manie and include
the following costs capitalised during the year:
Wages and salaries of US$1,114,000 (2015: US$721,000)
Depreciation of US$550,000 (2015: US$114,000)
Share based payment of US$138,000 (2015: US$439,000)
Mining licence costs US$nil (2015: $323,000) for the one-off payment for the grant of the mining
licence
- 40 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
6
Property, plant and equipment
Office and
computer
equipment
US$'000
Heavy
machinery
Motor
vehicles
Total
US$'000
US$'000
US$'000
1,021
569
(235)
1,355
2,344
485
4,184
769
114
(177)
706
552
190
1,448
790
362
(182)
970
445
233
220
194
(51)
363
1,875
246
1,648
2,484
170
43
(39)
174
325
64
563
590
69
(136)
523
223
124
870
778
447
200
1,921
2,736
189
50
649
252
2016
US$'000
2015
US$'000
666
90
756
452
60
512
Cost
At 1 January 2015
Additions
Foreign currency adjustments
At 31 December 2015
Additions
Foreign currency adjustments
At 31 December 2016
Accumulated depreciation and impairment
At 1 January 2015
Charge for the year
Foreign currency adjustments
At 31 December 2015
Charge for the year
Foreign currency adjustments
At 31 December 2016
Carrying amount
At 31 December 2016
At 31 December 2015
At 1 January 2015
7
Inventories
Other materials and supplies
Fuel
11
13
(2)
22
24
6
52
9
2
(2)
9
4
2
15
37
13
2
- 41 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
8
Other receivables
Other receivables
VAT recoverable
Prepayments
Due within one year
2016
US$'000
-
224
544
2015
US$'000
45
267
918
768
1,230
Other receivables are classified as loans and receivables and are therefore measured at amortised cost.
Prepayments represent prepayment and annual fees paid in advance under the normal course of
business.
9
Financial assets - credit risk
The principle financials assets of the Group are bank balances and other receivables. The credit risk on
liquid funds is limited because the counterparties are banks with credit ratings assigned by international
credit rating agencies.
The Group’s maximum exposure to credit risk by class of individual financial instrument is shown in the
table below:
Other debtors
Cash and cash equivalents
Carrying value
Maximum exposure
2016
US$'000
2015
US$'000
2016
US$'000
2015
US$'000
-
8,199
8,199
45
9,613
9,658
-
8,199
8,199
45
9,613
9,658
The fair values of financial assets are considered to approximate to their book values due to their short term
nature.
- 42 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
10 Derivative financial asset
In July 2013 the Company entered into financing arrangements with Lanstead Capital L.P. ("Lanstead")
which included an equity swap price mechanism for 75% of shares issues. All of the voting rights were
transferred on the date of the transition with consideration received over a 24 month period. The actual
consideration receivable varied to the extent that the actual share price was greater or lower than the
reference point. As the consideration was variable depending upon the Company's share price, the
agreements were treated as a derivative financial asset and re-valued through the income statement with
reference to the Company's share price.
In October 2015, the Company completed the Lanstead financing agreement. This provided 24 settlements
for a total of US$11.2m. In 2015 21 settlements were finalised totalling US$10.8m as shown in the table
below:
Level 2 fair value measurements
Lanstead instruments were deemed to be Level 2 derivative financial assets under the fair value hierarchy
as fair value measures of these instruments are based on observable inputs derived from prices.
The movement in the fair values is shown in the table below:
At 1 January
Repayment
Finance income
Fair value movement
At 31 December
11 Trade and other payables
Trade payables
Accruals
Social security and other taxation
Other payables
Notes
18
Derivative financial asset
2015
US$'000
7,381
(10,789)
2,224
1,184
2016
US$'000
-
-
-
-
-
-
Due within one year
2016
US$'000
261
62
49
44
2015
US$'000
328
74
-
137
416
539
- 43 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
12 Financial liabilities - Liquidity risk
The Group has todate funded its operations through equity and seeks to manage financial risk to ensure
sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
Management monitors rolling cash flow forecasts of the Group and Company to ensure that the sufficient
funds are available to meet the Group’s and Company’s commitments. The review consists of considering
the liquidity of local markets, projecting cash flows and the level of liquid assets to meet these. Management
raises additional capital financing when the review indicates this to be necessary.
The contractual maturities of the Group’s financial liabilities are shown in the table below:
At 31 December 2015
Trade and other payables
At 31 December 2016
Trade and other payables
Carrying amount Contractual cash
flows
US$'000
US$'000
6 months of less
US$'000
539
539
367
367
539
539
367
367
539
539
367
367
- 44 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
13 Derivative financial liabilities
During the year the Company granted 72,586,729 new warrants (2015: 17,045,455) to Crede CG III Limited
at a subscription price between 9.945 pence and 5.07 pence (2015: 14.3 pence) as part of an equity
subscription agreement entered into on 14 December 2015 (note 15).
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 highest subscription price of the remaining outstanding warrants.
The movement in warrants during the year has been as follows:
At 1 January
New issue of warrants
Exercise of warrants
At 31 December
2016
Number
17,045,455
72,586,729
(27,045,455)
2015
Number
-
17,045,455
-
62,586,729
17,045,455
As the warrants are exchangeable into variable number of shares they are accounted for as derivative
financial liability at fair value through profit or loss. 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 (pence)
Expected volatility
Option life (years)
Expected dividends
Risk free rate
2016
10.23
121%
2.50
-
0.11%
2015
7.78
85%
4.96
-
1.38%
- 45 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
13 Derivative financial liabilities
(Continued)
Level 3 fair value measurements
Warrants instruments have been deemed to be Level 3 liabilities under the fair value hierarchy as fair value
measures of these liabilities are not based on observable market data.
The movement in their fair values is shown in the table below:
At 1 January
New issue of warrants
Fair value movements recognised through profit or loss
Exercise of warrants
At 31 December
Derivative financial liabilities
2015
US$'000
-
370
-
-
2016
US$'000
370
1,630
2,007
(712)
3,295
370
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.
14 Reserves
Group reserves comprise the following:
Share capital
Amounts subscribed for share capital at proceeds received (note 15).
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.
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$.
Share options reserve
The balance held in the share options reserve relates to the fair value of the share options that have been
charged to the profit or loss since adoption of IFRS 2 'Share-based payment'.
Retained deficit
Cumulative net gains and losses recognised in the income statement and the statement of other
comprehensive income less any amounts reflected directly in other reserves.
- 46 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
15 Share capital
Ordinary share capital
Authorised
Ordinary shares of no par value
Issued and fully paid
594,683,617 (2015: 460,250,162) ordinary shares of no par value
Reconciliation of movements during the year:
At 1 January 2015
Service providers
Employee options
Crede CG III Ltd - issue of equity
At 31 December 2015
Crede CG III Ltd - warrants conversion
Crede CG III Ltd - issue of equity
Crede CG III Ltd - warrants conversion
Crede CG III Ltd - issue of equity
Service providers
2016
Number
2015
Number
1,000,000,000
1,000,000,000
2016
US$'000
2015
US$'000
60,293
54,093
Number
US$'000
431,151,334
48,949
5,395,155
976,400
22,727,273
1,095
257
3,792
460,250,162
54,093
22,033,235
32,679,739
15,367,916
64,102,565
250,000
370
2,711
342
2,762
15
(f)
(g)
(h)
(a)
(b)
(c)
(d)
(e)
At 31 December 2016
594,683,617
60,293
(a) 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.
(b) 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 (US$2.7 million) before expenses. The Company also issued warrants over 24,509,805
ordinary shares.
(c) On 19 May 2016, the Company, pursuant to the subscription agreement entered into with Crede CG III
Ltd on 14 December 2015, converted all 10,000,000 warrants held by Crede using the Black-Scholes
valuation method applicable to the agreement, for 15,367,916 new Ordinary Shares.
(d) 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 (US$2.8 million) before expenses. The Company also issued warrants over 48,076,924
ordinary shares.
- 47 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
15 Share capital
2016
(Continued)
2015
(e) On 8 December 2016, the Company raised £11,700 (US$14,762) through the issue of 250,000 new
Ordinary Shares to Jett Capital Advisors LLC, following the exercise of options at an exercise price of 4.68
pence per share.
(f) On the 7 January 2015 and 27 July 2015, the Company raised £311,000 (US$470,000) and £410,000
(US$625,000) respectively through the issue of 3 million new shares at a placing price of 10.25p per share
and 2.4 million new shares at a placing price of 17p per share respectively to the Board of Directors,
Executive staff and other service providers in lieu of compensation for services provided.
(g) On 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.
(h) 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.
16 Share-based payment transactions
Options granted
Number of share options Weighted average exercise
Outstanding at 1 January
Granted
Exercised
Expired
2016
2015
39,577,918
2,903,469
(250,000)
(9,570,000)
27,265,500
13,288,818
(976,400)
-
Outstanding at 31 December
32,661,387
39,577,918
price
2016
(pence)
15.40
6.20
4.68
12.68
15.38
2015
(pence)
10.20
26.25
11.00
-
15.40
Exercisable at 31 December
32,661,387
30,491,433
12.40
12.40
The weighted average share price at the date of exercise for share options exercised during the year
was 6 pence (2015 - 9 pence).
The options outstanding at 31 December 2016 had an exercise price ranging from 4.68 pence to 26.25
pence, and a remaining contractual life of 2.3 - 4.5 years.
- 48 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
16 Share-based payment transactions
(Continued)
During 2016, 980,392 options were granted on 17 March 2016 and 1,923,077 options were granted on 20
June 2016 to Jett Capital Advisors LLC, in lieu of services provided. The fair value of the options on the
measurement date was US$107,573 and US$109,560 respectively, measured by reference to the fair value
of services received.
During 2015, 13,288,818 options were granted to key management and personnel. The weighted average
fair values of the options on the measurement date was US$1,691,382. Fair value was measured using
Black-Scholes Model.
Inputs were as follows:
Weighted average share price (pence)
Weighted average exercise price (pence)
Expected volatility
Expected life (years)
Risk free rate
2016
2015
-
-
-
-
-
16
26.25
97%
5
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$712,240 (2015: US$1,578,000), out of which US$137,532 (2015:
US$439,000) was capitalised within Exploration and evaluation assets (note 5), and US$217,132 (2015:
US$370,000) recognised in equity as costs directly associated with issue of equity.
Share for services
During 2016, no equity instruments other than warrants and option were granted.
During 2015, 5,395,155 of equity instruments were granted as consideration for services received. The
value of shares issued at the measurement date was US$1,096,000.
- 49 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
17 Operating loss
Operating loss for the year is stated after charging:
Employee costs, including Directors' fees
Net foreign exchange losses
Fees payable to the Company's auditors for the audit of the Group's
financial statements
Depreciation of property, plant and equipment
Share-based payments (note 16)
2016
US$'000
2015
US$'000
1,112
1,357
89
2
358
1,023
13
89
-
1,139
The average number of employees for the Group for the period to 31 December 2016 was 49 (2015: 40
employees).
18 Finance income
Interest income
Bank deposits
Finance income on Lanstead swap arrangement
Total interest income
Exchange differences
Notes
10
2016
US$'000
2015
US$'000
4
-
4
-
4
-
2,134
2,134
90
2,224
19 Income tax expense
Current tax - BVI corporation tax
Current tax - Russian corporation tax
Continuing operations
2016
US$'000
-
-
2015
US$'000
-
-
-
-
- 50 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
19 Income tax expense
(Continued)
The charge for the year can be reconciled to the loss per the income statement as follows:
Loss before taxation
Expected tax charge based on the BVI corporation tax rate of 0%
Expenses not deductible in determining taxable profit
Income not taxable
Utilisation of tax losses not previously recognised
Unutilised tax losses carried forward
Effect of overseas tax rates
Tax charge for the year
2016
US$'000
2015
US$'000
(5,771)
(706)
-
450
(198)
(213)
-
(39)
-
-
412
(534)
-
206
(84)
-
During the exploration and development stages, the Group will accumulate tax losses which may be
carried forward. As of 31 December 2016, the subsidiary in Russia had tax losses carried forward of:
Tax losses carried forward
Potential deferred tax impact at the standard
rate of corporation tax in Russia of 20%
2016
US$'000
2015
US$'000
8,241
7,884
1,648
1,577
The tax losses of the subsidiary in Russia are available for use over a 10-year period. The total available
Russian subsidiary tax losses, translated to US Dollars at the rate prevailing at the reporting date, are as
follows:
Date tax losses available to:
31 December 2021
31 December 2022
31 December 2023
31 December 2024
31 December 2025
Available tax
losses
1,184
462
897
4,667
1,031
8,241
On 23 May 2016, certain tax incentives for regional investment projects in excess of US$5m were
introduced in Russia. Although assessed on project by project basis, this could reduce the Group’s future
regional profit tax to 0% - 10% for the first 10 years of production.
- 51 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
20 Loss per share
Basic and diluted loss per share are calculated and set out below. The effects of warrants and share
options outstanding at the year ends are anti-dilutive and the total of 95.3 million (2015: 56.6 million) of
potential ordinary shares have therefore been excluded from the following calculations:
Number of shares
Weighted average number of ordinary shares used in the calculation of
basic earnings per share
2016
US$'000
2015
US$'000
547,940,724
436,576,884
Net loss for the year from continued operations attributable to equity
shareholders
(5,771)
(706)
Loss per share for continuing operations
Basic and diluted earnings per share
US$(0.011)
US$(0.002)
- 52 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
21 Directors' remuneration
The aggregate remuneration of the Directors of the Company was as follows:
Executive Directors
Robin Young
Non-Executive Directors
Robert Schafer
Brian Savage
Paul Gazzard
Salaries
US$'000
Fees
US$'000
2016
Total
US$'000
Salaries
US$'000
Fees
US$'000
2015
Total
US$'000
316
-
-
-
-
61
86
13
316
297
61
86
13
-
-
-
-
57
49
-
297
57
49
-
316
160
476
297
106
403
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 2015
Additions
At 31 December 2015
Additions
At 31 December 2016
Options held
Exercise
price
£0.12675
(US$0.16)
Exercise
dates
18.04.11-
18.04.16
£0.087
(US$0.10)
23.04.13-
23.04.18
£0.2625
(US$0.32)
27.07.15-
27.07.20
Robin
Young
1,771,336
-
Robert
Schafer
250,622
-
Brian
Savage
181,383
-
Paul
Gazzard
-
-
1,771,336
-
250,622
-
181,383
-
1,771,336
250,622
181,383
-
-
-
Robin
Young
Robert
Schafer
Brian
Savage
Paul
Gazzard
3,600,000
2,400,000
1,600,000
7,800,000
1,950,000
1,950,000
3,301,000
748,000
635,000
At 1 January 2016
14,701,000
5,098,000
4,185,000
Options expired / lapsed
Options granted
£0.12675
(US$0.16)
£0.2625
(US$0.32)
18.04.11-
18.04.16
19.09.16-
27.07.20
(3,600,000)
(2,400,000) (1,600,000)
-
-
-
338,000
At 31 December 2016
11,101,000
2,698,000
2,585,000
338,000
US$ exercise prices are shown for indicative purposes only, calculated at 31 December 2016 exchange rates.
- 53 -
-
-
-
-
-
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
22 Financial and capital risk management
The Group is exposed to risks that arise from its use of financial instruments and capital management.
The main purpose of financial instruments is to raise and utilise finance in the Group’s operations.
The main risks arising from the Group’s financial instruments are credit risk (note 9), liquidity risk (note 12),
interest risk, and currency risk.
The Directors review and agree policies for managing these risks and these are summarised below.
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 2016 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 2015.
The Group is exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with
banks. The cash balances maintained by the Group are managed in order to ensure that the maximum
level of interest is received for the available funds but without affecting working capital flexibility.
The Group is not currently exposed to cash flow interest rate risk on borrowings as it has no debt or fixed
rate finance leases. No subsidiary of the Group is permitted to enter into any borrowing facility or lease
agreement without the Company’s prior consent.
Currency risk
The Group undertakes certain transactions denominated in foreign currencies hence exposures to
exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy
parameters by holding bank deposits in Russian Roubles, US Dollars and Pound Sterling (GBP).
Management reviews its currency risk exposure periodically and hedges part of its exposure to the US
dollar by buying and holding on deposit GBP. The Group also hold Roubles in order to cover a proportion
of anticipated Rouble expenditures. As at 31 December 2016 the Group had on deposit approximately
US$1,407,000 in GBP (2015: US$8,216,000) and US$21,000 in Rouble (2015: US$19,000) bank accounts.
An analysis of the Group’s net monetary assets and liabilities by functional currency of the underlying
companies at the year-end is as follows:
Currency of net monetary assets/liabilities
US Dollar
Pound Sterling
Russian Rouble
At 31 December
Functional currency
US Dollar Russian Rouble
2016
US$'000
2016
US$'000
6,539
1,290
19
7,848
143
-
18
161
Total
2016
US$'000
6,682
1,290
37
8,009
- 54 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
22 Financial and capital risk management
(Continued)
Currency of net monetary assets/liabilities
US Dollar
Pound Sterling
Russian Rouble
At 31 December
Functional currency
US Dollar Russian Rouble
2015
US$'000
2015
US$'000
Total
2015
US$'000
1,346
8,032
-
9,378
-
-
(259)
(259)
1,346
8,032
(259)
9,119
The table above indicates that the Company’s primary exposure is to exchange rate movements between
UK Pound Sterling and the US Dollar. The table below shows the impact of changes in exchange rates on
the result and financial position of the Company.
Pound Sterling 10% weakening against US Dollar
Pound Sterling 10% strengthening against US Dollar
Pound Sterling 20% weakening against US Dollar
Pound Sterling 20% strengthening against US Dollar
2016
US$'000
198
(73)
333
(208)
2015
US$'000
675
(960)
1,777
(1,492)
In the Directors’ opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as
the year end exposure reflects only the impact on the year-end balance sheet of changes in exchange
rates and does not reflect the exposure on on-going and future expenditure. Rouble denominated
expenditures is seasonal with higher volumes in the second and third quarters of the financial year.
Capital risk
The Group’s objectives when managing capital (i.e. share capital, share premium and retained deficit) are
to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders
and benefits for other shareholders. Historically the Company has issued share capital to provide funds for
the exploration programmes. The need for further finance is kept under review by the Board through review
of cash flow forecasts and further finance, from equity or debt, will be considered for future exploration and
development work.
23 Commitments
Capital commitments
2016
US$'000
2015
US$'000
Contracted for but not provided in the financial statements:
Acquisition of property, plant and equipment
484
-
Operating lease commitments
The Group leases various offices and other buildings under cancellable operating lease agreements.
The leases have varying terms, and renewal rights and are immaterial to the Group.
- 55 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
24 Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, who are considered to be the Directors and senior
management, is set out below in aggregate for each of the categories specified in IAS 24 'Related Party
Disclosures'.
Short-term employee benefits
Share-based payments
2016
US$'000
2015
US$'000
1,106
406
1,512
1,039
1,253
2,292
US$194,000 (2015: US$201,000) of the short-term employee benefits amount and US$88,000 (2015: US
$279,000) of the share-based payments amount related to key management personnel were capitalised
within exploration and evaluation assets.
The fees of US$316,000 (2015: US$297,000) in respect of Robin Young's director services are paid to
Western Services Engineering Inc., a company of which he is also a director and a shareholder. At the
reporting date US$37,000 (2015: US$nil) of the amount remained outstanding.
There were no other related party transactions in the current or preceding years.
25
Events after the reporting date
On 6 January 2017 the Company appointed Mr Lou Naumovski to the Board as a Non-Executive Director,
effective 2 January 2017.
On 12 January 2017 the Company issued 500,000 new ordinary shares to Jett Capital Advisors LLC
following the exercise of warrants at an exercise price of 4.68 pence per new ordinary share.
On 30 January 2017 the Company issued 500,000 new ordinary shares to Jett Capital Advisors LLC
following the exercise of warrants at an exercise price of 4.68 pence per new ordinary share.
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