AMUR MINERALS CORPORATION
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
AMUR MINERALS CORPORATION
CORPORATE DIRECTORY
Directors
Registered office
Auditors
Nominated adviser and broker
Legal advisers
Solicitors
Mr R Schafer
Mr R Young
Mr B Savage
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
At a glance
Chairman's statement
Corporate governance
Operating risks and uncertainties
Remuneration committee report
Audit committee report
Directors' report
Statement of Directors' responsibilities
Page(s)
1 - 3
4 - 6
7 - 13
14 - 16
17 - 18
19 - 20
21 - 22
23
Independent auditors' report to the members of Amur Minerals Corporation
24 - 27
Consolidated statement of financial position
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of cash flows
Consolidated statement of changes in equity
28
29
30
32
31
Notes to the financial statements
33 - 61
AMUR MINERALS CORPORATION
AT A GLANCE
Kun-Manie – the largest undeveloped and drill proven nickel copper sulphide deposit in Asia
“…the right place, at the right time with the right commodity”
Strategically Situated to Feed Major Markets
Kun-Manie Project is close to
major nickel markets
Direct access
to China
through existing rail and road
infrastructure
Proximity to Vladivostok port
allows shipment of product to
China, Japan and Korea,
large users of nickel
Opportunity
Europe
Petersburg
via
to deliver
rail
into
to St
Located in An Established Mining Area
• Amur region is home to London listed Petropavlovsk’s gold operations, with four mines nearby the
Project
• The Kun-Manie Project will benefit from established road and rail infrastructure with direct routes to
China and internally through Russia via the Baikal-Amur and Tran Siberian rail lines
• Amur region is well known to commodity traders and has established logistics routes
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AMUR MINERALS CORPORATION
AT A GLANCE (CONTINUED)
Robust Pre-Feasibility Study
• March 2018 JORC Mineral Resource Estimate containing 155.1 million ore tonnes comprising a nickel
equivalent grade of 1.02%, equating to a total of 1.58 million equivalent tonnes of nickel
• A three-year construction period and a 15 year production period with potential to extend the life of mine
• Production will derive from four open pits and one underground mining operation
• Two production scenarios :
- TS Option - Toll Smelt option which provides the swiftest path to revenue generation
- FFS Option - where the Company constructs and operates an electric furnace / flash smelter
generating a Low Grade Matte with enhanced revenue generation
• Low cost operations:
- C1 * costs within the second lower quartile for all nickel producers
- TS Option estimated $3.87 per pound of payable nickel
- FFS Option estimated $2.34 per pound including additional by-product revenues
• Strong NPV and IRR (using 10% discount rate and $8.00 per pound industry consensus long term nickel
price )
- TS Option - $614.5 million and IRR 29.3%
- FFS Option - $987.4 million and IRR 34.7%
* fully explored reserves and resources under the Russian minerals reporting system
Project De-Risking to Drive Further Value
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AMUR MINERALS CORPORATION
AT A GLANCE (CONTINUED)
Asia’s Largest Undeveloped Nickel Copper Sulphide Deposit
Following the successful drill programme in 2018 not included in the March 2018 JORC resource statement,
substantial upside opportunities including:
Increase in the Mineral Resource Estimate
•
• Expansion of the mine life based on Mining Ore Reserve increases
• Optimisation of a production schedule to move higher revenue generating ores forward allowing for
enhanced early cash flow during the first 10 years of production when reduced Metals Royalty and Net
Profits Tax are available
• Metallurgical test work to reduce the magnesium oxide content for which penalty fees are applied during
smelting
• The potential to generate a separate copper concentrate stream providing copper stream revenues
having higher payabilities than presently considered
• Negotiate improved product purchaser agreement terms
• Define Russian government low cost loan considerations for the access road and any other potential
infrastructure requirements that may be identified
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT
Dear Shareholder s,
It is with pleasure that I take this opportunity to present shareholders of Amur Minerals Corporation (“Amur” or
the “Company”) with the 2018 operational and financial result.
The 2017 field season resulted in an impressive 50% expansion of the Kun-Manie resource base to just over 1.5
million tonnes of nickel equivalent averaging 1.02% resulting in its being ranked among the five largest
undeveloped nickel sulphide projects in the world. Although this establishes Kun-Manie as a large scale deposit
by global standards we felt that there some important and valuable objectives still to be explored and proven for
the 2018 field season. Primarily, that the Ikenskoe (“IKEN”) and Kubuk (“KUB”) deposits form one continuous
open pit mineable deposit.
2018 Operational Developments
Substantial Field Season and Resource Expansion
The updated Mineral Resource statement released in March 2018, incorporating the 2017 field season, provided
a 50% increase in the JORC compliant resource to 155 million ore tonnes with a nickel equivalent (“Ni Eq”)
content of 1.58 million tonnes averaging 1.02% Ni Eq. In June 2018 we released an updated Mining Potential
statement based on this new Mineral Resource statement. In February 2019 we released an updated Pre-
Feasibility Statement (“PFS”) based on these new 2018 resource and mining potential numbers (the Executive
Summary of this PFS can be downloaded from Amur’s website). While the PFS was being compiled, we utilised
the opportunity to further enhance the Mineral Resource with additional drilling.
The 2018 field season was an even bigger undertaking than the year before and was targeted at converting a
large block of inferred resource to indicated and very importantly determining if the Ikenskoe and Kubuk deposits
are connected and the resultant linking of the two deposit was suited to allowing for a single open pit operation.
Whilst we awaited final independent verification of the 2018 drill results, we reported that as much as 30 million
tonnes of inferred resource has been converted to indicated and that an additional 25 million tonnes for new
resource has been defined linking the Ikenskoe and Kubuk deposits. All drilling was implemented to allow for its
categorisation as indicated, therefore making it suitable for inclusion in the Mining Ore Reserves. The
successfully linking of the two deposits will potentially form one large 4-kilometre-long pit.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
Also, as part of the 2018 drill program, a large scale metallurgical samples from Ikenskoe, Kubuk and the area
between these two deposits w as collected to be added to similar samples from Maly Kurumkon / Flangovy and
Vodorazdelny. This bulk sample now totalling approximately 15 tonnes will be used in a number of studies to
determine final processing design and the potential to produce a separate copper only concentrate stream.
We feel strongly that the newly identified mineralisation provides the potential to substantially enhance the
February 2019 PFS which demonstrates Kun-Manie is already a sufficient resource that is economically viability.
With the robust results reported within the PFS, we have begun to advance our plans and activities to identify
and engage with potential strategic partners.
Financial Overview
As at 31 December 2018 the Company had cash reserves of US$1.3million, down from the US$2.6 million at the
start of 2018.
In February 2018 the Company entered into a convertible loan facility of up to US$10 million, with an initial
advance of US$4 million being drawn. As at 31 December 2018 50.9 million new ordinary shares have been
issued by the Company in settlement of US$2.4 million in principal and accrued interest. As at reporting date the
balance of the loan, net of issue costs, stood at US$1. 7 million. In February 2019, the Company restructured the
outstanding US$1.2 million of the initial advance and drew down a further US$0.5 million (net of implementation
fee). A further 10.9 million warrants with an exercise price of 3.76 pence per share were issued to the investors
as part of this restructuring and second draw down.
In April 2018 the Board and executive management entered into a 12 month share purchase program whereby
an independent broker would purchase GBP5,000 of shares from the open market on the 20th of each month.
As at reporting date 1.1 million shares have been purchased under the programme.
In 2018 the Company spent US$2.0 million on exploration costs (2017: US$3.23 million) and US$4 8 ,000 on
capital equipment (2017: US$470,000).
In the Consolidated Statement of Comprehensive Income an exchange loss on the translation of foreign
operations of US$4.2 million was recorded (2017: US$1.2 million gain). This was due to the weakening of the
Russian Rouble to the US Dollar.
Outlook
The work that we are undertaking in 2019 is orientated towards preparing and positioning the Company for the
next stage of its development – strategic investment and project financing. To date this has involved
management, with support from the Groups financial advisor Medea Capital Partners Ltd, engaging with external
parties who provide long term support for projects transitioning from exploration to production and beyond.
These engagements have for the most part been centered around developing the external parties knowledge of
Kun-Manie and building personal relationships. We have benefited in return by gaining current knowledge of the
global markets for nickel and just as importantly, the end users of nickel.
With those relationships in place, and new ones being developed, we will in 2019 be able to undertake focused
activities that will support the Company’s aim of attracting the right sort of strategic investment and partnering. It
is important that the Company is in as strong a position as it can attain for this next stage of development as
success here will begin to unlock the considerable value held within the Kun-Manie project. The Board and
management believe that the Company is well positioned given the size and location of Kun-Manie to capitalise
on the growth in the nickel market. We have been seeing clear indicators that recent increased interest in nickel
is now turning towards interest in the future sourcing of nickel supply.
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AMUR MINERALS CORPORATION
CHAIRMAN'S STATEMENT (CONTINUED)
The PFS is a report on the current state of Kun-Manie’s development and it presents a robust picture of a large
nickel/copper sulphide project ready to advance toward and through development and the value chain. However,
the PFS is a living document and we will be updating the Mineable Ore Reserves to include the 2018 field
season results which in turn will result in an updated mine plan and project economics. Detailed metallurgical
work will also be undertaken to firstly determine if a separate copper stream can be produced and if so what the
economic impact that would have as this could materially increase the revenue potential of the copper. Secondly,
the detailed flow sheet or ore processing plant design will also be finalised. Both of these studies will utilise the
15 tonne bulk sample acquired across all deposits. Running concurrently with the metallurgical test work various
studies such as detailed logistics, road design and environmental/social impact will also be undertaken.
This work will ultimately turn the PFS into a Bankable Feasibility Study (“BFS”) and will just as importantly be
used to produce the Permanent Conditions TEO, the Russian version of a BFS. So although we do not foresee
the need for any further drilling this next stage of undertakings will provide the necessary information to obtain
Russian authorisation to commence construction and implementation of a full-scale operation.
Lastly, I would like to thank our hard working and dedicated staff in Khabarvosk many of whom have been with
us from the beginning. Their knowledge and understanding of the Kun-Manie project has been critical to the
success of getting the Company to its current position.
On behalf of the board
Mr R Schafer
Non-Executive Chairman
24 June 2019
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE
Dear Shareholders,
As Chairman of the Company, I firmly believe that strong corporate governance helps provide the building blocks
that allow an organisation to be successful. The Board is committed to good governance across the business, at
executive level and throughout its operations. Following the revisions to the AIM Rules for Companies in March
2018 pursuant to which all AIM companies are required to comply with a recognised corporate governance code,
the decision has been made by the Company that it will adopt The Quoted Companies Alliance Corporate
Governance Code 2018 (the “QCA Code” or the “Code”) which is believed to be the most appropriate recognised
governance code for the Company.
The Board not only sets expectations for the business but also works towards ensuring that strong values are
set and carried out by the Directors across the business. The Board strives to ensure that the objectives of the
business, the principles and risks are underpinned by values of good governance throughout the Company.
The importance of engaging with our shareholders is key to the success of the business, and the Board strives
to ensure that there are numerous opportunities for investors to engage with both the Board and executive team.
Mr R Schafer
Non-Executive Chairman
24 June 2019
Set out below are the 10 key principals of the QCA code adopted by Amur. In addition to the details provided
below, governance disclosures can be found on the Company’s website at https://amurminerals.com/corporate-
governance-code/.
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
The Board has concluded that the highest medium and long-term value can be delivered to shareholders
through the continued development of the Kun-Maine sulphide nickel deposit located in the far east of Russia.
The Company will continue to develop the project to increase its value whilst simultaneously looking for suitable
strategic partners who can assist in bringing the project to production.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Company remains committed to listening and communicating openly with its shareholders to ensure that its
strategy, business model and performance are clearly understood and communicated. Understanding what
analysts and investors think about us, and in turn, helping these audiences understand our business, is a key
part of driving our business forward and we actively seek dialogue with the market. We do so via investor
roadshows, attending investor conferences, maintaining regular updates on the Companys FAQ page and our
regular reporting.
Amur is committed to providing full and transparent disclosure of its activities via the Regulatory News Service
(RNS) of the London Stock Exchange. Company announcements are also available on the Company’s website.
Amur has an active and effective investor relations programme that includes institutional road-shows and
presentations, effective Annual General Meetings with presentations to shareholders and a high level of
disclosure of the Company’s activity to its shareholders.
In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting and investors
have access to current information on the Company through its website (www.amurminerals.com) and via the
info@amurminerals.com email address. The company also retains the services of Blytheweigh as PR advisor.
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE (CONTINUED)
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for
long-term success
The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of
the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a
range of processes and systems to ensure that there is close oversight and contact with its key resources and
relationships.
The Company has staff dedicated to ensuring that it has active relationships with local communities who are
within the vicinity of its operations to understand their concerns and expectations thereby seeking to ensure a
mutually beneficial co-operation for both sides. The Company is subject to oversight by a number of different
governmental and other bodies who directly or indirectly are involved with the licencing and approval process of
exploration and mining operations in Russia. The Company makes all reasonable efforts, directly or through its
advisers, to engage in and maintain active dialogue with each of these governmental bodies, to ensure that any
issues faced by the Company, including but not limited to regulations or proposed changes to regulations, are
well understood and ensuring to the fullest extent possible that the Company is in compliance with all
appropriate regulation, standards and specific licencing obligations, including environmental, social and safety, at
all times.
The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the
opportunity to raise issues and provide feedback to the Company, and the Board is regularly updated on wider
stakeholder insights into issues that matter to them and the business to enable the Board to understand and
consider these issues in decision making.
The Board recognises that our employees are one of our most important stakeholder groups.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout
the organisation
Financial controls
The Company has an established framework of internal financial controls, the effectiveness of which is regularly
reviewed by the Executive Management, the Audit Committee and the Board in light of an ongoing assessment
of significant risks facing the Company.
• The Board is responsible for reviewing and approving overall Company strategy, approving revenue and
capital budgets and plans, and for determining the financial structure of the Company including treasury,
tax and dividend policy. Monthly results and variances from plans and forecasts are reported to the
Board.
• The Audit Committee assists the Board in discharging its duties regarding the financial statements,
accounting policies and the maintenance of proper internal business, and operational and financial
controls, including the review of results of work performed by the Group controls function.
• There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the
Board business performance against those budgets and plans, and for forecasting expected
performance over the remainder of the financial period. These cover cash flows, capital expenditure and
balance sheets. Monthly results are reported against budget and compared with the prior year, and
forecasts for the current financial year are regularly revised in light of actual performance.
• The Company has a consistent system of prior appraisal for investments, overseen by the Chief
Financial Officer, Chief Executive Officer and Chief Operating Officer, with defined financial controls and
procedures with which each business area is required to comply in order to be granted investment funds
for development.
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE (CONTINUED)
Non-financial controls
The Board recognises that maintaining sound controls and discipline is critical to managing the downside risks to
our plan. The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its
effectiveness. However, any such system of internal control can provide only reasonable, but not absolute,
assurance against material misstatement or loss. The Board considers that the internal controls in place are
appropriate for the size, complexity and risk profile of the Group.
The principal elements of the Group’s internal control system include:
• Close management of the day-to-day activities of the Group by the Executive Directors
• An organisational structure with defined levels of responsibility, which promotes entrepreneurial
decision-making and rapid implementation while minimising risks
• A comprehensive annual budgeting process producing a detailed integrated profit and loss, balance
sheet and cash flow, which is approved by the Board
• Detailed monthly reporting of performance against budget
• Central control over key areas such as capital expenditure authorisation and banking facilities
The details of the Group's principal risks and controls to mitigate them are outlined on pages 14 - 16.
Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chairman
The Board comprises the Non-Executive Chairman, one Executive Director and three Non-Executive Directors.
The Board of Amur is supported by two members of the senior management team. The details and background
of the members of the Board and senior management can be found on the Company's website at https://
amurminerals.com/management-team/.
The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of
the Company on the other, to enable it to discharge its duties and responsibilities effectively. All Directors are
encouraged to use their independent judgement and to challenge all matters, whether strategic or operational.
The following Directors are considered to be independent Directors:
• Robert Schafer (Non-Executive Chairman)
• Brian Savage (Non-Executive Director)
• Paul Gazzard (Non-Executive Director)
• Lou Naumovski (Non-Executive Director)
The Board has established an Audit Committee and a Remuneration Committee, particulars of which appear
hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole. The Non-
Executive Directors are considered to be part time but are expected to provide as much time to the Company as
is required. The Board considers that this is appropriate given the Companyʼs current stage of operations. It shall
continue to monitor the need to match resources to its operational performance and costs and the matter will be
kept under review going forward. The Board notes that the QCA recommends a balance between executive and
non-executive Directors and recommends that there be two independent non-executives. The Board shall review
further appointments as scale and complexity grows.
Attendance at Board and Committee Meetings
The Company shall report annually on the number of Board and committee meetings held during the year and
the attendance record of individual Directors. In order to be efficient, the Directors
meet formally and informally both in person and by telephone.
Key Board activities this year included:
• Discussing strategic priorities
•
Initiating the 2018 field season objectives
• Open dialogue with the investment community
• Discussing the Company’s capital structure and financial strategy
• Discussing internal governance processes
• Discussing the Company’s risk profile
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE (CONTINUED)
Directors’ conflict of interest
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware
of the other commitments and interests of its Directors, and changes to these commitments and interests are
reported to and, where appropriate, agreed with the rest of the Board.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills
and capabilities
The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and
experience required for the Company. Biographies of the directors are available on the Company’s website. All
Directors receive regular and timely information on the Group’s operational and financial performance. Relevant
information is circulated to the Directors in advance of meetings.
The Board recognises that it currently has limited diversity and this will form a part of any future recruitment
consideration if the Board concludes that replacement or additional directors are required. The Board will also
review annually the appropriateness and opportunity for continuing professional development whether formal or
informal.
Appointment, removal and re-election of Directors
The Board makes decisions regarding the appointment and removal of Directors, and there is a formal, rigorous
and transparent procedure for appointments. The Company’s Articles of Association require that one-third of the
Directors must stand for re-election by shareholders annually in rotation; that all Directors must stand for re-
election at least once every three year s ; and that any new Directors appointed during the year must stand for
election at the AGM immediately following their appointment.
Independent advice
All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at
the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company
Secretary and Chief Financial Officer.
Principle 7: Evaluate the Board performance based on clear and relevant objectives, seeking continuous
improvement
The Board has determined that it shall itself be responsible for assessing the effectiveness and contributions of
the Board as a whole, its committees (which currently comprise the Audit Committee, the Remuneration
Committee) and individual directors. The size of the Board allows for open discussion and the Chairman has
regular dialogue with the Chief Executive whereby the Board’s role and effectiveness can be considered. The
Chief Financial Officer also has regular dialogue with the Head of the Audit Committee whereby that
Committee’s effectiveness can be considered.
Internal evaluation of the Board, the Committee and individual Directors is to be undertaken on an annual basis
in the form of peer appraisal and discussions to determine the effectiveness and performance of the Directors
and their continued independence. No formal assessments have been prepared however the Board will keep
this matter under review and especially if either the size of the Board or the number of committees increases
which in turn may require a more formalised assessment and evaluation process to be established to ensure
continued effectiveness.
Principle 8: Promote a culture that is based on ethical values and behaviours
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the
Company as a whole and that this will impact the performance of the Company. The Board is very aware that the
tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that
employees behave. The corporate governance arrangements that the Board has adopted are designed to
ensure that Amur delivers long term value to its shareholders and that shareholders have the opportunity to
express their views and expectations for the Company in a manner that encourages open dialogue with the
Board.
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE (CONTINUED)
A large part of Amurʼs activities is centred upon what needs to be an open and respectful dialogue with
employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is
crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great
importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company
does. The directors consider that at present the Company has an open culture facilitating comprehensive
dialogue and feedback and enabling positive and constructive challenge.
Additionally, the Company has adopted a code for Directorsʼ and employeesʼ dealings in securities which is
appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the
Market Abuse Regulation which came into effect in 2016.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good
decision-making by the Board
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Companyʼs activities rests with the Board, the respective
responsibilities of the Chairman and Chief Executive Officer arising as a consequence of delegation by the
Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to
the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Companyʼs
business and primary contact with shareholders has been delegated by the Board to the Chief Executive Officer.
Audit Committee
During the financial year ended 31 December 201 8 the Audit Committee currently comprises Brian Savage and
Robert Schafer. This committee has primary responsibility for monitoring the quality of internal controls and
ensuring that the financial performance of the Company is properly measured and reported. It receives reports
from the executive management and auditors relating to the interim and annual accounts and the accounting
and internal control systems in use throughout the Company. The Audit Committee shall meet not less than twice
in each financial year and it has unrestricted access to the Companyʼs auditors.
Remuneration Committee
The Remuneration Committee comprises Brian Savage and Robert Schafer. The Remuneration Committee
reviews the performance of the executive directors and employees and makes recommendations to the Board
on matters relating to their remuneration and terms of employment. The Remuneration Committee also
considers and approves the granting of share options pursuant to the share option plan and the award of shares
in lieu of bonuses pursuant to the Companyʼs Remuneration Policy.
Nominations Committee
Given the size and complexity of Amur, the Board has agreed that appointments to the Board will be made by
the Board as a whole and so has not created a Nominations Committee.
Non-Executive Directors
At each Annual General Meeting one third of the directors must retire by rotation, whereupon they can offer
themselves for re-election if eligible. The Board evaluates its performance and composition on a regular basis
and will make adjustments as and when indicated. When assessing the independence of each Non-Executive
Director, length of service is one of the considerations. The Board will when assessing new appointments in the
future consider the need to balance the experience and knowledge that each independent director has of the
Company and its operations, with the need to ensure that independent directors can also bring new perspectives
to the business.
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE (CONTINUED)
Executive Team
The Executive Team consists of Robin Young, Jack Swanson, Randy Lewis and Paul McKay with input from the
subsidiary managers and teams. They are responsible for formulation of the proposed strategic focus for
submission to the Board, the day-to-day management of the Group’s businesses and its overall trading,
operational and financial performance in fulfilment of that strategy, as well as plans and budgets approved by the
Board of Directors. It also manages and oversees key risks, management development and corporate
responsibility programmes. The Chief Executive Officer reports to the Corporation Board on issues, progress
and recommendations for change. The controls applied by the Executive Team to financial and non-financial
matters are set out earlier in this document, and the effectiveness of these controls is regularly reported to the
Audit Committee and the Board.
Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders
The Board is committed to maintaining good communication and having constructive dialogue with its
shareholders. The Company has close ongoing relationships with its private shareholders. Institutional
shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the
Company. In addition, all shareholders are encouraged to attend the Companyʼs Annual General Meeting. The
outcomes of all votes will be disclosed in a clear and transparent manner via the R N S of the London Stock
Exchange.
Investors also have access to current information on the Company though its website, www.amurminerals.com,
and via the info@amurminerals.com email post questions that are incorporated into the FAQ page of the
Company’s website. The Company lists contact details on its website and on all announcements released via
RNS, should shareholders wish to communicate with the Board.
The Company shall include, when relevant, in its annual report, any matters of note arising from the audit or
remuneration committees.
The Board
The Board comprises of the non-executive chairman, three non-executive directors and a Chief Executive Officer
(“CEO”). The Board has significant industry, financial, public markets and governance experience, possessing
the necessary mix of experience, skills, personal qualities and capabilities to deliver on the Group’s strategy for
the benefit of shareholders over the medium to long-term.
The C hairman has the responsibility of ensuring that the Board discharges its responsibilities and is also
responsible for facilitating full and constructive contributions from each member of the Board in determination of
the Group’s strategy and overall commercial objectives. The Board is responsible for the overall management
and performance of the Group and operates within a framework of prudent and effective controls which enables
risk to be assessed and managed.
The CEO leads the business with the support of a strong executive team ensuring that the strategic and
commercial objectives are met. They are accountable to the Board for the operational and financial performance
of the business.
The Board as a whole is kept abreast with developments of governance and AIM regulations. The Company’s
lawyers provide updates on governance issues and the Company’s NOMAD provides annual boardroom training
as well as the initial training as part of a director’s onboarding.
The directors have access to the Company’s NOMAD, company secretary, lawyers and auditors and are able to
obtain advice from other external bodies as and when required. The 2018 performance of the business and its
staff will be measured across both financial and operational functions and is captured in a corporate scorecard.
The scorecard is made up of various KPIs and is tracked throughout the year.
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AMUR MINERALS CORPORATION
CORPORATE GOVERNANCE (CONTINUED)
Matters Reserved for the Board
The Board retains full and effective control over the Group and is responsible for the Group’s strategy and key
financial and compliance issues. There are certain matters that are reserved for the Board which are reviewed
on an annual basis, and they include but are not limited to:
• Strategy and Management – approval of strategic aims and objectives; approval of the Group’s annual
operating and capital expenditure budgets and changes; decision to cease to operate all or any material
part of the Group’s business;
• Structure and Capital – major changes to the Group’s corporate structure; any change to the
Company’s listing;
• Financial Reporting and Controls – approval of: financial results; annual reports and accounts;
dividend policy and declaration of any dividend; significant changes in accounting policies/practice;
treasury policies;
•
Internal Controls – ensuring maintenance of a sound system of internal control and management;
• Contracts – major capital contracts; contracts which are material or strategic; major investments or any
acquisitions/disposals;
• Communications – approval or resolutions and documentation put forward to shareholders;
• Board Membership and Other Appointments;
• Remuneration – determining the remuneration policy for directors, senior execs and non-executive
directors, introduction of new share incentive plans, changes to existing plans;
• Corporate Governance Matters – review of the Group’s overall corporate governance arrangements;
• Policies – approval of Group policies, including the share dealing code;
Board Evaluation
The directors consider seriously the effectiveness of the Board, its Committees and individual performance.
The Board generally meets formally five times a year with ad hoc Board meetings as the business demands.
There is a strong flow of communication between the directors, and in particular between the CEO and
Chairman. Board meeting agendas are set in consultation with both the CEO and Chairman, with consideration
being given to both standing agenda items and the strategic and operational needs of the business.
Comprehensive board papers are circulated in advance of meetings, giving directors ample time to review the
documentation and enabling an effective meeting. Resulting actions are tracked for appropriate delivery and
follow up. The directors have a broad knowledge of the business and understand their responsibilities as
directors of a UK company quoted on AIM and developing appropriate corporate governance procedures and
looking forward to building further on the governance structure already in place.
The Company’s Nomad provides annual boardroom training as well as initial training as part of a director’s
onboarding. The Company Secretary helps keep the Board up-to-date with developments in corporate
governance and liaises with the Nomad on areas of AIM requirements. The Company Secretary has frequent
communication with both the Chairman and CEO and is available to other members of the Board as required.
The directors also have access to the Company’s auditors and lawyers as and when required, and the directors
are able, at the Company’s expense, to obtain advice from other external advisers if required.
The Board entered into 2018 looking forward to building further on the governance structure already in place.
Whilst being mindful of the size and stage of development of the Company, the board reviews and ensures the
highest level of governance is maintained.
- 13 -
AMUR MINERALS CORPORATION
OPERATING RISKS AND UNCERTAINTIES
Set out below are the key operating risks and uncertainties affecting the Group.
The Group’s licences
The Group’s activities are dependent upon the grant and renewal of appropriate licences, permits and regulatory
consents. The Group’s Exploration and Mine Production licence is valid until 1 July 2035 and 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 Group’s licences are regulated by the Russian governmental agencies and contain
a range of obligations, failure to comply with which could result in additional costs, penalties being levied or the
suspension or revocation of the licence. This would have a material adverse impact on the Group
Mitigation : management closely monitor compliance with the terms of the Group’s licences and utilises the legal
services of Norton Rose Fulbright in Moscow who review all documentation and filings 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.
Mitigation: t he scale of the project mandates that all work is 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 ed the results of Company work.
Project work is 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.
Mitigation: r esources 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.
- 14 -
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.
Mitigation: t he Company utilises Equator Principle s standards with regard to its monitoring and maintenance of
environmental protection. Equator Principle s 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.
Mitigation: t he 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 US $ 9 .00 per
pound and is US $ 3.00 per pound for copper. All study work currently utilises prices of US $ 8.00 and US $ 3.00 for
nickel and copper respectively.
Political and economic risks
Most of Group’s assets and operations are based in Russia and are subject to Russian federal and regional laws
and regulations. Russian legal and regulatory regime is still undergoing a substantial transformation and is
subject to frequent changes and interpretations. Amendments to current laws and regulations governing the
Group’s operating activities or more stringent implementation or interpretation of these laws and regulations
could have a material adverse impact on the Group.
Additionally, R ussian Federation is currently subject to sanctions imposed by various countries, prolonging and
tightening of which could have an impact on the Group’s operations.
Mitigation: t he Company utilises its Moscow based legal representatives of Norton Rose Fulbright to
continuously monitor the situation regarding sanctions and conduct 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.
- 15 -
AMUR MINERALS CORPORATION
OPERATING RISKS AND UNCERTAINTIES (CONTINUED)
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.
Mitigation: t he Company utilises its Moscow legal team of Norton Rose Fulbright to monitor changes to the
regulatory system. In addition, the Mining Advisory Council also participates in reviews and working with the
governmental groups responsible for regulatory control and the authoring of new legislation. Proactively, the
Company assesses the potential impact of any proposed modifications and is dynamically changing Company
policies and approaches to match the Russian regulatory environment. Often planning and work is completed in
advance of changes when they are identifiable and could impact exploration and operations.
Taxation
Russian tax legislation has been subject to frequent change and some of the laws relating to taxes to which the
Group is subject are relatively new. The government’s implementation of such legislation, and the courts’
interpretation thereof, has been often unclear or non-existent, with few precedents established. Differing opinions
regarding legal interpretation may exist both among and within government ministries and organisations and
various local inspectorates. The introduction of new tax provisions may affect the Group’s overall tax efficiency
and may result in significant additional tax liability.
Mitigation: t he Company continually assesses the tax regime and utilise s 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 fuel l ed generator
sets which will preclude the need to construct a power line to the site. The Prefeasibility Study incorporates the
construction of the access road into the initial capital expenditures.
- 16 -
AMUR MINERALS CORPORATION
REMUNERATION COMMITTEE REPORT
Dear Shareholders,
I am pleased to present this report on behalf of the Audit Committee and to report on progress made by the
Committee during the year. Throughout 2018 the Committee has focused on how best to align reward with
results and specifically how to incentivise our people to act like business owners.
Remuneration Policy and Aims of the Remuneration Committee
Our overall aim is to align employee remuneration with the successful delivery of long-term shareholder value.
We have adopted three key principles to enable us to achieve this goal:
• To offer competitive salary packages that attract, retain and motivate highly-skilled individuals;
• To align remuneration packages with performance related metrics that mirror our long-term business
strategy; and,
• To encourage accountability in the workplace and link reward with success.
The Group currently operates the following remuneration framework:
• Annual salary and associated benefits such as paid holiday;
The Remuneration Committee consists of myself as the Chairman together with one other independent Non-
Executive Directors, Brian Savage. The Committee aims to meet at least once each year and its key
responsibilities include reviewing the performance of senior staff, setting their remuneration and determining the
payment of bonuses.
The Chief Executive Officer and Chief Financial Officer are invited to attend meetings of the Committee, but no
Director is involved in any decisions relating to their own remuneration. None of the Committee has any
personal financial interest (other than as shareholders), conflicts of interests arising from cross-directorships, or
day-to-day involvement in running the business.
Terms of reference
The terms of reference of the Remuneration Committee are set out below.
Determine and agree with the Board the Company’s overall remuneration policy and monitor the efficacy of the
policy on an ongoing basis;
• Determine and agree with the Board the remuneration of the Executive Directors and senior
management;
• Determine the objectives and headline targets for any performance-related bonus or incentive schemes;
• Monitor, review and approve the remuneration framework for other senior employees; and,
• Review and approve any termination payment such that these are appropriate for both the individual
and the Company.
Directors Remuneration
Executive Directors
Robin Young
Non-Executive Directors
Robert Schafer
Brian Savage
Paul Gazzard
Lou Naumovski
Salaries
US$'000
Fees
US$'000
2018
Total
US$'000
Salaries
US$'000
Fees
US$'000
2017
Total
US$'000
316
-
316
316
-
316
-
-
-
-
66
57
64
57
66
57
64
57
-
-
-
-
58
50
49
50
58
50
49
50
316
244
560
316
207
523
- 17 -
AMUR MINERALS CORPORATION
REMUNERATION COMMITTEE REPORT (CONTINUED)
The year ahead
We believe that remuneration throughout the business is structured appropriately to incentivise performance,
rewarding behaviour in the spirit of ownership throughout the organisation. This will undergo ongoing review as
the business evolves, in order to ensure that our employees and executives are remunerated optimally in the
interests of the Company.
The Committee and I remain focused on ensuring that reward at the Company continues to be closely aligned
with the delivery of long-term shareholder value.
Mr R Schafer
Chair of the Remuneration Committee
24 June 2019
- 18 -
AMUR MINERALS CORPORATION
AUDIT COMMITTEE REPORT
Dear Shareholders,
I am pleased to present this report on behalf of the Audit Committee and to report on progress made by the
Committee during the year.
Aims of the Audit Committee
Our overall aim is to assist the Board in discharging its duties regarding the financial statements, to ensure that
a robust framework of accounting policies is in place and enacted, and to oversee the maintenance of proper
internal financial controls.
The Audit Committee consists of myself as the Chairman together with the non-executive Chairman Robert
Schafer. The Committee aims to meet at least twice each year and its key responsibilities include monitoring the
integrity of the Group’s financial reporting. The Chief Executive Officer and Chief Financial Officer are invited to
attend meetings of the Committee.
Key responsibilities
The Audit Committee is committed to:
• Maintaining the integrity of the financial statements of the Company and reviewing any significant
reporting matters they contain;
• Reviewing the Annual Report and Accounts and other financial reports and maintaining the accuracy
and fairness of the Company’s financial statements including through ensuring compliance with
applicable accounting standards and the AIM Rules;
• Monitoring external auditors' independence, including the scope and extent of non-audit services
provision;
• Reviewing the adequacy and effectiveness of the internal control environment and risk management
systems; and,
• Overseeing the relationship with and the remuneration of the external auditor, reviewing their
performance and advising the Board members on their appointment.
The Audit Committee met three times in 2018 and the external auditors were present during each of these
meetings.
Activities of the Audit Committee during the year
On behalf of the Board, the Audit Committee has closely monitored the maintenance of internal controls and risk
management during the year. Key financial risks are reported during each Audit Committee meeting, including
developments and progress made towards mitigating these risks.
The Committee received reports from the Chief Financial Officer throughout the year and was satisfied with the
effectiveness of internal controls and risk mitigation. It supports recommendations made by the Chief Financial
Officer and is satisfied with the actions taken and plans in place by management for further improvement.
External audit
The Audit Committee considers various areas when reviewing the appointment of an external auditor including
their performance in conducting the audit and its scope, terms of engagement including remuneration and their
independence and objectivity.
- 19 -
AMUR MINERALS CORPORATION
AUDIT COMMITTEE REPORT (CONTINUED)
BDO have been appointed as external auditor since 2011. The Audit Committee has confirmed it is satisfied with
BDO’s knowledge of the Company and its effectiveness as external auditor. As such the Audit Committee has
recommended the reappointment of BDO to the Board. There will be a resolution to this effect at the forthcoming
Annual General Meeting.
The year ahead
The Committee and I remain focused on ensuring that the standard of the Group’s financial reporting is
maintained moving forward, and that the robust framework of internal controls and systems in place is both
maintained and regularly reviewed for improvement. The Committee will also continue to closely monitor the
financial risks faced by the business and progress made towards mitigating these.
Mr B Savage
Chair of the Audit Committee
24 June 2019
- 20 -
AMUR MINERALS CORPORATION
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The Directors present their annual report and the audited financial statements for the year ended 31 December
2018.
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 c hairman’s s tatement which accompanies
these financial statements.
Results and dividends
The results for the year are set out on page 29.
No ordinary dividends were paid (2017: US$nil). The Directors do not recommend payment of a final dividend
(2017: US$nil).
Directors
The Directors who held office during the year and up to the date of signature of the financial statements were as
follows:
Mr R Schafer
Mr R Young
Mr B Savage
Mr P Gazzard
Mr L Naumovski
Details of Directors ' remuneration and other interests are detailed in note 22.
Listing
The Company’s ordinary shares have been traded on the AIM market of the London Stock Exchange s ince 15
March 2006. SP Angel Corporate Finance LLP is the Company’s Nominated Adviser and Broker. The share price
at 31 December 201 8 was 4.0p .
Donations
The Group has not made any charitable or political donations during the year (201 7 : 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 23 . The key operating risks affecting the Group are
set out on pages 14 - 16.
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 C ompany’s auditors are unaware. Additionally, the D irectors 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 C ompany’s auditors are aware of that information.
- 21 -
AMUR MINERALS CORPORATION
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
Going Concern
The Group operates as a natural resources exploration and development group. To date, it has not earned
significant revenues and is considered to be in the final stages of exploration and evaluation activities of its Kun-
Manie project.
The Directors have reviewed the Group’s cash flow forecast for the period to 31 December 2020 and note that
the Group’s ability to continue advancing its exploration and evaluation work program to Definitive Feasibility
Stage (“DFS”) is dependent on its ability to raise additional financing either through share placings with new
partners or combination of debt and equity financing from financial institutions. The Group’s cashflow forecast
has been prepared on the basis whereby the loan note will be converted in line with the agreed schedule rather
than redeemed for cash.
The Directors are currently in negotiations with a number of parties in respect of raising further funds. Whilst
progress is being made on a number of potential transactions which would provide additional funding to the
Group, there are no binding agreements in place.
These conditions indicate the existence of a material uncertainty which may cast significant doubt over the
Group’s ability to continue as a going concern. Based on the current progress of the negotiations with potential
investors and providers of finance the Directors believe that the necessary funds to provide adequate financing
to continue with the current work program on its Kun-Manie project will be raised as required and accordingly
they are confident that the Group will continue as a going concern and have prepared the financial statements
on that basis.
The financial statements do not include the adjustments that would result if the Group was not able to continue
as a going concern.
Approved by the Board of Directors and signed on behalf of the Board by:
Mr R Schafer
Director
24 June 2019
- 22 -
AMUR MINERALS CORPORATION
STATEMENT OF DIRECTORS' RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2018
The Directors are responsible for preparing the financial statements and have, as required by the AIM Rules of
the London Stock Exchange, elected to prepare the g roup financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union in order to give a true and fair view of the
state of affairs of the G roup and of its profit or loss for that period.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Group will continue in business.
The Directors are responsible for keeping records that are sufficient to show and explain the Group ’s
transactions and will, at any time, enable the financial position of the Group to be determined with reasonable
accuracy. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable
steps to prevent and detect fraud and other irregularities and for the preparation of any additional information
accompanying the financial statements that may be required by law or regulation.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the C ompany’s website in accordance with legislation in the
British Virgin Islands governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the C ompany's website is the responsibility of
the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements
contained therein.
Mr R Young
Director
24 June 2019
Mr B Savage
Director
24 June 2019
- 23 -
AMUR MINERALS CORPORATION
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF AMUR MINERALS CORPORATION
Opinion
We have audited the financial statements Amur Minerals Corporation (the “Parent Company”) and its
subsidiaries (the “Group”) for the year ended 31 December 2018 which comprise the Consolidated Statement
of Financial Position, Consolidated Income Statement, the Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and notes to the
financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
•
the financial statements give a true and fair view of the state of the Group’s affairs as at 31 December
2018 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to note 2.3 in the financial statements which indicates that the Group will need additional
financing within the next twelve months to enable it to continue as a going concern. These conditions, along
with the other matters as set out in note 2.3, indicate that a material uncertainty exists that may cast significant
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
We considered going concern to be a Key Audit Matter as the directors have to make highly subjective
judgements and assumptions in this area. We performed the following work in response this matter:
• We considered whether the assumptions and inputs in the cashflow forecast prepared by the directors
were in line with our understanding of the Group’s operations and other information obtained by us
during the course of the audit.
• We corroborated the opening cash position by reference to bank letters.
• We compared the forecast expenditure by reference to actual expenditures in 2018 and Management’s
budgeted expenditure in 2019. We confirmed that contractually committed amounts were included.
• We sensitised the information available to changes in contractual commitments and discretionary
expenditures.
• We performed a mechanical check on the cashflow forecast model prepared by Management.
• We reviewed the convertible loan facility (Note 11) and agreement, considered the conditions attached
to future to drawdowns and the level of certainty attached to receipt of such funds. Additionally we
confirmed that the ability to convert the facility was with the loan provider.
• We discussed the progress of other funding options with management and verified documentation to
support discussions have been initiated and were ongoing.
• We evaluated the adequacy of disclosures made within the financial statements.
- 24 -
AMUR MINERALS CORPORATION
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF AMUR MINERALS CORPORATION
Key audit matters
In addition to the matter described in the material uncertainty related to going concern section, key audit matters
are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER
Accounting for convertible loan notes and valuation of derivatives and warrants
Refer to Note 11 of the financial report.
Accounting for convertible notes was considered a key audit matter due to:
• The complexity involved in assessing whether to account for the convertible notes and
attached warrants as equity, a liability or a combination of both (refer to Note 2.11);
• Measurement at initial recognition of the of the individual components of the liability based
on the terms and conditions of the agreement and the significant judgement in determining
the fair value of the embedded derivative liability, loan value and attached warrants (refer
to Note 3); and
• Measurement subsequent to initial recognition including the fair value measurement at each
conversion date and the reporting date.
OUR RESPONSE
We have evaluated the accounting for the convertible notes in accordance with relevant accounting
standards. In doing so we performed the following procedures:
• We assessed the terms and conditions of the convertible loan note agreement to determine
if the convertible notes are to be accounted for as equity, liability or a combination of both.
• We considered Management’s assessment of the conversion option as an embedded
derivative against the conversion terms in the loan agreement.
• Management engaged an independent expert to value the conversion option which is
considered to be an embedded derivative. We performed a detailed review of the models
used in the valuation at both inception and the reporting date, and specifically agreed key
assumptions used to empirical data and found no issues. We have assessed the expertise,
independence and qualification of the expert used by Management to value the embedded
derivative and found no issues.
• We have verified the conversion of notes in the year to supporting documentation such as
RNS announcements agreed this through to the accounting for each tranche converted.
• We have reviewed the disclosures within the financial statements and found no material
issues.
Key observations
We found the accounting treatment of the convertible loan note liability, embedded derivative liability
and attached warrants to be materially compliant with the relevant accounting standard.
- 25 -
AMUR MINERALS CORPORATION
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF AMUR MINERALS CORPORATION
Our application of materiality
Group materiality FY 2018
Group materiality FY 2017
Basis for materiality
$400,000
$500,000
1.4% of total assets
(2017: 1.75% of total assets)
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
We determined that an asset based measure is appropriate as the Group’s principal activity is the exploration
& evaluation of Kun-Manie asset, such that the asset base is considered to be a key financial metric for users
of the financial statements.
Whilst materiality for the financial statements as a whole was $400,000, a lower level of materiality was set for
each significant component of the Group ranging from $300,000 to $360,000 which was used to determine the
financial statement areas that were included within the scope of our audit and the extent of sample sizes applied
during the audit.
Performance materiality is the application of materiality at the individual account or balance level set at an
amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole. Performance materiality was set at
$300,000 for the Group. Each significant component of the group was audited at a lower level of performance
materiality ranging from $230,000 to $270,000, which represents 75% of the above materiality levels.
We agreed with the Audit Committee that we would report all audit differences in excess of $10,000 (2017:
$25,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
An overview of the scope of our audit
Our Group audit scope focused on the Group’s principal operating locations in Russia, being the Kun-Manie
exploration project held by the Group’s 100% owned subsidiary ZAO Kun-Manie, which was subject to a full
scope audit. Together with the parent company and the Group consolidation, which were also subject to a full
scope audit, these represent the significant components of the Group.
The remaining component of the Group was considered non-significant and this component was principally
subject to analytical review procedures.
The audits of each of the components were performed in Russia (Khabarovsk) and the United Kingdom. All of
the audits were conducted by BDO LLP. As part of the audit, BDO LLP visited the Russian subsidiary.
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the Annual Report and Financial Statements, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
- 26 -
AMUR MINERALS CORPORATION
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF AMUR MINERALS CORPORATION
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 23, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website : www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with the terms of our
engagement letter dated 18 December 2018. Our audit work has been undertaken so that we might state to
the Parent Company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
BDO LLP
Chartered Accountants
London, UK
24 June 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
- 27 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Notes
5
6
7
8
10
11
12
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
Convertible loan notes
Derivative financial liabilities
Net current (liabilities)/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
2018
US$'000
23,010
1,668
24,678
257
191
1,257
1,705
26,383
802
1,663
153
2,618
(913)
146
2,764
23,619
65,674
4,904
(15,476)
2,034
(33,517)
23,619
2017
US$'000
22,376
2,884
25,260
769
741
2,555
4,065
29,325
768
-
-
768
3,297
176
944
28,381
62,879
4,904
(11,227)
3,366
(31,541)
28,381
The financial statements were approved by the Board of directors and authorised for issue on 24 June 2019
and were signed on its behalf by:
Mr R Young
Director
Mr B Savage
Director
The accompanying notes on pages 33 - 61 form an integral part of these financial statements.
- 28 -
AMUR MINERALS CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2018
Notes
2018
US$'000
Administrative expenses
Operating loss
Finance income
Finance costs
Fair value movements on derivative financial
instruments
Loss before taxation
Tax expense
Loss for the year attributable to owners of
the parent
17
18
19
12
20
(2,153)
(2,153)
1
(1,223)
67
(3,308)
-
(3,308)
2017
US$'000
(1,924)
(1,924)
3
-
767
(1,154)
-
(1,154)
Loss per share (expressed in cents)
Basic and diluted
21
(0.51)
(0.20)
The items in the above statement are derived from continuing operations.
The accompanying notes on pages 33 - 61 form an integral part of these financial statements.
- 29 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Loss for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Total other comprehensive (loss)/income for
the year
Total comprehensive (loss)/income for the
year attributable to owners of the parent
2018
US$'000
(3,308)
(4,249)
(4,249)
(7,557)
2017
US$'000
(1,154)
1,200
1,200
46
The accompanying notes on pages 33 - 61 form an integral part of these financial statements.
- 30 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Share
capital
Share
premium
Foreign
currency
translation
reserve
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Share
options
reserve
Retained
deficit
Total
equity
Balance at 1 January 2017
60,293
4,904
(12,427)
3,575
(30,596) 25,749
Year ended 31 December
2017:
Loss for the year
Other comprehensive income:
Exchange differences on
translation of foreign operations
Total comprehensive income for
the year
Issue of share capital
Options expired
Exercise of options
15
-
-
-
2,528
-
58
-
-
-
-
-
-
-
1,200
1,200
-
-
-
-
-
(1,154)
(1,154)
-
1,200
-
-
(209)
-
(1,154)
-
209
-
46
2,528
-
58
Balance at 31 December 2017
62,879
4,904
(11,227)
3,366
(31,541) 28,381
Balance at 1 January 2018
62,879
4,904
(11,227)
3,366
(31,541) 28,381
Year ended 31 December
2018:
Loss for the year
Other comprehensive income:
Exchange differences on
translation of foreign operations
-
-
Total comprehensive loss for the
year
Issue of share capital
Conversion of loan notes
Options expired
15
11, 12
-
39
2,756
-
-
-
-
-
-
-
-
(4,249)
-
-
(3,308)
(3,308)
-
(4,249)
(4,249)
-
-
-
-
-
-
(1,332)
(3,308)
-
-
1,332
(7,557)
39
2,756
-
Balance at 31 December 2018
65,674
4,904
(15,476)
2,034
(33,517) 23,619
- 31 -
AMUR MINERALS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Notes
US$'000
US$'000
US$'000
US$'000
2018
2017
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
Net cash used in investing activities
Cash flow from financing activities
Cash received on issue of shares
Issue of convertible loans, net of issue
costs
Net cash generated from financing
activities
Net decrease in cash and cash
equivalents
Cash and cash equivalents at beginning of
year
Exchange (losses)/gains on cash and cash
equivalents
Cash and cash equivalents at end of year
(2,003)
(48)
1
-
3,454
18
11
(2,586)
(2,703)
(2,586)
(2,703)
(3,234)
(470)
3
(2,050)
(3,701)
570
-
3,454
570
(1,182)
(5,834)
2,555
(116)
1,257
8,199
190
2,555
The accompanying notes on pages 33 - 61 form an integral part of these financial statements.
- 32 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
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-Ma nie , 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
These financial statements have been prepared under the historical cost convention, except for the valuation
of derivative financial instruments, on the basis of a going concern and in accordance with International
Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting
Standards Board (IASB) as adopted by the European Union.
The financial statements are presented in thousands of United States Dollars.
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.
- 33 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
2
Significant accounting policies
(Continued)
2.2 Changes in accounting policies and disclosures
A number of new and amended standards and interpretations issued by IASB have become effective for the
first time for financial periods beginning on (or after) 1 January 2018 and have been applied by the Group in
these financial statements. None of these new and amended standards and interpretations had a significant
effect on the Group b e cause they are either not relevant to the Group’s activities or require accounting which
is consistent with the Group’s current accounting policies , in particular:
IFRS 9 "Financial Instruments" has replaced IAS 39 "Financial Instruments: Recognition and Measurement".
All financial assets of the Group continue to be classified and measured at amortised cost. There are no
material financial assets subject to the expected credit loss model defined within IFRS 9, except for cash.
The level of credit risk that the Group is exposed to has not given rise to material allowances within the
expected credit loss model. The adoption of the new standard has not had a material impact on the Group’s
financial liabilities.
New standards, amendments and interpretations that are not yet effective and have not been early
adopted
There are a number of standards, amendments to standards, and interpretations which have been issued by
the IASB that are effective in future accounting periods and which have not been adopted early. None of
these are expected to have a significant effect on the Group, in particular:
IFRS 1 6 " Leases ” (effective for periods beginning on or after 1 January 2019) requires lessees to use single
on-balance sheet model and recognise all lease assets and liabilities on the balance sheet. Management
have completed an assessment of existing operating contracts and do not anticipate the adoption of IFRS 16
to have a significant impact on the Group’s financial statements as the operating leases held by the Group
are of low value and short-term in nature.
2.3 Going concern
The Group operates as a natural resources exploration and development group. To date, it has not earned
significant revenues and is considered to be in the final stages of exploration and evaluation activities of its
Kun-Manie project.
The Directors have reviewed the Group’s cash flow forecast for the period to 31 December 2020 and note
that the Group’s ability to continue advancing its exploration and evaluation work program to Definitive
Feasibility Stage (“DFS”) is dependent on its ability to raise additional financing either through share placings
with new partners or combination of debt and equity financing from financial institutions. The Group’s
cashflow forecast has been prepared on the basis whereby the loan note will be converted in line with the
agreed schedule rather than redeemed for cash, for further information refer to note 11.
The Directors are currently in negotiations with a number of parties in respect of raising further funds. Whilst
progress is being made on a number of potential transactions which would provide additional funding to the
Group, there are no binding agreements in place.
These conditions indicate the existence of a material uncertainty which may cast significant doubt over the
Group’s ability to continue as a going concern. Based on the current progress of the negotiations with
potential investors and providers of finance the Directors believe that the necessary funds to provide
adequate financing to continue with the current work program on its Kun-Manie project will be raised as
required and accordingly they are confident that the Group will continue as a going concern and have
prepared the financial statements on that basis.
The financial statements do not include the adjustments that would result if the Group was not able to
continue as a going concern.
- 34 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
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 statements are presented in US D ollars ( US $), which is the Group's presentation
currency and is the functional and presentation currency of the Company. The functional currency of the
Group’s operating subsidiary is the Russian Rouble (RUB) .
The exchange rate on 31 December 201 8 was US$ 1:RUB 69.46 (201 7 : US $1:RUB 57.70 ), with the average
rates applied to transactions during the year of US $1:RUB 62.77 (201 7 : US $1:RUB 58.28 ).
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 the Group's subsidiaries that have functional currency different from the
Group's presentation currency are translated into the presentation currency at rates approximating to those
ruling when the transactions took place. All assets and liabilities of these subsidiaries are translated at the
rate ruling at the reporting date. Exchange differences arising on translating the opening equity and reserves
at opening/historic rates and the results at actual rates are recognised in other comprehensive income and
accumulated in the foreign currency translation 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.
- 35 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
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:
title to the asset is compromised ;
• sufficient data exists that render the resource uneconomic and unlikely to be developed ;
•
• budgeted or planned expenditure is not expected in the foreseeable future ;
•
insufficient discovery of commercially viable resources leading to the discontinuation of activities.
- 36 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
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
Operating equipment
Vehicles and machinery
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 ( cash
generating units ). 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 are carried at cost and include all highly liquid investments with a maturity of
three months or less.
2.11 Financial instruments
Financial assets and financial liabilities are recognised in the Group 's statement of financial position when
the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial
liabilities are only offset and the net amount reported in the consolidated statement of financial position and
income statement when there is a currently enforceable legal right to offset the recognised amounts and the
Group intends to settle on a net basis or realise the asset and liability simultaneously.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
- 37 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
2
Significant accounting policies
(Continued)
Financial assets
All Group's recognised financial assets are measured subsequently in their entirety at either amortised cost
or fair value, depending on the classification of the financial assets.
Classification of financial assets
Financial assets that meet the following conditions are measured subsequently at amortised cost using the
effective interest rate method:
• The financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows; and,
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
The Group does not hold any financial assets that meet conditions for subsequent recognition at fair value
through other comprehensive income (“FVTOCI”) , nor does it hold any financial assets which are measured
subsequently at fair value through profit or loss (“FVTPL”).
Impairment of financial assets
The Group does not hold any m aterial financial assets subject to the expected credit loss model as defined
within IFRS 9 "Financial Instruments" , except for cash . As such it does not calculate a loss allowance for the
expected credit losses on financial assets that are measured at amortised cost .
Derecognition of financial assets
The Group derecognises a financial asset 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 of the
asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises its retained interest in the
asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the
risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the
financial asset and also recognises a collateralised borrowing for the proceeds received.
- 38 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
2
Significant accounting policies
(Continued)
Financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial
liability w as issued and its characteristics. All purchases of financial liabilities are recorded on trade date,
being the date on which the Group becomes party to the contractual requirements of the financial liability.
Unless otherwise indicated the carrying amounts of the Group’s financial liabilities approximate to their fair
values.
The Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial
liabilities at fair value through profit or loss.
Financial liabilities measured subsequently at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii)
held for trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the
effective interest method. The Group’s financial liabilities measured at amortised cost comprise convertible
loan notes , trade and other payables , and accruals.
The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of
allocating interest income/expense over the relevant period. The effective interest rate is the rate that
discounts estimated future cash receipts/payments through the expected life of the financial asset/liability or,
where appropriate, a shorter period.
Convertible loan notes
The Group has issued a hybrid financial instrument which comprises a convertible loan that can be
converted to share capital at the option of the holder. The conversion component of this hybrid financial
instrument does not meet the definition of equity and is accounted for as an embedded derivative on the
basis that the number of shares to be issued on conversion of the loan varies in response to the changes in
the Company’s shares price and foreign exchange rates.
The financial instrument components include derivative financial instrument, liability component and
attached warrant. The proceeds received on issue of the Group’s convertible loan are allocated into their
embedded derivative components, non-derivative liability and attached warrant equity instrument.
The derivative financial instrument is recognised initially at the fair value measured using the Monte-Carlo
simulation model. It is subsequently accounted for at fair value with changes taken to profit or loss.
The non-derivative liability component is recognised initially at the fair value of a similar liability that does not
have a conversion feature. It is subsequently measured at amortised cost using the effective interest rate
method.
Residual value is allocated to the warrant equity instrument.
Directly attributable transactions costs are apportioned between the non-derivative host component and the
derivative financial instrument component. Transactions costs allocated to the non-derivative component are
amortised over the term of the convertible loan. Transaction costs allocated to the derivative financial
instrument component are expensed immediately through profit or loss.
- 39 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
2
Significant accounting policies
(Continued)
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual
obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the income statement .
Fair value measurement hierarchy
The Group classifies its financial assets and financial liabilities measured at fair value using a fair value
hierarchy that reflects the significance of the inputs used in making the fair value measurement (note 12).
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.
2.12 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.
2.13 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, u ltimately, the cumulative amount recognised over the vesting period is
b ased 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.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the
goods and s ervices received, except where the fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments grante d at the date the entity obtains the goods or
the counterparty renders the service.
Fair value is measured using 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.
- 40 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
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
reporting 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.
- 41 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
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 D irectors 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.
- 42 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
3 Critical accounting estimates and judgements
(Continued)
Key sources of estimation uncertainty
Valuation of derivative financial liabilities
The Group has issued a hybrid financial instrument which comprises a convertible loan that can be
converted to share capital at the option of the holder. The conversion component of this hybrid financial
instrument is accounted for as an embedded derivative which is recognised recognised at fair value through
profit or loss, The Directors estimated the fair value of the derivative component using Monte-Carlo
simulation model , as described in note 12. This produced a distribution of possible outcomes based on a
variety of different probabilities applied to simulated future share price and exchange rates which inevitably
involved a degree of judgement and the actual outcome may vary.
Share-based payments
The Company makes equity-settled share-based payments to certain employee s, advisers and funding
providers.
Equity-settled share-based payments are measured at the fair value of the services received, unless the fair
value cannot be estimated reliably in which case they are measured 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. This is discussed further in note 16.
- 43 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
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. The 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 201 8:
Corporate
(Unallocated)
US$'000
Kun-Manie
Total
US$'000
US$'000
Administrative expenses
Finance income
Finance expense
Fair value movements on derivative financial instruments
(276)
1
(1,223)
67
(1,877)
-
-
-
(2,153)
1
(1,223)
67
Loss for the year
(1,431)
(1,877)
(3,308)
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
-
-
54
1,140
24,678
257
137
117
24,678
257
191
1,257
Segment assets
1,194
25,189
26,383
Trade and other payables
Convertible loan notes
Derivative financial liabilities
Rehabilitation provision
(760)
(1,663)
(153)
-
(42)
-
-
(146)
(802)
(1,663)
(153)
(146)
Segment liabilities
(2,576)
(188)
(2,764)
Segment net assets
(1,382)
25,001
23,619
Capital expenditure
Property, plant and equipment
Exploration and evaluation
-
-
60
4,265
60
4,265
- 44 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
4
Segmental reporting
(Continued)
Reportable information as at 31 December 2017:
Corporate
(Unallocated)
US$'000
Kun-Manie
Total
US$'000
US$'000
Administrative expenses
Finance income
Fair value gain on derivative financial asset
(1,461)
3
767
(463)
-
-
(1,924)
3
767
Loss for the year
(691)
(463)
(1,154)
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
-
-
27
2,409
25,260
769
714
146
25,260
769
741
2,555
Segment assets
2,436
26,889
29,325
Trade and other payables
Rehabilitation provision
Segment liabilities
(658)
-
(658)
(110)
(176)
(768)
(176)
(286)
(944)
Segment net assets
1,778
26,603
28,381
Capital expenditure:
Property, plant and equipment
Exploration and evaluation
-
-
878
4,276
878
4,276
The accounting policies of the reportable segment are the same as the Group’s accounting policies
described in note 2.
Segment loss represents the loss incurred by the segment without allocation of central administration costs
and Directors’ salaries and finance income or costs. This is the measure reported to the chief operating
decision makers for the purposes of resource allocation and assessment of segment performance.
- 45 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
5
Exploration and evaluation assets
Cost and carrying amount
At 1 January 2017
Additions
Foreign currency adjustments
At 31 December 2017
Additions
Foreign currency adjustments
At 31 December 2018
Exploration and evaluation assets
US$'000
17,167
4,276
933
22,376
4,265
(3,631)
23,010
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$1,546,000 (2017: US$1,635,000);
• Depreciation of US$860,000 (2017: US$890,000).
- 46 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
6
Property, plant and equipment
Cost
At 1 January 2017
Additions
Foreign currency adjustments
At 31 December 2017
Additions
Foreign currency adjustments
Office and
computer
equipment
US$'000
Operating
equipment
US$'000
Vehicles
and
machinery
US$'000
Total
US$'000
52
-
3
55
7
(10)
1,648
1
88
1,737
1
(294)
2,484
877
173
3,534
52
(604)
4,184
878
264
5,326
60
(908)
At 31 December 2018
52
1,444
2,982
4,478
Accumulated depreciation
At 1 January 2017
Charge for the year
Foreign currency adjustments
At 31 December 2017
Charge for the year
Foreign currency adjustments
At 31 December 2018
Carrying amount
At 31 December 2018
At 31 December 2017
At 1 January 2017
7
Inventories
Other materials and supplies
Fuel
15
6
1
22
6
(4)
24
28
33
37
870
294
56
1,220
262
(232)
563
596
41
1,200
597
(261)
1,448
896
98
2,442
865
(497)
1,250
1,536
2,810
194
1,446
1,668
517
2,334
2,884
778
1,921
2,736
2018
US$'000
2017
US$'000
145
112
257
630
139
769
- 47 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
8 Other receivables
Trade debtors
VAT recoverable
Prepayments
2018
US$'000
2017
US$'000
1
26
164
191
-
170
571
741
Prepayments represent prepayment and annual fees paid in advance under the normal course of business.
9
Financial assets - credit risk
The principle financials assets of the Group are bank balances. The credit risk on liquid funds is limited
because the counterparties are banks with credit ratings assigned by international credit rating agencies.
The Group’s maximum exposure to credit risk by class of individual financial instrument is shown in the
table below:
Carrying value
Maximum exposure
2018
US$'000
2017
US$'000
2018
US$'000
2017
US$'000
Cash and cash equivalents
1,257
2,555
1,257
2,555
The fair values of financial assets are considered to approximate to their book values due to their short term
nature.
10 Trade and other payables
Trade payables
Accruals
Other payables
2018
US$'000
2017
US$'000
189
573
40
802
148
578
42
768
- 48 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
11 Convertible loan notes
On 13 February 2018, the Group entered into a US$10 million convertible loan facility with Cuart
Investments PCC and YA II PN Ltd (‘the investors’). Under the agreement, the Group received a US$4
million advance on 13 February 2018. The loan is unsecured, bears 8% annual compound interest and is
repayable in 12 monthly instalments. The Group can elect to make monthly repayments of interest and
principal in accordance with the expected repayment schedule. Should the Group not make the
repayments, the investors can elect to receive full repayment at the end of the 12 months period or to
periodically convert the amounts into shares at the lower of:
• The fixed conversion price, being 130% of the Amur’s daily volume average price over the period
of 20 trading days immediately prior to the date on which the loan advance was paid to the
Company; or
• The variable conversion price, being 90% of the Amur’s lowest daily volume average price over
the 5 trading days immediately preceding the relevant conversion notice.
As the loan notes are convertible into variable number of Company's shares, the conversion component,
representing the fair value of the option to convert the financial liability into equity, has been split from the
net proceeds received from the issue of the convertible loan notes and accounted for as an embedded
derivative financial liability through profit or loss ( note 12).
Attached warrant equity instrument has been allocated residual value of US$nil.
The movement in convertible loan notes is analysed as follows:
Amount received
Issue costs - cash
Issue costs - shares (note 15)
Fair value of embedded derivative (note 12)
Effective interest accrued (note 19)
Loan and interest converted (note 15)
At 31 December 2018
Due within 12 months
US$'000
4,000
(465)
(39)
(555)
1,142
(2,420)
1,663
1,663
- 49 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
12 Derivative financial liabilities
Embedded derivative
2018
US$'000
2017
US$'000
153
153
-
-
Embedded derivative
The embedded derivative represents the conversion element of the convertible loan issued to Cuart
Investments PCC and YA II PN Ltd on 13 February 2018 ( note 11).
It is recognised at fair value through profit or loss. On conversion to Company’s shares, the fair value of the
embedded derivative is transferred to equity.
The fair values on the grant date and each reporting date were determined using a Monte-Carlo simulation
model. The simulation involved two components. The first is the simulation of the USD/GBP exchange rate,
and the second is the simulation of the GBP denominated share price of the Company. For each iteration
of the simulation, the simulated exchange rates and the share prices were analysed to determine the
derivative's value.
The following key assumptions were used in determining the derivative's fair value at the reporting date:
Time (months)
Starting Price (£)
Volatility (%)
Mean Growth (%)
Iterations
USD/GBP
Share Price
2.3
0.7837
9.66
1.84
5,000
2.3
0.0405
105.66
0.74
5,000
Warrants
During 2016, the Company granted 72,586,729 new warrants to Crede CG III Limited at a subscription
price between 9.945 pence and 5.07 pence as part of an equity subscription agreement entered into on 14
December 2015 and all outstanding warrants previously granted were exercised in full during the year
ended 31 December 2017.
At 1 January
New issue of warrants
Exercise of warrants
At 31 December
2018
Number
2017
Number
-
-
-
-
62,586,729
-
(62,586,729)
-
- 50 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
12 Derivative financial liabilities
(Continued)
As the warrants were exchangeable into variable number of shares they were accounted for as derivative
financial liability at fair value through profit or loss. Their fair values on the grant date and each 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. No valuation was required at 31 December
2017 and 31 December 2018 as all warrants were fully exercised.
Level 3 fair value measurements
Embedded derivative and warrants instruments are 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
Embedded derivative arising in the year
Embedded derivative converted in the year (note 15)
Fair value movements recognised through profit or loss
Exercise of warrants
Derivative financial liabilities
2017
US$'000
3,295
-
-
2018
US$'000
-
-
555
(336)
(66)
-
(767)
(2,528)
At 31 December
153
-
- 51 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
13 Financial liabilities - Liquidity risk
The Group has to date funded its operations through equity and seeks to manage financial risk to ensure
sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
Management monitors rolling cash flow forecasts of the Group to ensure that the sufficient funds are
available to meet the Group’s commitments. The review consists of considering the liquidity of local
markets, projecting cash flows and the level of liquid assets to meet these commitments . Management
raises additional capital financing when the review indicates this to be necessary.
The contractual maturities of the Group’s financial liabilities are shown in the table below:
At 31 December 2018
Trade and other payables
Convertible loan notes
Derivative
At 31 December 2017
Trade and other payables
Carrying amount
US$'000
Contractual
cash flows
US$'000
6 months orf
less
US$'000
802
1,663
153
2,618
802
1,723
153
2,678
802
1,723
47
2,572
768
768
768
14 Reserves
Group reserves comprise the following:
Share capital
Amounts subscribed for share capital at proceeds received (note 15) .
Share premium
S hare premium 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 Dollars and the long-term monetary items forming
part of the G roup's net investment in the overseas operation s.
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.
- 52 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
15 Share capital
Ordinary share capital
Authorised
Ordinary shares of no par value
Issued and fully paid
685,939,046 (2017: 634,429,789) ordinary shares of no par value
Reconciliation of movements during the year:
At 1 January 2017
Service providers
Crede CG III Ltd - warrants conversion
Crede CG III Ltd - warrants conversion
At 31 December 2017
Service providers
Conversion of loan notes
At 31 December 2018
2018
Number
2017
Number
1,000,000,000
1,000,000,000
2018
US$'000
2017
US$'000
65,674
62,879
Number
US$'000
594,683,617
60,293
1,000,000
15,869,131
22,877,041
58
198
2,330
634,429,789
62,879
610,925
50,898,332
39
2,756
685,939,046
65,674
(c)
(d)
(e)
(a)
(b)
(a) On 2 May 2018, the Company issued 610,925 new Ordinary Shares in exchange for services it
acquired from Medea Capital Partners Ltd in the amount of US$39,000, measured at the fair value of the
services received.
(b) Between March and December 2018, pursuant to the convertible loan agreement entered into on 13
February 2018, the Company issued 50,898,332 new Ordinary Shares to Cuart Investment PPC Ltd and
YA II PN Ltd in settlement of US$2,756,000 of principal and accrued interest (notes 11 and 12).
(c) In January 2017, the Company raised £46,800 (US$57,800) through the issue of 1,000,000 new
Ordinary Shares to Jett Capital Advisors LLC, following the exercise of options at an exercise price of 4.68
pence per share.
(d) On 28 April 2017, the Company, pursuant to the subscription agreement entered into with Crede CG III
Ltd on 14 December 2015, converted 14,509,805 warrants held by Crede using the Black-Scholes
valuation method applicable to the agreement, for 15,869,131 new Ordinary Shares.
(e) On 18 September 2017, the Company, pursuant to the subscription agreement entered into with Crede
CG III Ltd on 14 December 2015, converted 48,076,924 warrants held by Crede using the Black-Scholes
valuation method applicable to the agreement, for 22,877,041 new Ordinary Shares.
All of these shares have been admitted to the AIM market of the London Stock Exchange plc.
- 53 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
16 Share-based payment transactions
Options granted
Number of share options Weighted average exercise
2018
2017
price
2018
(pence)
Outstanding at 1 January
Exercised
Expired
30,746,569
-
(18,372,569)
32,661,387
(1,000,000)
(914,818)
15.69
-
8.47
Outstanding at 31 December
12,374,000
30,746,569
26.25
2017
(pence)
15.38
5.70
16.62
15.69
Exercisable at 31 December
12,374,000
30,746,569
26.25
15.69
The weighted average share price at the date of exercise for share options exercised during the
comparative year was 5 pence.
The options outstanding at 31 December 2018 had a weighted average exercise price of 26.25 pence,
and a remaining contractual life of 1.6 years. These options were granted in July 2015 to certain key
management and personnel. They are fully vested and have no market vesting conditions attached.
During 2018 and 2017, no new options were granted.
There was no charge arising from outstanding options for the current and preceding years.
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 and audit related
services of the Group's financial statements
2018
US$'000
2017
US$'000
1,201
35
103
1,165
(115)
94
The average number of employees for the Group for the period to 31 December 201 8 was 63 (201 7 : 62
employees).
18 Finance income
Bank deposits
2018
US$'000
1
2017
US$'000
3
- 54 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
19 Finance costs
Effective interest on convertible loan notes (note 11)
Other finance costs expensed
20 Tax expense
Current tax - BVI corporation tax
Current tax - Russian corporation tax
2018
US$'000
2017
US$'000
1,142
81
1,223
-
-
-
Continuing operations
2017
US$'000
-
-
2018
US$'000
-
-
-
-
The charge for the year can be reconciled to the loss per the income statement as follows:
Loss before taxation
Expected tax charge based on the BVI corporation tax rate of 0%
Expenses not deductible in determining taxable profit
Income not taxable
Unutilised tax losses carried forward
Effect of overseas tax rates
Tax charge for the year
2018
US$'000
2017
US$'000
(3,308)
(1,154)
-
7
(826)
1,194
(375)
-
167
(67)
158
(258)
-
-
During the exploration and development stages, the Group will accumulate tax losses which may be carried
forward. At the reporting date , the subsidiary in Russia had unrecognised tax losses carried forward of:
Tax losses carried forward
Potential deferred tax impact at the standard
rate of corporation tax in Russia of 20%
2018
US$'000
2017
US$'000
13,320
9,541
2,664
1,908
On 23 May 2016, certain tax incentives for regional investment projects in excess of US$5 million were
introduced in Russia. Although assessed on project by project basis, this could reduce the Group’s future
regional profit tax to between 0% - 10% for the first 10 years of production.
- 55 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
21 Loss per share
Basic and diluted loss per share are calculated and set out below. The effects of warrants and share
options outstanding at the year ends are anti-dilutive and the total of 12.4 million (201 7 : 30.7 million) of
potential ordinary shares have therefore been excluded from the following calculations:
Number of shares
Weighted average number of ordinary shares used in the calculation of basic
earnings per share
656,558,298
613,250,727
2018
2017
Earnings
Net loss for the year from continued operations attributable to equity
shareholders
2018
US$'000
2017
US$'000
(3,308)
(1,154)
Loss per share for continuing operations (expressed in cents)
Basic and diluted loss per share
(0.51)
(0.20)
- 56 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
22 Directors' remuneration
The aggregate remuneration of the Directors of the Company was as follows:
Executive Directors
Robin Young
Non-Executive Directors
Robert Schafer
Brian Savage
Paul Gazzard
Lou Naumovski
Salaries
US$'000
Fees
US$'000
2018
Total
US$'000
Salaries
US$'000
Fees
US$'000
2017
Total
US$'000
316
-
316
316
-
316
-
-
-
-
66
57
64
57
66
57
64
57
-
-
-
-
58
50
49
50
58
50
49
50
316
244
560
316
207
523
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 2017
Additions
Robin
Young
2,306,068
-
Robert
Schafer
438,249
-
Brian
Savage
340,013
-
Paul
Gazzard
-
-
Lou
Naumovski
-
-
At 31 December 2017
Additions
2,306,068
138,499
438,249
138,499
340,013
138,499
-
138,499
-
138,499
At 31 December 2018
2,444,567
576,748
478,512
138,499
138,499
Options held
Exercise
price
£0.087
(US$0.10)
Exercise
dates
23.04.13-
23.04.18
£0.2625
(US$0.32)
27.07.15-
27.07.20
£0.2625
(US$0.32)
19.09.16-
27.07.20
Robin
Young
Robert
Schafer
Brian
Savage
Paul
Gazzard
Lou
Naumovski
7,800,000
1,950,000
1,950,000
3,301,000
748,000
635,000
-
-
-
-
-
338,000
At 1 January 2018
11,101,000
2,698,000
2,585,000
338,000
Options expired / lapsed
Options granted
(7,800,000) (1,950,000) (1,950,000)
-
-
-
-
-
At 31 December 2018
3,301,000
748,000
635,000
338,000
US$ exercise prices are shown for indicative purposes only, calculated at 31 December 2018 exchange rates.
- 57 -
-
-
-
-
-
-
-
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
23 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 13),
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 201 8 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 201 7 .
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 with
variable interest rates 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.
Management reviews its currency risk exposure periodically and hedges part of its exposure to Pound
Sterling by buying and holding on US Dollar deposit s. The Group also hold Roubles in order to cover a
proportion of anticipated Rouble expenditures. As at 31 December 201 8 the Group had on deposit
approximately US$633,000 in Pound Sterling (201 7 : US$ 1,487 ,000) and US$19,000 in Rouble (201 7 : US
$ 25,000 ) 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
2018
US$'000
2018
US$'000
Total
2018
US$'000
482
(15)
15
482
113
-
(80)
33
595
(15)
(65)
515
- 58 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
23 Financial and capital risk management
(Continued)
Currency of net monetary assets/liabilities
US Dollar
Pound Sterling
Russian Rouble
At 31 December
Functional currency
US Dollar Russian Rouble
2017
US$'000
2017
US$'000
893
839
19
1,751
141
-
65
206
Total
2017
US$'000
1,034
839
84
1,957
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
2018
US$'000
(2)
2
2017
US$'000
47
(114)
(3)
3
127
(195)
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) and
loans/debt 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 C ompany 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.
- 59 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
24 Commitments
Capital commitments
Contracted for but not provided in the financial statements:
Acquisition of property, plant and equipment
2018
US$'000
2017
US$'000
17
21
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.
25 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
2018
US$'000
2017
US$'000
1,158
1,091
1,158
1,091
US$227,000 (2017: US$220,000) of the short-term employee benefits amount related to key management
personnel were capitalised within exploration and evaluation assets.
The fees of US$316,000 (2017: US$316,000) in respect of Robin Young's director services are paid to
Western Services Engineering Inc., a company of which he is also a director and a shareholder. No
amounts remained outstanding at the reporting date (2017: US$nil).
There were no other related party transactions in the current or preceding years.
- 60 -
AMUR MINERALS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
26 Events after the reporting date
On 12 January 2019, pursuant to the convertible loan agreement entered into on 1 3 February 2018, the
Company issued 13,200,051 new O rdinary S hares to Cuart Investment PPC Ltd and YA II PN Ltd in
settlement on US $ 404,000 of principal and accrued interest.
On 26 February 2019, the Company announced the completion of its Pre-Feasibility Study on the Kun-
Manie nickel-copper sulphide project.
On 27 February 2019, pursuant to the convertible loan agreement entered into on 1 3 February 2018, the
Company issued 6,193,997 new O rdinary S hares to Cuart Investment PPC Ltd and YA II PN Ltd in
settlement on US $ 218,000 of principal and accrued interest.
On 22 March 2019, the Company has extended the maturity date to 20 March 2020 on the existing
convertible loan notes entered into with Cuart Investments PPC Ltd and YA II PN Ltd on 13 February.
Additionally, a further advance of US$500,000 (net of an implementation fee) has been secured. In
conjunction with the extension of the maturity date and the further advance, the investors have been also
issued with 10,902,956 warrants to subscribe for shares in the Company at an exercise price of 3.76 pence
per share, representing a premium of approximately 25% to the closing mid-market price on 21 March
2019. The warrants will be exercisable for a period of three years.
- 61 -