ANNUAL REPORT & ACCOUNTS 2011
Chairman’s Report
Managing Director’s Report
Directors’ Biographies
Report of the Directors
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated & Company Statement of Financial Position
Consolidated & Company Statement of Changes In Equity
Consolidated & Company Cash Flow Statement
Notes to the Financial Statement
Notice of Annual General Meeting
Company Information
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FRONT COVER
Aerial view of the Copper Flat project in New Mexico, USA
CHAIRMAN’S REPORT
The year to 30 September 2011 and the period since
have seen ECR continue to actively grow its asset base.
The highlight has been the sale of ECR’s interest in the
Copper Flat copper-molybdenum-gold-silver project in
New Mexico, USA.
The Company’s exclusive option over 100% of the
Copper Flat project was sold to THEMAC Resources
Group Ltd, a company listed on the TSX Venture
Exchange. As announced, the sale completed during
the year and delivered to ECR an interest in THEMAC
of considerable value.
Notable progress was made on ECR’s Sierra de las
Minas gold project in La Rioja Province, Argentina, and
this project will be a major focus of our activities in 2012.
The planned drilling programme is unfortunately slightly
behind schedule due to delays in the importation of a
brand new drilling rig for the programme to Argentina,
and drilling is now expected to commence in March
2012. Drilling by the Company at the Unchimé iron ore
project in Salta Province, Argentina during 2011 along
with initial metallurgical testwork failed to produce
results that justified the cost of the proposed Unchimé
acquisition and it was decided not to proceed further.
The ACS cable support manufacturing business, whilst
operating in an environment suffering from the world
wide slowdown, retained its key customer accounts
and managed to secure new outlets. Fortunately the
ACS facilities were not directly affected by the floods in
Thailand although many of the business’s suppliers were
flooded and the resulting lack of certain supplies delayed
some production.
The outlook for 2012 construction activity within the
markets served by the ACS business appears to be
showing signs of recovery with some very large resource
projects offering ACS opportunities to move forward
even with the global economic uncertainty.
Many projects in ACS’s sector are becoming bigger in
terms of tonnage and value and financing of the larger
projects is becoming more of a challenge. ECR has
addressed this by providing capital to augment ACS’s
working funds, and ACS is currently seeking to adjust its
bank facilities to provide a more reliable and sustainable
source of funding for the future.
In February 2011 Paniai Gold Ltd, in which the Company
currently has a 26% shareholding, agreed to sell its
interest in the Derewo River project in Papua Province,
Indonesia to West Wits Mining Ltd, a company listed on
the Australian Securities Exchange. The Derewo River
gold project was identified by ECR in late 2008, at which
time the Company moved to put in place an appropriate
holding structure with Paniai as the chosen development
vehicle. Paniai went on to raise early stage funding in
Australia during 2009 before agreeing the transaction
with West Wits following the implementation of the
new Indonesian mining code in 2010.
The sale of Paniai’s interest to West Wits has now
completed and Paniai and its shareholders, and therefore
ECR, retain a sizable stake in the Derewo River project
while having no obligation to fund ongoing development
and exploration. Excitingly, alluvial gold production is
expected to commence at the project during this year,
funded by West Wits.
During the year the administrators of the Company’s
Australian subsidiary Mercator Gold Australia Pty Ltd
(“MGA”) accepted a bid from Reed Resources Ltd for
MGA’s Meekatharra gold assets, and now that the Reed
Resources transaction has been completed it is hoped
that in due course ECR will be able to identify a suitable
new project for MGA that will use to best advantage
the substantial tax losses we believe exist within MGA.
The financial statements for the year recorded a surplus
for ECR and its subsidiaries (the “Group”) with the
exception of MGA of £6,274,307, compared with a net
deficit of £3,293,850 for the year to 30 September 2010,
and pleasingly the Group’s net assets on the balance
sheet increased in the year by £9,365,880.
Michael Silver
Chairman
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
1
MANAGING DIRECTOR’S REPORT
The year to 30 September 2011 saw the crystallisation of two key transactions for ECR, one
being the sale of the Company’s option over the Copper Flat project in New Mexico, USA to
THEMAC Resources Group Ltd (TSX: MAC), and the other being the sale of Paniai Gold Ltd’s
interest in the Derewo River gold project in Papua, Indonesia to West Wits Mining Ltd (ASX: WWI).
The sale of the Copper Flat option is largely responsible for the fact that the Company has been
able to record total recognised income for the year of £6,274,307. The receipt of 11,149,826
West Wits Mining shares following a distribution by Paniai Gold also contributed to this figure,
and both transactions contributed to a 337% increase in the net assets of the Group to
£13,318,296.
As a result of the Copper Flat transaction the Company presently holds 14.35 million shares
and 14.35 million warrants of THEMAC. ECR’s shareholding equates to approximately 19%
of THEMAC's issued shares, and combined with the Company’s warrants translates to a
21% fully diluted interest. At the time of writing THEMAC has a market capitalisation of
approximately C$64 million. ECR’s shares and warrants are on the Group balance sheet at
a value of £10,661,287, and importantly, the Company’s holding is not subject to any escrow
or similar restrictions to trading.
At the year-end ECR held approximately 14% of Paniai Gold’s outstanding shares. Post the
year-end this has in percentage terms almost doubled to approximately 26%. Paniai sold its
interest in the Derewo River project to West Wits Mining for 80 million West Wits ordinary
shares, 46 million performance shares and 12.5 million options exercisable at A$0.08 for five
years. The ordinary shares received were distributed pro rata to Paniai shareholders, including
ECR, in July 2011, and the performance shares and options are retained by Paniai.
The Company’s holdings in Paniai and West Wits together represent substantial exposure to
the Derewo River gold project, where work is underway to commence alluvial gold production
during 2012. The alluvial operation is then expected to anchor, logistically and financially, an
active exploration programme in what is one of the most promising exploration provinces in
the world.
Turning to ECR’s directly held projects, the Sierra de las Minas project area in Argentina
delivered some outstanding exploration results during the year. Moreover, a small scale
production strategy for the project area has been identified and is being advanced by the
Company with the objective of achieving initial cash flow during the second half of 2012.
The Sierra de las Minas project area is particularly valuable to the Company because it does
not carry onerous acquisition costs or heavy ongoing requirements for exploration expenditure.
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ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
Argentina Gold Projects
By far the most significant new business development
for the Company has been the acquisition of and
subsequent good progress with the Sierra de las Minas
gold project area in La Rioja Province, Argentina, and
particularly the El Abra prospect.
ECR holds 100% exploration rights to the Sierra de las
Minas project area and 100% exploitation rights to a
number of prospects within it, including the El Abra
prospect.
Mineralisation at Sierra de las Minas is primarily of
mesothermal lode style, frequently with copper and
silver. A large number of such mineral occurrences are
present across the project area, which extends over
approximately 70,000 hectares, and a large part of ECR’s
work during calendar year 2011 was to begin to prioritise
the known historic prospects. This work is still ongoing,
but a number of high priority prospects have been
identified, led by the El Abra prospect.
Surface geochemical sampling at El Abra during the first
half of 2011 confirmed the presence of high grade gold
mineralisation hosted within and in association with
numerous gold-bearing quartz veins. High grades
including 80.78, 44.98 and 39.74 g/t gold were obtained.
Geophysical surveying carried out at El Abra during late
2011 has been successful in delineating a number of
potential drill targets coincident with high grade surface
samples, and the results of initial metallurgical test-work
conducted on surficial samples from three prospects at
Sierra de las Minas, including El Abra, indicate that near
surface gold bearing material from these prospects can
be processed by conventional means to achieve high
rates of gold recovery.
An initial programme of diamond core drilling is planned
to commence at El Abra in the coming weeks, and
it is hoped that the results of the programme will
demonstrate that sufficient high grade, near surface
material is present at El Abra to support the
commencement of small scale production. This would
likely entail sending material for processing at an existing
plant elsewhere in Argentina, allowing cash flow to be
achieved relatively early and with minimal start-up capital.
Although El Abra is the focus of ECR’s activities at Sierra
de las Minas, multiple other prospects returned very
promising results from surface geochemical sampling
during the second half of 2011 and the Company will
continue to advance these prospects as far as possible
during 2012. Additional prospects within ECR’s
tenements that have yet to be subjected to initial
appraisal will be visited and sampled during the year
as far as resources allow.
Copper Flat Project & THEMAC
Resources Group
Since the acquisition of ECR’s option over the Copper
Flat copper-molybdenum-gold-silver porphyry project in
New Mexico, USA by THEMAC Resources Group was
completed in March 2011, THEMAC has proceeded to
exercise the option and acquire 100% ownership of the
Copper Flat project.
As detailed elsewhere in this report, this transaction
has allowed the Group to record a substantial surplus
for the year, for the first time ever. Since completion of
the transaction THEMAC has assembled a high calibre
management team with extensive copper development
experience, and we are confident that this team has
the wherewithal to develop the Copper Flat project to
production successfully. Therefore we are hopeful of
significant appreciation in the share price of THEMAC
in the years to come.
Operationally, in November and December 2011
THEMAC reported highly promising results from its 2011
drilling campaign at Copper Flat, which saw 18 diamond
core holes completed. A total programme of 47 holes has
been permitted, and drilling of the remainder is expected
to take place during 2012. The highest grade intercept
from the 2011 campaign was of 2.34% copper from
EL ABRA
ECR holds 100% exploration rights to the Sierra de las Minas
project area and 100% exploitation rights to a number of
prospects within it, including the El Abra prospect.
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
3
MANAGING DIRECTOR’S REPORT CONTINUED
COPPER FLAT
The sale of the Copper Flat option is largely responsible for the
fact that ECR has been able to record total recognised income for
the year of £6,274,307.
20 to 25 ft in a hole that recorded an average grade
from surface to total depth of 0.35% copper over 1,177
ft. The results of 16 of the 18 holes completed during
2011 have been announced by THEMAC to date, and it
is very encouraging to see not only numerous high grade
intercepts but also high grade intercepts at relatively
shallow depth, where high grade material can be mined
and processed early in the life of the operation. This may
be expected to have a positive impact on the economics
of the project.
A recent and momentous development was the
announcement by THEMAC in late January 2012 of an
updated NI43-101 compliant resource estimate for the
Copper Flat deposit. The updated estimate incorporated
data from 2011 drilling and from the re-assay of 2,969
historical drill sample pulps, allowing the inclusion of gold
and silver in the deposit’s NI43-101 compliant resources
for the first time.
The result of the update was to increase the Measured
& Indicated resources of the deposit to 194Mst grading
0.26% copper, 0.008% molybdenum, 0.002 oz/t gold
and 0.05 oz/t silver, equating to a 56% increase in the
amount of contained copper in the Measured &
Indicated categories to an estimated 1,005,891,000 lbs.
This was an impressive outcome which should
substantively strengthen the economic case for the
return of the Copper Flat deposit to production.
Moreover, the re-assay of further historical pulps is
expected to enable the inclusion of additional gold and
silver, while the orebody remains open and drilling is set
to recommence in spring 2012 with a particular focus on
improving THEMAC’s understanding of the high grade
core of the deposit.
THEMAC’s progress in growing the Copper Flat
deposit’s resource inventory, with ongoing feasibility
studies, in assembling the right management team and
in the permitting process for the return of the deposit
to production is all highly encouraging, and we look
forward to seeing the project develop into a producing
mine of note.
At the time of writing ECR has a holding of 14.35 million
shares and 14.35 million warrants of THEMAC. The
Company’s holding is equivalent to approximately 19%
of THEMAC’s issued shares (21% fully diluted). All the
warrants held are exercisable at C$0.28 per share, with
3.85 million warrants being valid until 3 May 2013 and
the remaining 10.5 million valid until 4 March 2016.
Paniai Gold & West Wits Mining
In July 2011, Paniai Gold Ltd completed the sale of its
interest in the Derewo River project in Papua Province,
Indonesia to West Wits Mining Ltd (ASX: WWI) for
a package of 80 million ordinary shares, 46 million
performance shares and 12.5 million options.
The Derewo River project covers approximately 129,000
hectares of mining and exploration tenements and is a
joint venture between West Wits and a local party, the
joint venture having been established by Paniai in 2008
with support from ECR. West Wits has a 50% interest
in joint venture, and can increase its interest in the
exploration tenements to 80%.
Following the conversion of loans to Paniai Gold totalling
A$337,937 in December 2011, ECR holds 100 million
Paniai shares, equivalent to approximately 26% of Paniai’s
issued share capital. Paniai in turn holds 46 million West
Wits performance shares and 12.5 million West Wits
options exercisable at A$0.08 and expiring on 28 July
2016. The performance shares convert to ordinary
shares subject to the Derewo River project achieving
the production of 20,000oz gold by 28 July 2013.
On conversion of the performance shares and exercise
of its options, Paniai would hold approximately 18% of
West Wits’s ordinary shares (based on the number of
ordinary shares currently outstanding).
Paniai distributed to its shareholders the ordinary shares
received from West Wits, and as a result ECR has a
direct holding of 11,149,826 West Wits ordinary shares,
which is equivalent to approximately 4% of the ordinary
shares in issue.
The immediate objective of the Derewo River project is
to establish a modern alluvial gold mining operation on
a granted mining licence that has been the site of very
prolific artisanal mining. Exploration of a wider area for
4
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
Main picture, topography of the
Derewo River project area; inset,
the Derewo River project area
and proximity to Freeport
McMoRan’s tenements
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
5
MANAGING DIRECTOR’S REPORT CONTINUED
alluvial and hardrock deposits is also planned, and
exploration targets include large scale alluvial gold,
porphyry gold-copper and bonanza grade quartz sulphide
gold veins.
long term potential, ultimately it was determined that
the results of the Company’s due diligence did not justify
further work, particularly in light of the acquisition costs
of the project and the uncertain economic climate.
Indonesia’s Papua Province is arguably one of the world’s
most prospective areas for mineral exploration, and the
Derewo River project tenements are contiguous with
Freeport McMoRan’s mining and exploration leases
containing the Grasberg copper-gold mine and the Wabu
gold deposit. Wabu is an undeveloped gold resource of
around eight million oz and lies approximately 15km from
the boundary of the Derewo River tenements. The joint
venture’s proposed alluvial operation is situated
approximately 60km further to the west.
The Company provided logistical support and advice to
three white water kayakers from North Wales who in
September 2011 attempted to be the first to descend
the entire length of the Derewo River by kayak. Although
the expedition fell short of this goal it was nevertheless
judged a success and we are pleased to have been able
to assist.
Unchimé Iron Ore Project
During the year the Company secured an option to
acquire an initial 70% interest in the Unchimé iron ore
project in Salta Province, Argentina, and more than six
months was spent carrying out extensive due diligence
on the project.
The results of the analysis of core samples from a
diamond drilling programme completed at Unchimé by
ECR during September 2011 were judged inconclusive as
to the resource potential of the deposit, while the results
of metallurgical testwork did not enable the Company to
conclude with sufficient certainty that a saleable iron ore
product could be economically produced.
Further work in both areas would be required in order to
make a full evaluation of the potential of the project, and
although we are of the view that Unchimé may have real
ACS Asia
ECR holds a 70% economic interest in ACS Asia, an Asia
Pacific focused metal products business with a modern
manufacturing facility in Rayong, Thailand employing
more than 100 people. The core product lines of ACS
are electrical and mechanical support systems.
ACS recorded revenue for the year of approximately
£4.95 million, compared with approximately £4.8 million
for the year to 30 September 2010. Despite this increase
the business has been affected by a shortage of working
capital, and ECR has sought to remedy this situation by
providing ACS with extra funds.
Numerous promising enquiries have been received by
ACS in recent months and a large order from the Middle
East is presently being serviced, and it is hoped that with
additional working capital provided by ECR and by local
banks a marked improvement in the financial
performance of ACS can be achieved.
Warm Springs Renewable
Energy Corporation
Warm Springs Renewable Energy Corporation
(“WSREC”), in which ECR has a 90% interest, has since
2010 been evaluating an opportunity to develop a solar
power plant in New Mexico, USA in conjunction with
the proposed restart of the Copper Flat mine being
developed by THEMAC Resources Group, in which
ECR is a substantial shareholder.
Although the concept remains very promising, WSREC
has found the environment for the development of such
PANIAI GOLD
ECR’s holdings in Paniai and West Wits together represent
substantial exposure to the Derewo River gold project, where
work is underway to commence alluvial gold production
during 2012.
6
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
a project more challenging than anticipated. In view
of the promising investment opportunities available
to ECR elsewhere the Company has reduced its
expenditure in relation to WSREC to the bare minimum,
and an alternative means of financing any further work by
WSREC is currently being sought. On this basis the ECR
board have considered it prudent to provide against the
Company’s investment in WSREC in the amount of
approximately £240,000, leaving WSREC on the Group
balance sheet as an asset in the reduced amount of
£100,000.
Mercator Gold Australia
An element of control of ECR’s Australian subsidiary
Mercator Gold Australia Pty Ltd (“MGA”) was returned to
its directors in July 2011 following completion of the sale
of the Meekatharra gold project by MGA’s administrators.
However, settlement of the claims of the creditors of
MGA by the administrators remained ongoing to a
significant extent at 30 September 2011, leaving a large
amount of uncertainty as to MGA’s financial position
and meaning that in accounting terms full and effective
control of MGA had not been regained at that date.
On this basis the financial information available for MGA
as at 30 September 2011 has not been consolidated
with that of the Group. Once MGA’s creditors have been
entirely dealt with by the administrators and the most
recent Deed of Company Administration (DOCA) has
been fully effectuated, the Company will be in a position
to produce Group accounts that include MGA.
The full amount of the tax losses accumulated by MGA
is now estimated at a total of A$77M. We believe these
tax losses to be valid and useable by MGA subject to
certain conditions, although detailed advice is still being
sought to confirm this and to ascertain the best means
of using the tax losses for the benefit of ECR, MGA’s
sole shareholder.
ECR has already benefited from the sale of the
Meekatharra project in so far as in July 2011 MGA
received 1,252,650 shares of Reed Resources Ltd (ASX:
RDR), the company that purchased Meekatharra, with no
restrictions as to their disposal. These shares were sold
gradually during and after the year-end and the proceeds
totalling in the region of A$500,000 have been used to
support ECR’s working capital position and to fund the
operating costs of MGA, which mainly relate to the tax
and accounting investigations referred to above.
Financial & Corporate
Luca Tenuta and Stephen Clayson were appointed as
directors of ECR in April 2011, Luca to serve as a non-
executive director and Stephen to serve as an executive
director and the Company’s Chief Financial Officer, having
held the latter role since September 2010. At the same
time, Mick Elias resigned as a non-executive director
having given his dedicated service to the Company
in that capacity since 2004.
Promotional activities during the year included
presentations organised by MiningMaven, Minesite
and Proactive Investors and an appearance at the Master
Investor show, and the success of these and other
activities is reflected in the high liquidity that is evident in
ECR shares in comparison to many AIM listed companies
of similar market capitalisation.
Since the date of ECR’s last annual report convertible
loan notes of £825,000 in face value have been converted
to shares and notes of £200,000 in face value have been
repaid, lightening the burden of interest on the Company.
In August 2011 ECR secured a US$1.5M loan from YA
Global Master SPV Ltd (“YA Global”), which is advised
by Yorkville Advisors LLC. The loan bears interest at
10% per annum and will be fully repaid by August 2012.
The loan is secured over listed securities held by the
Company and under the Standby Equity Distribution
Agreement (“SEDA”) entered into by the Company with
YA Global in April 2010. The proceeds of the YA Global
loan were used to provide for the ongoing costs of
ECR’s activities and to specifically fund exploration at the
Unchimé and Sierra de las Minas projects in Argentina.
A total of approximately £1.225 million has been raised
since the publication of the Company’s last annual report
through equity placings and under the SEDA with YA
Global, and these capital raisings have been of key
importance in enabling the progress described in this
report to be made. Nonetheless, during 2012 we will
evaluate very closely whether it may be in the interests
of shareholders to dispose of certain existing assets of
ECR and to deploy the proceeds of doing so to advance
the Company’s directly held projects.
I am pleased to be able to report on the strides forward
detailed above, and I expect further significant progress
during calendar year 2012.
Patrick Harford
Managing Director
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
7
DIRECTORS’ BIOGRAPHIES
Michael Bernard Silver
Executive Chairman (aged 75)
Michael Silver was appointed Executive Chairman on 28
July 2008. A civil engineer, Mr Silver is a Member of the
Institution of Engineers of Australia with more than 40
years of experience. Mr Silver founded a substantial
contract mining company in Australia, operating in mineral
sands, coal, copper, iron ore, sapphires and tin, and as the
original contract miner at the Telfer gold-copper mine in
Western Australia. He also has industrial experience as
owner of numerous metal fabrication businesses.
Previous mine development roles include:
• Developing the Nevoria gold mine in Western Australia
for Southern Goldfields;
• Assembling the development team for the Coliseum
gold mine in California;
• Developing the Tolukuma gold mine in Papua New
Guinea for Dome Resources.
Patrick Aloysius Harford
Managing Director (aged 60)
Patrick Harford was appointed Managing Director on
22 March 2004. He graduated with Honours in
Geomorphology from Melbourne University in 1973.
Past senior management roles include:
• Grants Patch Mining (Managing Director), which
operated a 10Mt gold tailings retreatment operation
in Western Australia producing 750,000oz gold;
• Zapopan (Managing Director), which participated in
the discovery and development of the Mt Todd and
Tanami gold mines in Australia’s Northern Territory;
• Auridiam Consolidated, which developed the 2Mtpa
River Ranch diamond mine in Zimbabwe. The River
Ranch mine produced in excess of 500,000 carats
per annum.
Stephen James Clayson
Director & Chief Financial Officer (aged 26)
Stephen Clayson was appointed as an executive director
of the Company on 1 April 2011 having been Chief
Financial Officer of ECR since September 2010, and
having been involved in the Company’s affairs for some
two years prior to his appointment as Chief Financial
Officer. He has acquired substantial experience in the
mineral exploration and development sector and in the
operations of listed companies since 2006.
Luca Tenuta
Non-executive Director (aged 35)
Luca Tenuta was appointed as a non-executive director
of the Company on 1 April 2011 and has over 10 years of
experience in financial and corporate matters. He started
his career as a credit and risk analyst for Banca Intesa
London (today San Paolo IMI) and Credit Suisse First
Boston. During his time in banking he was responsible for
European aerospace and defence, engineering and energy
companies and structured debt/equity transactions for
non-investment grade counterparties. He subsequently
gained experience in the natural resources sector as CEO
of Uranio AG and of Worldwide Natural Resources plc. He
is currently Chairman of Ecovista plc, a company listed on
PLUS, and is working with Old Park Lane Capital plc, the
Company’s joint broker in a corporate broking capacity.
Luca holds an MA in Economics and Finance from
Universita’ La Sapienza in Rome. He is also an FSA
approved person with the designation CF30.
Michael Elias (resigned 1 April 2011)
Non-executive Director (aged 60)
Michael Elias was appointed a Non-Executive Director on
7 July 2004. Mr Elias is a geologist with over 30 years of
experience in the mining industry. He was formerly Chief
Geologist for Resource Development in WMC’s nickel
division and is currently a Principal Consultant for CSA
Australia, one of Australia’s largest mining consultancies.
8
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
REPORT OF THE DIRECTORS
For the year ended 30 September 2011
ECR Minerals plc company no. 5079979
The Directors of ECR Minerals plc (the “Directors” or
the “Board”) present their report and audited financial
statements for the year ended 30 September 2011.
Principal activities
The Company is registered under no. 5079979 in England.
The principal activities of the Company are those of a
mineral exploration and development company, most
frequently as a parent company to various operating
subsidiaries. The activity of its direct subsidiary Gold
Crest Holdings Ltd which is based in Hong Kong is that
of a holding company and the activity of Gold Crest’s
ultimate subsidiary based in Thailand is that of a metal
products manufacturer.
In common with many similar companies, the Company
raises finance for its activities, and those of its subsidiaries,
in discrete tranches which finance activities for limited
periods. Further fundraising is undertaken as and when
required. Equity financing totalling £1.4 million was raised
during the year.
Business review
Main projects & interests
• Copper Flat Project and Themac Resources Group Ltd –
Copper mine development in New Mexico, USA
• Sierra de las Minas Gold Project Area – Gold exploration
in La Rioja Province, Argentina
• Paniai Gold Ltd and West Wits Mining Ltd – Derewo
River gold project in Papua Province, Indonesia
• ACS Asia – Manufacture of metal products in Thailand
General
• Financial & Corporate
A full review of the above matters is contained in the reports
of the Chairman and Managing Director.
Group financial results
The financial statements for the year recorded a surplus
for ECR and its consolidated subsidiaries (the “Group”) of
£6,274,307, compared with a net deficit of £3,293,850 for
the year to 30 September 2010. The Group’s net assets on
the balance sheet increased in the year by £9,265,880.
The Group reported £4,953,728 of turnover and a cost of
sales of £3,915,108 with a gross profit of £1,038,620, all
of which is attributable to ACS Asia (1996) Company Ltd
(“ACS Asia”).
The Group’s operating and investment activity continued
along the same lines as in the previous year with
management focusing on enhancing the value of the
Group’s projects in the mineral sector. Consequently ECR’s
administrative expenses for the year were similar to those
of the previous year after allowing for the inclusion of a full
year of ACS Asia’s administrative expenses in the Group’s
results.
Future developments
The Directors continue to look for development
opportunities in the mineral and other sectors that would be
suitable as acquisitions or for investment and will evaluate
them with consideration for their financing potential.
Projects will be developed in accordance with their progress
and potential. Funding for this will be in line with project
merits and available cash resources.
Financial and other risk management objectives
and policies
The business of mining, exploration and the operation
of business in other countries has an inherent risk of the
Company’s failing to discover sufficient viable deposits
of minerals within the limits of the Company’s present
resources, being exposed to excessive inflation of input
costs, the frustration of supply of necessary raw materials,
or government permits and operating permits not being
granted. There is also the more recent development of
credit risk and the unpredictable behaviour of project
finance institutions and volatile world-wide economics.
The Board is aware of these risks and continuously reviews
them. When it is able, it takes the necessary steps to avoid
them or to limit the Company’s exposure to such risks. The
Company takes out suitable insurance against operational
and corporate risks that are anticipated as being material
and insurable.
The Company does not presently hold any forward or hedge
positions in either currency or minerals. These are presently
not deemed necessary but this is reviewed from time-to-
time. There is inherent risk in operating between different
currencies, namely GBP, AUD, USD, Thai baht and Argentine
pesos, and the Board monitors and reviews this exposure on
a regular basis.
The Board recognises the Company’s exposure to liquidity
risk and that the Company’s ability to continue operating is
dependent on there being sufficient cash to sustain day-to-
day operations while seeking a route to redeveloping the
existing operations and new investment opportunities. The
Board continually monitors this situation and seeks potential
routes to realise part of the Company’s investments to
maintain adequate levels of solvency to meet the
Company’s obligations as they fall due.
The locations of the Company’s principal activities are the
USA, Thailand, Argentina and Australia and its corporate base
is in the United Kingdom, all of which locations are considered
stable with advanced economic and legal infrastructures.
Further details of the Group’s financial risk management
objectives and policies are set out in Note 22 to the financial
statements.
ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
9
Directors’ interests
Share interests
Directors who held office at 30 September 2011 held the
following beneficial interests, either directly or indirectly,
(including interests held by spouses, minor children or
associated parties) in the ordinary shares of the Company:
M B Silver
P A Harford
S J Clayson
L Tenuta
Total
30 September 30 September
2010
no. of shares
2011
no. of shares
18,034,181
3,516,467
0
0
3,080,043
3,516,467
n/a
n/a
21,550,648
6,596,510
Share options
Directors of the Company who served during the year held
the following share options granted under the Company’s
unapproved share option scheme.
No share options were exercised by Directors during the year.
REPORT OF THE DIRECTORS CONTINUED
Present position of the Company
As at 30 September 2011 and currently the Company’s
financial position is stable. As explained herein, the financial
statements continue to be prepared on a going concern basis.
Reviews of operations and business developments are
provided in the reports of the Chairman and Managing
Director, the report of the Directors, and within the details of
the financial statements. Therein are set out certain forward
looking statements that have been made by the Directors in
good faith. By the nature of these statements there can be
no certainty that any or all predictions will be met.
Policy on payment of suppliers
The Group’s policy is to settle terms of payment with its
suppliers when agreeing the terms of each transaction,
ensuring that suppliers are made aware of the terms of
payment, and abiding by the agreed terms. The number
of days of trade creditors outstanding at the year-end was
88 days (2010: 43 days).
Dividends and profit retention
The results for the year are set out in the Income Statement
on page 14. No dividend is proposed in respect of the year
(2010: nil). The Group surplus for the year of £6,274,307
(2010: loss £3,293,850) has been taken to reserves.
Directors
The Directors who served during the year were:
Michael Bernard Silver
Patrick Aloysius Harford
Luca Tenuta (appointed 1 April 2011)
Stephen James Clayson (appointed 1 April 2011)
Michael Elias (resigned 1 April 2011)
Under the Company’s articles of association, at every annual
general meeting (AGM) of the Company, any Director:
• who has been appointed by the Board since the last
annual general meeting; or
• who held office at the time of the two preceding annual
general meetings and who did not retire at either of
them; or
• who has held office with the Company as a non-
executive Director (that is, he has not been employed by
the Company or held executive office) for a continuous
period of nine years or more at the date of the meeting;
shall retire from office and may offer himself for election/re-
election by the members.
In accordance with the above, all the Directors are required
to retire at the forthcoming annual general meeting.
10 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
Directors’ interests continued
M B Silver
M B Silver – total
P A Harford
P A Harford – total
S J Clayson
S J Clayson – total
M Elias
M Elias – total
Total Directors’ options
as at 30 September 2011
Options issued
Date issued
Expiry date
30 September 2011
Exercise price
Balance
6,000,000
6 January 2011
6 January 2021
£0.025
6,000,000
6,000,000
6,000,000
5,800,000
6 January 2011
6 January 2021
£0.025
5,800,000
5,800,000
5,800,000
3,900,000
6 January 2011
6 January 2021
£0.025
3,900,000
3,900,000
3,900,000
2,500,000
6 January 2011
6 January 2021
£0.025
2,500,000
2,500,000
2,500,000
18,200,000
Interest in convertible loan notes
On 17 October 2011, the Company issued and allotted a total of
13,636,363 ordinary shares at £0.011 per share in respect of the
conversion of convertible loan notes of face value £150,000 held
by Fair Choice Ltd, a company controlled by Michael Silver. On
28 November 2011, Fair Choice acquired further convertible loan
notes of the Company of face value £125,000, repayable on 17
October 2013.
Share capital and substantial share interests
Details of the Company’s share capital are disclosed in Note 13
of the financial statements.
On 1 March 2012, the Company was aware of the following
holdings of 3% or more in the Company’s issued share
capital (713,909,432 shares):
Registered Shareholder Name
Shares
%
Barclayshare Nominees Limited
85,065,443 11.91
TD Direct Investing Nominees (Europe) Ltd 80,744,240 11.31
6.90
LR Nominees Limited
6.16
HSDL Nominees Limited
5.95
Lawshare Nominees Limited
5.13
James Capel (Nominees) Limited
4.49
Pershing Nominees Limited
3.51
Share Nominees Ltd
3.44
Investor Nominees Limited
3.33
JIM Nominees Limited
49,245,520
43,986,182
42,456,987
36,639,702
32,054,138
25,078,361
24,578,910
23,758,321
Statement of Directors’ responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have elected to prepare the Group and Parent
Company financial statements in accordance with
International Financial Reporting Standards (“IFRSs”) as
adopted by the European Union and, as regards the Parent
Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006. Under
Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group for that
period. In preparing these financial statements the
Directors are required to:
•
select suitable accounting policies and then apply
them consistently;
• make judgments and accounting estimates that are
•
•
reasonable and prudent;
state whether applicable IFRSs as adopted by the
European Union have been followed subject to any
material departures disclosed and explained in the
financial statements;
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company
and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
the financial statements may differ from legislation in other
jurisdictions.
ANNUAL REPORT & ACCOUNTS 2011 11
ECR MINERALS PLC
•
each of the Directors has taken all the steps that they
should have taken as a Director to make himself aware
of any relevant audit information and to establish that
the Company’s auditors are aware of the information.
Auditors
Nexia Smith & Williamson have expressed their willingness
to continue in office as auditors of the Company and a
resolution to confirm their appointment will be proposed
at the forthcoming annual general meeting.
AGM
The annual general meeting (the “AGM”) of the Company
will be held at 10am on Saturday 31 March 2012 at the
East India Club, 16 St James’s Square, London SW1Y 4LH.
Notice of the AGM is on pages 35 to 37.
This report was approved by the Board on Monday 5 March
2012.
By order of the Board
Patrick Harford
Managing Director
Michael Silver
Chairman
REPORT OF THE DIRECTORS CONTINUED
Corporate Governance
The Directors seek, as far as is considered appropriate
having regard to the size and nature of activities of the
Company, to comply with the Combined Code on Corporate
Governance applicable to listed companies. The Board
is assisted in this regard by the Remuneration and Audit
Committees.
The Remuneration Committee
The Remuneration Committee comprises Michael Silver and
Luca Tenuta. The Remuneration Committee will meet at any
time when it is considered appropriate to review and make
recommendations on the remuneration arrangements for
Directors and senior management, including any bonus
arrangements and the award of share options, having regard
to the performance of the Company and the interests of
shareholders. The remuneration and terms of appointment
of non-executive Directors will be set by the Board.
Total Directors’ emoluments are disclosed in Note 6 to
the financial statements and details of the share options
granted to Directors are disclosed above.
The Directors will comply with Rule 21 of the AIM rules
relating to Directors’ dealings and will take all reasonable
steps to ensure compliance by the Company’s Directors
and applicable employees.
The Audit Committee
The Audit Committee comprises Michael Silver and Luca
Tenuta. The Audit Committee will meet at any time when it
is considered appropriate to consider and discuss audit and
accounting related issues. The Audit Committee may make
recommendations on the appointment of the auditors and
the audit fees, be responsible for ensuring the financial
performance of the Company is properly monitored and
reported on and will receive and review reports from
management and auditors relating to the interim reports,
the annual report and accounts and internal control systems
of the Company.
Going concern
Based on a review of the Company’s budgets and cashflow
forecasts, the Directors are satisfied that the Company has
sufficient resources to continue its operations and to meet
its commitments for the immediate future.
Statement on disclosure of information to auditors
Having made the requisite enquiries and in the case of each
of the Directors who are Directors of the Company at the
date when this report is approved:
• So far as they are individually aware, there is no relevant
audit information (as defined by Section 418 of the
Companies Act 2006) of which the Company’s auditors
are unaware; and
12 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
INDEPENDENT AUDITOR’S REPORT
For the year ended 30 September 2011
Independent auditor’s report to the members of
ECR Minerals plc
We have audited the financial statements of ECR Minerals Plc
for the year ended 30 September 2011 which comprise the
Group Income Statement and Statement of Comprehensive
Income, the Group and Parent Company Statements of
Financial Position, the Group and Parent Company Statements
of Cash Flows, the Group and Parent Company Statements of
Changes in Equity and the related notes 1 to 25. The financial
reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 11, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements
in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 30 September 2011 and of the group’s profit for
the year then ended;
• the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter – amount owed by a former
subsidiary
In forming our opinion on the financial statements, which
is not qualified, we have considered the adequacy of the
disclosure made in note 11 to the financial statements
concerning the Company’s and the Group’s ability to recover
an amount due from a former subsidiary, Mercator Gold
Australia Pty Ltd (“MGA”), of £3,396,858, after an impairment
provision made in previous years of £31,849,884. MGA is
currently subject to a Deed of Company Administration
(“DOCA”) and has no tangible assets. Control of MGA will
not pass back to the Group until the DOCA has been fully
effectuated and creditors dealt with. It is estimated the full
amount of tax losses accumulated by MGA currently totals
A$77,000,000. The Group is currently in the process of
receiving detailed advice to confirm the amount of tax losses
that are useable by MGA and to ascertain the conditions and
means of using the tax losses to the benefit of the Company
and the Group. The existence of these tax losses has meant
that the Group has been able to enter into preliminary
negotiations with third parties on projects that are intended
to generate surplus funds in MGA to enable it to repay the
amount due to the Company and the Group.
Opinion on other matter prescribed by the Companies
Act 2006
In our opinion the information given in the Directors’ Report
for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Philip Quigley
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate, London EC2R 6AY
5 March 2012
The maintenance and integrity the web site of ECR Minerals plc is the
responsibility of the directors; the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the web site.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
ANNUAL REPORT & ACCOUNTS 2011 13
ECR MINERALS PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2011
ECR Minerals plc company no. 5079979
Revenue
Cost of sales
Gross profit
Project realisation
Exploration expenses
Other administrative expenses
Other income
Impairment loss on trade receivables
Currency exchange differences
Impairment of and loss on disposal of other investments
Total administrative expenses
Operating loss
Gain or loss on revaluation of other investments
Gain on derivative
Profit on disposal of available for sale financial asset
Financial income
Financial expense
Finance income and costs
Profit /(loss) for the year before taxation
Income tax
Profit /(loss) for the year
Attributable to owners of the parent
Attributable to non-controlling interests
Profit/(loss) per share (basic and diluted)
Year ended
30 September 2011
£
Year ended
30 September 2010
£
Note
4,953,728
(3,915,108)
1,038,620
430,239
(251,610)
(3,342,467)
34,851
(206,835)
18,711
(20,034)
(3,515,774)
(2,298,525)
964,275
69,000
6,025,645
4,760,395
38,676
(451,481)
(412,805)
4,347,590
(45,476)
4,302,114
4,404,105
(101,991)
4,302,114
0.86p
4,768,492
(3,480,574)
1,287,918
–
–
(3,035,255)
93,634
–
21,669
(1,364,635)
(4,284,587)
(2,996,669)
–
–
–
(2,996,669)
1,945
(496,838)
(494,893)
(3,491,562)
–
(3,491,562)
(3,385,248)
(106,314)
(3,491,562)
(1.52)p
3
7
5
4
The profit for the Parent Company for the year was £ 4,668,341 (2010: £3,137,181 loss)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2011
Year ended
30 September 2011
£
Year ended
30 September 2010
£
4,302,114
1,926,271
45,922
6,274,307
6,362,521
(88,214)
6,274,307
(3,491,562)
–
197,712
(3,293,850)
(3,246,207)
(47,643)
(3,293,850)
Profit/(loss) for the year
Fair value movements on available for sale assets
Gain on exchange translation
Total comprehensive income /(expense) for the year
Attributable to:
Owners of the parent
Non-controlling interest
Total recognised income/(expense) for the year
14 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
CONSOLIDATED & COMPANY STATEMENT OF FINANCIAL POSITION
At 30 September 2011
ECR Minerals plc company no. 5079979
Assets
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Other investments
Exploration assets
Other non current assets
Current assets
Inventories
Trade and other receivables
Available for sale financial assets
Other financial assets
Taxation
Other current assets
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Interest bearing borrowings
Current liabilities
Trade and other payables
Interest bearing borrowings
Provisions for costs
Total current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
Share premium
Exchange reserve
Other reserves
Retained losses
Non-controlling interests
Total equity
Group
Company
30 September
2011
£
30 September
2010
£
30 September
2011
£
30 September
2010
£
Note
8
9
9
10
16
11
9
9
12
15
14
15
13
13
503,043
–
175,000
772,691
5,314
542,508
–
966,611
–
1,714
4,298
919,684
175,000
–
–
5,821
515,753
966,611
–
–
1,456,048
1,510,833
1,098,982
1,488,185
712,324
4,805,429
6,621,049
4,318,364
21,630
2,672
593,642
566,467
4,414,863
3,547,206
–
20,424
111,301
374,453
–
4,427,451
6,621,049
4,318,364
20,752
2,672
240,755
–
4,100,645
3,547,206
–
20,423
16,000
325,667
17,075,110
9,034,714
15,631,043
8,009,941
18,531,158
10,545,547
16,730,025
9,498,126
1,824,266
2,526,693
1,824,266
2,526,693
2,091,158
1,294,385
3,053
3,573,579
489,850
3,009
514,257
882,265
–
2,954,944
193,437
–
3,388,596
4,066,438
1,396,522
3,148,381
5,212,862
6,593,131
3,220,788
5,675,074
13,318,296
3,952,416
13,509,237
3,823,052
7,738,267
36,111,908
205,118
669,667
(31,499,830)
7,526,572
33,658,773
172,973
765,696
(38,352,978)
7,738,267
36,111,908
–
671,174
(31,012,112)
7,526,572
33,658,773
–
767,203
(38,129,496)
13,225,130
93,166
3,771,036
181,380
13,509,237
–
3,823,052
–
13,318,296
3,952,416
13,509,237
3,823,052
The notes on pages 18 to 34 are an integral part of these consolidated financial statements
The financial statements on pages 14 to 34 were approved and authorised for issue by the Directors on 5 March 2012 and were signed
on its behalf by:
Patrick Harford
Managing Director
Michael Silver
Chairman
ANNUAL REPORT & ACCOUNTS 2011 15
ECR MINERALS PLC
CONSOLIDATED & COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2011
ECR Minerals plc company no. 5079979
Note
Share
capital
Share
premium
Exchange
reserves
Other
reserves
Retained
reserves
Group
£
£
£
£
£
Non-
controlling
interest
££
Total
Balance at 1 October 2009
7,316,059 30,865,318
37,831
787,364 (34,982,251)
229,023
4,253,344
Loss for the year
Gain on exchange translation
Total comprehensive loss
Transfer between reserves
Currency translation differences
Issue of shares
–
–
–
–
–
–
–
132,898
132,898
– (3,385,248)
6,143
–
(106,314) (3,491,562)
197,712
58,671
– (3,379,105)
(47,643) (3,293,850)
–
–
210,513
–
–
2,793,455
–
2,244
–
(8,378)
(13,290)
–
8,378
–
–
–
–
–
–
(11,046)
3,003,968
Balance at 30 September 2010
13
7,526,572 33,658,773
172,973
765,696 (38,352,978)
181,380
3,952,416
Profit/(loss) for the year
Available for sale financial assets
fair value movements
Gain on exchange translation
Total comprehensive income/(loss)
Conversion of loan notes
Share options lapsed
Share-based payments
Issue of shares
–
–
–
–
–
–
–
–
–
–
211,695
–
68,257
–
–
2,384,878
–
–
32,145
32,145
–
–
–
–
–
–
–
–
(68,257)
(522,772)
495,000
–
4,404,105
(101,991) 4,302,114
1,926,271
–
6,330,376
–
522,772
–
–
–
13,777
1,926,271
45,922
(88,214) 6,274,307
–
–
495,000
2,596,573
–
–
–
-
Balance at 30 September 2011
13
7,738,267 36,111,908
205,118
669,667 (31,499,830)
93,166 13,318,296
Company
Note
Share
capital
£
Share
premium
£
Retained
reserves
£
Other
reserves
££
Total
Balance at 1 October 2009
7,316,059
30,865,318
(35,010,969)
785,857
3,956,265
Loss for the year and
Total comprehensive loss
Transfer between reserves
Issue of shares
–
–
210,513
–
–
2,793,455
(3,137,181)
18,654
–
–
(18,654)
–
(3,137,181)
–
3,003,968
Balance at 30 September 2010
13
7,526,572
33,658,773
(38,129,496)
767,203
3,823,052
Profit for the year
Available for sale financial assets
fair value movements
Total comprehensive income
Conversion of loan notes
Share options lapsed
Share-based payment
Issue of shares
–
–
–
–
–
–
211,695
–
–
–
68,257
–
–
2,384,878
4,668,341
1,926,271
6,594,612
–
522,772
–
–
–
–
–
(68,257)
(522,772)
495,000
–
4,668,341
1,926,271
6,594,612
–
–
495,000
2,596,573
Balance at 30 September 2011
13
7,738,267
36,111,908
(31,012,112)
671,174
13,509,237
16 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
CONSOLIDATED & COMPANY CASH FLOW STATEMENT
For the year ended 30 September 2011
ECR Minerals plc company no. 5079979
Operating activities
Profit / (loss) for the year/period before tax
Adjustments:
Depreciation expense, property, plant and equipment
Loss on disposal of property, plant and equipment
Loss on disposal of investments
Provisions and impairment of investment and loans
Profit/(loss) on sale of convertible loan notes
Profit on available for sale financial assets
Interest income
Gain on derivative
Investment income
Gain on revaluation of investments
Issue costs amortised – Convertible loan
Interest cost imputed on unwinding loan discount
Interest paid on convertible loans
Interest expense – other
Share-based payments
Impairment of loan to subsidiary
(Increase)/decrease in accounts receivable
Increase/(decrease) in accounts payable
(Increase)/decrease in inventories
Shares issued in lieu of expense payments
Exploration costs written off
Loan(increase)/ reduction in lieu of expense payments
Decrease in provision for software expenses
(Increase)/decrease in other non current assets
Net cash flow used in operations
Investing activities
Purchase of property plant and equipment
Increase in Exploration assets
Loans issued to subsidiary
Proceeds from sale of investments
Investment in subsidiaries
Investment in available for sale financial assets
Investment in other ventures
Other loans
Other loans repaid
Proceeds from sale of convertible loan notes
Investment in current asset investments
Interest received
Group
Year ended
30 September
2011
£
Year ended
30 September
2010
£
Company
Year ended
30 September
2011
£
Year ended
30 September
2010
£
Note
4,234,255
(3,491,562)
4,668,341
(3,137,181)
8
7
7
10
8
89,244
380
–
20,033
4,500
(6,025,645)
(38,676)
(69,000)
(430,239)
(964,275)
75,585
29,927
345,969
–
495,000
–
(305,151)
984,189
(145,857)
145,687
240,823
(13,906)
–
–
81,102
–
1,364,635
–
(30,000)
–
(7,496)
–
–
–
59,984
94,151
233,989
147,331
–
–
695,094
(1,280,502)
328,888
83,333
–
18,976
(116,537)
(163)
2,769
380
–
294,131
4,500
(6,025,645)
(69,487)
(69,000)
(430,239)
(964,275)
75,585
29,927
245,021
–
495,000
140,000
(26,513)
(10,056)
–
145,687
–
–
–
–
3,207
–
1,364,635
–
(30,000)
–
(6,274)
–
–
–
59,984
94,151
233,989
–
–
–
11,981
(16,472)
–
83,333
–
18,976
–
–
(1,327,157)
(1,818,777)
(1,493,874)
(1,319,669)
(59,247)
(637,011)
–
–
–
(50,000)
–
–
19,618
275,500
–
4,755
(59,869)
–
–
1,811,486
–
–
(910,054)
(224,852)
–
–
(952,295)
1,945
(1,626)
–
(546,250)
–
(403,933)
(50,000)
–
–
19,618
275,500
–
4,048
(7,665)
–
–
1,811,486
–
–
(910,054)
(224,852)
–
–
(952,295)
724
Net cash used in investing activities
(446,385)
(333,639)
(702,643)
(282,656)
Financing activities
Proceeds from issue of share capital
Proceeds from issue of convertible loan notes
Repayment of convertible loan notes
Finance costs on fundraising
Redemption of convertible loan notes
Repurchase of convertible loan notes
Repayment of finance lease creditors
Loan from bank
Interest paid on convertible loan notes
Interest paid – other
1,816,237
921,654
(93,342)
(123,992)
(200,000)
–
–
–
(211,793)
(97,433)
2,296,635
–
–
-
-
(250,000)
(3,313)
296,413
(175,786)
(119,912)
1,816,237
921,654
(93,342)
(123,992)
(200,000)
–
–
–
(211,793)
–
2,296,635
–
–
–
–
(250,000)
–
–
(175,786)
–
Net cash from financing activities
2,011,331
2,044,037
2,108,764
1,870,849
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of change in exchange rates
237,789
374,453
(18,600)
(108,378)
344,105
138,726
(87,753)
325,667
2,841
Cash and cash equivalents at end of the year
12
593,642
374,453
240,755
268,524
57,143
–
325,667
ANNUAL REPORT & ACCOUNTS 2011 17
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2011
1 General information
ECR Minerals plc (the “Company” or the “Parent Company”)
and its subsidiaries (together “the Group”) operate and
structure transactions in relation to mineral exploration and
development projects, as well as operating a subsidiary that
manufactures metal products. The Group’s interests are located
in the USA, Thailand, Indonesia, Argentina and Australia.
The Company is a public limited company incorporated in
England and Wales and domiciled in England. The registered
office is Webber House, 26-28 Market Street, Altrincham,
Cheshire WA14 1PF and its principal place of business is located
at 20 Eastcheap, London EC3M 1EB. The Company is listed on
the Alternative Investment Market (AIM).
2 Accounting policies
Overall considerations
The principal accounting policies that have been used in the
preparation of these consolidated financial statements are set
out below. The policies have been consistently applied unless
otherwise stated.
Basis of preparation
The financial statements of both the Group and the Parent
Company have been prepared in accordance with International
Financial Reporting Standards (IFRSs) and Interpretations
issued by the International Financial Reporting Interpretations
Committee (IFRIC) as adopted by the European Union and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. These are the standards, subsequent
amendments and related interpretations issued and adopted by
the International Accounting Standard Board (IASB) that have
been endorsed by the European Union at the year end. The
consolidated financial statements have been prepared under
the historical cost convention, as modified by the revaluation
of certain financial instruments. The Directors have taken
advantage of the exemption available under Section 408 of the
Companies Act 2006 and have not presented a Statement of
Comprehensive Income for the Company alone.
The Group and Parent Company financial statements have been
prepared on a going concern basis as explained on page 12 of
the Directors’ Report.
New accounting standards and interpretations
Effective during the year
During the year the Group has adopted the following standards:
• Improvements to IFRSs 2009 (effective 1 January 2010)
• Amendment to IAS 32 Classification of Rights Issues
(effective 1 February 2010)
• Amendment to IFRS 2 Group Cash-settled Share-based
Payment Transactions (effective 1 January 2010)
• IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments (effective 1 July 2010)
The adoption of these standards and interpretations did not
have any impact on the financial position or performance of
the Group.
Not yet effective
At the date of authorisation of these consolidated Group
Financial Statements and the Parent Company Financial
Statements, the following Standards, amendments and
interpretations were endorsed by the EU but not yet effective:
• Revised IAS 24 Related Party Disclosures (effective 1
January 2011)
• Improvements to IFRSs 2010 (effective 1 January 2011)
• IFRS 7 (Amendment) ‘Disclosures – Transfer of Financial
Assets’ (effective from 1 July 2011)
The Directors anticipate that the adoption of these Standards
and Interpretations in future years will have no material impact
on the Group financial statements.
Revenue recognition
1. Sale of goods
Revenues represent amounts receivable for sale of metal
products and are recognised when goods for domestic sales are
despatched to customers in their land of origin. Sales are stated
at the invoiced price, excluding value added tax, of goods
supplied after deducting discounts and goods returned. In the
case of export sales, revenues are recognised when goods are
shipped and title is passed to the buyer. Title is passed to the
buyer when the goods are delivered to the common carrier in
the country of origin, the carrier acting as agent for the buyer.
2. Provision of services
Revenues are recognised once the service has been provided
and is recognised at the point of billing.
Interest income
3.
Interest earned is recognised on a time proportionate basis
where this is materially different from the point of receipt;
otherwise it is recognised at the point of receipt.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and four of its subsidiaries made
up to 30 September 2011. Subsidiary undertakings acquired
during the period are recorded under the acquisition method
of accounting and their results consolidated from the date of
acquisition, being the date on which the Company obtains
control, and continue to be consolidated until the date such
control ceases. Two other subsidiaries have not been
consolidated on the grounds of immateriality. As explained
in the Managing Director’s Report, MGA is not treated as a
subsidiary undertaking as at 30 September 2011 on the basis
that control of MGA had not passed to the directors of MGA
as at that date.
Inventories
Inventories are stated at the lower of cost or net realisable
value. Costs of raw materials are determined by the weighted
average method. The cost of purchase comprises both the
purchase price and costs directly attributable to the acquisition
of the inventory, such as import duties and transportation
charge, less all attributable discounts, allowances or rebates.
The cost of finished goods and work in process comprises raw
materials, direct labour, other direct costs and related production
overheads, the latter being allocated on the basis of normal
operating activities. Net realisable value is the estimate of the
selling price in the ordinary course of business, less the costs
of completion and selling expenses. Provision is made, where
necessary, for obsolete, slow-moving and defective inventories.
18 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
Cash and cash equivalents
Cash includes petty cash and cash held in current bank
accounts. Cash equivalents include short-term investments
that are readily convertible to known amounts of cash and
which are subject to insignificant risk of changes in value.
Property, plant and equipm ent
Property, plant and equipment are stated at cost, less
accumulated depreciation and any provision for impairment
losses.
Depreciation is charged on each part of an item of property,
plant and equipment so as to write off the cost or valuation of
assets less the residual value over their estimated useful lives,
using the straight-line method. Depreciation is charged to the
income statement. The estimated useful lives are as follows:
Office equipment
Furniture and fittings
Land improvements
Buildings
Machinery and equipment
Motor vehicles
3 years
5 years
20 years
20 years
5 years
5 years
Expenses incurred in respect of the maintenance and repair of
property, plant and equipment are charged against income when
incurred. Refurbishments and improvements expenditure,
where the benefit is expected to be long lasting, is capitalised
as part of the appropriate asset.
An item of property, plant and equipment ceases to be
recognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on
cessation of recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is included in the income statement in the
year the asset ceases to be recognised.
Exploration and development costs
All costs associated with mineral exploration and investments
are capitalised on a project-by-project basis, pending
determination of the feasibility of the project. Costs incurred
include appropriate technical and administrative expenses but
not general overheads. If an exploration project is successful,
the related expenditures will be transferred to mining assets
and amortised over the estimated life of the commercial ore
reserves on a unit of production basis. Where a licence is
relinquished or a project abandoned, the related costs are
written off in the period in which the event occurs. Where the
Group maintains an interest in a project, but the value of the
project is considered to be impaired, a provision against the
relevant capitalised costs will be raised.
The recoverability of all exploration and development costs
is dependent upon the discovery of economically recoverable
reserves, the ability of the Company to obtain necessary
financing to complete the development of reserves and future
profitable production or proceeds from the disposition thereof.
Impairment testing
Individual assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount of
an asset may exceed its recoverable amount, being the higher
of net realisable value and value in use. Any such excess of
carrying value over recoverable amount or value in use is taken
as a debit to the income statement.
Provisions
A provision is recognised in the balance sheet when the Group has
a present legal or constructive obligation as a result of a past event,
and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect is material, provisions
are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the
liability.
Leased assets
In accordance with IAS 17, leases in terms of which the Group
assumes substantially all the risks and rewards of ownership
are classified as finance leases. All other leases are regarded
as operating leases and the payments made under them are
charged to the income statement on a straight line basis over
the lease term.
Taxation
Current tax is the tax currently payable based on taxable profit
for the period.
Deferred income taxes are calculated using the balance sheet
liability method on temporary differences. Deferred tax is
generally provided on the difference between the carrying
amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill
or on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax
or accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries and joint ventures is
not provided if reversal of these temporary differences can be
controlled by the Company and it is probable that reversal will not
occur in the foreseeable future. In addition, tax losses available
to be carried forward as well as other income tax credits to the
Company are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting.
Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted
at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except
where they relate to items that are charged or credited directly
to equity, in which case the related current or deferred tax is
also charged or credited directly to equity.
Investments in subsidiaries
Subsidiary undertakings are all entities over which the Group
has the power to govern the financial and operating policies
so as to claim benefit from their activities.
The investments in subsidiaries held by the Company are valued
at cost less any provision for impairment that is considered to
have occurred, the resultant loss being recognised in the income
statement.
ANNUAL REPORT & ACCOUNTS 2011 19
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
Equity
Equity comprises the following:
• “share capital” represents the nominal value of equity
shares, both ordinary and deferred;
• “share premium” represents the excess over nominal value
of the fair value of consideration received for equity shares,
net of expenses of the share issues;
• “other reserves” represent the equity component of
convertible debentures issued, plus the equity component
of share options issued;
• “retained losses” include all current and prior year results
as disclosed in the income statement;
• “exchange reserve” includes the amounts described in
more detail in the following note on foreign currency below.
Foreign currency translation
The consolidated financial statements are presented in pounds
sterling which is the functional and presentational currency
representing the primary economic environment of the Group.
Foreign currency transactions are translated into the respective
functional currencies of the Company and its subsidiaries using
the exchange rates prevailing at the date of the transaction or at
an average rate where it is not practicable to translate individual
transactions. Foreign exchange gains and losses are recognised
in the income statement.
Monetary assets and liabilities denominated in a foreign currency
are translated at the rates ruling at the balance sheet date.
The assets and liabilities of the Group’s foreign operations are
translated at exchange rates ruling at the balance sheet date.
Income and expense items are translated at the average rates
for the period. Exchange differences are classified as equity and
transferred to the Group’s exchange reserve. Such differences
are recognised in the income statement in the periods in which
the operation is disposed of.
Share-based employee remuneration
The Company operates equity-settled share-based remuneration
plans for remuneration of some of its employees. The Company
awards share options to certain Company Directors and
employees to acquire shares of the Company.
All goods and services received in exchange for the grant of any
share-based payment which vested after the Company’s transition
to IFRSs are measured at their fair values. Where employees
are rewarded using share-based payments, the fair values of
employees’ services are determined indirectly by reference to
the fair value of the instrument granted to the employee.
The fair value is appraised at the grant date and excludes the
impact of non-market vesting conditions. Fair value is measured
by use of the Black Scholes model. The expected life used in
the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.
All equity-settled share-based payments are ultimately
recognised as an expense in the income statement with
a corresponding credit to “other reserves”.
If vesting periods or other non-market vesting conditions apply,
the expense is allocated over the vesting period, based on the
best available estimate of the number of share options expected
to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment
prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior years
if share options ultimately exercised are different to that
estimated on vesting.
Upon exercise of share options the proceeds received net of
attributable transaction costs are credited to share capital and,
where appropriate, share premium.
Financial instruments
The Group’s financial assets comprise cash and cash equivalents,
investments and loans and receivables. Financial assets are
assigned to the respective categories on initial recognition,
depending on the purpose for which they were acquired. This
designation is re-evaluated at every reporting date at which
a choice of classification or accounting treatment is available.
The Group’s loans, investments and receivables are non-
derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Loans and receivables
are measured at fair value on initial recognition. After initial
recognition they are measured at amortised cost using the
effective interest rate method, less any provision for
impairment. Any change in their value is recognised in profit or
loss. The Group’s receivables fall into this category of financial
instruments. Discounting is omitted where the effect of
discounting is immaterial. All receivables are considered for
impairment on a case-by-case basis when they are past due at
the balance sheet date or when objective evidence is received
that a specific counterparty will default.
Available for sale financial assets are financial assets that are
not classified in any other categories. After initial recognition,
available-for sale financial assets are measured at fair value. Any
gains or losses from changes in fair value of the financial asset
are recognised in equity, except that impairment losses, foreign
exchange gains and losses on monetary items and interest
calculated using the effective interest method are recognised
in the profit or loss.
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the entity after
deducting all of its financial liabilities. Any instrument that
includes a repayment obligation is classified as a liability.
Where the contractual liabilities of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities, and are presented as such in the balance sheet.
Finance costs and gains or losses relating to financial liabilities
are included in the profit and loss account. Finance costs are
calculated so as to produce a constant rate of return on the
outstanding liability.
Where the contractual terms of share capital do not have
any features meeting the definition of a financial liability then
such capital is classed as an equity instrument. Dividends and
distributions relating to equity instruments are debited direct
to equity.
20 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
Compound financial instruments
Compound financial instruments comprise both liability
and either equity components or embedded derivatives.
For compound instruments including equity components,
at issue date the fair value of the liability component is
estimated by discounting its future cash flows at an interest
rate that would have been payable on a similar debt instrument
without any equity conversion option. The liability component is
accounted for as a financial liability. The difference between the
net issue proceeds and the liability component, at the time of
issue, is the residual or equity component, which is accounted
for as an equity reserve.
Embedded derivatives included within compound instruments
are calculated using the Black-Scholes-Merton model and are
also included within liabilities, but are measured at fair value
in the balance sheet, with changes in the fair value of the
derivative component recognised in the consolidated income
statement. The amounts attributable to the liability components
equal the discounted cash flows.
Transaction costs that relate to the issue of a compound
financial instrument are allocated to the liability and equity
components of the instrument in proportion to the allocation
of the proceeds.
The interest expense on the liability component is calculated
by applying the effective interest rate for the liability component
of the instrument. The difference between any repayments and
the interest expense is deducted from the carrying amount of
the liability.
Upon conversion of loan note debt the corresponding carrying
value of loan note liability and equity reserve are released,
and the difference between these and the nominal value of the
shares issued on conversion is recognised as a share premium.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs
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 various other factors that are believed to be
reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimate is revised if the
revision affects only that year or in the year of the revision and
future years if the revision affects both current and future years.
The most critical accounting policies and estimates in
determining the financial condition and results of the Group are
those requiring the greater degree of subjective or complete
judgement. These relate to:
• impairment reviews covering investments;
• fair values of acquired investments;
• inventory valuation;
• capitalisation of exploration costs;
• recovery of amount due from former subsidiary;
• share-based employee remuneration.
3 Operating loss
The operating loss is stated
after charging:
Depreciation of property, plant
and equipment
Loss on sale of fixed assets
Operating lease expenses
Share-based payments
Auditors' remuneration:
Year ended
Year ended
30 September 30 September
2010
£
2011
£
89,244
81,102
380
15,300
495,000
–
13,843
–
Fees payable to current auditor for
audit of the Group’s annual financial
statements (including £15,000 in
respect of the Company)
Fees payable to previous auditor for:
Audit services
Fees payable for other services
31,450
27,000
–
–
28,000
1,600
4 Profit/(loss) per share
Profit/(loss) per share is calculated by reference to the
profit/(loss) for the year of £4,404,105 (2010: loss £3,385,248)
and the weighted number of shares in issue during the year of
513,268,320 (2010: 223,037,596).
There is no dilutive effect of share options on the profit for
the current year.
5 Corporation tax expense
The relationship between the expected tax expense based
on the corporation tax rate of 27% for the year ended 30
September 2011 (2010: 28%) and the tax expense actually
recognised in the income statement can be reconciled as
follows:
Year ended
Year ended
30 September 30 September
2010
£
2011
£
Group profit/(loss) for the year
before tax
Profit/(loss) on activities at
effective rate of corporation tax
of 27% (2010: 28%)
Expenses not deductible for
tax purposes
4,347,590
(3,491,562)
1,173,850
(977,637)
205,749
183,524
Effect of marginal rates
(43,109)
Impairment of subsidiary undertaking
–
Income not taxable
(192,773)
–
37,769
(5,305)
Depreciation in excess of
capital allowances
Utilisation of tax losses
brought forward
(165)
898
(1,189,901)
381,854
Loss carried/(brought) forward
89,100
378,897
Overseas local taxes
Current tax income / expense, net
2,725
45,476
–
–
ANNUAL REPORT & ACCOUNTS 2011 21
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
5 Corporation tax expense continued
The Company has unused tax losses of £330,000 (2010: £4,409,965) and other temporary differences amounting to losses of
£495,000. The related deferred tax asset has not been recognised in respect of these losses as there is no certainty in regards to the
level and timing of future profits. No deferred tax liability arises on the fair value movements on the available for sale investments as
any gain/loss on disposal will be exempt from tax.
6 Staff numbers and costs
Directors
Production
Logistics
Administration
Total
The aggregate payroll costs of these persons were as follows:
Staff wages and salaries
Directors cash based emoluments
Share-based payments
Year ended
30 September
2011
Year ended
30 September
2010
Number
Number
4
104
6
13
127
£
1,032,989
322,500
495,000
1,850,489
5
80
25
18
128
£
1,023,452
499,899
–
1,523,351
The remuneration of the Directors, who are the key management personnel of the Group, in aggregate for each of the categories
specified in IAS 24 ‘Related Party Disclosures’ was as follows:
Directors’ cash based emoluments
Employer’s national insurance
Short term employment
Share based payments
£
322,500
4,454
326,954
360,360
687,314
£
499,899
–
499,899
–
499,899
Directors’ remuneration
As required by AIM Rule 19, details of remuneration earned in respect of the financial year ended 30 September 2011 by each
Director are set out below:
Year ended 30 September 2011
Director
M B Silver
P A Harford
M Elias
S Clayson
L Tenuta
Year ended 30 September 2010
Director
M B Silver
P A Harford
M J de Villiers
R N Allen
M Elias
Salary
£
120,000
140,000
15,000
35,000
12,500
322,500
Salary
£
120,000
140,112
144,787
15,000
30,000
449,899
Bonus
£
–
–
–
–
–
–
Bonus
£
–
50,000
–
–
–
50,000
Total
£
120,000
140,000
15,000
35,000
12,500
322,500
Total
£
120,000
190,112
144,787
15,000
30,000
499,899
The highest paid Director received remuneration of £140,000 (2010: £190,112).
Details of each Director’s share options and interests in the Company’s shares are shown in the Report of the Directors starting
on page 9.
22 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
7 Finance income and expenses
Finance expenses
Interest cost imputed on unwinding convertible loan discount
Issue costs of convertible loans amortised
Interest paid on convertible loans
Furniture
and
fittings
£
3,135
–
(395)
–
2,740
£
1,664
(395)
360
–
1,629
1,471
1,111
Finance income
Interest on cash and cash equivalents
Total
8 Property, plant and equipment
Group
Cost
At 1 October 2010
Additions
Disposals
Exchange differences arising on translation
At 30 September 2011
Depreciation
At 1 October 2010
Disposals
Depreciation for the year
Exchange differences arising on translation
At 30 September 2011
Net book value
At 1 October 2010
At 30 September 2011
Company
Cost
At 1 October 2010
Additions
Disposals
At 30 September 2011
Depreciation
At 1 October 2010
Disposals
Depreciation for the year
At 30 September 2011
Net book value
At 1 October 2010
At 30 September 2011
Year ended
30 September
2011
Year ended
30 September
2010
£
29,927
75,585
345,969
451,481
2011
£
38,676
38,676
£
94,151
59,984
342,703
496,838
2010
£
1,945
1,945
Land
Office improvements Machinery &
equipment
£
& Buildings
£
equipment
£
153,809
7,175
(7,474)
(1,826)
646,395
–
–
(8,305)
606,354
52,072
–
(8,576)
Motor
vehicles
££
88,610
–
–
(1,139)
Total
1,498,303
59,247
(7,869)
(19,846)
151,684
638,090
649,850
87,471
1,529,835
£
£
£
££
113,737
(7,094)
41,029
(702)
256,185
–
23,483
(2,927)
505,835
–
20,683
(6,180)
78,374
–
3,689
(949)
955,795
(7,489)
89,244
(10,758)
146,970
276,741
520,338
81,114
1,026,792
40,072
390,210
100,519
10,236
542,508
4,714
361,349
129,512
6,357
503,043
Furniture and fittings
£
Office equipment
£
3,135
–
(395)
2,740
1,664
(395)
360
1,629
1,471
1,111
17,190
1,626
(7,474)
11,342
12,840
(7,095)
2,409
8,154
4,350
3,187
Total
£
20,325
1,626
(7,869)
14,082
14,504
(7,490)
2,769
9,783
5,821
4,298
Except as disclosed in Note 15, the Group's property, plant and equipment are free from any mortgage or charge.
ANNUAL REPORT & ACCOUNTS 2011 23
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
8 Property, plant and equipment continued
The comparable table for 2010 is detailed below:
Furniture
and
fittings
£
1,335
1,800
–
–
3,135
£
1,197
–
467
–
1,664
138
1,471
Group
Cost
At 1 October 2009
Additions
Disposals
Exchange differences arising on translation
At 30 September 2010
Depreciation
At 1 October 2009
Disposals
Depreciation for the year
Exchange differences arising on translation
At 30 September 2010
Net book value
At 1 October 2009
At 30 September 2010
Company
Cost
At 1 October 2009
Additions
Disposals
At 30 September 2010
Depreciation
At 1 October 2009
Disposals
Depreciation for the year
At 30 September 2010
Net book value
At 1 October 2009
At 30 September 2010
9 Investments
Cost as at 1 October 2010
Investment in overseas ventures
Impairment
Reclassified as exploration assets
Reclassified as an investment available for sale
Land
Office improvements Machinery &
equipment
£
& Buildings
£
equipment
£
111,515
29,785
–
12,509
574,254
7,072
–
65,069
524,912
21,212
–
60,230
Motor
vehicles
££
79,637
–
–
8,973
Total
1,291,653
59,869
–
146,781
153,809
646,395
606,354
88,610
1,498,303
£
£
££
£
87,600
–
16,887
9,250
208,649
–
23,178
24,358
432,355
–
23,888
49,592
113,737
256,185
505,835
54,898
–
16,682
6,794
78,374
784,699
–
81,102
89,994
955,795
23,915
40,072
365,605
92,557
390,210
100,519
24,739
10,236
506,954
542,508
Furniture and fittings
£
Office equipment
£
1,335
1,800
–
3,135
1,197
–
467
1,664
138
1,471
Investment in
subsidiaries
£
515,753
403,931
–
–
–
11,325
5,865
––
17,190
10,100
––
2,740
12,840
1,225
4,350
Other
ventures
£
966,611
–
(20,033)
(376,503)
(395,075)
Total
£
12,660
7,665
20,325
11,297
3,207
14,504
1,363
5,821
Total
£
1,482,364
403,931
(20,033)
(376,503)
(395,075)
Balance at 30 September 2011
919,684
175,000
1,094,684
24 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
9 Investments continued
The comparable table for 2010 is detailed below:
Cost as at 1 October 2009
Investment in overseas ventures
Impairment
Reclassified as an investment available for sale
Balance at 30 September 2010
Investment in
subsidiaries
£
515,753
–
–
–
515,753
Other
ventures
£
266,574
4,200,861
–
(3,500,824)
966,611
At 30 September 2011, the Company has interests in the following investments and subsidiary undertakings:
Subsidiaries:
Gold Crest Holdings Ltd
Country of
incorporation
Hong
Kong
Principal
activity
Holding
company
Mercator Gold plc (formerly Island Gold plc)
UK
Dormant
Principal
country of
operation
Hong
Kong
UK
Warm Springs Renewable Energy Corporation
USA
Solar power
USA
Ochre Mining SA
Electrum Resources SA
Argentina
Argentina
Copper Flat Corporation (formerly New Mexico Copper Corporation)
USA
Mining
Mining
Mining
Argentina
Argentina
USA
Gold Crest Holdings Ltd has an interest in 99.6% of the equity share capital of ACS Asia (1996) Company Ltd.
Available for sale financial assets
Quoted investments
Unlisted equity securities
2011
£
6,621,049
–
6,621,049
Total
£
782,327
4,200,861
–
(3,500,824)
1,482,364
Description
and effective
proportion of
shares held
70%
ordinary
100%
ordinary
90%
100%
100%
100%
2010
£
–
3,547,206
3,547,206
As at 30 September 2011, listed shares with a market value of £1,749,772 were pledged as security against loans of £672,765.
Included in the above amount of £6,621,049 is the value of the Company’s holding of shares of THEMAC Resources Group Ltd
(“THEMAC”). At 30 September 2011, the Company beneficially held 19.3% of THEMAC’s issued share capital. The Company
also held warrants, as noted below, which if exercised would potentially increase the Company’s shareholding to 21.1%. The
Company does not have any representation on THEMAC’s board of directors, does not nor does it have a right to participate in
policy-making decisions and has not had any material transactions or interchanged managerial personnel (save that Patrick
Harford, Managing Director of the Company, serves as a director of THEMAC’s subsidiary New Mexcio Copper Corporation) or
provided significant technical information to THEMAC since the sale of the Copper Flat project. The investment in THEMAC is
therefore not accounted for as an investment in an associate.
Other financial assets
Warrants in a listed entity
2011
£
4,318,364
2010
£
–
During the year the Company acquired warrants as part consideration for the disposal of the Copper Flat project to THEMAC.
Changes in fair values of the warrants are recorded in other gains / (losses) on revaluation of investments in the income
statement.
ANNUAL REPORT & ACCOUNTS 2011 25
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
9 Investments continued
The fair value of these warrants is calculated using the Black-Scholes-Merton model with reference to the share price
of THEMAC which is listed on the TSX Venture Exchange at the balance sheet date. The inputs into the model and resulting fair
values were as follows:
Share price (CAN$)
Exercise price (CAN$)
Expected volatility
Average option life in years
Expected dividends
Weighted average risk-free interest rate (based on national government bonds)
0.70
0.28
74%
3.65
–
1.45%
The expected volatility is based on the average historic volatility over the previous 15 months of THEMAC shares and those of
two other similar entities.
10 Exploration assets
At 1 October 2010
Reclassification from investments
Additions
Exploration costs written off
At 30 September 2011
2011
£
–
376,503
637,011
(240,823)
772,691
2010
£
–
–
–
–
–
Exploration assets comprise of all costs associated with mineral exploration and are capitalised pending determination of the
feasibility of the project and include appropriate technical and administrative expenses but not general overheads.
11 Trade and other receivables
Amount owed by a former subsidiary
Balances due from subsidiaries
Trade receivables before provisions
Less: provisions
Net trade receivables
Prepayments and accrued income
Other receivables
Group
Company
2011
£
3,396,858
–
1,087,298
(168,656)
918,642
263,135
226,794
2010
£
3,396,858
–
605,326
(72,562)
532,764
25,416
459,825
2011
£
3,396,858
764,136
–
–
–
18,066
248,391
2010
£
3,396,858
–
–
–
–
25,416
678,371
4,805,429
4,414,863
4,427,451
4,100,645
The short-term carrying values are considered to be a reasonable approximation of the fair value.
Amount owed by a former subsidiary
The amount of £3,396,858 due from a former subsidiary, Mercator Gold Australia Pty Ltd (“MGA”), is the Directors’ best
estimate of the amount recoverable and is stated after an impairment provision made in previous years of £31,849,884 and in
the context of the following.
MGA is currently subject to a Deed of Company Administration (“DOCA”) and has no tangible assets. Control of MGA will not
pass back to the Group until the DOCA has been fully effectuated and the creditors of MGA have been dealt with completely
by the deed administrators. Although the Company remains MGA’s sole shareholder, MGA will be referred to as a former
subsidiary until control has been regained.
It is estimated that the full amount of tax losses accumulated by MGA currently totals approximately A$77,000,000. Advice to
date indicates that these tax losses are available for use against future profits of MGA subject to certain conditions, and the
Group is in the process of receiving more detailed advice to confirm this and to ascertain the means by which the losses may
be used for the benefit of the Company and the Group. The success of work completed to date to confirm the tax losses has
allowed the Group to enter into preliminary negotiations with third parties with regard to projects that are intended to generate
surplus funds in MGA that would enable it to repay the amount due to the Company and the Group.
26 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
11 Trade and other receivables continued
To recover the amount due from MGA, the Company and the Group are dependent on MGA being able to generate sufficient
surplus funds from future projects. The amount that may ultimately be receivable by the Company and the Group may be more or
less than that shown above and this balance represents management’s best estimate of the amount that will be recoverable.
The financial statements do not include the adjustments that would result if MGA were to be unable to generate sufficient
surplus funds to settle the amount due to the Company and the Group.
12 Cash and cash equivalents
Cash and cash equivalents at 30 September 2011
consisted of the following:
Deposits at banks
Cash on hand
Group
Company
2011
£
591,382
2,260
593,642
2010
£
373,853
600
374,453
2011
£
240,332
423
240,755
2010
£
325,094
573
325,667
13 Share capital and share premium accounts
The share capital of the Company consists of two classes of shares: ordinary shares which have equal rights to receive
dividends or capital repayments and each of which represents one vote at shareholder meetings; and deferred shares which
have limited rights as laid out in the Company’s articles. In particular deferred shares carry no right to dividends or to attend or
vote at shareholder meetings and deferred share capital is only repayable after ordinary share capital has been repaid.
a) Authorised share capital
At 30 September 2011
Ordinary shares of 0.1 pence each
Deferred shares of 9.9 pence each
Number of shares
Nominal value
1,000,000,000
200,000,000
£1,000,000
£19,800,000
£20,800,000
b) Changes in issued share capital and share premium:
Number of
shares
Ordinary
shares
£
Share
premium
£
Deferred
shares
£
Total
£
At 1 October 2010
331,755,437
331,756
33,658,773
7,194,816
41,185,345
Shares issued during the year
Shares issued in private placing
Shares issued in payment of creditors
Loan converted into shares
Share warrants exercised
127,576,178
14,760,805
50,909,087
18,449,446
127,576
14,761
50,909
18,449
1,572,424
147,049
567,617
166,045
–
–
–
–
1,700,000
161,810
618,526
184,494
Balance at 30 September 2011
543,450,953
543,451
36,111,908
7,194,816
43,850,175
All the shares issued are fully paid up and none of the Company’s shares are held by any of its subsidiaries.
ANNUAL REPORT & ACCOUNTS 2011 27
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
13 Share capital and share premium account continued
c) Potential issue of ordinary shares
Share options
The number and weighted average exercise prices of share options valid at the year end are as follows:
Exercisable at the beginning of the year
Granted during the year
Exercised during year
Lapsed during year
Exercisable at the end of the year
Weighted
average
exercise price
2011
£
Number of
options
2011
Weighted
average
exercise price
2010
£
0.87
0.025
–
0.87
1,755,000
25,000,000
–
(1,755,000)
0.025
25,000,000
0.87
–
–
0.95
0.87
Number of
options
2010
5,780,000
–
–
(4,025,000)
1,755,000
The options outstanding at 30 September 2011 have an exercise price of £ 0.025 and a weighted average remaining contractual
life of 10 years (2010: 2.60 years).
Share warrants
Exercisable at the beginning of the year
Granted during the year
Exercised during the year
Expired in year
Exercisable at the end of the year
Weighted
average
exercise price
2011
0.03
–
0.03
0.03
0.03
Number of
warrants
2011
27,221,652
–
(18,449,446)
(3,900,000)
4,872,206
Weighted
average
exercise price
2010
0.75
0.02
0.02
–
0.03
Number of
warrants
2010
10,576,387
26,948,202
(7,977)
(10,294,960)
27,221,652
Share-based payments
The fair value of services received in return for share options granted is measured by reference to the fair value of share options
granted. The estimate of the fair value of the services received is measured based on the Black-Scholes valuation model.
Fair value of share options and assumptions
Fair value at measurement date
Weighted average share price
Weighted average exercise price
Expected volatility
Average option life in years
Expected dividends
Weighted average risk–free interest rate (based on national government bonds)
The expected volatility is based on the historic volatility for the past 3.5 years.
There are no service or market related conditions associated with share option exercises.
Share options granted
Total expense recognised as employee costs
2011
£
495,000
0.0198
0.0250
285%
5
–
2.43%
2011
£
25,000,000
£495,000
2010
£
–
–
–
–
–
–
–
2010
£
–
–
28 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
14 Trade and other payables – short term
Trade payables
Amount owed to a Director
Amount owed to a subsidiary
Social security and employee taxes
Other creditors and accruals
15 Interest bearing liabilities
Group and Company
Group
Company
2011
£
949,242
225,566
–
6,397
909,953
2010
£
407,149
232,403
–
3,630
2,930,397
2011
£
51,610
–
49,395
6,397
406,855
2010
£
65,007
–
49,395
3,630
2,836,912
2,091,158
3,573,579
514,257
2,954,944
Convertible loan notes – 8.5% - current liability
Convertible loan notes – 10% - current liability
Convertible loan notes – 10% - non-current liability
YA Global Master SPV Ltd loan
Embedded derivative represented by conversion rights attaching to loan stock
Total for company
Secured loans
2011
£
–
200,500
1,824,266
672,765
9,000
2,706,531
412,120
3,118,651
2010
£
193,437
–
2,526,693
–
–
2,720,130
296,413
3,016,543
Secured loans
The figure for secured loans above relates to a mortgage advanced to one of the subsidiary undertakings and is secured by
legal charge over the freehold property included in note 8 with a net book value of £200,465.
As further explained under note 9, the YA Global Master SPV Ltd loan is secured by way of a pledge of listed securities.
Convertible loan notes repayable 17 October 2013
On 17 October 2007 the Company issued £2,565,000 in face value of three-year convertible loan notes carrying interest at
8.5% per annum, payable quarterly in arrears. As of the first anniversary of issue, the loan notes are convertible at the election
of note holders into shares at a specified price.
Note holders have the option of accepting the payment of interest in cash or in ordinary shares at the lower of a specified price
and the average mid-market closing price per ordinary share for the seven business days prior to the date that interest is payable.
The Company has the right (as of the date falling 18 months after the date of issue of the loan notes) to repay the notes early,
subject to the payment of double the accrued interest outstanding as at the date of early repayment. The holder of the notes
has the option of accepting early repayment in cash or in ordinary shares at a specified price.
On 29 September 2010 the loan notes were extended for a further three years and the rate of interest was increased to 10%
per annum by extraordinary resolution of the holders. The loan notes are now repayable on 17 October 2013.
Until the second anniversary of issue the specified price in respect of the above was 95 pence per share; between the second
anniversary and 29 September 2010 the specified price was 120 pence per share; as of 29 September 2010 the specified price
was 1.1 pence per share.
Convertible loan notes repayable 15 July 2011
On 15 July 2008 the Company issued £200,000 in face value of three-year convertible notes carrying interest of 8.5% per
annum, payable quarterly in arrears. As of the first anniversary of issue, the loan notes were convertible at the election of note
holders into shares at a specified price.
Note holders had the option of accepting the payment of interest in cash or in ordinary shares at the lower of a specified price and
the average mid-market closing price per ordinary share for the seven business days prior to the date that interest was payable.
The Company had the right (as of the date falling 18 months after the date of issue of the loan notes) to repay the notes early,
subject to the payment of double the accrued interest outstanding as at the date of early repayment. The holder of the notes
had the option of accepting early repayment in cash or in ordinary shares at a specified price.
Until the second anniversary of issue the specified price in respect of the above was 50 pence per share; from the second
anniversary the specified price was 95 pence per share.
These notes were repaid in full during the year having reached the end of their term, and accordingly are no longer in existence.
ANNUAL REPORT & ACCOUNTS 2011 29
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
16 Inventories – Group
Raw materials
Work in progress
Finished goods
Provision for slow moving inventories
2011
£
275,302
200,516
249,018
(12,512)
712,324
2010
£
253,535
123,368
189,565
–
566,467
Inventories expensed during the year
3,642,394
3,480,574
17 Capital management
The Group’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern and develop its
mineral exploration and development and other activities to provide returns for shareholders and benefits for other stakeholders.
The Group’s capital structure comprises all the components of equity (all share capital, share premium, retained earnings when
earned and other reserves). When considering the future capital requirements of the Group and the potential to fund specific
project development via debt, the Directors consider the risk characteristics of the underlying assets in assessing the optimal
capital structure.
18 Related party transactions
Group
Company
Amounts payable to a Director at 30 September 2011
225,566
232,403
2011
£
2010
£
2011
£
–
Amounts owed by a Director at 30 September 2011
34,706
2,103
34,706
2010
£
–
2,103
Details of Directors’ emoluments are disclosed in Note 6.
The Directors are the only key management. Transactions with the subsidiary undertakings are disclosed in Note 19 and this note.
Details of transactions with Directors and other related parties during the year are as follows:
Michael Silver, Executive Chairman of the Company, holds a beneficial interest in Meridien Capital Limited (“Meridien”).
Meridien holds a beneficial interest in 10% of the issued equity share capital of Gold Crest Holdings Limited (“Gold Crest”).
During the year to 30 September 2011, ACS Asia produced and shipped goods to a company named Australian Cable Tray
Systems Pty Limited ("ACTS"). ACTS is owned as at 30 September 2011 as to 51% by Meridien and as to 49% by another
party. Goods shipped by ACS Asia to ACTS during the year totalled US$629,192, of which US$242,900 has been paid to ACS
Asia by Michael Silver on behalf of ACTS and of which US$50,000 has been paid by a director of ACS Asia on the same basis.
A 100% provision as to the recovery of the balance, being US$332,301, has been made in the financial statements of Gold
Crest, and is reflected in the Group financial statements. The amount due from ACTS is unsecured and interest free. Additional
shipments to ACTS were made subsequent to 30 September 2011 and were funded in part by advances made to ACS Asia on
behalf of the ultimate customers of ACTS.
Michael Silver has provided a loan to Gold Crest in respect of which interest is charged at 2% per month on the balance
outstanding. The loan amount outstanding on 30 September 2011 was A$359,733 (2010: A$381,166). The loan is repayable on
demand and is secured by a floating charge over the trade receivables of Gold Crest plus a guarantee from ACS Asia.
Stephen Clayson’s compensation for his services to the Company as Chief Financial Officer prior to becoming a director was
paid to a company under his control and for the year to 30 September 2011 amounted, along with compensation for other
services provided to the Company, to £61,667 (2010: £84,000).
30 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
19 Advances made to directors
P A Harford
Amount owed at beginning of year
Advances – to cover for business expenses
Repayments achieved through expense claims
Amount owed at the year end
M B Silver
Amount owed at beginning of year
Advances – to cover business expenses
Repayments achieved through expense claims
Amount owed at the year end
20 Commitments and contingencies
2011
£
3,678
26,233
(13,872)
16,039
–
18,667
–
18,667
2010
£
13,992
(10,314)
3,678
–
–
–
–
Capital expenditure commitment
As at 30 September 2011, the Group had commitments for future expenditure on its SAP software system of approximately
£37,232 (2010: £36,583).
Operating lease commitments
Details of operating lease commitments are set out in Note 21 below.
21 Operating leases
Non-cancellable operating lease liabilities of the Group are as follows:
Payable:
In less than one year
Between 2 - 5 years
22 Financial instruments
Categories of financial instrument
Financial assets
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Other financial assets
Financial liabilities
Trade and other payables
Borrowings
2011
£
–
10,688
2011
£
593,642
918,642
6,621,049
4,318,364
949,242
3,118,651
2010
£
–
–
2010
£
374,353
532,764
3,547,206
–
407,149
3,016,543
Risk management objectives and policies
The Group’s principal financial assets comprise cash and cash equivalents, trade and other receivables, investments and
prepayments. In addition the Company’s financial assets include amounts due from its former operating subsidiary, Mercator
Gold Australia Pty Ltd, which is held at cost less a provision for impairment. The Group’s liabilities comprise trade payables,
other payables including taxes and social security, and accrued expenses.
All the Group’s financial liabilities are measured at amortised cost. All the Group’s financial assets are classified as loans,
investments and receivables.
The Board determines as required the degree to which it is appropriate to use financial instruments, commodity contracts
or other hedging contracts to mitigate financial risks.
ANNUAL REPORT & ACCOUNTS 2011 31
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
22 Financial instruments continued
Credit risk
The Group's cash at bank is held with reputable international banks. Cash is held either on current account or on short-term
deposit at floating rates of interest determined by the relevant prevailing base rate. The fair value of cash and cash equivalents
at 30 September 2011 and 30 September 2010 did not differ materially from their carrying value.
The Company has material exposure to receivables risk in respect of the loan to its former subsidiary, Mercator Gold Australia
Pty Ltd, presently under administration. While the subsidiary is not under the Company’s control, this risk cannot be mitigated.
Market risk
The Group’s financial instruments potentially affected by market risk include bank deposits, and trade payables. An analysis
is required by IFRS 7, intended to illustrate the sensitivity of the Group’s financial instruments (as at period end) to changes
in market variables, being exchange rates and interest rates.
Since the bank deposits were relatively immaterial and the amount due from the former subsidiary was interest free, there
is no material sensitivity to changes in interest rates.
Interest rate risk
The Company has no material exposure to interest rate risk.
Foreign currency risk
The Company is exposed to foreign currency risk in so far as some dealings with overseas subsidiary undertakings are in
foreign currencies and in that certain of the Company’s holdings of listed securities are denominated in foreign currencies, in
particular Canadian and Australian dollars. The foreign currency exposure to the impaired former Australian subsidiary is not
considered to be material in the context of the provision made against it.
Fair value of financial instruments
The fair values of the Company's financial instruments at 30 September 2011 and 30 September 2010 did not differ materially
from their carrying values.
The Company’s long term convertible loan note borrowing, a compound financial instrument, did not differ from its carrying value.
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: valuation techniques based on observable inputs either directly (i.e. as prices) or indirectly (i.e. derived from prices);
• Level 3: valuation techniques that include inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair
value, by the level in the fair value hierarchy into which the measurement is categorised:
Group and company
30 September 2011
Available for sale financial assets
Other financial assets
Group and Company
30 September 2010
Available for sale financial assets
Level 1
£
Level 2
£
Level 3
£
Total
£
6,342,923
–
–
4,596,490
6,342,923
4,596,490
–
–
–
6,342,923
4,596,490
10,939,413
Level 1
£
–
Level 2
£
Level 3
£
Total
£
–
3,547,206
3,547,206
The following table shows a reconciliation for fair value measurements in level 3 of the fair value hierarchy
Opening balance
Sales during the year
Transferred into Level 3
Transfers out of Level 3
Closing balance
32 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
2011
£
3,500,824
–
–
(3,500,824)
–
2010
£
2,417,233
(2,417,233)
3,500,824
–
3,500,824
22 Financial instruments continued
During the year investments that were previously unquoted became quoted and therefore inputs that were previously
unobservable became observable.
There were no sales of available for sale financial assets during the year. In 2010 there was a loss of £693,783 on the sale
of available for sale financial assets.
Liquidity risk
The Company at its present stage of development is partially funded by revenue from operations. It therefore finances its
operations through the issue of equity share capital and debt in order to ensure sufficient cash resources are maintained to
meet short-term liabilities and future project development requirements. Management monitors availability of funds in relation
to forecast expenditures in order to ensure timely fundraising. Funds are raised in discrete tranches to finance activities for
limited periods.
Funds surplus to immediate requirements may be placed in liquid, low risk investments.
The Company’s ability to raise finance is subject to market perceptions of the success of its current established and developing
projects, and of the other ventures undertaken by the Company during the year and subsequently. Due to the uncertain state of
financial markets there can be no certainty that future funding will continue to be available.
The table below sets out the maturity profile of financial liabilities as at 30 September 2011.
Due in less than one month
Due between one and three months
Due between three months and one year
Due after one year
2011
£
879
905
1,323
278
3,385
2010
£
676
256
2,861
283
4,076
In addition, as disclosed in Note 15, the Company had in issue at 30 September 2011 £1,824,266 of convertible loan notes
currently classed as non-current liabilities that are redeemed at the option of the Company.
23 Segmental report
The Company is engaged in mineral exploration and development. One of the Group undertakings is involved in the
manufacture of metal products. An analysis of the Group revenue, results, assets and liabilities, capital expenditure and
depreciation is provided below:
Year ended 30 September 2011
Year ended 30 September 2010
External revenue
Interest income
Interest expense
Other finance costs
Net profit/(loss)
Total assets
Total liabilities
Capital expenditure
Depreciation & amortisation
Impairment of and loss on disposal
of other investments
Metal
products
Mining and
exploration
Total
Group
Metal
products
Mining and
exploration
Total
Group
4,953,728
–
100,947
–
(340,457)
2,631,335
2,342,139
57,621
86,475
–
38,676
274,949
75,585
4,642,571
15,899,823
2,870,723
1,626
2,769
4,953,728
38,676
375,896
75,585
4,302,114
15,531,158
5,212,862
59,247
89,244
4,768,492
1,221
108,714
–
(108,831)
1,781,692
967,453
52,204
77,894
–
724
328,140
59,984
(3,382,731)
8,763,854
5,625,677
7,665
3,208
4,768,492
1,945
436,854
59,984
(3,491,562)
10,545,546
6,593,130
59,869
81,102
–
(20,033)
(20,033)
–
(1,364,635)
(1,364,635)
No geographical analysis is provided as this would replicate the analysis above with the metal products activity being in Asia and
the mining and exploration being in Europe, Argentina and USA. The management do not segment the mining and exploration by
geographical region when evaluating performance.
During the year to 30 September 2011, sales made to two customers accounted for approximately 47.73% of total revenues
(2010: 29.8%). Sales to Customer A amounted to £1,650,182 (2010: £768,197). Sales to Customer B amounted to £736,994
(2010: £652,718). All these sales related to the metal products segment.
ANNUAL REPORT & ACCOUNTS 2011 33
ECR MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the year ended 30 September 2011
24 Consolidated cash flow statement
Non-cash transactions
During the year there were the following significant non-cash transactions:
• receipt of THEMAC shares and warrants as consideration for the sale of the Copper Flat Project;
• receipt of shares in West Wits Mining Ltd.
25 Post balance sheet events
• On 13 October 2011 the Company announced the issue of 45,258,765 ordinary shares in respect of:
8,495,130 ordinary shares for gross proceeds of £102,000 pursuant to a Standby Equity Distribution Agreement (“SEDA”)
signed with YA Global Master SPV Ltd in April 2010;
399,999 ordinary shares in settlement of convertible loan note interest totalling £4,400 based on a price of £0.011 per
share;
36,363,636 ordinary shares following the conversion of convertible loan notes of total principal amount £400,000 based
on a price of £0.011 per share.
• On 17 October 2011 the Company announced the issue of 13,363,636 ordinary shares following the conversion of
convertible loan notes of total principal amount £150,000 based on a price of £0.011 per share.
• On 20 December 2011 the Company announced the issue of 37,460,000 ordinary shares in respect of:
the placement of 32,460,000 ordinary shares for gross proceeds of £324,600 based on a price of £0.01 per share; and
5,000,000 ordinary shares for gross proceeds of £50,000 pursuant to a Standby Equity Distribution Agreement (“SEDA”)
signed with YA Global Master SPV Ltd in April 2010.
• On 20 December 2011 the Company announced that it had increased its shareholding in Paniai Gold Ltd (“Paniai”) through
the conversion of a total of A$337,937 in loans to Paniai including accrued interest into 50 million new Paniai shares. ECR
became the holder of 100 million Paniai shares, equating to 26% of Paniai’s issued share capital and making the Company
Paniai’s largest shareholder.
• On 4 January 2012 the Company announced that it had elected not to exercise its right to acquire an initial 70% interest in
the Unchimé iron ore project in Salta Province, Argentina. As such costs of approximately £216,000 included within
exploration assets at 30 September 2011 have now been written off.
• On 20 January 2012 the Company announced the placement of 55,000,000 ordinary shares at £0.01 per share for gross
proceeds of £550,000.
• On 1 March 2012 the Company issued and allotted 19,103,351 ordinary shares at £0.010469 per share for gross proceeds
of £200,000 pursuant to a Standby Equity Distribution Agreement (“SEDA”) signed with YA Global Master SPV Ltd in April
2010.
34 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
Please note that this document is important and requires your immediate attention. If you are in any doubt as to the action to
be taken, please consult an independent adviser immediately.
If you have sold or transferred or otherwise intend to sell or transfer all of your holding of ordinary shares in the Company
prior to the Annual General Meeting of the Company to be held at the East India Club, 16 St James’s Square, London SW1Y
4LH on Saturday 31 March 2012 at 10:00 am, you should send this document, together with the accompanying Form of Proxy,
to the (intended) purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was or
is to be effected for transmission to the (intended) purchaser or transferee.
Company Number: 5079979
Notice of Annual General Meeting
ECR MINERALS plc (the “Company”)
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Company will be held at the East India Club, 16 St
James’s Square, London SW1Y 4LH on Saturday 31 March 2012 at 10:00 am in order to consider and, if thought fit, pass
resolutions 1 to 7 as Ordinary Resolutions and resolution 8 as a Special Resolution:
Ordinary Resolutions
1 To receive, consider and adopt the Directors’ report and accounts of the Company for the year ended 30 September 2011.
2 To re-appoint Nexia Smith & Williamson Audit Ltd of 25 Moorgate, London EC2R 6AY, as auditors of the Company and to
authorise the directors to determine their remuneration.
3 To re-elect as a director Michael Silver who is retiring in accordance with Article 29 of the Company’s Articles of Association
and who being eligible is offering himself for re-election.
4 To re-elect as a director Patrick Harford who is retiring in accordance with Article 29 of the Company’s Articles of
Association and who being eligible is offering himself for re-election.
5 To re-elect as a director Stephen Clayson who is retiring in accordance with Article 29 of the Company’s Articles of
Association and who being eligible is offering himself for re-election.
6 To re-elect as a director Luca Tenuta who is retiring in accordance with Article 29 of the Company’s Articles of Association
and who being eligible is offering himself for re-election.
7 That the Directors be generally and unconditionally authorised pursuant to Section 551 of the Companies Act 2006 (the
“Act”) to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company
(“Rights”) up to an aggregate nominal amount of £800,000, provided that this authority shall, unless previously revoked or
varied by the Company in general meeting, expire at the conclusion of the next Annual General Meeting of the Company
following the date of the passing of this resolution or (if earlier) 12 months from the date of passing this resolution, but so
that the directors may before such expiry make an offer or agreement which would or might require relevant securities to
be allotted after such expiry and the directors may allot relevant securities in pursuance of that offer or agreement as if the
authority hereby conferred had not expired.
ANNUAL REPORT & ACCOUNTS 2011 35
ECR MINERALS PLC
Special Resolution
8 That, subject to the passing of Resolution 7, the Directors be given the general power to allot equity securities (as defined
by Section 560 of the Act) for cash, either pursuant to the authority conferred by Resolution 7 or by way of a sale of
treasury shares, as if Section 561(1) of the Act did not apply to any such allotment, provided that this power shall be
limited to:
8.1 the allotment of equity securities in connection with an offer by way of a rights issue:
8.1.1 to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and
8.1.2 to holders of other equity securities as required by the rights of those securities or as the Directors otherwise
consider necessary, but subject to such exclusions or other arrangements as the Board may deem necessary
or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in
or under the laws of any territory or the requirements of any regulatory body or stock exchange; and
8.2 the allotment (otherwise than pursuant to paragraph 8.1 above) of equity securities up to an aggregate nominal amount
of £800,000.
The power granted by this resolution will unless otherwise renewed, varied or revoked by the Company, expire at the
conclusion of the next Annual General Meeting of the Company following the date of the passing of this resolution or (if earlier)
12 months from the date of passing this resolution, save that the Company may, before such expiry make offers or agreements
which would or might require equity securities to be allotted after such expiry, and the Directors may allot equity securities in
pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.
This resolution revokes and replaces all unexercised powers previously granted to the Directors to allot equity securities as if
section 561(1) of the Act did not apply, but without prejudice to any allotment of equity securities already made or agreed to
be made pursuant to such authorities.
By order of the Board
Patrick Harford
Managing Director
Registered Office:
Webber House
26-28 Market Street
Altrincham
Cheshire
WA14 1PF
Dated 6 March 2012
36 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
NOTES
1 A member entitled to attend and vote at the meeting is also entitled
to appoint a proxy to attend and vote on a poll instead of him. A proxy
may demand, or join in demanding, a poll. A proxy need not be a
member of the Company.
2 Completion and return of the form of proxy will not preclude ordinary
shareholders from attending or voting at the meeting, if they so wish.
3 To be effective, this proxy form must be lodged with the Company’s
registrars, Computershare Investor Services plc, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY, United Kingdom not later than
48 hours before the time of the meeting or any adjournment thereof,
together, if appropriate, with the power of attorney or other authority
(if any) under which it is signed or a notarially certified copy of such
power or, where the proxy form has been signed by an officer on
behalf of a corporation, a notarially certified copy of the authority
under which it is signed.
4 In the case of a joint holding, a proxy need only be signed by one joint
holder. If more than one such joint holder lodges a proxy only that of
the holder first on the register of members will be counted. Any
alterations made to this proxy should be initialled.
5 If you submit more than one valid proxy appointment, the
appointment received last before the latest time for the receipt
of proxies will take precedence.
6 In the case of a corporation this proxy must be given under its
common seal or be signed on its behalf by an attorney or officer
duly authorised.
(Saturdays and public holidays excepted) from the date of this notice
until the conclusion of the Annual General Meeting.
9 Pursuant to Regulation 41 of the Uncertificated Securities Regulations
2001, the time by which a person must be entered on the register of
members in order to have the right to attend and vote at the Annual
General Meeting is on Thursday 29 March 2012 at 10:00am, (being
not more than 48 hours prior to the time fixed for the Meeting) or, if
the Meeting is adjourned, such time being not more than 48 hours
prior to the time fixed for the adjourned meeting. Changes to entries
on the register of members after that time will be disregarded in
determining the right of any person to attend or vote at the Meeting.
10 CREST members who wish to appoint a proxy or proxies by utilising
the CREST electronic proxy appointment service may do so by
utilising the procedures described in the CREST Manual. CREST
Personal Members or other CREST sponsored members, and those
CREST members who have appointed a voting service provider(s),
should refer to their CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on their behalf.
In order for a proxy appointment made by means of CREST to be
valid, the appropriate CREST message must be transmitted so as
to be received by the Company’s agent, Computershare Investor
Services plc (whose CREST ID is 3RA50) by the specified latest
time(s) for receipt of proxy appointments. For this purpose, the time
of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host)
from which the Company’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed.
7 Any power of attorney or any other authority under which this proxy
form is signed (or a duly certified copy of such power or authority)
must be included with the proxy form.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(A) of the Uncertificated
Securities Regulations 2001.
8 A copy of the balance sheet and every document required by law
to be annexed to it, which are to be laid before the above mentioned
meeting, are enclosed. The register of interests of the directors in
the share capital of the Company and copies of contracts of service
of directors with the Company will be available for inspection at the
registered office of the Company during normal business hours
ANNUAL REPORT & ACCOUNTS 2011 37
ECR MINERALS PLC
NOMINATED ADVISER
& STOCKBROKER
Daniel Stewart & Company plc
Becket House
36 Old Jewry
London EC2R 8DD
STOCKBROKER
Old Park Lane Capital plc
55 Park Lane
London W1K 1NA
PUBLIC RELATIONS
Blythe Weigh Communications
Southbank House
Black Prince Road
London SE1 7SJ
Barry Kaplan Associates
623 River Road, Suite 200
Fair Haven NJ 07704
USA
COMPANY INFORMATION
DIRECTORS
M B Silver Executive Chairman
P A Harford Managing Director
S J Clayson Director & Chief Financial Officer
L Tenuta Non-Executive Director
AUDITORS
Nexia Smith & Williamson
Audit Ltd 25 Moorgate
London EC2R 6AY
REGISTRARS
Computershare
The Pavilions
Bridgwater Road
Bristol BS13 8AE
BANKERS
Barclays Bank plc
Town Gate House
Church Street East
Woking
Surrey GU21 6XW
SOLICITORS (UK)
Gowlings (UK) LLP
15th Floor
125 Old Broad Street
London EC2N 1AR
COMPANY SECRETARY
Oakwood Corporate Secretary Ltd
Webber House
26-28 Market Street
Altrincham
Cheshire
WA14 1PF
REGISTERED OFFICE
Webber House
26-28 Market Street
Altrincham
Cheshire
WA14 1PF
HEAD OFFICE
ECR Minerals plc
Peek House
20 Eastcheap
London EC3M 1EB
Tel: +44 (0)20 7929 1010
Fax: +44 (0)20 7929 1015
info@ecrminerals.com
www.ecrminerals.com
AIM: ECR
ADR: MTGDY
Company no. 5079979
38 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
ANNUAL REPORT & ACCOUNTS 2011 39
ECR MINERALS PLC
40 ECR MINERALS PLC
ANNUAL REPORT & ACCOUNTS 2011
ECR Minerals plc
Peek House
20 Eastcheap
London EC3M 1EB
Tel: +44 (0)20 7929 1010
Fax: +44 (0)20 7929 1015
Email: info@ecrminerals.com
www.ecrminerals.com