Annual Report and Accounts 2013 2 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 4 6 8 9 12 13 Chairman’s Statement Strategic Report Directors’ Biographies Directors’ Report Independent Auditor’s Report Financial Statements 20 Notes to the Financial Statements 37 Notice of Annual General Meeting 41 43 Form of Proxy Company Information ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 3 Chairman’s Statement Dear Shareholder, Since I wrote to you in our annual report in 2013, the Company has made substantial progress in developing its platinum business in Russia. At our West Kytlim project, work continued to identify further reserves and a new report was submitted to the authorities for approval in September 2013. These reserves were approved in March 2014 and our application for a Discovery Certificate followed. On granting of this, the Company will apply for a production licence. We are hopeful that this licence will be granted this year and allow us to commence mining in 2015. Meanwhile in Kola, we applied for an extension of the Monchetundra licence following the drilling programme in the summer of 2013. This was granted in December for a further three years, until December 2016. West Kytlim Once again the Company has succeeded in increasing its reserves of platinum over 12 months, with the new total approved by RosNedra in March 2014. Exploration work has increased C1 and C2 category Reserves of contained raw platinum by 35% from 1,689Kg in 2013 to 2,283Kg (80,495oz) this year. In our early years of exploration, we identified the extent of the platinum resources over the entire length of the Tylai and Kosva rivers within our licence area. Subsequently we undertook additional work at Bolshaya Sosnovka where we registered our first reserve and Discovery Certificate. While we were offered a mining licence shortly afterwards, the area was small and restricted to a single production site which was not optimal. For this reason we continued to undertake further detailed drilling, pitting and bulk sampling to increase the reserves and enlarge the area to be included in a production licence application. This was achieved last year when we submitted in September a TEO (Russian feasibility study) for approval of the enlarged area of reserves capable of sustaining an expanded multiple worksite operation. This TEO was based on two production sites operating over a 9-10 year period. It should be noted that these estimates are Reserves as defined by the national Russian standard on mining and minerals as published by the National Certification Body of the Russian Federation. For data to be included under this standard the Russian State or Federal body must approve it. Furthermore, the licence still has considerable potential as we know there are P1 and P2 Resources remaining which are targets for upgrading to reserves. Successful results from such work would allow the development of further mining sites and an extension of the productive life at West Kytlim to 14-15 years. 4 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Monchetundra Kamushanovsky Discussions continue with a third party to acquire a majority stake in this uranium venture in which the Company has a minority interest. Michael Martineau Chairman A new drilling programme was completed on the West Nittis target in our Monchetundra licence during the summer of 2013. The mineralization here occurs within a layered series of ultramafic rocks situated on the western flank of the NKT Massif. The drilling confirmed the presence of two styles of mineralization. The stratiform or layered zone which grades 1-1.2 g/t PGM and a separate zone with high angle structures which again yielded high results, with the best value being 1 metre at grades of 1.57 g/t Pt, 16.7 g/t Pd, 3.85% Cu, 0.08% Ni and 0.22 g/t Au. The 2013 program was directed at improving our understanding of the orientation of the mineralization, testing ore continuity, as well as expanding the dimensions of the known resource. The new results confirm several generations of steeply dipping North-South trending zones of mineralization which have an affinity with ore bodies elsewhere in the NKT Massif, and which were mined for high grade nickel and copper veins between 1937 and 1971. The potential for PGM deposits within the Massif has been largely ignored until recent exploration. Management is optimistic that this project will develop into a significant asset in the near term. To achieve this, additional exploration work is required and we continue to seek ways to develop this project without recourse to shareholder equity. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 5 Strategic report Eurasia Mining Plc Company No. 3010091 Eurasia Mining Plc (the “Eurasia” or the “Company”) is a public limited company incorporated and domiciled in Great Britain with its registered office and principal place of business at 2nd Floor, 85-87 Borough High Street, London SE1 1NH. The Company’s shares are quoted on AIM, the market operated by the London Stock Exchange Group plc. The principal activities of the Company its subsidiaries and joint venture (the “Group”) are related to the exploration for and development of platinum group metals (the “PGM”), gold and other minerals. The Group is currently developing two licences with its joint venture partner – West Kytlim in the Central Urals and Monchetundra on the Kola Peninsula in Russia while continuing to assess the potential of near to production gold projects in other regions in Russia and other countries of the former Soviet Union. At West Kytlim, the Group made several PGM discoveries of resources suitable for commercial mining and is working on obtaining a permit for an enlarged production licence area. Meanwhile, ongoing drilling continues to expand and upgrade the resource base. On the Kola Peninsular the Group discovered the PGM mineralisation within the Monchetundra licence, which is being further explored. Work continues on the potential open pit resource at West Nittis area within the Monchetundra licence boundaries. The Group also maintains an active interest in several non-core, innovative mining solutions including the Kamushanovsky Uranium Project in Kyrgyzstan. The Company’s aim is to deliver value to its shareholders by leveraging the significant experience of its directors and management team to advance our licences and to acquire new projects. 6 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Strategic report continued Eurasia Mining Plc Company No. 3010091 Key performance indicators At this stage of the Group business activities the Directors think it appropriate to limit the Key Performance Indicators (KPIs) used to monitor progress in the delivery of the Group’s strategic objectives, to assess actual performance against targets and to aid management of the business, other than the monitoring of licences and stages of exploration. The Board monitors relevant KPIs which it considers appropriate for a company at Eurasia’s stage of development. The KPIs for the Group are as follows: Financial KPIs Shareholder return – the performance of the share price. The Company’s shares are quoted on AIM and the shares have traded at 0.47-0.95p (2012: 0.41-0.80p) during the year under review; Exploration expenditure – funding and development costs. The availability of sufficient cash to facilitate continued investment and funding of exploration programmes and project development is essential. The Group monitors the availability of sufficient cash to fund work. At 31 December 2013 the group had a cash balance of £361,905 to allow it to continue its core project development. Non financial KPIs Environment management – the Group has environmental policies in place. Performance against environmental policies is continuously monitored. The directors consider that this has served to minimize any negative impact of current exploration activities on the environment. Operational – the number of additional exploration licences and exploration successes. There has been extensive exploration activity in the year, and the directors are encouraged by the prospectivity of the Group’s exploration licenses and by the exploration results obtained to date. Currently there is one production license application pending for a platinum mining at West Kytlim area in the Central Urals region in Russia. The Directors consider that performance against all KPI’s in 2013 was acceptable. Principal risks and uncertainties The risks inherent in an exploration business are kept under constant review by the Board and the Executive Committee. The going concern risk and the key financial risks affecting the Group and the Company are set out respectively in Notes 2 and 26 to the financial statements and the principal operating risks affecting the Group are detailed below: Project development risks The mineral property licences held by the Group and/or permits do not currently provide for the development of a mine. Consequently, the Group will be required to obtain further licences and/or permits (mining, environmental and otherwise) from the respective government departments in the applicable countries of operation. The Group engages into close discussion with respective government departments to have better understanding of the requirements and to make sure all requirements are implemented and duly reported to guaranty the grant of permits and licences. Political risk The Group’s assets are located in Russia which is still undergoing a substantial transformation from a centrally controlled command economy to a market-driven economy. In addition, in view of the legal and regulatory regime in Russia and sanctions imposed to certain individuals and companies in Russian over Ukraine in 2014, legal and economical inconsistencies may arise. The Group closely monitors all regulatory requirements and changes to the laws, rules and regulation taking steps whenever necessary to comply with regulation. Environmental issues The Group’s operations are subject to environmental regulation, including environmental impact assessments and permitting. Russian environmental legislation comprises numerous federal and regional regulations which are not fully harmonised and may not be consistently interpreted. The Group makes assessment of the environmental impact at the time it applies for permits and licences which are subject to such assessment. The regulatory environment The Group’s activities are subject to extensive federal and regional laws and regulations governing various matters, including licensing, production, taxes, mine safety, labour standards, occupational health and safety and environmental protections. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation or interpretation of these laws and regulations can have a material adverse impact on the Group and/or delay or prevent the development or expansion of the Group’s properties in Russia. The Group closely monitors all regulatory requirements and changes to the laws, rules and regulation taking steps whenever necessary to comply with regulation. By order of the Board M J de Villiers Secretary 2 May 2014 ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 7 Directors’ Biographies Eurasia Mining Plc Company No. 3010091 MICHAEL MARTINEAU GARY FITZGERALD MA, D.Phil, FIMMM, age 69, is Non-Executive age 60, is a Non-Executive Director. He was Chairman. Following a First Class Honours degree and previously a Director of Framlington Investment a Doctorate in Geology from Oxford University, he has Management Limited and has over 30 years had 30 years experience in the mining and minerals experience in investment management. He has industry. He was in charge of global exploration for diverse experience of emerging markets including the BP Minerals International later becoming Exploration launch of the first fund for investing in Russia in the Director of its Australian listed subsidiary, Seltrust. early 1990’s. In 1987, he joined Cluff Resources PLC, as Director Minerals and Managing Director of Cluff Mineral Exploration Limited. In 1989 he co-founded Samax DMITRY SUSCHOV Resources, which listed on the Toronto Stock age 36, is a Non-Executive Director. He is currently Exchange in 1996 and which was acquired by Ashanti a director of Deloan Investments Limited and the Goldfields in 1998. He is currently a Director of First following Russian and Ukrainian companies: Quantum Minerals. Daltekhgas (Open Joint Stock Company), Kiev Oxygen Works (Closed Joint Stock Company), and Pivdentekhgas (Open Joint Stock Company). He has CHRISTIAN SCHAFFALITZKY BA(Mod), FIMMM, PGeo, CEng, age 60, is Managing also been a director of NH Capital Limited, Dutch Noble House Limited and Noble House Kazakhstan Director. With over 30 years experience in minerals Limited. He is an Investment Banker with extensive exploration, Christian Schaffalitzky was a founder experience in the Russian resources industry and has of Ivernia West PLC, where he led the exploration, previously worked with IG Capital (former Lukoil- discovery and development of the Lisheen world Reserve-Invest), MDM Bank, PricewaterhouseCoopers class zinc deposit in Ireland. More recently, he was and Ernst&Young as mining & metals leader in Managing Director of Ennex International PLC, an Irish corporate finance for Russia and CIS. quoted mineral exploration company, focused on zinc development projects. He has also been engaged in precious and base metals minerals exploration and development in Russia and the former Soviet Union. He is an independent director on the board of Russian company, Raspadskaya Coal Company and is a director of a number of other public companies including Kibo Mining and Red Crescent Resources. 8 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Directors’ report Directors The Directors who served during the period were: Michael Martineau Non-Executive Chairman Christian Schaffalitzky Managing Director Gary FitzGerald Non-Executive Director Dmitry Suschov Non-Executive Director Directors’ interests Share interests The Directors of the Company held the following beneficial interests (including interests held by spouses and minor children) in the ordinary shares of the Company: M. Martineau C. Schaffalitzky G. FitzGerald D. Suschov* Total 31 Dec 2013 No. of shares 12,618,625 20,919,168 15,326,994 234,500,000 31 Dec 2012 No. of shares 12,618,625 20,919,168 15,326,994 234,500,000 283,364,787 283,364,787 *as sole shareholder and director of Deloan Investment Limited Share options The Directors of the Company held share options granted under the Company’s Executive share option scheme, as indicated below. No share options were exercised during the year. M. Martineau C Schaffalitzky G FitzGerald D. Suschov Total 31 Dec 2013 No. of options 31 Dec 2012 No. of options 3,000,000 8,000,000 3,000,000 3,000,000 3,600,000 8,900,000 3,225,000 3,000,000 17,000,000 18,725,000 Share capital Issued capital of the Company as at 31 December 2013 was: Number of shares Fully paid ordinary shares at 0.1 pence Deferred shares 4.9 pence 965,468,701 143,377,203 Nominal value £ 965,469 7,025,483 Section 561 of the Companies Act 2006 (the “Act”) provides that any shares being issued for cash must in general be issued to all existing shareholders pro-rata to their holding. However, where Directors had a general authority to allot shares, they may be authorised by the Articles or by a special resolution to allot shares pursuant to the authority as if the statutory pre-emption rights did not exist. At the General Meeting, held on 26 June 2013, the Board was given authority to allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £1,000,000, such authority to expire on the date of the next Annual General Meeting. The Board has not utilised this authority to issue new shares since the AGM. It will be proposed at the Annual General Meeting as an ordinary resolution to renew the Directors’ general authority to issue relevant securities up to an aggregate nominal amount of £2,000,000. It will also be proposed at the Annual General Meeting as a special resolution for the renewal of the Directors’ authority to allot relevant securities for cash, without first offering them to shareholders pro rata to their holdings, pursuant to section 561 of the Company Act 2006 up to an aggregate nominal amount of £2,000,000. It will be further proposed that the Company be given a general authority to purchase its own shares pursuant to sections 693 and 701 of the Companies Act 2006. The authority will be limited to 250,000,000 Ordinary Shares at a price of no less than 0.01p and no more than 1p per share. Substantial share interests The Company had been notified of the following interests in shares in excess of 3 per cent of the issued share capital at 01 May 2014: Queeld Ventures Ltd Deloan Investments Limited Fitel Nominees Limited Barclayshare Nominees Limited TD Direct Investing Nominees No of shares held 288,500,000 225,000,000 47,155,500 35,156,065 30,420,475 % of share capital 29.88% 23.30% 4.88% 3.64% 3.15% 626,232,040 64.85% Share Analysis As at 20 May 2013 Holdings 1 - 50,000 50,001 - 100,000 100,001 - 500,000 500,001 - 1,000,000 1,000,001 - 5,000,000 5,000,001 – 10,000,000 10,000,000 – 100,000,000 Over 100,000,000 Totals No of accounts No of % of share capital shares held 1,004 47 64 26 24 11 14 2 1,192 8,578,389 3,932,966 15,118,573 19,119,459 46,011,775 80,812,605 278,394,934 513,500,000 0.89% 0.40% 1.56% 1.98% 4.77% 8.37% 28.84% 53.19% 965,468,701 100% ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 9 Directors’ report continued Risk Management The Directors consider that assessing and monitoring the inherent risks in the exploration business, as well as other financial risks, is crucial for the success of the Group. Risk assessment is essential in the Group’s planning processes. The Board regularly reviews the performance of projects against plans and forecasts. Further detail on management of financial risk is set out in note 26. Statement of Directors’ responsibilities The Directors are responsible for preparing the Directors’ 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 financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs). 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 and profit or loss of the company and 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 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 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 Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm that so far as each Director is aware: • there is no relevant audit information of which the Company’s auditor is unaware; and • the directors have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. 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 financial statements may differ from legislation in other jurisdictions. 10 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Corporate Governance The Board of Directors The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company’s objectives. Any such system of internal financial control can only provide reasonable but not absolute assurance against material misstatement or loss. Full Board meetings are held quarterly to review Group strategy, direction and financial performance. The executive Directors meet regularly to review operational reports from all the Group’s areas of operations. The process is used to identify major business risks and evaluate their financial implications and ensure an appropriate control environment. Certain control over expenditure is delegated to on site project managers subject to Board control by means of monthly budgetary reports. Internal financial control procedures include:- • preparation and regular review of operating budgets and forecasts • prior approval of all capital expenditure • review and debate of treasury policy • unrestricted access of non-executive Directors to all members of senior management. The Board, in conjunction with members of the Audit Committee, has reviewed the effectiveness of the system of internal control for the period from 1 January 2013 to the date of this report. Audit Committee The Chairman of the Audit Committee is Gary FitzGerald. The Audit Committee may examine any matters relating to the financial affairs of the Group and the Group’s audits, this includes reviews of the annual financial statements and announcements, internal control procedures, accounting procedures, accounting policies, the appointment, independence, objectivity, terms of reference and fees of external auditors and such other related functions as the Board may require. The membership of the Audit Committee comprises two non-executive Directors, Michael Martineau and Gary FitzGerald. The external auditors have direct access to the members of the Committee, without the presence of the executive Directors, for independent discussions. Remuneration Committee The Chairman of the Remuneration Committee is Michael Martineau. The committee comprises two non-executive Directors, Michael Martineau and Gary FitzGerald. It determines the terms and conditions of employment and annual remuneration of the Executive Directors. It consults with the Managing Director, takes into consideration external data and comparative third party remuneration and has access to professional advice outside the Company. Financial instruments Details of the financial risk management objectives and policies of the Group and the exposure of the Group to currency risk and liquidity risk are set out in note 26 to the financial statements. Auditors Grant Thornton UK LLP are willing to continue in office and a resolution proposing their re-appointment as auditors of the Company and a resolution authorising the Directors to fix their remuneration will be put to shareholders at the Annual General Meeting. By order of the Board M J de Villiers Secretary 2 May 2014 Directors’ report continued The key policy objectives of the Remuneration Committee in respect of the Company’s executive Directors and other senior executives are:- a) to ensure that individuals are fairly rewarded for their personal contribution to the Company’s overall performance, and b) to act as an independent committee ensuring that due regard is given to the interests of the Company’s Shareholders and to the financial and commercial health of the Company. Remuneration of executive Directors comprises basic salary, discretionary bonuses, participation in the Company’s share option scheme and other benefits. The Company’s remuneration policy with regard to options is to maintain an amount of not more than 10% of the issued share capital in options for the Company’s management and employees which may include the issue of new options in line with any new share issues. Total Directors’ emoluments are disclosed in notes 8 and 22 to the financial statements and the Directors’ options are disclosed above. During 2013 no options were granted to the Directors (2012: nil). Dividends and profit retention No dividend is proposed in respect of the year (2012: £nil) and the retained loss for the year attributable to the equity holders of the parent of £746,024 (2012: £1,331,700) has been taken to reserves. Research and development The Group’s research and development activities during the year continued to be concentrated principally on mineral exploration programmes and the improvement of mining techniques and metallurgical processes. Policy on payment of suppliers The Company'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. There were no trade creditors at the year-end. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 11 Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and 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. Nick Page Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 2 May 2014 Independent Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EURASIA MINING PLC We have audited the financial statements of Eurasia Mining plc for the year ended 31 December 2013 which comprise the group and parent company statement of financial position, the group statement of comprehensive income, the group and parent company statements of cash flow, the group and parent company statements of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union 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 10, 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 Financial Reporting Council'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 31 December 2013 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. 12 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Consolidated statement of comprehensive income Eurasia Mining Plc Company No. 3010091 For the year ended 31 December 2013 Revenue Administrative costs Loss on revised period of repayment of the loan made to joint venture Finance income Other financial result Loss before tax Income tax expense Loss for the period Other comprehensive income: Items that will not be reclassified subsequently to profit and loss: NCI share of foreign exchange differences on translation of foreign operations Items that will be reclassified subsequently to profit and loss: Parents share of foreign exchange differences on translation of foreign operations Other comprehensive income for the period, net of tax Total comprehensive income for the period Loss for the period attributable to: Equity holders of the parent Non-controlling interest Total comprehensive income for the period attributable to: Equity holders of the parent Non-controlling interest Note 14 9 10 Year to 31 December 2013 £ Year to 31 December 2012 £ 16,355 62,223 (508,340) (270,178) 2,908 8,916 (750,339) - (756,051) (651,006) 9,025 (22,788) (1,358,597) - (750,339) (1,358,597) (5,371) (12,250) (15,057) 13,061 (20,428) 811 (770,767) (1,357,786) (746,024) (4,315) (1,331,700) (26,897) (750,339) (1,358,597) (761,081) (9,686) (1,318,639) (39,147) (770,767) (1,357,786) Loss per share attributable to equity holders of the parent: Basic and diluted loss (pence per share) 21 (0.08) (0.17) In accordance with section 408(3) of the Companies Act 2006, Eurasia Mining plc is exempt from the requirement to present its own income statement. The amount of the loss for the financial year recorded within the financial statements of Eurasia Mining plc is £708,263 (2012: £1,250,471). ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 13 Consolidated statement of financial position Eurasia Mining Plc Company No. 3010091 As at 31 December 2013 ASSETS Non-current assets Property, plant and equipment Other financial assets Total non-current assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total current assets Total assets EQUITY Issued capital Reserves Accumulated losses Equity attributable to equity holders of the parent Non-controlling interest Total equity LIABILITIES Current liabilities Trade and other payables Total current liabilities Total liabilities Total equity and liabilities Note 11 14 15 16 18 19 31 December 2013 £ 31 December 2012 £ 25,558 3,114,037 24,876 2,526,665 3,139,595 2,551,541 968 72,610 361,905 1,618 58,434 1,735,420 435,483 1,795,472 3,575,078 4,347,013 22,327,527 3,268,646 (22,407,199) 22,327,527 3,289,345 (21,666,817) 3,188,974 261,947 3,950,055 259,257 3,450,921 4,209,312 124,157 124,157 137,701 137,701 124,157 137,701 3,575,078 4,347,013 These financial statements were approved by the board on 2 May 2014 and were signed on its behalf by: C. Schaffalitzky Managing Director 14 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Company statement of financial position Eurasia Mining Plc Company No. 3010091 As at 31 December 2013 ASSETS Non-current assets Property, plant and equipment Investments Other financial assets Total non-current assets Current assets Trade and other receivables Cash and cash equivalents Total current assets Total assets EQUITY Issued capital Reserves Accumulated losses Total equity LIABILITIES Current liabilities Trade and other payables Total current liabilities Total liabilities Total equity and liabilities Note 11 12, 13 14, 22 15 16 18 19 31 December 2013 £ 31 December 2012 £ 2,167 307,615 3,888,261 804 162,372 3,285,287 4,198,043 3,448,463 172,870 361,087 252,765 1,731,199 533,957 1,983,964 4,732,000 5,432,427 22,327,527 3,939,141 (21,842,534) 22,327,527 3,944,783 (21,139,913) 4,424,134 5,132,397 307,866 307,866 307,866 300,030 300,030 300,030 4,732,000 5,432,427 These financial statements were approved by the board on 2 May 2014 and were signed on its behalf by: C. Schaffalitzky Managing Director ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 15 Consolidated statement of changes in equity For the year ended 31 December 2013 Eurasia Mining Plc Company No. 3010091 Share capital £ Share premium £ Deferred shares £ Note Capital redemption and other reserves £ Foreign currency translation reserve £ Accumulated losses £ Total attributable to owners of parent £ Non- controlling interest £ Total £ Balance at 1 January 2012 Issue of ordinary shares for cash Recognition of share-based payment 676,969 11,740,075 2,596,500 288,500 - - 7,025,483 - - 3,878,093 - 66,690 (668,499) - - (20,335,117) - - 2,317,004 2,885,000 66,690 298,404 - 2,615,408 2,885,000 66,690 Transactions with owners 288,500 2,596,500 Loss for the period Exchange differences on translation of foreign operations Total comprehensive income - - - - - - - - - - 66,690 - - - - - - 2,951,690 - 2,951,690 (1,331,700) (1,331,700) (26,897) (1,358,597) 13,061 - 13,061 (12,250) 811 13,061 (1,331,700) (1,318,639) (39,147) (1,357,786) Balance at 31 December 2012 965,469 14,336,575 7,025,483 3,944,783 (655,438) (21,666,817) 3,950,055 259,257 4,209,312 Balance at 1 January 2013 Cancellation of options by forfeiture Contributed by non-controlling interest 18, 20 Transactions with owners Loss for the period Exchange differences on translation of foreign operations Total comprehensive income 965,469 14,336,575 7,025,483 3,944,783 (5,642) - - - - - - - - - - - - - - - - - - - (5,642) - - - (655,438) - - (21,666,817) 5,642 - 3,950,055 - - 259,257 4,209,312 - 12,376 - 12,376 - - 5,642 - 12,376 12,376 (746,024) (746,024) (4,315) (750,339) (15,057) - (15,057) (5,371) (20,428) (15,057) (746,024) (761,081) (9,686) (770,767) Balance at 31 December 2013 965,469 14,336,575 7,025,483 3,939,141 (670,495) (22,407,199) 3,188,974 261,947 3,450,921 16 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Company statement of changes in equity For the year ended 31 December 2013 Eurasia Mining Plc Company No. 3010091 Share capital £ Share premium £ Deferred shares £ Other reserves £ Retained loss £ Total £ Note Balance at 1 January 2012 Issue of ordinary shares for cash Recognition of share-based payment 676,969 288,500 - 11,740,075 2,596,500 - 7,025,483 - - 3,878,093 (19,889,442) - - - 66,690 3,431,178 2,885,000 66,690 Transactions with owners 288,500 2,596,500 Loss and total comprehensive income - - - - 66,690 - 2,951,690 - (1,250,471) (1,250,471) Balance at 31 December 2012 965,469 14,336,575 7,025,483 3,944,783 (21,139,913) 5,132,397 Balance at 1 January 2013 Cancellation of options by forfeiture 18, 20 965,469 14,336,575 7,025,483 3,944,783 (21,139,913) 5,642 (5,642) 5,132,397 - Transactions with owners Loss and total comprehensive income - - - - - - (5,642) 5,642 - - (708,263) (708,263) Balance at 31 December 2013 965,469 14,336,575 7,025,483 3,939,141 (21,842,534) 4,424,134 ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 17 Consolidated statement of cash flows For the year ended 31 December 2013 Eurasia Mining Plc Company No. 3010091 Cash flows from operating activities Loss for the period Adjustments for: Depreciation of non-current assets Loss on revised period of repayment of the loan made to joint venture Finance income Net foreign exchange loss Expense recognised in income statement in respect of equity-settled share-based payments Movement in working capital Decrease/(increase) in inventories Increase in trade and other receivables Decrease in trade and other payables Cash outflow from operations Net cash used in operating activities Cash flows from investing activities Interest received Advanced to joint venture Purchase of property, plant and equipment Contributed by non-controlling party Net cash used in investing activities Cash flows from financing activities Proceeds from issue of equity shares Net cash proceeds from financing activities Net (decrease)/increase in cash and cash equivalents Effects of exchange rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Year to 31 December 2013 £ Year to 31 December 2012 £ Note (750,339) (1,358,597) 839 270,178 (2,908) (8,916) 372 651,006 (9,025) 22,788 - 66,690 (491,146) (626,766) 650 (14,869) (12,658) (1,242) (26,215) (19,186) (518,023) (673,409) (518,023) (673,409) 2,908 (867,735) (2,202) 12,376 9,025 (655,398) (572) - (854,653) (646,945) - - (1,372,676) (839) 1,735,420 2,885,000 2,885,000 1,564,646 (324) 171,098 361,905 1,735,420 11 16 18 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Company statement of cash flows For the year ended 31 December 2013 Eurasia Mining Plc Company No. 3010091 Cash flows from operating activities Loss for the period Adjustments for: Depreciation of non-current assets Finance income Impairment loss Loss on revised period of repayment of the loan made to joint venture Net foreign exchange loss Expense recognised in income statement in respect of equity-settled share-based payments Movement in working capital Increase in trade and other receivables Decrease/(increase) in trade and other payables Cash outflow from operations Net cash used in operating activities Cash flows from investing activities Interest received Purchase of property, plant and equipment Amounts advanced to related party Net cash used in investing activities Cash flows from financing activities Proceeds from issue of equity shares Net cash proceeds from financing activities Net (decrease)/increase in cash and cash equivalents Effects of exchange rate changes on the balance of cash held in foreign currencies Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Year to 31 December 2013 £ Year to 31 December 2012 £ Note (708,263) (1,250,471) 665 (2,908) 270,178 1,162 372 (9,025) - 651,006 1,248 - 66,690 (439,166) (540,180) (65,348) 9,177 (91,734) (38,424) (495,337) (670,338) (495,337) (670,338) 2,908 (2,028) (873,152) 9,025 (572) (657,056) (872,272) (648,603) - - 2,885,000 2,885,000 (1,367,609) 1,566,059 (2,503) (2,577) 1,731,199 167,717 361,087 1,731,199 11 22 16 ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 19 Notes to the consolidated financial statements For the year ended 31 December 2013 1 General information Eurasia Mining Plc (the “Company”) is a public limited company incorporated and domiciled in Great Britain with its registered office and principal place of business at 2nd Floor, 85-87 Borough High Street, London SE1 1NH. The Company’s shares are listed on the Alternative Investment Market of the London Stock Exchange. The principal activities of the Company and its subsidiaries (the “Group”) are related to the exploration for and development of platinum group metals, gold and other minerals in Russia. Eurasia Mining Plc’s consolidated financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company. 2 Going concern The directors have a reasonable expectation based on a review of the Group's budgets, plans, cash flow forecasts and the ability to flex their forecast spending to suit prevailing circumstances, that the Group is a going concern for a period of at least 12 months from the date of signing the financial statements. 3 Changes in accounting policies 3.1 New and revised standards that are effective for annual periods beginning on or after 1 January 2013 A number of new and revised standards are effective for annual periods beginning on or after 1 January 2013. Information on these new standards is presented below: Standard / interpretation Content Applicable for financial years beginning on/after IFRS13* Fair Value Measurement 01 January 2013 Amendments to IAS1* IFRIC20* Amendment to IAS 1: Presentation of Items of Other Comprehensive Income Stripping Costs in the Production Phase of a Surface Mine 01 July 2012 01 January 2013 IAS 19 (revised)* IAS 19 Employee Benefits (Revised June 2011) 01 January 2013 * The adoption of these Standards and Interpretations has had no material impact on the financial statements of the Group 3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group At the date of authorisation of these financial statements, certain new standards, amendments IAS 8.31 and interpretations to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Group. Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements. IFRS 9 ‘Financial Instruments’ (IFRS 9) The IASB aims to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’ (IAS39) in its entirety with IFRS 9. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning on or after 1 January 2015. Chapters dealing with impairment methodology and hedge accounting are still being developed. Further, in November 2011, the IASB tentatively decided to consider making limited modifications to IFRS 9’s financial asset classification model to address application issues. The Group’s management have yet to assess the impact of this new standard on the Group’s consolidated financial statements. Management does not expect to implement IFRS 9 until it has been completed and its overall impact can be assessed. IFRS 10 ‘Consolidated Financial Statements’ (IFRS 10) IFRS 10 supersedes IAS 27 ‘Consolidated and Separate Financial Statements’ (IAS 27) and SIC12 ‘Consolidation- Special Purpose Entities’. IFRS 10 revises the definition of control and provides extensive new guidance on its application. These new requirements have the potential to affect which of the Group’s investees are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged. Management has reviewed its control assessments in accordance with IFRS 10 and has concluded that there is no effect on the classification (as subsidiaries or otherwise) of any of the Group’s investees held during the period or comparative periods covered by these financial statements. IFRS 11 ‘Joint Arrangements’ (IFRS 11) IFRS 11 supersedes IAS 31 ‘Interests in Joint Ventures’ (IAS 31) and SIC 13 ‘Jointly Controlled Entities- Non-Monetary- Contributions by Venturers’. IFRS 11 revises the categories of joint arrangement, and the criteria for classification into the categories, with the objective of more closely aligning the accounting with the investor’s rights and obligations relating to the arrangement. In addition, IAS 31’s option of using proportionate consolidation for arrangements classified as jointly controlled entities under that Standard has been eliminated. IFRS 11 now requires the use of the equity method for arrangements classified as joint ventures (as for investments in associates). The Group’s only joint arrangement within the scope of IFRS 11 is its 50% investment in Urals Alluvial Platinum Ltd (Cyprus), which was accounted for using the equity method under IAS 31. 20 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 Management has reviewed the classification of Urals Alluvial Platinum Ltd in accordance with IFRS 11 and has concluded that there is no effect on the classification of the Groups’s joint venture operations during the period or comparative periods covered by these financial statements. IFRS 12 ‘Disclosure of Interests in Other Entities’ (IFRS 12) IFRS 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities. ‘Investment Entities – Amendments to IFRS 10, IFRS 12 and IAS 27’ The Amendments define the term ‘investment entity’, provide supporting guidance and require investment entities to measure investments in the form of controlling interests in another entity at fair value through profit or loss. Management does not anticipate a material impact on the Group’s consolidated financial statements. 4 Summary of significant accounting policies 4.1 Basis of preparation The consolidated financial statements of the Group and the Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) as endorsed by the EU. These financial statements have been prepared under the historical cost convention. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated financial statements. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling party’s share of changes in equity since the date of the combination. 4.4 Business combinations The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised as a profit or loss immediately. 4.2 Presentation of financial statements 4.5 Interests in joint ventures The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial Statements. The Group has elected to present the “Statement of comprehensive income” in one statement. 4.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control that is when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control. The Group reports its interests in jointly controlled entities using the equity method of accounting, except when the investment is classified as held for sale. Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of individual investments. Losses of a joint venture in excess of the Group’s interest in that joint venture are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 21 Notes to the consolidated financial statements continued For the year ended 31 December 2013 contingent liabilities of the joint venture recognised at the date of acquisition is recognised as goodwill. The goodwill, if any is included within the carrying amount of the investment and is assessed annually for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately as a profit or loss. Unrealised gains on transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the joint venture. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. 4.6 Interests in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post- acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill, if any, is included within the carrying amount of the investment and is assessed annually for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate. 4.7 Foreign currencies Functional and presentation currency The individual financial statements of each group entity are prepared in the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in GBP, which is the functional and the presentation currency of the Company. Transaction and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; • income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and • all resulting exchange differences are recognised as a separate component of other comprehensive income. 4.8 Share-based payments Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by use of 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. The fair value determined at the grant date of the equity- settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. All equity-settled share-based payments are ultimately recognised as an expense in the profit or loss with a corresponding credit to “Share-based payments reserve". Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting or if the share options vest but are not exercised. 22 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 When share options expire or cancelled by forfeiture the respective amount recognised in the Share-based payment reserve is reversed and credited to accumulated profit and loss reserve. values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. 4.9 Revenue Revenue comprises project management services to external customers (excluding VAT). Consideration receivable from customers is only recorded as revenue to the extent that the Company has performed its contractual obligations in respect of that consideration. 4.10 Taxation The estimated useful lives are as follows: Office equipment Furniture and fittings 3 years 5 years The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Income tax expense represents the sum of the tax currently payable and deferred tax. 4.12 Intangible assets Current tax The tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. Deferred tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill, initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 4.11 Property, plant and equipment Freehold properties held for administrative purposes, are stated in the statement of financial position at cost. Fixtures and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method. The estimated useful lives, residual Exploration and evaluation of mineral resources Exploration and evaluation expenditure comprises costs that are directly attributable to: • researching and analysing existing exploration data; • conducting geological studies, exploratory drilling and sampling; • examining and testing extraction and treatment methods; and/or • compiling prefeasibility and feasibility studies. Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a detailed assessment of deposits that have been identified as having economic potential. Such capitalised evaluation expenditure is reviewed for impairment at each statement of financial position date. The review is based on a status report regarding the Group’s intentions for development of the undeveloped property. Subsequent recovery of the resulting carrying value depends on successful development of the area of interest or sale of the project. If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are written off. 4.13 Impairment testing intangible assets and property, plant and equipment At each statement of financial position date, the Group reviews the carrying amounts of the assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 23 Notes to the consolidated financial statements continued For the year ended 31 December 2013 Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash- generating unit) in prior years. A reversal of an impairment loss of the assets is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 4.14 Financial instruments Financial assets and liabilities are recognised on the group’s statement of financial position when the group has become a party to the contractual provisions of the instrument. Financial assets Loans and receivables Trade receivables, loans, cash and cash equivalents, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured initially fair value plus transaction costs and subsequently at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial. Cash and cash equivalents Cash and cash equivalents comprise cash in hand and on deposit with banks. Impairment of financial assets Financial assets are assessed for indicators of impairment at each statement of financial position date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment losses recognised previously on debt securities are reversed through the income statement when the increase can be related objectively to an event occurring after the impairment loss was recognised in the income statement. Revision in timing of cash flows Where there is a change in the planned timing of repayment of loans or receivables the carrying amount of these financial assets or liabilities are adjusted to reflect the revised estimated cash flows. The present value of the estimated future cash flows is computed by reference to the effective interest rate of the item, the adjustment is recognised in profit or loss as income or expense. Financial liabilities and equity instruments issued by the Group Classification as debt or equity 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. 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 statement of financial position. Finance costs and gains or losses relating to financial liabilities are included in the income statement. 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. 24 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 5.3.1 Share-based payments The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Group has made estimates as to the volatility of its own shares, the probable life of options granted and the time of exercise of those options. The model used by the Group is the Black-Scholes valuation model (see also note 21). 5.3.2 Recoverability of other financial assets The majority of other financial assets represent loans provided to subsidiary and joint venture, which are associated with funding of mineral exploration and development projects. The recoverability of such loans is dependent upon the discovery of economically recoverable reserves, the ability of the Company to maintain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition thereof. 5.3.3 Estimation of loans advanced to joint venture Loans extended on an interest free basis advanced to the joint venture enterprise, Urals Alluvial Platinum, have been discounted to reflect the time value of money. The discount has been applied in accordance with a best estimate of the likely repayment period. The repayment period is based on the future commercial operations located in the Urals generating cash flows. There is uncertainty as to the exact timing of these cash flows and as such the repayment period represents a source of estimation uncertainty. 5.3.4 Effective interest rate The monies advanced to the joint venture enterprise have been discounted using an effective interest rate of 10% which is management's best estimate of the risks relating to the country, the asset and the projects current status of exploration. 6 Segmental information During the year under review Management identified the group as one operating segment being investing in the joint venture which undertakes the exploration for and development of platinum group metals, gold and other minerals in Russia. This one segment is monitored and strategic decisions are made based upon it and other non-financial data collated from the on-going exploration activities. The formats of financial reports that are reported to the Chief Operating Decision Maker are consistent with those presented in the annual financial statements. Other financial liabilities Other financial liabilities, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. 4.15 Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Chief Operating Decision-Maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors of the Group that make the operating decisions. 5 Critical accounting judgements and key sources of estimation uncertainty Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 5.1 Investments in associates The Company has a combined interest in Russian registered Terskaya Mining Company and Yuksporskaya Mining Company of 60%. 20% in each of them is held directly by the Company and the remaining 80% is held by the joint venture Urals Alluvial Platinum Limited (the “UAP”) where the company has a 50% interest. By arrangements with the UAP the Company’s ownership does not constitute control even though more than half of the potential voting power is owned by the Company and therefore the direct 20% interest has being accounted as interest in associates. 5.2 Investments in subsidiaries The Company has a holding of 48.33% in the BVI registered company Energy Resources Asia Limited (the “ERA”). Directors consider the ERA to be a subsidiary of the Company despite holding less than 50% of the voting power of the entity based on the fact that the Company has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. 5.3 Key sources of estimation uncertainty The following are the key assumptions / uncertainties at the statement of financial position date, which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year: ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 25 Notes to the consolidated financial statements continued For the year ended 31 December 2013 7 Employees Average number of staff (excluding non-executive directors) employed throughout the year was as follows: By the Company By the Group 8 Loss for the year Loss for the year has been arrived at after charging: Depreciation Staff benefits expense: Wages, salaries and directors fees (note 22 ) Social security costs Share based payments Other short term benefits Audit fees payable to the company’s auditor for the audit of the annual Group’s accounts 9 Other financial results Net foreign exchange profit/(loss) 10 Income taxes Loss before tax Current tax at 24.5% Adjusted for the effect of: Expenses not deductible for tax purposes Difference between depreciation and capital allowances Tax losses carried forward Tax liability 2013 5 19 2012 5 19 Year to 31 December 2013 Company £ Group £ Year to 31 December 2012 Company £ Group £ 596 596 372 372 317,963 33,813 - 14,807 254,593 17,108 - 14,807 366,583 286,508 304,330 31,326 66,690 9,600 411,946 251,675 17,158 66,690 9,600 345,123 20,000 20,000 20,000 20,000 19,500 19,500 19,500 19,500 Year to 31 December 2013 Company £ Group £ Year to 31 December 2012 Company £ Group £ 8,916 8,916 (1,162) (1,162) 22,788 22,788 1,248 1,248 Year to 31 December 2013 Company £ Group £ Year to 31 December 2012 Company £ Group £ (750,339) (183,833) (708,263) (173,524) (1,358,597) (332,856) (1,250,471) (306,365) 72,948 (146) 66,194 (146) 189,185 (197) 175,836 (197) (111,031) (107,477) (143,869) (130,727) - - - - There was no tax payable for the year ended 31 December 2013 (2012: £nil) due to the Group and the Company having taxable losses. The Group’s business operations currently comprise mining projects in Russia, which are all currently at an exploration stage. The Group has tax losses carried forward on which no deferred tax asset is recognised. These losses may affect the future tax position by way of offset against profits as and when mining projects reach a development stage. The deferred asset arising from the accumulated tax losses has not been recognised due to insufficient evidence of timing of suitable taxable profits against which it can be recovered. 26 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 11 Property, plant and equipment Group property, plant and equipment Cost Balance at 1 January 2012 Additions Disposals Exchange differences Balance at 31 December 2012 Additions Disposals Exchange differences Balance at 31 December 2013 Depreciation Balance at 1 January 2012 Depreciation expense Disposals Exchange differences Balance at 31 December 2012 Depreciation expense Disposals Exchange differences Balance at 31 December 2013 Carrying amount: at 31 December 2012 at 31 December 2013 Company’s office fixture and fittings Cost Balance at 1 January Additions Disposal Balance at 31 December Depreciation Balance at 1 January Depreciation expense Disposals Balance at 31 December Carrying amount Freehold £ Office fixture and fittings £ 23,994 - - 78 24,072 - - (681) 23,391 - - - - - - - - - 24,072 23,391 Total £ 68,685 572 (2,053) 115 67,319 2,202 (1,322) (996) 67,203 (44,087) (372) 2,053 (37) 44,691 572 (2,053) 37 43,247 2,202 (1,322) (315) 43,812 (44,087) (372) 2,053 (37) (42,443) (42,443) (839) 1,322 315 (839) 1,322 315 (41,645) (41,645) 804 2,167 2013 £ 39,741 2,028 (1,322) 40,447 (38,937) (665) 1,322 (38,280) 24,876 25,558 2012 £ 41,222 572 (2,053) 39,741 (40,618) (372) 2,053 (38,937) 2,167 804 The Group’s and Company's property, plant and equipment are free from any mortgage or charge. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 27 Notes to the consolidated financial statements continued For the year ended 31 December 2013 12 Significant subsidiaries Details of the Company's significant subsidiaries at 31 December 2013 are as follows: Name of subsidiary Eurasia Mining (UK) Limited Eurasia Investment Limited Eyessel Metals Limited Energy Resources Asia Limited* Place of incorporation Proportion of ordinary shares held UK Cyprus Ireland BVI 100% 100% 100% 48.33% Principal activity Holding Company Holding Company Holding Company Mineral Evaluation * In 2011 the Group signed the Memorandum of Understanding (the “MOU") to acquire an interest in the Kamushanovsky uranium project in Kyrgyzstan. To facilitate the MOU, the Group has nominated Energy Resources Asia Limited (the “ERA”), a British Virgin Islands registered company. During 2011 the Group raised $486,000 (£299,960) net of expenses on the market to fund acquisition and during the same period the Group invested $602,000 (£389,392) (note 14 ) towards the acquisition of interest in the company holding Kamushanovsky licence. Following this investment work has continued on completing a feasibility study for the mining of this project. The legal holder of the Kamushanovsky licence is negotiating a sale of all or part of the deposit and it is expected that the investment made by the Group will be refunded to the Group at profit. Directors consider ERA to be a subsidiary of the Company despite only holding 48.33% of the voting power of the entity based on the fact that the Company has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. During 2013 the ERA’s shareholders agreed to convert the debts owed by the ERA into shares. The Company converted amount of £145,243 ($234,000) into 234 shares at $1,000 per share increasing its shareholding from 47% to 48.33%. Under the same arrangements $20,000 was contributed to ERA and consequently converted into 20 at ERA’s shares $1,000 per share by a non-controlling interest. The Company’s investments in subsidiaries presented on the basis of direct equity interest and represent the following: Investment in subsidiaries 13 Investments in equity accounted investees Investments in associates Details of the Group's associates are as follows: Name of associates ZAO Terskaya Mining Company ZAO Yuksporskaya Mining Company 2013 £ 145,243 145,243 2012 £ - - Place of incorporation Proportion of ordinary shares held directly Russia Russia 20% 20% Principal activity Mineral Evaluation Mineral Evaluation The company has a combined interest in the above associates of 60%. 20% of the shares are held directly by the Company and the remaining 80% is held by the joint venture Urals Alluvial Platinum Limited (the “UAP”). By arrangements between the partners in the UAP the Company does not have the power to exert control over the above companies in proportion to its total holding in those companies and therefore 20% interest is being accounted for as interest in associates. Summarised financial information in respect of the Group's associates is set out below: Total assets Total liabilities Net liability Group's share of associates' net (liability)/assets Total revenue Total loss for the period Recognised share of associates' loss for the period: Total unrecognised losses 28 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 2013 £ 2012 £ 3,031,209 (3,714,133) 3,202,783 (3,664,315) (682,924) (461,532) - - - - (20,830) (17,215) - - (685,450) (660,575) Notes to the consolidated financial statements continued For the year ended 31 December 2013 The Company’s investments in associates presented on the basis of direct equity interest and represent the following: Investment in associates 2013 £ 162,372 162,372 2012 £ 162,372 162,372 Investments in joint ventures The Group has the following significant interests in joint ventures: Name of joint venture Place of incorporation Proportion of ownership interest Principal activity Urals Alluvial Platinum Limited Cyprus 50% Mineral Evaluation Summarised financial information in respect of the joint venture is set out below: Non-current assets Current assets Total assets Non-current liability Current liability Total liabilities Non-controlling interest Net liabilities Total revenue Total loss for the period 2013 £ 2012 £ 8,531,481 274,069 8,805,550 (13,481,156) (31,518) (13,512,674) 585,100 8,194,814 501,427 8,696,241 (12,794,516) (46,028) (12,840,545) 489,001 (4,122,024) (3,655,303) - - (453,568) (22,606) Financial information in respect of the joint venture stated above had not been adjusted for the effect of loan fair valuation. 14 Other financial assets Loan to joint venture Loans to subsidiaries Advanced to acquire interest in uranium project 2013 Group £ Company £ 2,748,967 - 365,070 2,630,227 1,258,034 - Group £ 2,153,910 - 372,755 2012 Company £ 2,032,670 1,252,617 - 3,114,037 3,888,261 2,526,665 3,285,287 Loans to joint venture and subsidiaries are provided by the Group on an interest free basis with no fixed date of repayment. The Group does not hold any collateral as security. The Group has remeasured the fair value of the loan due from the joint venture due to the pattern of future cash flows having changed. The loan was discounted using NPV method and the discount of £270,178 (2012: £651,006) has been recognised. Actual repayment schedule and interest chargeable on the loan will be revised by the joint venture partners as soon as the production licence has been granted. Undiscounted amount of the loan at the end of 2013 is £3,551,411 (2012: £2,804,916). The monies advanced to the subsidiary enterprises by the Company are on an interest free basis with no fixed date for repayment. As such these amounts represent a net investment in the other members of the Group and are recognised at their full value as there are no indications of impairment. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 29 Notes to the consolidated financial statements continued For the year ended 31 December 2013 14 Other financial assets (continued) In prior years the Group advanced $602,000 with the intention to acquire an interest in the Kyrgyzstan company holding the Kamushanovsky uranium exploration licences (note 12 ). This amount is equivalent to £365,070 using the prevailing rate of exchange at the year end (2012: £372,755). The maximum exposure to credit risk at the reporting date is the carrying value of each class of assets mentioned above. Recoverability of the loans is dependent on the borrower’s ability to (i) transform them into cash generating units through discovery of economically recoverable reserves and their development into profitable production or (ii) to complete a sale of all or part of the deposit, which is currently being negotiated (note 12). 15 Trade and other receivables Trade receivables Other receivables Prepayments Due from subsidiaries 2013 2012 Group £ 34,847 23,867 13,896 - Company £ 34,863 16,370 13,896 107,741 72,610 172,870 Group £ 23,439 16,396 18,599 - 58,434 Company £ 161,462 8,921 18,241 64,141 252,765 The fair value of trade and other receivables is not materially different to the carrying values presented. None of the receivables are secured or past due. 16 Share capital Issued and fully paid ordinary shares with a nominal value of 0.1p Number Nominal value(£) Issued and fully paid deferred shares with a nominal value of 4.9p Number Nominal value (£) Fully paid ordinary shares carry one vote per share and carry the right to dividends. Deferred shares have attached to them the following rights and restrictions: - they do not entitle the holders to receive any dividends and distributions; 2013 2012 965,468,701 965,469 965,468,701 965,469 143,377,203 7,025,483 143,377,203 7,025,483 - they do not entitle the holders to receive notice or to attend or vote at General Meetings of the Company; - on return of capital on a winding up the holders of the deferred shares are only entitled to receive the amount paid up on such shares after the holders of the ordinary shares have received the sum of 0.1p for each ordinary share held by them and do not have any other right to participate in the assets of the Company. There was no issue of share capital in 2013 (2012: 288,500,000 shares issued at 1p per share). 30 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 17 Contingent shares Share options and warrants outstanding at the end of the year have the following expiry date and exercise prices: Expiry date Share options 24-Nov-13 24-Nov-13 02-Jun-14 22-Dec-15 22-Dec-15 21-Dec-17 Weighted average exercise price Warrants 11-Jul-17 Weighted average exercise price Exercise price in pence per share Number of options as at 31 December 2013 Number of options as at 31 December 2012 7.25 10.00 7.25 1.20 1.45 7.00 - - 750,000 14,500,000 17,000,000 250,000 1,675,000 500,000 750,000 15,000,000 17,000,000 250,000 32,500,000 35,175,000 1.52 1.90 1.00 500,000 500,000 1.50 500,000 500,000 1.50 Total contingently issuable shares at 31 December 33,000,000 35,675,000 All options were exercisable as at 31 December 2013 and 2012 and all listed warrants were exercisable as at 31 December 2013 and 2012 respectively. 18 Reserves Capital redemption reserve Foreign currency translation reserve: At 1 January Recognised in the period At 31 December Share-based payments reserve: At 1 January Recognised reserve on issue of warrants Recognised reserve on issue of options Cancellation of options (note 20 ) At 31 December 2013 Group £ Company £ 2012 Group £ Company £ 3,539,906 3,539,906 3,539,906 3,539,906 (655,438) (15,057) (670,495) - - - (668,499) 13,061 (655,438) 404,877 - - (5,642) 404,877 - - (5,642) 399,235 399,235 338,187 2,880 63,810 - 404,877 - - - 338,187 2,880 63,810 - 404,877 3,268,646 3,939,141 3,289,345 3,944,783 The capital redemption reserve was created as a result of a share capital restructure in early years. The foreign currency translation reserve represents exchange differences relating to the translation from the functional currencies of the Group’s foreign subsidiaries into GBP. The share-based payments reserve represents (i) reserve arisen on the grant of share options to employees under the employee share option plan, (ii) reserve arisen on the grant of warrants under terms of professional service agreements and (iii) reserve arisen on the grant of warrants. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 31 Notes to the consolidated financial statements continued For the year ended 31 December 2013 19 Trade and other payables Accruals Social security and other taxes Other payables Due to related party 2013 2012 Group £ 42,898 8,406 72,853 - Company £ 33,802 7,047 68,434 198,583 Group £ 53,471 9,081 75,149 - 124,157 307,866 137,701 Company £ 36,974 7,479 56,994 198,583 300,030 The fair value of trade and other payables is not materially different to the carrying values presented. The above listed payables were all unsecured. 20 Share-based payments Share options No share options had been granted by the Group in 2013 (2012: nil). Movement in number of share options and their related weighted average exercise prices are as follows: (Price expressed in pence per share) Share options At 1 January Granted Expired and forfeited options cancelled At 31 December 2013 2012 Average exercise price No. of options Average exercise price No. of options 1.90 - 6.63 35,175,000 - (2,675,000) 2.03 - 10.00 35,725,000 - (550,000) 1.52 32,500,000 1.90 35,175,000 Other than those options which either expired or were forfeited during the year all options were exercisable as at 31 December 2013 and 2012. Warrants No warrants were granted by the Group in 2013 (2012: 500,000 warrants). Movement in number of warrants outstanding and their related weighted average exercise prices are as follows: (Share price expressed in pence per share) Warrants At 1 January Granted Expired At 31 December 2013 2012 Average exercise price 1.50 - - 1.50 No. of warrants 500,000 - - 500,000 Average exercise price No. of warrants 1.00 1.50 1.00 1.50 46,850,000 500,000 (46,850,000) 500,000 All listed warrants were exercisable as at 31 December 2013 and 2012 respectively. 32 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 21 Loss per share Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. Loss attributable to equity holders of the company Weighted average number of ordinary shares in issue Basic loss per share There is no dilutive effect of share options or warrants. 22 Related party transactions 2013 £ 2012 £ (746,024) 965,468,701 (1,331,700) 803,781,888 (0.08) (0.17) Transactions with subsidiaries and joint venture In the normal course of business, the Company provides funding to its subsidiaries for reinvestment into exploration projects and manages funds received from partners in joint venture. Receivables from subsidiaries Loans provided to subsidiaries Loan provided to joint venture Payables to subsidiaries Compensation of management expenses recharged to joint venture 2013 £ 107,741 1,258,034 2,630,227 (198,583) 148,359 2012 £ 64,141 1,252,617 2,032,670 (198,583) 149,497 Amounts due from the joint venture have been discounted to recognise the time value of money based on management best estimate of the future repayment period. The amounts owed by subsidiary and joint venture companies are unsecured and receivable on demand but are not expected to be fully received within the next twelve months but when the project reaches such an advanced stage of development that it can be repaid out of the proceeds of either the project’s cash flow or through the direct or indirect disposal to a third party of an interest in the project. Transactions with key management personnel The Group considers that the key management personnel are the directors of the Company. The directors of the Company who held office at 31 December 2013 received the following: Short-term benefits Recognised value in respect of share options 2013 £ 137,032 - 137,032 2012 £ 137,988 41,765 179,753 The remuneration of the directors is determined by the remuneration committee having regard to the performance of individuals and market trends. No pension contribution has been made for the directors in 2013 (2012: nil). An analysis of remuneration for each director of the company in the current financial year: M. Martineau Non-Executive Chairman C. Schaffalitzky Managing Director G. FitzGerald Non-Executive Director D. Suschov Non-Executive Director Salaries £ - 85,008 - - Directors fees £ 20,000 - 15,000 15,000 85,008 50,000 ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 33 Notes to the consolidated financial statements continued For the year ended 31 December 2013 23 Operating lease arrangements Operating leases relate to the office premises with lease terms up to one year. The Group does not have an option to purchase the leased asset at the expiry of the lease period. 2013 Group £ Company £ 2012 Group £ Company £ 31,513 24,140 42,385 22,793 25,077 7,917 - 32,994 19,000 7,917 - 26,917 30,086 - - 30,086 22,793 - - 22,793 Payments recognised as an expense: Minimum lease payments Non-cancellable operating lease commitments: Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years 24 Commitments The Group has no material commitments. 25 Contingent liabilities and contingent assets The Group has no material contingent liabilities and assets (2012 - £nil). 26 Risk management objectives and policies Financial risk management objectives The Group’s operations are limited at present to investing in entities that undertake mineral exploration. All investments in exploration are capitalised on project basis, which are funded by shareholders funds, fixed rate borrowings and contributions from the partners in joint ventures. The Group’s activities expose it to a variety of financial risks including currency, fair value and liquidity risk. The Group seeks to minimise the effect of these risks on daily basis, though due to its limited activities the Group has not applied policy of using any financial instruments to a hedge these risks exposures. Risk management is carried out by the Company under close board supervision. Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to US Dollars and Russian Roubles. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group’s policy is not to enter into currency hedging transactions. The Group did not have sufficient exposure to foreign currencies to materially affect the Group’s operating results when tested for hypothetical changes in foreign exchange rates. Interest rate risk As the Group has no significant interest-bearing assets, the group’s operating cash flows are substantially independent of changes in market interest rates. Fair values In the opinion of the directors, there is no significant difference between the fair values of the Group’s and the Company’s assets and liabilities and their carrying values. 34 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes to the consolidated financial statements continued For the year ended 31 December 2013 Credit risk The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the statement of financial position date, as summarised below: Non-current loans and advances Trade and other receivables Cash and cash equivalents 2013 Group £ Company £ 3,114,037 72,610 361,905 3,888,261 172,870 361,087 Group £ 2,526,665 58,434 1,735,420 2012 Company £ 3,285,287 252,765 1,731,199 3,548,552 4,422,218 4,320,519 5,269,251 The Group’s only significant risk is on cash at bank, held principally at an independently “A” rated bank and the loan to the joint venture. No significant amounts are held at banks rated less than “B”. Cash is held either on current account or on short-term deposit at floating rate. Interest determined by the relevant prevailing base rate. The fair value of cash and cash equivalents at 31 December 2013 are not materially different from its carrying value. Recoverability of the loans is dependent on the borrower’s ability to transform them into cash generating units through discovery of economically recoverable reserves and their development into profitable production. The Company continuously monitors defaults by the counterparties, identified either individually or by group, and incorporates this information into its credit risk control. Management considers that all of the above financial assets that are not impaired are of good credit quality. Liquidity risk Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, borrowing facilities, cash and cash equivalent by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. 2013 Trade and other payables 2012 Trade and other payables within 6 months £ 124,157 124,157 137,701 137,701 Current Non-current 6 to 12 months £ 1 to 5 years £ later than 5 years £ - - - - - - - - - - - - The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities. 2013 Trade and other payables 2012 Trade and other payables Current Non-current within 6 months £ 6 to 12 months £ 1 to 5 years £ later than 5 years £ 109,283 198,583 109,283 198,583 101,447 198,583 101,447 198,583 - - - - - - - - The tables above have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. The contractual maturities reflect the gross cash flows, which may differ to the carrying values of the liabilities at the statement of financial position date. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 35 Notes to the consolidated financial statements continued For the year ended 31 December 2013 26 Risk management objectives and policies (continued) Capital risk At present the Group’s capital management objective is to ensure the Group’s ability to continue as a going concern. Capital is monitored on the basis of its carrying amount and summarised as follows: Total borrowings Less cash and cash equivalents Net debt Total equity Total capital Gearing 2013 Group £ Company £ 2012 Group £ Company £ - (361,905) - (361,087) - (1,735,420) - (1,731,199) - 3,188,974 3,188,974 0% - 4,424,134 4,424,134 0% - 3,950,055 3,950,055 0% - 5,132,397 5,132,397 0% Capital structure is managed depending on economic conditions and risk characteristics of underlying assets. In order to maintain or adjust capital structure, the Group may issue new shares and debt financial instruments or sell assets to reduce debt. 27 Events after the statement of financial position date No other adjusting or significant non-adjusting events have occurred between the statement of financial position date and the date of authorisation of the financial statements. 36 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take, you are recommended to seek your own personal advice from your stockbroker, bank manager, solicitor, accountant or other professional adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all of your shares in Eurasia Mining plc, please send this document and the Form of Proxy as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. If you have sold any part of your holding of shares in Eurasia Mining plc, please contact your stockbroker, banker or other agent through whom the sale was effected immediately. Company No. 3010091 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Annual General Meeting of Eurasia Mining Plc (“the Company”) will be held at The East India Club, 16 St James’s Square, London SW1Y 4LH on 19 June 2014 at 11:00 am for the following purposes. Ordinary Business As ordinary business to consider and, if thought fit, pass the following as ordinary resolutions: 1. To receive and consider the audited accounts for the period ended 31 December 2013 together with the Directors’ and the auditors’ reports thereon. 2. To re-appoint Grant Thornton UK LLP as auditors of the Company to hold office until the conclusion of the next general meeting at which accounts are laid before the Company. 3. To authorise the Directors to determine the remuneration of the auditors of the Company. 4. To re-appoint as a Director, Dmitry Suschov, who is required under the Articles of Association of the Company to retire by rotation and who, is eligible for re-election. 5. That, in accordance with section 551 of the Companies Act 2006, the Directors be generally and unconditionally authorised 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 £2,000,000 provided that this authority shall, unless renewed, varied or revoked by the Company, expire at the end of the next Annual General Meeting of the Company to be held after the date on which this resolution is passed, save that the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or Rights to be granted and the Directors may allot shares or grant Rights in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This authority is in substitution for all previous authorities conferred on the Directors in accordance with section 551 of the 2006 Act. ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 37 Special Business As special business, to consider and, if thought fit, pass the following which will be proposed as special resolutions: 6. THAT, subject to the passing of resolution 5, the Directors be given the general power to allot equity securities (as defined by section 560 of the 2006 Act) for cash, either pursuant to the authority conferred by resolution 5 or by way of a sale of treasury shares, as if section 561(1) of the 2006 Act did not apply to any such allotment, provided that this power shall be limited to: a. the allotment of equity securities in connection with an offer by way of a rights issue to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings 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 b. the allotment (otherwise than pursuant to paragraph (a) above) of equity securities up to an aggregate nominal amount of £2,000,000. The power granted by this resolution will expire on the conclusion of the Company’s next annual general meeting (unless renewed, varied or revoked by the Company prior to or on such date) 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 section 561(1) of the 2006 Act did not apply but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities. 7. TO authorise the Company generally and unconditionally to make market purchases (within the meaning of section 693(4) of the Companies Act 2006) of ordinary shares of 0.1 pence each provided that: a. The maximum aggregate number of ordinary shares that may be purchased is 250,000,000; b. The minimum price (excluding expenses) which may be paid for each ordinary share is £0.001; c. The maximum price (excluding expenses) which may be paid for each ordinary share is the higher of: i. 105 per cent of the average market value of an ordinary share in the Company for the five business days prior to the day the purchase is made; and ii. the value of an ordinary share calculated on the basis of the higher of the price quoted for: • • the last independent trade of; and the highest current independent bid for, any number of the Company's ordinary shares on the trading venue where the purchase is carried out. The authority conferred by this resolution shall expire at the conclusion of the Company's next annual general meeting save that the Company may, before the expiry of the authority granted by this resolution, enter into a contract to purchase ordinary shares which will or may be executed wholly or partly after the expiry of such authority Dated 2 May 2014 BY ORDER OF THE BOARD M J de Villiers Secretary 38 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Notes 1. A member of the Company entitled to attend and vote at the 10. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the Company’s agent, Capita Registrars Limited (CREST Participant ID: RA10), no later than 48 hours before the time appointed for the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. 11. CREST members and, where applicable, their CREST sponsor or voting service provider should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsor or voting service provider are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 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. 12. Copies of the service contracts and letters of appointment of each of the Directors will be available for inspection at the registered office of the Company during usual business hours on any weekday (Saturdays and public holidays excluded) and at the place of the Annual General Meeting from at least 15 minutes prior to and until the conclusion of the Annual General Meeting. 13. Copies of the Articles of Association will be available for inspection at the Company’s registered office during usual business hours until the date of the Annual General Meeting. meeting convened by this Notice may appoint one or more proxies to attend and vote on a poll in his stead. A proxy need not be a member of the Company. 2. To be valid, the enclosed Form of Proxy must be completed and lodged together with the Power of Attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, at the office of the Company’s Registrars, Capita Registers, Pxs, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not less than forty eight hours before the time appointed for holding the meeting. 3. Completion of the Form of Proxy does not preclude a member from attending and voting at the meeting if they so wish. 4. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only shareholders registered in the register of members of the Company as at 11.00am on 17 June 2014 (being 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, shall be entitled to attend and vote, whether in person or by proxy, at the Annual General Meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after that time shall be disregarded in determining the rights of any person to attend or vote at the Annual General Meeting. 5. By attending the meeting, members agree to receive any communication at the meeting. 6. Biographical details of the Director who is being proposed for re-election by shareholders are set out in the Directors Biographies. 7. The total number of ordinary shares of 0.1p in issue as at 08 May 2014, the last practicable day before printing this document was 965,468,701, ordinary shares and the total level of voting rights was 965,468,701, none of which were attached to shares held in treasury by the Company. 8. Any corporation, which is a member, can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. 9. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting to be held on 19 June 2014 at 11.00 am and any adjournment(s) thereof by using 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 should refer to their CREST sponsors or voting service provider(s), who will be able to take the appropriate action on their behalf. . ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 39 40 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 PLEASE COMPLETE IN BLOCK CAPITALS I/We of FORM OF PROXY (Please insert full name(s) and address(es) in block letters - see Note 1 below) being (a) member(s) / a person nominated by (a) member(s) of the above-named Company to exercise the right to appoint a proxy, pursuant to Articles of Association of the Company, hereby appoint the Chairman of the meeting or of (See Note 3 below) as my/our proxy or proxies to vote for me/us and on my/our behalf at the annual general meeting of the Company to be held on 19 June 2014 at 11:00 am and at any adjournment of that meeting and to vote at that meeting as indicated below. Please indicate how you wish your proxy or proxies to vote by inserting “X” in the box below. Where no “X” is inserted, and on any other resolutions proposed at the meeting, your proxy will vote or abstain from voting as he/she thinks fit. FOR AGAINST VOTE WITHHELD RESOLUTIONS 1. To approve Accounts for the year ended 31 December 2013 2. To re-appoint Grant Thornton LLP as auditors of the Company 3. To authorise the Directors to determine the remuneration of the auditors of the Company 4. To re-appoint Mr. Dmitry Suschov as a Director 5. To authorise the Directors to allot relevant securities pursuant to section 551 of the Companies Act 2006 6. To authorise the Directors to allot equity securities pursuant to section 571 of the Companies Act 2006 7. To authorise the Company to buy back its own shares pursuant to sections 593 and 710 of the Companies Act 2006 Please tick here if this proxy appointment is one of multiple appointments being made Signed Full name and address PLEASE COMPLETE IN BLOCK CAPITALS NOTES Dated 1. To appoint as a proxy a person other than the Chairman of the meeting insert the full name in the space provided. A proxy need not be a member of the Company. You can also appoint more than one proxy provided each proxy is appointed to exercise the rights attached to a different share or shares held by you. The following options are available: 3. The Form of Proxy below must arrive not later than 48 hours before the time set for the meeting at to Capita Registrars, Pxs, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU during usual business hours accompanied by any Power of attorney under which it is executed (if applicable) 4. A corporation must execute the Form of Proxy under either its common seal or the hand (a) To appoint the Chairman as your sole proxy in respect of all your shares, simply fill in any voting instructions in the appropriate box and sign and date the Form of Proxy of a duly authorised officer or attorney. (b) To appoint a person other than the Chairman as your sole proxy in respect of all and should not be amended or submitted in respect of a different account. 5. The Form of Proxy is for use in respect of the shareholder account specified above only your shares, delete the words ‘the Chairman of the meeting (or)’ and insert the name of your proxy in the spaces provided. Then fill in any voting instructions in the appropriate box and sign and date the Form of Proxy (c) To appoint more than one proxy, you may photocopy this form. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. If you wish to appoint the Chairman as one of your multiple proxies, simply write ‘the Chairman of the Meeting’. All forms must be signed and should be returned together in the same envelope 6. The ‘Vote Withheld’ option is to enable you to abstain on any particular resolution. Such a vote is not a vote in law and will not be counted in the votes ‘For’ and ‘Against’ a resolution. 7. Shares held in uncertificated form (i.e. in CREST) may be voted through the CREST Proxy Voting Service in accordance with the procedures set out in the CREST manual. 8. Completion and return of the Form of Proxy will not preclude you from attending and voting in person at the Meeting should you subsequently decide to do so 2. Unless otherwise indicated the proxy will vote as he thinks fit or, at his discretion, abstain from voting. 9. If you prefer, you may return the proxy form to the Registrar in an envelope addressed to FREEPOST RLYX-GZTU-KRRG, Capita Registrars (Pxs), 34 Beckenham Road, Beckenham, Kent, BR3 4TU. (cid:0) ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 41 42 E U R A S I A M I N I N G P L C ANNUAL REPORT & ACCOUNTS 2013 Company Information Directors M. Martineau (Non-Executive Chairman) C. Schaffalitzky (Managing Director) G. FitzGerald (Non-Executive Director) D. Suschov (Non-Executive Director) Secretary M. J. de Villiers Head Office and Registered Office 2nd Floor, 85-87 Borough High Street London SE1 1NH Telephone: +44 (0) 20 7932 0418 Facsimile: +44 (0) 20 7976 6283 E-mail: info@eurasiamining.co.uk www.eurasiamining.co.uk Russian Office 194 Lunacharsky Street Ekaterinburg Russia Telephone: +7 3432 615187 Facsimile: +7 3432 615924 Company Number 3010091 ADVISERS Registrars Capita Registrars Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Auditors Grant Thornton UK LLP Grant Thornton House Melton Street Euston Square London NW1 2EP Bankers Barclays Bank plc Town Gate House Church Street East Woking, Surrey GU21 6AE Solicitors Gowlings (UK) LLP 15th Floor, 125 Old Broad Street London EC2N 1AR Nominated Adviser and Stockbrokers WH Ireland Limited 24 Martin Lane London EC4R 0DR and 11 St. James’s Square Manchester M2 6WH Financial Advisers Loeb Aron & Company Ltd Georgian House 63 Coleman Street London EC2R 5BB ANNUAL REPORT & ACCOUNTS 2013 E U R A S I A M I N I N G P L C 43 2nd Floor, 85-87 Borough High Street London SE1 1NH Telephone: +44 (0) 20 7932 0418 E-mail: info@eurasiamining.co.uk www.eurasiamining.co.uk