Annual Report and Accounts 2016
PGM
PRODUCER
Highlights
1
2
8
Chairman’s Statement
Operations Update
Strategic Report
10
Directors’ Biographies
11
14
15
22
45
Directors’ Report
Independent Auditor’s Report
Financial Statements
Notes to the Financial Statements
Company Information
2016 Highlights
West Kytlim
(cid:0) Project successfully advanced from development to production
(cid:0) Trial mining season produced platinum concentrate with gold and other
PGM credits
(cid:0) Full season of production commenced for 2017
Monchetundra/Kola Peninsula
(cid:0) Definition of maiden Reserves at two open pit targets
(cid:0) Reserves report and Feasibility study approved at state level
(cid:0) EPC contract in place with Sinosteel
Semenovsky Tailings Project
(cid:0) Definition of maiden reserves
(cid:0) Approval of feasibility study and reserves report
(cid:0) Metallurgical study refined processing scheme
Chairman’s Statement
Dear Shareholder
It is my pleasure to report to you this year as a new mining company. Eurasia has worked for some time
towards production and this has now been achieved at our Platinum Group Minerals (”PGM”) and gold
operation at West Kytlim in the Urals. In parallel, we have also made significant progress and had
feasibility study and reserves approved by the state at our Monchetundra Project.
Firstly, to the mine. West Kytlim is an alluvial mining operation with seasonal (spring through autumn)
production in the Ural Mountains, several hundred kilometres north of our regional office in Ekaterinburg.
We started production initially using Eurasia’s own washplant, while the main production unit was being
commissioned. Ultimately this was achieved later in the season and by September 2016 platinum had been
produced; indeed the grades of in-situ metal exceeded those in our calculated reserves. We look forward
to a full season of production in 2017, with the main washplant operating from the outset – at the time of
writing all systems were in place to commence gravel washing. If permitting of a second area at Kluchiki
goes to schedule then it is possible a second plant will be established before the end of the field season.
Meanwhile at Monchetundra, a major compilation effort, combined with new hydrogeological and
metallurgical work, culminated in a feasibility study being lodged in December 2016 as an application
for the approval of reserves under the Russian classification system. At the time of writing, this study
had been approved and the Company is awaiting the formal registration of these reserves. The next
step is the application for a Discovery Certificate and then a production licence for a 25-year term. This
will allow us to complete a development plan for the two deposits discovered by our exploration work.
Eurasia completed our due diligence work at the Semenovsky tailings project and confirmed robust
economics using a straightforward cyanide leach circuit. The Company is evaluating several project
finance options for this operation and continues to work with the owner under exclusivity. As with West
Kytlim, the Company aims to achieve production without issuing further equity, indeed minimising
shareholder dilution has remained a key concern for the board throughout the past year, and through
what we hope has been the final year of the recent downturn in the sector.
During May 2017, the company designed a financing package of around US$2 million to refinance
existing debt and integrate with cashflow from the West Kytlim mine. This gives us confidence in
achieving our 2017 objectives.
This is my last report to you as Chairman. I will be retiring at this year’s AGM on 29 June 2017 at which
time it is intended, subject to election, that Christian Schaffalitzky take over as Executive Chairman and
acting CEO. I consider that this is an appropriate time to retire. Not only has the Company achieved its
aim of becoming a producer of precious metals with the successful commissioning of the plant at West
Kytlim but also I have reached and passed the age of 70; an age which I have long believed appropriate
for Directors to hand over to younger minds. Before leaving I would like to express my appreciation and
admiration of our staff in both London and Russia but most particularly to the field and administrative
staff in Russia who have successfully worked through adverse field conditions and repeated and
frustrating delays in the approval process without which we could have achieved production four or five
years ago. A personal thank you to all of you. Finally, a thank you to our shareholders who have stuck with
us through a very long and expensive process and to those senior staff and Directors who have equally
shown confidence in the future of Eurasia by foregoing cash and accepting remuneration at par in shares.
Michael Martineau
Chairman
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
1
Operations update
W E S T K Y T L I M
Preparatory work for the first season of mining at West Kytlim began in June and continued
through July 2016. The necessary infrastructure for the mine site was constructed, including a
tailings water pond, process water pond, field camp and field laboratory for upgrade of metal-
bearing concentrates. Meanwhile, a wash-plant, its main component being two vibrating screens
in series, was commissioned by Eurasia’s mining contractor, ‘SKRS Region Metal (’SKRS’) and
shipped to site for assembly in August 2016. In addition, a second wash-plant, owned by Eurasia
and previously used to process a bulk sample was refurbished and commissioned to operate
alongside the main plant. Work at site continued into the first week in November, when cold
weather conditions began to effect metal recoveries on the sluice and the decision was made to
resume operations in the spring of 2017. Ultimately 11kg of platinum was produced and shipped
to a refinery in Ekaterinburg during this initial trial mining season. The main washplant has been
modified and reinstalled for use in the 2017 season. Reserves upgrade drilling work began in April
and mining blocks were prepared as we awaited warmer conditions and running water later in
spring. Ultimately gravel washing began in the last weeks of May in what promises to be the first
full season of mining in our projected 12 year Life of Mine.
Background
Various processing schemes for washing the platinum and gold bearing gravels at West Kytlim
were investigated throughout 2016. A full-time Mining Engineer with experience operating on
platinum mines in the Ural Mountains joined the company and has proven a key decision maker
both on site and off. In alluvial mining, trial mining is often the only way to gain sufficient
knowledge about the precise nature of the material to be processed. Of the available options,
a vibrating screen offered the best potential of reliable and cost effective gravel washing.
A vibrating screen is effective at washing gravel known to contain a significant quantity of flat
or platy boulders while simultaneously separating the material by size class. Oversize is ‘scalped’
off as the material passes through a series of ever finer sieves, and is washed constantly by
pressurized jets of water. The screens are contained in two units each six meters long by three
meters wide. Electric powered motors vibrate the screens constantly and the pitch on each
screen is such that the material proceeds by gravity through the system.
The sub 6mm fraction passes on to a 5-track sluice. Heavy minerals, such as the precious metals
platinum and gold, and nuggets formed of precious metal and native iron, collect in mats in the
base of the sluice which are emptied when filled. This material is termed a Sluice Concentrate
and is delivered directly to the laboratory on site for upgrade to saleable product.
On arrival at the laboratory material is initially washed and again screened, the oversize fraction
is then checked manually for nuggets while the smaller fraction, suspended in water, passes to a
concentration table. This riffled and oscillating surface again uses the greater density of precious
metals to separate them from gangue.
MALAYA SOSNOVKA
PRODUCTION FOR 2017 COMMENCED IN THE FIRST
WEEKS OF MAY IN WHAT PROMISES TO BE THE FIRST
FULL SEASON OF MINING IN OUR PROJECTED 12 YEAR
LIFE OF MINE.
2
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Operations update continued
Malaya Sosnovka Mine Site
Mining in 2016 commenced at the Malaya Sosnovka Area. Material is excavated and trucked
a distance of several hundred meters to the washplant. In excavating the tailings dam and
process water pond a previously unknown extension to an orebody was discovered. This
material was stockpiled and later processed along with ore from the known ore blocks. In all
a total of 22,000m3 of gravels were processed. The vibrating screens had downtime for repairs
and the decision was made to modify the washplant for the 2017 mining season. More and
larger platy, boulder (>100mm) size material was encountered than had been anticipated and
the vibrating screens have now been modified to deal with this material.
MALAYA SOSNOVKA AREA - MINE LAYOUT
yl a i
e r T
R iv
410
420
425
4
1
5
3
4
1
0
4
1
5
Reserves Blocks
1-5
4
2
0
2
4
2
5
1
430
5
4
Washplant site
4
2
0
4
2
5
4
3
0
4
3
5
442,5
Tailings Dam
Bolshaya
Sosnovka
Process water
pond
4
3
0
4
3
5
442,5
Z(cid:605)(cid:618)(cid:607)(cid:603)(cid:615)(cid:633)=443,5
4
4
0
0
100m
N
Basecamp
W
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
3
pond
Malaya Sosnovka
Area
(100kg Pt Reserve)
Omutoshnaya
N
0
Approved Reserves
(cid:586) Resources
1 km
Tylai
Levy
Operations update continued
Grades were higher than anticipated. Mining grade for the season averaged 449 g/m3, 120%
of the expected average grade as measured for reserves blocks. A total of 11.3kg raw platinum
was produced through the season, with some credits from Palladium, Iridium, Rhodium and
Gold. In early November, it became difficult to operate the sluice due to freezing conditions
and the decision was made to resume the operations in spring. Credit is due to the professional
approach of our contractor in ensuring there were no accidents or injuries to personnel in the
2016 Mining season.
Exploration and future development of the West Kytlim Reserves and Resources
A key provision of our agreement with the mining contractor is that SKRS pay all third party
costs relating to exploration and reserves upgrade drilling. Significant resources exist within the
license area and these will be upgraded to reserve status ahead of mining. There is also the
potential for the discovery of further ore bodies, and extensions to known ore bodies as mining
progresses through the license; and this has been well demonstrated by the discovery of ore
bodies during excavations of the tailings dam and process water pond during 2016. SKRS have
committed to funding the 5 year exploration program which will upgrade all known resource
blocks to reserves ahead of mining. Resource drilling commenced in April of 2016. Samples
collected are assayed at the mine site, using the same lab facility described above. Eurasia
coordinate this exploration process, and, as holders of the mining right and license are the
chief authors of the reserves statements and other reporting to the Ministry for Subsoil use.
Current approved reserves stand at 2,283Kg raw platinum (73,000 oz) with a further 1,856 Kg
(60,000 oz) as known resources on the license. In order to maintain their exclusive right to
contract mining at West Kytlim, SKRS are obliged to meet the volumes of an agreed mining
schedule which includes all reserves and resources over the 12 year Life of Mine. The volumes
are such that an additional washplant and associated machinery will need to be deployed every
year until 2020 when the mine reaches full capacity.
M O N C H E T U N D R A
Feasibility study approved at PGM, Nickel and Copper project
2016 was arguably the most important year to date in the 10 year exploration and development
phase of this PGM and base metals project on Kola Peninsula, North West Russia. A feasibility
report, incorporating a reserves calculation, was filed for government approvals in late
December 2016. This report, in seven books with associated appendices; calculations, maps
and cross sections, was subject to scrutiny by a panel of experts and was successfully defended
by Eurasia and then approved by the state Reserves Commission. The reserves are officially
assigned to the state balance when approved by Rosnedra, the Russian Ministry for Subsoil
use. An application for issue of a Discovery Certificate is being filed, this permits the holder to
apply for a Mining License to develop the project to mining. In addition, An EPC (Engineering,
Procurement and Construction) contract was signed with Sinosteel, a major Chinese company
experienced in large mining projects. This EPC contract is agreed with an associated financing
structure providing 85% of the contract value of $176 million.
West Nittis and Loipishnune Deposits
Two open pit PGM-base metal deposits have been identified on the license, located
approximately 3km apart. The proposed processing plant would treat ore from both pits and
be located to the north of the larger Loipishnune Pit. Three metallurgical samples, two from
drill core at West Nittis and one from drill core at Loipishnune were studied as part of the
2016 feasibility report. Excellent recoveries were demonstrated using a gravity floatation
scheme. Platinum, Palladium, Gold, Copper and Nickel are recovered to a mixed commodity
concentrate which may be refined locally in Monchegorsk or further afield.
4
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Operations update continued
(cid:85)
(cid:85)
(cid:85)
(cid:85)
PK
(cid:85)
NKT
massif
M O N C H E G O R S K
C I T Y
West Nittis
Open Pit
Exploration
License
Monchepluton
massif
Monchetundra
massif
Loipishnune
Open Pit
0
1
2km
West Nittis contains narrow and higher grade late stage mineralization dominated by sulphidic
veins with surrounding hydrothermal alteration, referred to as ‘Hanging Wall’ mineralization.
Beneath the Hanging Wall zone, further sulphidic mineralization with elevated PGM occurs
over wider intervals but of lower grade. Both zones are planned to be extracted at West Nittis.
The PGM Mineralization here correlates well with Sulphur, Nickel and Copper mineralization.
At Loipishnune, the ore bodies are sub-vertical and stratiform. Loipishnune is considered low
sulphide PGM mineralization, finely disseminated and associated with the thinly layered upper
part of a norite intrusion. Two ore bodies, termed upper and lower, have been outlined within
the pit. At Loipishnune the Pd:Pt ratio ranges 1.5-2.5, averaging 2.1, and is generally uniform
on strike and down dip. The open pit at Loipishnune progresses to 350m, beneath which
further reserves may be extracted by underground mining methods.
Engineering, Procurement and Construction contract – EPC
Signed in early October of 2016, this contract was the culmination of almost two years of
discussions, site visits and due diligence exercises by Sinosteel, a Chinese state owned group
operating in mining, trading, and the engineering and manufacture of mining and mineral
processing equipment. The contract value totals US$176,000,000 with an associated loan
covering 85% of the contract value. Financing terms are included in the EPC Contract as a
10 year loan with early repayment permitted, at an indicative interest rate at 6 months LIBOR
plus 3.5%. Sinosteel carries the loan on its balance sheet until the plant is commissioned, an
incentive for Sinosteel to complete on time and within budget, whereupon the loan is assigned
to Eurasia’s local subsidiary Terskaya Mining Company. Government approval of reserves was a
stated condition of the EPC contract which has now been all but achieved.
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
5
Operations update continued
SEMENOVSKY
WORK THROUGH 2016 WAS IN A JOINT
VENTURE WITH METAL TIGER WHO HAVE
ELECTED NOT TO PARTICIPATE, THEREBY
INCREASING EURASIA’S POTENTIAL OPTION
FROM 33% TO 67%.
6
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Operations update continued
S E M E N O V S K Y TA I L I N G S P R O J E C T
Pre-feasibility gold and silver tailings Project, Bashkiria Russia
Eurasia have been working on this project since late 2015 and holds an exclusive right to
acquire up to 67%. Work through 2016 was in a Joint Venture with Metal Tiger who have
elected not to participate, thereby increasing Eurasia’s potential option from 33% to 67%.
Progress has been steady over the course of the 18 months since signing the initial
memorandum of understanding. Maiden Reserves were approved at Semenovsky in late
August 2016 – Reserves had not previously been approved due to an absence of metallurgical
work. 2.99 million tonnes of ore grading 1.18g/t Gold and 16.44g/t Silver for 3.5 tonnes of gold
and 49.3 tonnes of silver are now approved as Russian standard C2 category reserves.
A metallurgical study was undertaken during 2016. Eurasia drilled five new drill holes in April
2016, with samples taken at metre intervals and sent to SGS labs in Chita where gold and silver
assays returned values in line with previous workers’ estimates. A suite of bottle roll cyanide
tests on unground material were then attempted at various leach times, liquid to solid ratios
and cyanide concentrations. Fine grinding studies were undertaken on composite samples as
well as qualitative and quantitative mineralogy.
Ultimately the results suggested a recovery of circa 40% using a simple cyanide circuit. The
proposed circuit has been modified to replace a Merrill Crowe circuit with a resin column array.
In this scenario gold is won from the pregnant leach liquor and loaded to a manufactured resin.
This resin is a consumable and may be burned off as waste in a local refinery as part of the gold
and silver smelting process. The Company is focused on evaluating several project finance
options and strongly favours options which will not involve significant shareholder dilution.
Christian Schaffalitzky
Managing Director
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
7
Strategic report
Eurasia Mining plc Company No. 3010091
Eurasia Mining Plc (“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, a
market operated by the London Stock Exchange Group plc.
The principal activities of the Company and its subsidiaries
(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 – 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 was
granted the mining licence in 2015. Pilot mining operations
were carried out at the end of 2016 mining season before
closing for winter. Production resumed in May 2017.
On the Kola Peninsula the Group discovered the PGM
mineralisation within the Monchetundra area, which was
further explored in 2016. Following the exploration work
the Group initiated the procedure of obtaining the mining
licence. As a part of the process feasibility study was
approved by the authorities in April 2017.
More details on both projects are in the Operations update.
The Group also maintains an active interest in 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.
Key performance indicators
At this stage of the Group’s 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
Results for the year – The Group has made a profit of
£613,400 for the year ended 31 December 2016 (2015:
loss of £1,294,150). The profit of 2016 resulted from the
operational currency fluctuations. Foreign exchange profit
of £1,959,358 caused mainly by strengthening of Russian
Rouble and weakening of British Pound (2015 foreign
exchange loss of £1,019,838 due to weakening of the
Russian Rouble).
Shareholder return – the performance of the share price.
The Company’s shares are quoted on AIM and the shares
have traded at 0.43-1.3p (2015: 0.45-2.15p) 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
2016 the Group had a cash balance of £154,674 (2015:
£104,925) to allow it to continue its core project
development, limited to desktop studies. This reserve
was insufficient for the Group to carry on and the Group
raised additional funds through the loan entered into by
the Group in December 2016. Drawdowns made after
the year-end are disclosed in the Note 28.
Non financial KPIs
Environment management – the Group has environmental
policies in place. Performance against environmental
policies is continuously monitored. The Company did
minimum required field work in 2016, which would have
any environmental impact. The Directors consider that
this has served to minimize any negative impact of current
exploration activities on the environment.
Health and Safety - the Group has occupational health
and safety policies and procedures in place ensuring that
all efforts are made to minimise adverse personal and
corporate outcomes, through best practice training,
implementation and monitoring.
Operational – the number of additional exploration
licences and exploration successes. There has been limited
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.
During the year the Group was granted the mining licence
for a platinum mine at West Kytlim area in the Central Urals
region in Russia.
The Directors consider that performance against all KPIs in
2016 was acceptable.
8
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Strategic report continued
Eurasia Mining plc Company No. 3010091
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.
Commodity risk
A potential fall in commodity prices which could lead to
it becoming uneconomic for the Group to mine its assets.
The Group closely monitors the markets for the platinum
group metals, changes in demand and supply and effect
they have on the metal prices with a view to take necessary
measures in response to such changes, this may include
stockpiling when prices are low, price hedging when prices
rise above expectation.
Loss of key personnel risk
The loss of the key person consists of the departure
(voluntary or otherwise) of an important employee which
will, in all likelihood, result in a financial loss or increased
expense to the small business. The expenses may be
of a temporary or a permanent nature. These increased
expenses relate to the search and hiring of a new
employee. Training costs for the new hire, possible
“signing” bonus and ·higher remuneration packages.
These types of risks cannot be avoided. While the
iGroup can take measures to motivate and retain existing
employees it has limited powers in dealing with departures
by natural or legislative reasons.
Financing risk
This is the risk of running out of working and investment
capital. The Group has been relying primarily on the issue
of share capital and other financial arrangements, which
due to the risk factor require high returns to the investors
at the Group expense. The Group maintains tight financial
and budgetary control to keep its operations cost effective.
Forward planning helps ensure it is adequately funded to
reach its objectives.
By order of the Board
M J de Villiers
Secretary
26 May 2017
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 the Directors’ report and Notes 2 and 28
to the financial statements and the principal operating
risks affecting the Group are detailed below:
Exploration and project development risks
Inherent risks associated with the failure to discover
or develop an economically recoverable ore reserve,
to conclude a definitive feasibility study, and to obtain
the necessary consents and approvals for the conduct
of exploration and mining.
The Group engages in 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 boost the prospects
of the grant of permits and licences. The Group made
significant progress successfully applying for the mining
licence, which minimised the risk of non-granting the
licence in future.
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 economic inconsistencies may arise. There has
been no impact on the Group’s activity but 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.
There is no immediate risk to the Group’s operation
arising from environmental issues but the Group monitors
environmental regulation, to assess potential impact.
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
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
9
Directors’ Biographies
Eurasia Mining plc Company No. 3010091
MICHAEL MARTINEAU
GARY FITZGERALD
Michael Martineau, MA, D.Phil, FIMMM, age 72, is
Gary Fitzgerald, age 63, is a Non-Executive Director.
Non-Executive Chairman. Following a First Class
He was previously a Director of Framlington Investment
Honours degree and a Doctorate in Geology from
Management Limited and has over 30 years experience
Oxford University, he has had 45 years experience in
in investment management. He has diverse experience
the mining and minerals industry. He was in charge of
of emerging markets including the launch of the first
global exploration for BP Minerals International, later
fund for investing in Russia in the early 1990’s.
becoming Exploration Director of its Australian listed
subsidiary, Seltrust. In 1987, he joined Cluff Resources
PLC, as Director Minerals and Managing Director of
DMITRY SUSCHOV
Cluff Mineral Exploration Limited. In 1989 he cofounded
Dmitry Suschov, age 39, is a Non-Executive Director
Samax Resources, which listed on the Toronto Stock
and also a major shareholder of Eurasia. Dmitry is a
Exchange in 1996 and which was acquired by Ashanti
commodities trading veteran (primarily various grades
Goldfields in 1998. He was formerly a Director of First
of metallurgical and thermal coals) and has successfully
Quantum Minerals.
built a major Pulverized Coal Injection (PCI)
franchise throughout Asia, Europe and America with an
annual turnover of up to $100 million, thus accumulating
CHRISTIAN SCHAFFALITZKY
Christian Schaffalitzky, BA(Mod), FIMMM, PGeo, CEng,
around 2.5% of the global PCI market share. He is also
an investment banker with extensive experience in the
age 63, is Managing Director. With over 40 years
Russian resources industry and has previously worked
experience in minerals exploration, Christian
with IG Capital, MDM Bank, PricewaterhouseCoopers
Schaffalitzky was a founder of Ivernia West PLC, where
and Ernst&Young as mining & metals leader in corporate
he led the exploration, discovery and development
finance for Russia and CIS.
of the Lisheen world class zinc deposit in Ireland.
More recently, he was Managing Director of Ennex
International PLC, an Irish 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 Chairman of Kibo Mining
plc and on the board of two other listed companies.
10
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Directors’ report
Directors
The Directors who served during the period were:
The Board has utilised authority to allot shares and issue
warrants as follows:
Michael Martineau Non-Executive Chairman
Christian Schaffalitzky Managing Director
Gary FitzGerald Non-Executive Director
Dmitry Suschov Non-Executive Director
Company Secretary
Michael de Villiers
Directors’ interests
Date
Transaction
No of shares issued/ Nominal
value £
warrants granted
01 Aug 2016
20 Sept 2016
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
28,181,818
28,182
1,538,462
1,538
20 Sept 2016
Issue of ordinary shares
by way of placing
20,629,231
20,629
20 Sept 2016
Issue of ordinary shares in
lieu of financing commission
2,153,846
2,154
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 2016
No. of shares
17,831,403
49,696,674
18,608,387
284,877,066
31 Dec 2015
No. of shares
15,049,185
33,134,300
16,909,286
281,558,049
371,013,530
346,650,820
Share options
No share options were held by the Directors of the
Company at 31 December 2016 (31 December 2015 – nil).
26 Oct 2016
18 Nov 2016
20 Dec 2016
29 Dec 2016
03 Feb 2017
21 Feb 2017
27 Mar 2017
No share options were exercised during 2016 (2015 – nil).
26 Apr 2017
Share capital
Issued capital of the Company as at 31 December 2016 was:
Number
of shares
Fully paid ordinary shares at 0.1 pence
Deferred shares 4.9 pence
1,509,787,583
143,377,203
Nominal
value
£
1,509,788
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 30 June 2016, the Board
was given authority for the purposes of section 551 of
the Act 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.
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of ordinary shares
under term of financing
arrangements
Issue of warrants under
term of financing
arrangements
Issue of warrants under
term of financing
arrangements
Issue of warrants under
term of financing
arrangements
1,534,465
1,534
4,800,000
4,800
33,581,731
33,582
12,413,793
12,414
15,652,174
15,652
2,727,273
2,727
2,857,173
2,857
1,500,000
1,500
10,526,316
10,526
80,749,333
80,749
20,000,000
20,000
10,000,000
10,000
19 May 2017
19 May 2017
22 May 2017
23 May 2017
Total
248,845,615
248,844
The Board has not utilised authority to purchase the
Company’s own shares.
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 £1,000,000.
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 £1,000,000.
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
11
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 risks which includes foreign currency, interest
rate, credit, liquidity and capital risks are set out in note 27.
Going Concern
At 31 December 2016 the Group’s net current liabilities
amounted to £148,544 (2015: net current assets £1,782).
At the same time the Group had a cash balance of
£154,674 (2015: £104,925) and undrawn £350,000 under
the loan facility entered into in December 2016 (note 19).
£350,000 was fully drawn in after the year end which is
disclosed in the note 28. All these reserves were insufficient
to meet the Group’s demands for the working capital and
the loan repayment due in May 2017.
Directors have taken further measures to preserve cash and
secure additional finance. Within May 2017 the Company
raised around $2m to refinance existing debts and to have
funds for general working capital purposes (note 28).
During the year the Group finalised exploration work at
Kola and initiated the procedure of applying for the mining
licence, going forward cash demand to run Kola project
will be limited to desktop works aiming to support licence
application process. West Kytlim mining operations
restarted in May 2017. The Group expects sufficient
revenues from the mining operations to satisfy funding
requirement to run the project company and carry works
done towards extending platinum reserve base.
The Group has further implemented plans to minimise its
cash outflows by reducing its fixed costs and overheads
and by subletting part of the office premises. The Directors
took personal steps in conserving the Group’s cash by
taking their remuneration in the Company’s shares.
The Directors are confident that the existing projects in
the Group’s control are attractive to enable the Group to
secure new finance whenever required and the Group has
demonstrated a consistent ability to do so.
The Directors have concluded that the combination of
these circumstances represents a reasonable expectation
that the Group has adequate resources to continue in
operational existence for the foreseeable future. For these
reasons, they continue to adopt the going concern basis
in preparing the annual report and accounts.
By order of the Board
M J de Villiers
Secretary
26 May 2017
12
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic
Report, 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 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 judgements 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.
Directors’ report continued
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 1st January 2016 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.
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 normally comprises
basic salary, under circumstances it may include
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
23 to the financial statements and the Directors’ options
are disclosed above. During 2016 no options were granted
to the Directors (2015: nil).
Dividends and profit retention
No dividend is proposed in respect of the year (2015: £nil)
and the retained loss for the year attributable to the equity
holders of the parent of £740,265 (2015 loss of £1,372,466)
has been taken to reserves.
Research and future development
The Group’s activities during the year continued to
be concentrated principally on mineral exploration
programmes and the improvement of mining techniques
and metallurgical processes. While developing its core
projects disclosed in the Operations update the Group
will continue studying and searching for new “near
production” project in the geographical areas it gained
its experience in.
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 agree their remuneration will be put to
shareholders at the Annual General Meeting.
By order of the Board
M J de Villiers
Secretary
26 May 2017
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
13
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course
of the audit:
• 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.
• the Strategic Report and Directors' Report has been
prepared in accordance with applicable legal
requirements.
Matter on which we are required to report
under the Companies Act 2006
In the light of the knowledge and understanding of the
group and parent company and its environment obtained
in the course of the audit, we have not identified any
material misstatements in the Strategic Report and
Directors' Report.
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.
Nicholas Page
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
26 May 2017
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 2016 which comprise
the consolidated and parent company statements of
financial position, the consolidated statement of profit or
loss and other comprehensive income, the consolidated
and parent company statements of cash flow, the
consolidated 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 12, 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 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/auditscopeukprivate.
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 2016 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 accord -
ance with the requirements of the Companies Act 2006.
14
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Consolidated statement of profit or loss and
Eurasia Mining plc
Company No. 3010091
other comprehensive income
For the year ended 31 December 2016
Sales
Cost of sales
Gross profit
Administrative costs
Finance cost
Other gains and losses
Profit/(loss) before tax
Income tax expense
Profit/(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:
Parent’s share of foreign exchange differences on translation of foreign operations
Other comprehensive income for the period, net of tax
Total comprehensive profit/(loss) for the period
Profit/(loss) for the period attributable to:
Equity holders of the parent
Non-controlling interest
Total comprehensive profit/(loss) for the period attributable to:
Equity holders of the parent
Non-controlling interest
Profit/(loss) per share attributable to equity holders of the parent:
Basic profit/(loss) (pence per share)
Diluted profit/(loss) (pence per share)
Year to
31 December
2016
£
Year to
31 December
2015
£
Note
139,862
(130,688)
9,174
(654,263)
(224,814)
1,864,143
994,240
-
-
-
-
(667,970)
-
(1,019,838)
(1,687,808)
-
994,240
(1,687,808)
(132,190)
110,925
(248,650)
282,733
(380,840)
393,658
613,400
(1,294,150)
740,265
253,975
(1,372,466)
(315,342)
994,240
(1,687,808)
491,615
121,785
(1,089,733)
(204,417)
613,400
(1,294,150)
0.05
0.05
(0.11)
-
9
10
13
13
21
21
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 loss for the financial year recorded within the financial statements of Eurasia Mining plc
is £655,352 (2015: loss of £522,174).
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
15
Consolidated statement of financial position
Eurasia Mining plc
Company No. 3010091
As at 31 December 2016
ASSETS
Non-current assets
Property, plant and equipment
Assets in the course of construction
Intangible assets
Investments in joint operations
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
Other reserves
Accumulated losses
Equity attributable to equity holders of the parent
Non-controlling interest
Total equity
LIABILITIES
Current liabilities
Borrowings
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2016
£
31 December
2015
£
Note
11
12
14
15
16
18
13
19
20
4,402,272
39,216
813,135
44,131
489,312
24,375
-
3,200,726
-
406,702
5,788,066
3,631,803
23,844
149,146
154,674
327,664
218
210,795
104,925
315,938
6,115,730
3,947,741
25,577,993
3,281,842
(22,544,900)
24,185,436
3,530,492
(23,285,165)
6,314,935
(675,393)
4,430,763
(797,178)
5,639,542
3,633,585
318,314
157,874
476,188
476,188
-
314,156
314,156
314,156
6,115,730
3,947,741
These financial statements were approved by the board on 26 May 2017 and were signed on its behalf by:
C. Schaffalitzky
Managing Director
16
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Company statement of financial position
Eurasia Mining plc
Company No. 3010091
As at 31 December 2016
ASSETS
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Investments in joint operations
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
Other reserves
Accumulated losses
Total equity
LIABILITIES
Current liabilities
Borrowings
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Note
11
13
14, 23
15
16
18
19
20
31 December
2016
£
31 December
2015
£
238
1,277,489
44,131
5,765,654
705
1,277,489
-
4,915,081
7,087,512
6,193,275
80,040
116,428
70,921
83,444
196,468
154,365
7,283,980
6,347,640
25,577,993
3,542,694
(22,462,468)
24,185,436
3,542,694
(21,807,116)
6,658,219
5,921,014
318,314
307,447
625,761
625,761
-
426,626
426,626
426,626
7,283,980
6,347,640
These financial statements were approved by the board on 26 May 2017 and were signed on its behalf by:
C. Schaffalitzky
Managing Director
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
17
Consolidated statement of changes in equity
For the year ended 31 December 2016
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 2015
Issue of ordinary share capital for cash
Share issue costs
Reversals due to expired options
Recognition of share-based payments
21
1,108,220 15,046,077
868,358
(23,525)
-
-
160,823
-
-
-
7,025,483
-
-
-
-
3,939,141
-
-
(399,235)
2,788
(294,935)
-
-
-
-
(22,311,934)
-
-
399,235
-
4,512,052
1,029,181
(23,525)
-
2,788
(592,761)
-
-
-
-
3,919,291
1,029,181
(23,525)
-
2,788
Transactions with owners
160,823
844,833
-
(396,447)
Loss for the period
Exchange differences on translation
of foreign operations
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
399,235
1,008,444
-
1,008,444
(1,372,466)
(1,372,466)
(315,342)
(1,687,808)
282,733
-
282,733
110,925
393,658
282,733
(1,372,466)
(1,089,733)
(204,417)
(1,294,150)
Balance at 31 December 2015
1,269,043 15,890,910 7,025,483 3,542,694
(12,202) (23,285,165) 4,430,763
(797,178) 3,633,585
1,269,043 15,890,910 7,025,483 3,542,694
Balance at 1 January 2016
Issue of ordinary share capital for cash
Shares issued in lieu of loan note interest 13
Issue of shares for professional services
Share issue cost
145,350
90,458
4,937
723,207
458,542
20,063
(50,000)
Transactions with owners
240,745 1,151,812
Profit for the period
Exchange differences on translation
of foreign operations
Total comprehensive income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,202) (23,285,165) 4,430,763
868,557
549,000
25,000
(50,000)
-
-
-
-
-
-
-
-
(797,178) 3,633,585
868,557
549,000
25,000
(50,000)
-
-
-
-
-
-
-
1,392,557
- 1,392,557
740,265
740,265
253,975
994,240
(248,650)
-
(248,650)
(132,190)
380,840
(248,650)
740,265
491,615
121,785
613,400
Balance at 31 December 2016
1,509,788 17,042,722 7,025,483 3,542,694
(260,852) (22,544,900) 6,314,935
(675,393) 5,639,542
18
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Company statement of changes in equity
For the year ended 31 December 2016
Eurasia Mining plc
Company No. 3010091
Balance at 1 January 2015
Issue of ordinary share capital for cash
Share issue costs
Reversals due to expired options
Recognition of share-based payments
Note
21
Share
capital
£
Share
premium
£
Deferred
shares
£
Other
reserves
£
Retained
loss
£
Total
£
1,108,220
160,823
-
-
-
15,046,077
868,358
(23,525)
-
-
7,025,483
-
-
-
-
3,939,141
-
-
(399,235)
2,788
(21,684,177)
-
-
399,235
-
5,434,744
1,029,181
(23,525)
-
2,788
Transactions with owners
160,823
844,833
Loss and total comprehensive income
-
-
-
-
(396,447)
399,235
1,008,444
-
(522,174)
(522,174)
Balance at 31 December 2015
1,269,043
15,890,910
7,025,483
3,542,694 (21,807,116)
5,921,014
Balance at 1 January 2016
Issue of ordinary share capital for cash
Shares issued in lieu of loan note interest
Issue of shares for professional services
Share issue cost
13
1,269,043
145,350
90,458
4,937
-
15,890,910
723,207
458,542
20,063
(50,000)
7,025,483
-
-
-
-
3,542,694 (21,807,116)
-
-
-
-
-
-
-
-
5,921,014
868,557
549,000
25,000
(50,000)
Transactions with owners
240,745
1,151,812
Profit and total comprehensive income
-
-
-
-
-
-
-
1,392,557
(655,352)
(655,352)
Balance at 31 December 2016
1,509,788 17,042,722
7,025,483
3,542,694 (22,462,468)
6,658,219
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
19
Consolidated statement of cash flows
For the year ended 31 December 2016
Eurasia Mining plc
Company No. 3010091
Year to
31 December
2016
£
Year to
31 December
2015
£
Note
Cash flows from operating activities
Profit/(loss) for the period
Adjustments for:
Depreciation of non-current assets
Amortisation of intangible assets
Finance costs recognised in profit or loss
Impairment loss recognised on trade and other receivables
Net foreign exchange (profit)/loss
Expense recognised in income statement in respect of equity-settled share-based payment
994,240
(1,687,808)
1,923
15,712
224,814
95,215
(1,959,358)
25,000
1,936
-
-
-
1,019,838
2,788
(602,454)
(663,246)
(23,530)
46,371
(203,036)
25
(65,515)
150,180
(782,649)
(578,556)
-
(782,649)
-
(578,556)
11
12
(44,131)
(3,578)
(39,216)
(620,416)
-
(633)
-
(516,701)
(707,341)
(517,334)
818,557
892,500
(250,000)
1,005,626
-
-
1,461,057
1,005,656
(28,933)
78,682
104,925
(90,234)
(29,704)
224,863
154,674
104,925
Movement in working capital
(Increase)/decrease in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash outflow from operations
Income tax paid
Net cash used in operating activities
Cash flows from investing activities
Contributed to joint operations
Purchase of property, plant and equipment
Invested into assets under construction
Payment for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity shares
Proceeds from borrowings
Repayment of borrowings
Net cash proceeds from financing activities
Net decrease 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
20
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Company statement of cash flows
For the year ended 31 December 2016
Eurasia Mining plc
Company No. 3010091
Year to
31 December
2016
£
Year to
31 December
2015
£
Note
Cash flows from operating activities
(Loss)/profit for the period
Adjustments for:
Depreciation of non-current assets
Finance costs recognised in profit or loss
Net foreign exchange loss
Expense recognised in income statement in respect of equity-settled share-based payment
Movement in working capital
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash outflow from operations
Income tax paid
Net cash used in operating activities
Cash flows from investing activities
Contributed to joint operations
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
Proceeds from borrowings
Repayment of borrowings
Net cash proceeds from financing activities
Net decrease 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
(655,352)
(522,174)
467
224,814
1,818
25,000
1,013
-
(564)
2,788
(403,253)
(518,937)
(9,119)
(121,762)
(534,134)
-
(534,134)
(5,739)
85,782
(438,894)
-
(438,894)
11
(44,131)
-
(850,573)
-
(633)
(694,607)
(894,704)
(695,240)
818,557
892,500
(250,000)
1,005,656
-
-
1,461,057
1,005,656
32,219
765
83,444
116,428
(128,478)
1,762
210,160
83,444
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
21
Notes to the consolidated financial statements
For the year ended 31 December 2016
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 AIM Market of the
London Stock Exchange plc. 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.
At 31 December 2016 the Group’s net current liabilities
amounted to £148,544 (2015: net current assets £1,782).
At the same time the Group had a cash balance of £154,674
(2015: £104,925) and undrawn £350,000 under the loan
facility entered into in December 2016 (note 19). £350,000
was fully drawn in after the year end which is disclosed in
the note 28. All these reserves were insufficient to meet the
Group’s demands for the working capital and the loan
repayment due in May 2017.
Directors have taken further measures to preserve cash and
secure additional finance. Within May 2017 the Company
raised around $2m to refinance existing debts and to have
funds for general working capital purposes (note 28).
During the year the Group finalised exploration work at
Kola and initiated the procedure of applying for the mining
licence, going forward cash demand to run Kola project
will be limited to desktop works aiming to support licence
application process. West Kytlim mining operations
restarted in May 2017. The Group expects sufficient
revenues from the mining operations to satisfy funding
requirement to run the project company and carry works
done towards extending platinum reserve base.
The Group has further implemented plans to minimise its
cash outflows by reducing its fixed costs and overheads and
by subletting part of the office premises. The Directors took
personal steps in conserving the Group’s cash by taking
their remuneration in the Company’s shares.
The Directors are confident that the existing projects in
the Group’s control are attractive to enable the Group to
secure new finance whenever required and the Group has
demonstrated a consistent ability to do so.
The Directors have concluded that the combination of these
circumstances represents a reasonable expectation that the
Group has adequate resources to continue in operational
existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis in preparing the
annual report and accounts.
3 Changes in accounting policies
3.1 New and revised relevant standards that are
effective for annual periods commencing on or
after 1 January 2016
Amendments to IFRS 10, IFRS 12 and IAS 28 -
Investment entities: Applying the consolidation
exception (effective 1 January 2016)
Amendments made to IFRS 10 Consolidated Financial
Statements and IAS 28 Investments in associates and joint
ventures clarify that:
• The exception from preparing consolidated financial
statements is also available to intermediate parent
entities which are subsidiaries of investment entities.
• An investment entity should consolidate a subsidiary
which is not an investment entity and whose main
purpose and activity is to provide services in support
of the investment entity’s investment activities.
• Entities which are not investment entities but have an
interest in an associate or joint venture which is an
investment entity have a policy choice when applying the
equity method of accounting. The fair value measurement
applied by the investment entity associate or joint venture
can either be retained, or a consolidation may be
performed at the level of the associate or joint venture,
which would then unwind the fair value measurement.
Amendments to IFRS 11 Joint Arrangements
(effective 1 January 2016)
• These amendments provide guidance on the accounting
for acquisitions of interests in joint operations constituting
a business. The amendments require all such transactions
to be accounted for using the principles on business
combinations accounting in IFRS 3 ‘Business
Combinations’ and other IFRSs except where those
principles conflict with IFRS 11. Acquisitions of interests
in joint ventures are not impacted by this new guidance.
Amendments to IAS 1-Disclosure Initiative
(effective 1 January 2016)
The amendments to IAS 1 Presentation of Financial
Statements are made in the context of the IASB’s Disclosure
Initiative, which explores how financial statement disclosures
can be improved. The amendments provide clarifications on
a number of issues, including:
• Materiality – an entity should not aggregate or
disaggregate information in a manner that obscures
useful information. Where items are material, sufficient
information must be provided to explain the impact
on the financial position or performance.
• Disaggregation and subtotals – line items specified in
IAS 1 may need to be disaggregated where this is
relevant to an understanding of the entity’s financial
position or performance. There is also new guidance
on the use of subtotals.
22
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
• Notes – confirmation that the notes do not need to be
presented in a particular order.
• OCI arising from investments accounted for under the
equity method – the share of OCI arising from equity-
accounted investments is grouped based on whether the
items will or will not subsequently be reclassified to profit
or loss. Each group should then be presented as a single
line item in the statement of other comprehensive
income.
Amendments to IAS 16 and IAS 38 - Clarification of
Acceptable Methods of Depreciation and Amortisation
(effective 1 January 2016)
The IASB has amended IAS 16 Property, Plant and
Equipment to clarify that a revenue-based method should
not be used to calculate the depreciation of items of
property, plant and equipment.
IAS 38 Intangible Assets now includes a rebuttable
presumption that the amortisation of intangible assets
based on revenue is inappropriate. This presumption can
be overcome if either
• The intangible asset is expressed as a measure of
revenue (ie where a measure of revenue is the limiting
factor on the value that can be derived from the asset), or
• It can be shown that revenue and the consumption of
economic benefits generated by the asset are highly
correlated.
Amendments to IAS 27 - Equity method in separate
financial statements (effective 1 January 2016)
The IASB has made amendments to IAS 27 Separate
Financial Statements which will allow entities to use the
equity method in their separate financial statements to
measure investments in subsidiaries, joint ventures and
associates.
IAS 27 currently allows entities to measure their investments
in subsidiaries, joint ventures and associates either at cost or
as a financial asset in their separate financial statements.
The amendments introduce the equity method as a third
option. The election can be made independently for each
category of investment (subsidiaries, joint ventures and
associates). Entities wishing to change to the equity method
must do so retrospectively.
Amendments to IFRS 10 and IAS 28 - Sale or contribution
of assets between an investor and its associate or joint
venture (effective 1 January 2016)
The IASB has made limited scope amendments to IFRS 10
Consolidated financial statements and IAS 28 Investments in
associates and joint ventures, which clarify the accounting
treatment for sales or contribution of assets between an
investor and its associates or joint ventures. They confirm
that the accounting treatment depends on whether the non-
monetary assets sold or contributed to an associate or joint
venture constitutes a ‘business’ (as defined in IFRS 3
Business Combinations).
Where the non-monetary assets constitute a business, the
investor will recognise the full gain or loss on the sale or
contribution of assets. If the assets do not meet the
definition of a business, the gain or loss is recognised by
the investor only to the extent of the other investor’s
investors in the associate or joint venture. The amendments
apply prospectively.
Annual Improvements to IFRSs 2012-2014 cycle
(effective 1 January 2016)
The latest annual improvements clarify:
• IFRS 5 – when an asset (or disposal group) is reclassified
from ‘held for sale’ to ‘held for distribution’ or vice versa,
this does not constitute a change to a plan of sale or
distribution and does not have to be accounted for as
such
• IFRS 7 – specific guidance for transferred financial assets
to help management determine whether the terms of a
servicing arrangement constitute ‘continuing involvement’
and, therefore, whether the asset qualifies for
derecognition
• IFRS 7 – that the additional disclosures relating to the
offsetting of financial assets and financial liabilities only
need to be included in interim reports if required by
IAS 34
• IAS 19 – that when determining the discount rate for
post-employment benefit obligations, it is the currency
that the liabilities are denominated in that is important
and not the country where they arise
• IAS 34 – what is meant by the reference in the standard
to ‘information disclosed elsewhere in the interim
financial report’ and adds a requirement to cross-
reference from the interim financial statements to the
location of that information
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 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 (effective 1 January 2018)
IFRS 9 represents the completion of its project to replace
IAS 39 ‘Financial Instruments: Recognition and
Measurement’. The new standard introduces extensive
changes to IAS 39’s guidance on the classification and
measurement of financial assets and introduces a new
‘expected credit loss’ model for the impairment of financial
assets. IFRS 9 also provides new guidance on the
application of hedge accounting.
ANNUAL REPORT & ACCOUNTS 2016
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 2016
IFRS 15 Revenue from contracts with customers
(effective 1 January 2017)
The IASB has issued a new standard for the recognition of
revenue. This will replace IAS 18 which covers contracts for
goods and services and IAS 11 which covers construction
contracts.
The new standard is based on the principle that revenue is
recognised when control of a good or service transfers to a
customer – so the notion of control replaces the existing
notion of risks and rewards.
IFRS 16 Leases (effective 1 January 2019)
IASB released IFRS 16 'Leases', which will require lessees
to account for leases 'on-balance sheet' by recognising a
'right-of-use' asset and a lease liability.
IFRS 16 also:
• changes the definition of a lease;
• sets requirements on how to account for the asset and
liability, including complexities such as non-lease
elements, variable lease payments and option periods;
• provides exemptions for short-term leases and leases
of low value assets;
• changes the accounting for sale and leaseback
arrangements;
• largely retains IAS 17's approach to lessor accounting;
• introduces new disclosure requirements.
Amendments to IFRS 2 Classification and
Measurement of Share-based Payment Transactions
(effective 1 January 2018)
The amendments clarify the following:
1. In estimating the fair value of a cash-settled share-based
payment, the accounting for the effects of vesting and
non-vesting conditions should follow the same approach
as for equity-settled share-based payments.
2. Where tax law or regulation requires an entity to withhold
a specified number of equity instruments equal to the
monetary value of the employee’s tax obligation to meet
the employee’s tax liability which is then remitted to the
tax authority, i.e. the share-based payment arrangement
has a ‘net settlement feature’, such an arrangement
should be classified as equity-settled in its entirety,
provided that the share-based payment would have been
classified as equity-settled had it not included the net
settlement feature.
3. A modification of a share-based payment that changes
the transaction from cash-settled to equity-settled should
be accounted for as follows:
Amendments to IFRS 10 and IAS 28 Sale or Contribution
of Assets between an Investor and its Associate or Joint
Venture (effective on or after the date to be determined)
The amendments to IFRS 10 and IAS 28 deal with situations
where there is a sale or contribution of assets between an
investor and its associate or joint venture. Specifically, the
amendments state that gains or losses resulting from the
loss of control of a subsidiary that does not contain a
business in a transaction with an associate or a joint venture
that is accounted for using the equity method, are
recognised in the parent’s profit or loss only to the extent
of the unrelated investors’ interests in that associate or
joint venture. Similarly, gains and losses resulting from the
remeasurement of investments retained in any former
subsidiary (that has become an associate or a joint venture
that is accounted for using the equity method) to fair value
are recognised in the former parent’s profit or loss only to
the extent of the unrelated investors’ interests in the new
associate or joint venture.
Amendments to IAS 7 Disclosure Initiative
(effective 1 January 2017)
The amendments require an entity to provide disclosures
that enable users of financial statements to evaluate
changes in liabilities arising from financing activities.
Amendments to IAS 12 Recognition of Deferred Tax
Assets for Unrealised Losses (effective 1 January 2017)
The amendments clarify the following:
1. Decreases below cost in the carrying amount of a fixed-
rate debt instrument measured at fair value for which the
tax base remains at cost give rise to a deductible
temporary difference, irrespective of whether the debt
instrument’s holder expects to recover the carrying
amount of the debt instrument by sale or by use, or
whether it is probable that the issuer will pay all the
contractual cash flows;
2. When an entity assesses whether taxable profits will
be available against which it can utilise a deductible
temporary difference, and the tax law restricts the
utilisation of losses to deduction against income of
a specific type (e.g. capital losses can only be set off
against capital gains), an entity assesses a deductible
temporary difference in combination with other
deductible temporary differences of that type, but
separately from other types of deductible temporary
differences;
3. The estimate of probable future taxable profit may
include the recovery of some of an entity’s assets for more
than their carrying amount if there is sufficient evidence
that it is probable that the entity will achieve this; and
• i.the original liability is derecognised;
• the equity-settled share-based payment is recognised at
the modification date fair value of the equity instrument
granted to the extent that services have been rendered
up to the modification date; and
• any difference between the carrying amount of the
liability at the modification date and the amount
recognised in equity should be recognised in profit or
loss immediately.
4. In evaluating whether sufficient future taxable profits
are available, an entity should compare the deductible
temporary differences with future taxable profits
excluding tax deductions resulting from the reversal
of those deductible temporary differences.
The directors of the Company do not anticipate that the
application of these amendments will have a material
impact on the Group's consolidated financial statements.
24
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
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 adopted 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.
4.2 Presentation of financial statements
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 all of the following:
• Power over investee;
• Exposure, or rights, to variable returns from its
involvement with the investee;
• The ability to use its power over the investee to affect
the amount of investor’s returns.
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.
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.
In a business combination achieved in stages, the Group
remeasure its previously held equity interest in the acquiree
at its acquisition-date fair value and recognise the resulting
gain or loss, if any, in profit or loss or other comprehensive
income, as appropriate.
4.5 Interests in joint arrangements
A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement have
rights to the net assets of the joint venture. Joint control
is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties
sharing control. The considerations made in determining
significant influence or joint controls are similar to those
necessary to determine control over subsidiaries.
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
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
ANNUAL REPORT & ACCOUNTS 2016
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 2016
eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
the date the entity obtains the goods or the counterparty
renders the service.
4.6 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.
4.7 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
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.
When share options lapse or are forfeited the respective
amount recognised in the Share-based payment reserve
is reversed and credited to accumulated profit and loss
reserve.
4.8 Revenue
Goods sold
Revenue is measured at the fair value of the consideration
received or receivable (excluding VAT), net of returns, trade
discounts and volume rebates.
Revenue is recognised when persuasive evidence exists,
usually in the form of an executed sales agreement, that
the significant risks and rewards of ownership have been
transferred to the customer, recovery of the consideration
is probable, the associated costs and possible return of
goods can be estimated reliably, there is no continuing
management involvement with the goods, and the amount
of revenue can be measured reliably.
The timing of the transfers of risks and rewards varies
depending on the individual terms of the sales agreement.
For sales of the platinum group and other metals, the
transfer usually occurs upon receipt by the customer.
Services
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.
4.9 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
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.
26
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
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.
4.10 Property, plant and equipment
Mining assets
Mining assets are stated at cost less accumulated
depreciation. Mining assets include the cost of acquiring
and developing mining assets and mineral rights, buildings,
vehicles, plant and machinery and other equipment located
on mine sites and used in the mining operations.
Mining assets, where economic benefits from the asset are
consumed in a pattern which is linked to the production
level, are depreciated using a units of production method
based on the volume of ore reserves. This results in a
depreciation charge proportional to the depletion of
reserves. Where the mining plan anticipates future capital
expenditure to support the mining activity over the life
of the mine, the depreciable amount is adjusted for such
estimated future expenditure.
Other assets
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
values and depreciation method are reviewed at each year
end, with the effect of any changes in estimate accounted
for on a prospective basis.
The estimated useful lives are as follows:
Property
Office equipment
Furniture and fittings
30 years
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.
4.11 Intangible assets
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.
4.12 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.
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.
ANNUAL REPORT & ACCOUNTS 2016
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 2016
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.
4.13 Inventories
Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on the first-
in first-out principle, and includes expenditure incurred in
acquiring the inventories, production or conversion costs
and other costs incurred in bringing them to their existing
location and condition. In the case of manufactured
inventories and work in progress, cost includes an
appropriate share of production overheads based on
normal operating capacity.
Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and selling expenses.
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 subsiquently 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.
28
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
5.2.2 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, obtaining of regulatory approval for the extraction
of such 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.
6 Segmental information
During the year under review management identified the
group as one operating segment being investing in
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.
Dividends and distributions relating to equity instruments
are debited direct to equity.
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 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 ability to use its power over the investee to affect the
amount of the investor’s returns.
5.2 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.
5.2.1 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.
ANNUAL REPORT & ACCOUNTS 2016
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 2016
7 Employees
Average number of staff (excluding non-executive directors) employed throughout the year was as follows:
By the Company
By the Group
8 Profit/(loss) for the year
Profit/(loss) for the year has been arrived at after charging:
Staff benefits expense:
Wages, salaries and directors fees (note 22 )
Social security costs
Other short term benefits
Audit fees payable to the company’s auditor for
the audit of the Group’s annual accounts
9 Other gains and losses
VAT written off
Net foreign exchange (loss)/profit
10 Income taxes
(Loss)/profit before tax
Current tax at 20% (2015: 20%)
Adjusted for the effect of:
Expenses not deductible for tax purposes
Profits not subject to tax
2016
4
19
2015
5
19
Year to 31 December 2016
Company
£
Group
£
Year to 31 December 2015
Company
£
Group
£
250,644
24,848
18,500
180,724
7,476
18,500
293,992
206,700
314,432
26,429
16,141
357,002
249,651
10,425
16,141
276,217
33,553
33,553
33,553
33,553
28,487
28,487
31,424
31,424
Year to 31 December 2016
Company
£
Group
£
Year to 31 December 2015
Company
£
Group
£
(95,215)
1,959,358
-
(1,818)
-
(1,019,838)
-
564
1,864,143
(1,818)
(1,019,838)
(183,209)
Year to 31 December 2016
Company
£
Group
£
Year to 31 December 2015
Company
£
Group
£
994,240
198,848
(655,352)
(131,070)
(1,687,808)
(337,562)
(522,174)
(104,435)
-
-
-
-
-
-
-
-
Tax losses utilised/(carried forward)
194,848
(131,070)
(337,562)
(104,435)
Tax liability
-
-
-
-
There was no tax payable for the year ended 31 December 2016 (2015: £nil) due to the Group and the Company having
taxable losses.
The Group’s business operations currently comprise mining projects in Russia, which are either at an exploration stage or
entering into active production stage. The Group has tax losses of £15,679,161 (2015: £15,024,814) 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 full scale production 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.
30
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
11 Property, plant and equipment
a) Group property, plant and equipment
Mining
asset
Property
£
Plant and
machinery
£
Office fixture
and fittings
£
-
-
-
-
-
-
4,388,797
-
-
4,388,797
-
-
-
-
-
(15,712)
-
(15,712)
24,109
-
-
(1,461)
22,648
-
-
-
2,707
25,355
(404)
-
(82)
78
(408)
-
(117)
(180)
(705)
4,373,085
-
24,650
22,240
72,484
-
-
(13,910)
58,574
2,888
-
-
25,765
87,227
(70,569)
-
(805)
13,543
(57,831)
-
(1,207)
(25,438)
(84,476)
2,751
743
Cost
Balance at 1 January 2015
Additions
Disposals
Exchange differences
Balance at 31 December 2015
Additions
Transfer from intangible assets
Disposals
Exchange differences
Balance at 31 December 2016
Depreciation
Balance at 1 December 2015
Disposals
Depreciation expense
Exchange differences
Balance at 31 December 2015
Disposals
Depreciation expense
Exchange differences
Balance at 31 December 2016
Carrying amount:
at 31 December 2016
at 31 December 2015
b) Assets in the course of construction
Cost
Balance at 1 January
Additions
Balance at 31 December
Total
£
151,449
633
(1,162)
(18,160)
132,760
3,578
4,388,797
-
33,584
54,856
633
(1,162)
(2,789)
51,538
690
-
-
5,112
57,340
4,558,719
(52,877)
1,162
(1,049)
2,618
(123,850)
1,162
(1,936)
16,239
(50,146)
(108,385)
(599)
(4,809)
(17,635)
(30,427)
(55,554)
(156,447)
1,786
4,402,272
1,392
24,375
2016
£
-
39,216
39,216
2015
£
-
-
-
Assets in the course of construction represent the group investment in the powerline to deliver electricity to the West Kytlim
mining site. At 31 December 2016 the power line had not been commissioned yet.
ANNUAL REPORT & ACCOUNTS 2016
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 2016
11 Property, plant and equipment (continued)
c) 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
2016
£
39,918
-
-
39,918
(39,213)
(467)
-
(39,680)
238
2015
£
40,447
633
(1,162)
39,918
(39,362)
(1,013)
1,162
(39,213)
705
The Group’s and Company's property, plant and equipment are free from any mortgage or charge.
12 Intangible assets
In 2016 intangible assets represented only capitalised costs associated with the Group’s exploration, evaluation and development
of mineral resources.
Cost
Balance at 1 January
Additions
Transferred to mining asset
Exchange differences
Balance at 31 December
2016
£
2015
£
3,200,726
620,416
(4,388,797)
1,380,790
3,276,976
516,701
-
(592,951)
813,135
3,200,726
The Company did not directly own any intangible assets at 31 December 2016 (2015 – nil)
13 Subsidiaries
Details of the Company's subsidiaries at 31 December 2016 are as follows:
Name of subsidiary
Urals Alluvial Platinum Limited
ZAO Eurasia Mining Service
ZAO Kosvinsky Kamen
ZAO Terskaya Mining Company
ZAO Yuksporskaya Mining Company
Eurasia Mining (UK) Limited
Place of
incorporation
Proportion of
ordinary shares held
Cyprus
Russia
Russia
Russia
Russia
UK
100%
100%
75%
80%
100%
100%
Principal activity
Holding Company
Holding Company
Mineral Evaluation
Mineral Evaluation
Mineral Evaluation
Holding Company
* 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 an interest in the
company holding the 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.
The Directors consider ERA to be a subsidiary of the Company despite holding only 48.33% of the voting power of the entity
based on the fact that the Company has the ability to use its power over the investee to affect the amount of the Company’s
returns.
32
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
13 Significant subsidiaries (continued)
The Company’s investments in subsidiaries presented on the basis of direct equity interest and represent the following:
Investment in subsidiaries (i)
Investment in joint operations (ii)
2016
£
2015
£
1,277,489
44,131
1,277,489
-
1,321,620
1,277,489
(i) Investment in subsidiaries represents the Company investments made into its 100% subsidiary Urals Alluvial Platinum (the
“UAP”), which in turn controls other subsidiaries within the Group.
(ii) In 2015 the Group entered into the agreement to participate in the Semenovsky Tailings Project in Russia. The ultimate legal
structure of the arrangements is subject to the results of studies and due diligence work carried out by the parties and until
then the investment is treated as an investment in joint operations. Work has largely been funded by one of the participating
partners and the Group contribution by the end of 2016 totalled to £44,131 (2015- nil).
Subsidiary with material non-controlling interests (“NCI”)
Summary of non-controlling interest
As at 1 January
NCI arising on the acquisition of subsidiary
Profit/(loss) attributable to NCI
Exchange differences
As at 31 December
Non controlling interest on subsidiary basis
Energy Resources Asia Limited
ZAO Kosvinsky Kamen
ZAO Terskaya Mining Company
Energy Resources Asia Limited
Non-current assets
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Non-controlling interests
Loss for the year attributable to owners of the parent
Loss for the year attributable to NCI
Loss for the year
Total comprehensive income for the year attributable to owners of the parent
Total comprehensive income for the year attributable to NCI
Total comprehensive income for the year
2016
£
(797,178)
-
253,975
(132,190)
2015
£
(592,761)
(315,342)
110,925
(675,393)
(797,178)
2016
£
326,194
(436,518)
(565,069)
2015
£
286,558
(494,610)
(589,126)
(675,393)
(797,178)
2016
£
489,312
-
489,312
(3,545)
(3,545)
485,767
159,573
326,194
-
-
-
42,375
39,636
82,011
2015
£
406,702
-
406,702
(2,946)
(2,946)
403,756
117,198
286,558
(657)
(613)
(1,270)
9,133
8,545
17,678
ANNUAL REPORT & ACCOUNTS 2016
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 2016
13 Significant subsidiaries (continued)
ZAO Kosvinsky Kamen
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Non-controlling interests
Profit/(loss) for the year attributable to owners of the parent
Profit/(loss) for the year attributable to NCI
Profit/(loss)for the year
Total comprehensive income for the year attributable to owners of the parent
Total comprehensive income for the year attributable to NCI
Total comprehensive income for the year
ZAO Terskaya Mining Company
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Non-controlling interests
Profit/(loss) for the year attributable to owners of the parent
Profit/(loss)for the year attributable to NCI
Profit/(loss) for the year
Total comprehensive income for the year attributable to owners of the parent
Total comprehensive income for the year attributable to NCI
Total comprehensive income for the year
2016
£
2015
£
4,001,272
71,104
2,655,286
133,514
4,072,376
2,788,800
5,824,503
15,602
(4,781,766)
(7,133)
5,840,105
(4,788,899)
(1,767,729)
(1,331,211)
(436,518)
(2,000,099)
(1,505,489)
(494,610)
682,134
227,378
(923,317)
(307,773)
909,512
(1,231,090)
85,093
58,092
(578,203)
(210,123)
143,185
(788,326)
2016
£
760,534
58,534
2015
£
280,526
41,710
819,068
322,236
708,917
86,091
(299,920)
(118,541)
795,008
(418,461)
24,060
589,129
(565,069)
(96,225)
499,901
(589,126)
106,388
26,597
132,985
193,378
24,057
217,435
(27,824)
(6,956)
(34,780)
(63,822)
(2,839)
(66,661)
34
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
14 Other financial assets
Loans to subsidiaries
Advanced to acquire interest in uranium project
2016
Group
£
Company
£
-
489,312
5,765,654
-
Group
£
-
406,702
2015
Company
£
4,915,081
-
489,312
5,765,654
406,702
4,915,081
The monies advanced to the subsidiary enterprises by the Company are repayable on damand. 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.
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 13 ). This amount is equivalent to £489,312 using the prevailing rate of
exchange at the year end (2015: £406,702).
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.
15 Trade and other receivables
Trade receivables
Other receivables
Prepayments
Due from subsidiaries
2016
Group
£
Company
£
-
105,016
44,130
17,243
149,146
-
21,073
41,724
-
80,040
Group
£
-
178,554
32,241
38,913
210,795
2015
Company
£
-
14,711
17,297
-
70,921
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 Issued 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 (£)
Share premium
Value (£)
Total issued capital (£)
2016
2015
1,509,787,583 1,269,042,780
1,269,043
1,509,788
143,377,203
7,025,483
143,377,203
7,025,483
17,042,782
15,890,910
25,577,993
24,185,436
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;
- 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.
ANNUAL REPORT & ACCOUNTS 2016
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 2016
16 Issued capital (continued)
Issue of ordinary share capital in 2016
Price in pence
per share
Number
Nominal value
£
As at 1 January 2016
23 February 2016
05 April 2016
12 May 2016
31 May 2016
01 August 2016
20 September 2016
26 October 2016
26 October 2016
18 November 2016
20 December 2016
20 December 2016
29 December 2016
As at 31 December 2016
17 Contingent shares
0.550
0.770
0.550
0.550
0.550
0.650
0.875
0.550
0.625
0.650
0.800
0.725
1,269,042,780
22,523,357
13,388,100
90,909,091
9,090,909
28,181,818
24,321,539
1,142,857
391,608
4,800,000
30,769,231
2,812,500
12,413,793
1,269,043
22,523
13,388
90,909
9,091
28,182
24,322
1,143
392
4,800
30,769
2,812
12,414
240,744,803
240,745
1,509,787,583
1,509,788
Share options and warrants outstanding at the end of the year have the following expiry date and exercise prices:
Expiry date
Share options
21 December 2017
Weighted average exercise price
Warrants
11 July 2017
12 November 2018
Weighted average exercise price
Exercise
price in
pence per
share
Number of
options as at
31 December
2016
Number of
options as at
31 December
2015
7.00
250,000
250,000
7.00
250,000
250,000
7.00
1.50
0.57
500,000
950,000
500,000
950,000
1,450,000
1,450,000
0.89
0.89
Total contingently issuable shares at 31 December
1,700,000
1,700,000
All listed options and warrants were exercisable as at 31 December 2016 and 2015 respectively.
36
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
18 Other 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 in the period
Lapsed in the period (note 21 )
At 31 December
2016
Group
£
Company
£
2015
Group
£
Company
£
3,539,906
3,539,906
3,539,906
3,539,906
(12,202)
(248,650)
(260,852)
-
-
-
(294,935)
282,733
(12,202)
-
-
-
2,788
-
-
2,788
2,788
-
-
2,788
399,235
2,788
(399,235)
399,235
2,788
(399,235)
2,788
2,788
3,281,842
3,542,694
3,530,492
3,542,694
The capital redemption reserve was created as a result of a share capital restructure in earlier 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 and (ii) reserve arisen on the grant of warrants under terms of professional service agreements.
19 Borrowings
Unsecured loan
2016
Group
£
Company
£
2015
Group
£
Company
£
318,314
318,314
318,314
318,314
-
-
-
-
In 2016 the Company entered into three consecutive short term unsecured loan facilities with Sanderson Capital Partners
Limited. Under the terms of the facilities the funds were made available in monthly intervals, loan interest prepaid in shares
and due for issue on signature of the loan, drawdown fees payable on each drawdown and payable in shares.
Loan 1 – The Company entered into the loan facility for the total of £250,000 in February 2016. The loan was drawn in February
2016 and repaid in full in May 2016.
Loan 2 - The Company entered into the loan facility for the total of £500,000 in August 2016. The loan was drawn in monthly
instalments from August through November 2016. The loan was due for repayment in January 2017 but in December the
Company agreed with the lender to roll over the loan 2 into to loan 3 on its maturity date in January 2017.
Loan 3 - The Company entered into the loan facility for a total of £1,000,000 in December 2016. This comprised £500,000 to
be drawn in five monthly instalments starting from December 2016 and another £500,000 to be rolled over from Loan 2 in
January 2017 on the Loan 2 maturity of date. Fees of £75,000 were paid in shares on the roll over date. The Loan 3 matures
in May 2017. (note 28).
Combined movement of the three loans:
Loan proceeds
Arrangement fees
Interest accrued
Payments made in shares
Payments made in cash
Balance at 31 December 2016
2016
£
900,000
(7,500)
224,814
(549,250)
(250,000)
318,314
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
37
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
20 Trade and other payables
Accruals
Social security and other taxes
Other payables
Due to related party
2016
2015
Group
£
65,832
12,375
79,666
-
Company
£
60,467
5,064
43,333
198,583
157,874
307,447
Group
£
79,620
5,188
229,348
-
314,156
Company
£
72,932
1,785
153,326
198,583
426,626
The fair value of trade and other payables is not materially different to the carrying values presented. The above listed
payables were all unsecured.
21 Share-based payments
Share options
No share options had been granted by the Group in 2016 (2015: 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
Lapsed
At 31 December
2016
2015
Average
exercise
price
7.00
-
7.00
No. of
options
250,000
-
250,000
Average
exercise
price
No. of
options
1.38
1.33
7.00
31,750,000
(31,500,000)
250,000
The exercise price of all outstanding options at 31 December 2016 was 7p.
Other than those options which either expired or were forfeited during the year all options were exercisable as at 31 December
2016 and 2015 respectively.
Warrants
No warrants were granted by the Group in 2016 (2015: 950,000).
Movement in number of warrants outstanding and their related weighted average exercise prices are as follows:
(Price expressed in pence per share)
Warrants
At 1 January
Granted
Exercised
Exercised
At 31 December
2016
2015
Average
exercise
price
0.89
-
-
-
0.89
No. of
warrants
1,450,000
-
-
-
1,450,000
Average
exercise
price
0.90
0.57
0.63
1.00
0.89
No. of
warrants
42,568,358
950,000
(12,068,358)
(30,000,000)
1,450,000
All listed warrants were exercisable as at 31 December 2016 and 2015 respectively.
38
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
22 Profit per share
Basic profit/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the year.
Profit/(loss) attributable to equity holders of the company
Weighted average number of ordinary shares in issue
Basic profit/(loss) per share (pence)
2016
£
2015
£
740,265
(1,372,466)
1,382,366,350 1,216,456,798
0.05
(0.11)
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
2016
£
2015
£
Profit/(loss) attributable to equity holders of the company
Weighted average number of ordinary shares in issue
Share options and warrants
Weighted average number of ordinary shares for diluted earnings per share
740,265
(1,372,466)
1,382,366,350 1,216,456,798
-
1,384,066,350 1,216,456,798
1,700,000
Diluted profit per share (pence)
0.05
(0.11)
There was no dilutive effect of share options or warrants in 2015.
23 Related party transactions
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
Payables to subsidiaries
Service charges to subsidiary
2016
£
2015
£
17,243
5,765,654
(198,583)
38,913
4,915,081
(198,583)
120,000
120,000
The amounts owed by subsidiaries 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 following amounts were paid and accrued to the directors of the Company who held office at 31 December 2016:
Short-term benefits
2016
£
153,512
153,512
2015
£
151,149
151,149
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 2016 (2015: nil).
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
39
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
23 Related party transactions (continued)
An analysis of remuneration for each director of the company in the current financial year:
Salaries and
allowances
Directors fees
Name
Position
M. Martineau
C. Schaffalitzky
G. FitzGerald
D. Suschov
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
£
-
103,512
-
-
103,512
Amounts of directors remuneration and allowances accrued and remaining unpaid/(overpaid) at 31 December 2016
Name
Position
M. Martineau
C. Schaffalitzky
G. FitzGerald
D. Suschov
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
2016
£
11,341
(247)
1,990
3,595
16,679
£
20,000
-
15,000
15,000
50,000
2015
£
21,658
29,784
12,500
14,194
78,136
24 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.
Payments recognised as an expense:
Minimum lease payments
Non-cancellable operating lease commitments:
No longer than one year
Longer than one year and not longer than five years
Longer than five years
2016
Group
£
Company
£
2015
Group
£
Company
£
14,701
9,625
17,586
11,417
33,457
36,333
-
69,790
27,250
36,333
-
63,583
33,011
63,583
-
96,594
27,250
90,833
-
118,083
The minimum lease payment was adjusted for the office premises sub-lease receipts received by the Company in 2016.
The operating lease commitments represent full commitment by the Company under office lease arrangements. The expected
sub-lease receipts are not included and hence do not reduce the amount of the Company’s commitments.
25 Commitments
The Group is committed to issue 20m warrants of the Company shares exercisable at 1p to Sanderson Capital Partners Limited
on the loan repayment date due in May 2017 with an expiry date of 3 years from such date.
The Group has no other material commitments.
26 Contingent liabilities and contingent assets
The Group has no material contingent liabilities and assets (2015 - £nil).
40
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
27 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 following significant exchange rates have been applied during the year:
GBP
USD
RUB
Average rate
Reporting date spot rate
2016
1,364
92,132
2015
1.528
93.392
2016
1.230
75,347
2015
1.480
108.489
Sensitivity analysis
A reasonably possible strengthening (weakening) of the USD and RUB, as indicated below, against GBP at 31 December would
have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or
loss before taxes by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain
constant and ignores any impact of forecast sales and purchases.
31 December 2016
USD (5% movement)
RUB (5% movement)
31 December 2015
USD (5% movement)
RUB (5% movement)*
Strengthening
Weakening
Equity
USD
Profit or loss
USD
Equity
USD
Profit or loss
USD
106,294
(87,336)
38,858
54,278
(96,169)
79,012
(35,158)
(49,109)
(6,303)
(107,421)
12,642
(67,601)
5,702
97,193
(11,436)
61,162
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.
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 Non-current loans and advances
Trade and other receivables
Cash and cash equivalents
2016
Group
£
Company
£
489,312
149,146
154,674
5,765,654
80,040
116,428
Group
£
406,702
210,795
104,925
2015
Company
£
4,915,081
70,921
83,444
793,132
5,962,122
722,422
5,069,446
The Group’s risk is on cash at bank is mitigated by holding of majority of funds at “A” rated bank.
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 2016 are not materially different from its carrying value.
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
41
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
27 Risk management objectives and policies (continued)
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.
2016
Borrowings
Trade and other payables
2015
Trade and other payables
within
6 months
£
318,314
157,874
476,188
314,156
314,156
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.
2016
Borrowings
Trade and other payables
2015
Trade and other payables
Current
Non-current
within
6 months
£
318,314
105,864
424,178
228,043
228,043
6 to 12
months
£
-
198,583
198,583
198,583
198,583
1 to 5
years
£
later than
5 years
£
-
-
-
-
-
-
-
-
-
-
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.
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
42
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
2016
2015
Group
£
318,314
(154,674)
Company
£
318,314
(116,428)
163,640
6,314,935
201,886
6,658,219
6,478,575
3%
6,860,105
3%
Group
£
-
(104,925)
-
4,430,763
4,430,763
0%
Company
£
-
(83,444)
-
5,921,014
5,921,014
0%
Notes to the consolidated financial statements continued
For the year ended 31 December 2016
27 Risk management objectives and policies (continued)
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.
28 Events after the statement of financial position date
Subsequent to the reporting date the following transactions took place:
a) Issue of shares
Date
Transaction
03 February 2017
21 February 2017
27 March 2017
26 April 2017
19 May 2017
Total
Issue of ordinary shares under term of financing arrangements
Issue of ordinary shares under term of financing arrangements
Issue of ordinary shares under term of financing arrangements
Issue of ordinary shares under term of financing arrangements
Issue of ordinary shares under term of financing arrangements
b) Proceeds from the loan available at 31 December 2016
Date
Transaction
19 January 2017
21 February 2017
19 March 2017
20 April 2017
Drawn under the terms of financing arrangements
Drawn under the terms of financing arrangements
Drawn under the terms of financing arrangements
Drawn under the terms of financing arrangements
No of shares Nominal value
issued
15,652,174
2,727,273
2,857,173
1,500,000
10,526,316
33,262,936
£
15,652
2,727
2,857
1,500
10,526
33,262
£
100,000
100,000
100,000
50,000
c) New loan facilities entered into after 31 December 2016
i) On 17 May 2017 the Company repaid £750,000 of the £1,000,000 loan entered into with Sanderson Capital Partners Limited
in December 2017. The balance of £250,000 was transferred to a new loan facility entered into with Sanderson Capital Partners
Limited on 10 May 2017. Under the terms the total fees of 20% of the principle amount is payable to the lender in advance at
the inception. No interest to be accrued on the principle.
ii) On 15 May 2017 the Company entered into a loan agreement with YA II PN Limited for US$1,250,000, with a repayment date
of 15 May 2018 although this can be extended, by mutual agreement, for a further 6 months for a fee of 6% of the then
outstanding principal.
Interest applies on the loan at a rate of 14% although with a three-month repayment holiday on both interest and principal.
An implementation fee of US$100,000 is immediately deductible from the principal amount on transfer of funds.
The lender may elect, at its discretion, to convert all or part of the loan repayments (interest and principal) into shares in
the Company, at, the lower of a share price of 0.6p and, 90% of the Company's lowest daily volume weighted average
price('VWAP') during the five days prior to conversion.
In addition, the agreement includes the issue of Warrants to the lender at 50% cover of the principal amount, and at a 20%
premium to the VWAP in the 30 days preceding the agreement. Consequently the Company today issued 80,749,333 warrants
at an exercise price of 0.6p per warrant. The warrants issued shall have a subscription period of three years.
iii) On 24 May 2017 the Company entered into a loan agreement with Deloan Investments Limited, a company controlled by
Dmitry Suschov, a non-executive director of the Company for a convertible loan of up to US$500,000. The loan is convertible
at any time into Ordinary Shares in the Company, at a price of 0.475p per Ordinary Share.
Under the terms of the agreement interest accrues on the loan at a rate of 15% which is to be satisfied by either cash payments
or shares in the Company at a price of 0.475p per ordinary share.
In addition, the lender will be issued with a warrant to subscribe for 10,000,000 Ordinary Shares in the Company at any time
for the next three years at an exercise price of 1p.
The purpose of the loans from i to iii above is to refinance existing loan and to use for general working capital purposes.
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.
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
43
44
E U R A S I A M I N I N G P L C
ANNUAL REPORT & ACCOUNTS 2016
Company Information
Directors
M. Martineau (Non-Executive Chairman)
C. Schaffalitzky (Managing Director)
G. FitzGerald (Non-Executive Director)
D. Suschov (Non-Executive Director)
Company 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
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
Gowling WLG (UK) LLP
4 More London Riverside
London SE1 2AU
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
and
Beaufort Securities Ltd
131 Finsbury Pavement
London EC2A 1NT
ANNUAL REPORT & ACCOUNTS 2016
E U R A S I A M I N I N G P L C
45
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