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KODAL MINERALS PLC
GROUP ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2015
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CONTENTS
Company Information
Highlights
Strategic Report
Report of the Directors
Corporate Governance Report
Report on Remuneration
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated and Parent Company Statements of Financial Position
Consolidated Statement of Changes in Equity
Parent Company Statement of Changes in Equity
Consolidated and Parent Company Statements of Cash Flows
Principal Accounting Policies
Notes to the Financial Statements
Notice of Annual General Meeting
Page
2
3
5
13
16
17
19
21
22
23
24
25
26
34
52
Kodal Minerals Report & Accounts 2015 1
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COMPANY INFORMATION
DIRECTORS
SECRETARY
Luke Bryan
Markus Ekberg
David Jones
Robert Wooldridge
Weaver Financial Limited
Stapeley House
London Road
Nantwich CW5 7JW
COUNTRY OF INCORPORATION
England and Wales
REGISTERED NUMBER
07220790
REGISTERED OFFICE
NOMINATED ADVISOR
SOLICITORS
FINANCIAL ADVISER & BROKER
AUDITOR
SHARE REGISTRARS
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Allenby Capital Limited
3 St Helen’s Place
London EC3A 6AB
Field Fisher Waterhouse LLP
Riverbank House
2 Swan Lane
London EC4R 3TT
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Baker Tilly UK Audit LLP
25 Farringdon Street
London EC4A 4AB
Share Registrars Limited
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey GU9 7LL
Kodal Minerals Report & Accounts 2015 2
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HIGHLIGHTS
for the year ended 31 March 2015
The year ended 31 March 2015 has been a one of mixed results for Kodal Minerals plc (“Kodal Minerals” or the “Company” and
with its subsidiaries the “Group”); operationally much has been achieved, however the capital markets were challenging places for
most junior mining companies and the Company has been under pressure along with the rest of the sector. In addition the price of
iron ore has continued to fall thus negatively impacting the potential of the Group’s titanomagentite and phosphate deposit in
southern Norway referred to as the Kodal Project. The Company has responded to the change of circumstances by pegging new
exploration ground at very low cost and taking advantage of lower prices for exploration services.
Grimeli Project
● In July 2014, the Group was granted three exploration licences over 30 sq km and covering three historic copper mines.
The Company refers to these licences as the Grimeli Project.
● A ground based geophysics programme (magnetics) was completed to support and expand upon results from a survey completed
by the Norwegian Geological Survey (“NGU”) in about 1980. In total the survey yielded 3,200 metres of anomalous results
spread over multiple horizons.
● Underground channel sampling was carried out in the old underground mines. Very encouraging results were obtained including
7.24% copper over 1.74 metres.
● Given the positive results from the geophysics and channel sampling a 2,000 metre diamond drilling programme was started
in February 2015.
● The highest grades returned were 8.39% Copper and 6.98% Zinc. This was the first time zinc mineralisation had been encountered.
Kodal Project
● The price of iron ore (62% Fe) halved from US$112 per tonne in March 2014 to US$57 per tonne in March 2015, and has
continued to fall since, reaching a low of US$47 per tonne.
● In light of the fall in iron ore prices and in the absence of market expectations for it to recover significantly, the Company has
decided to cease all major expenditure on the Kodal Project while continuing to expend very limited funds to progress the
planning process.
● During the year work on the Kodal Project was focused on progressing the low cost environmental and planning processes.
Environmental baseline studies were completed and public meetings were held in both Larvik and Andebu municipalities.
● The Company is currently working with the municipalities of Larvik and Andebu to approve the format of the Environmental
and Social Impact Assessment (“ESIA”).There is no prescribed duration for this process and so the timing of the approval is
uncertain.
● In March 2014 the Group was granted 7 new exploration licences by the Norwegian Directorate of Mining covering an area of
nearly 20 sq km around the Kodal Project, including an area in which a geophysical anomaly has historically been reported.
Mapping of the entire exploration licence area was completed and two new areas of mineralised outcrop were identified.
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HIGHLIGHTS (continued)
for the year ended 31 March 2015
Financial Highlights
● Following an impairment review triggered by the dramatic fall in the iron ore price, the carrying value of the Kodal Project was
written off in full resulting in an impairment charge of £3,412,000.
● Including the Kodal Project impairment charge, for the year to 31 March 2015 the Group showed a loss of £3,960,000 (2014: loss
of £231,000).
● At 31 March 2015, the Group had cash balances of £307,000 compared with £1,501,000 at 31 March 2014.
● After the end of the financial year, in May 2015, the Company raised £0.4 million (before expenses) by way of a placing of
222,222,222 ordinary shares at 0.18 pence.
Kodal Minerals Report & Accounts 2015 4
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STRATEGIC REPORT
for the year ended 31 March 2015
In early 2014, the Board made the decision to acquire additional mineral exploration licences in Norway. This decision was based
upon the realisation that the planning process for the continued development of the titanomagnetite and phosphate deposit in
Southern Norway (referred to as the “Kodal Project”) was going to be slower than anticipated coupled with a degree of apprehension
about the future of the iron ore price. The decision to stay in Norway was relatively easy as the Company’s operations were already
established there and early research had identified possible areas of interest. The Company started a review of publicly available
information and arrived at a shortlist of projects which were visited by the Company’s technical staff in spring of 2014. An area in
Western Norway covering former copper mines, referred to as the Grimeli Project, was identified as being the most prospective,
and the Group applied to the Norwegian Directorate of Mining for three exploration licences covering this area. The licences were
acquired in June 2014 at a cost of approximately £300.
By mid October 2014, the historic copper mines covered by these licences had been accessed, surveyed and channel sampled and
a surface magnetic survey had been completed. The results from this were announced in early November 2014. The Company was
excited to be able to announce a best channel result of 7.24% copper over 1.74 metres along with three other results between 4%
and 5% copper. These excellent results were very encouraging and the Company committed to a 2,000 metre diamond drill
programme to test a number of targets for possible mineralisation.
Kodal Project impairment
Unfortunately the price of iron ore has fallen dramatically during the year from US$112 per tonne (62% Fe) in March 2014 to
US$57 per tonne in March 2015, reaching a low of US$47 per tonne. The preliminary design for the Kodal Project was for a mine
producing six hundred thousand tonnes of titanomagnetite per year and, at the time of listing Kodal Minerals plc in December 2013, it
was anticipated that revenue from iron ore sales would contribute approximately half of the project’s revenue. The fall in price has
eliminated this income stream and rendered the overall project uneconomic at current prices. Following an impairment review of
the Kodal Project, the directors have determined to impair the carrying value of the project resulting in a charge to income in the
year to 31 March 2015 of £3,411,664. The Group will not commit substantial further funds to the development of the Kodal Project
given the current market conditions.
The extraction licences at Kodal do not expire until July 2023 and the Company may be able to renew them for a further 10 years.
The Company will continue to monitor both iron ore and phosphate prices and will recommence development of the Kodal Project
once conditions support that decision. In the meantime, the Company believes the Kodal Project remains one of the most significant
and technically advanced phosphate resources in Europe.
Grimeli Project
The Grimeli Project was the focus of the majority of the Group’s activity during the year and almost all of the exploration work.
In July 2014, the Group was granted three exploration licences by the Norwegian Directorate of Mining covering 30 sq km.
The Company refer to these licences as the Grimeli Project.
Size and Location
The three contiguous licences (Grimeli 1 – 3) cover a total of 30 sq km and also cover three previously producing copper mines.
The nearest substantial town is Førde, a municipality in the county of Sogn og Fjordane in western Norway which is approximately
50 km to the east of the project area. The licences are approximately 130 km north of Bergen.
The exploration licences are valid for seven years to July 2021.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2015
Historic Production
The licence area covers three former copper mines:
a. Grimeli mine: The Grimeli copper mine was in production over three periods from 1759-1776, 1854-1883 and 1906-1920. The
underground workings extend over two areas, the first approximately 200m vertical by 200m horizontal and the second about
half those dimensions according to a mine plan dated 1929. At this stage it is thought that the Grimeli mines produced a hand
cobbled high grade copper ore which was exported to England for smelting.
b. Vågendal mine: Vågendal was in operation as an underground copper mine between 1871 and 1880.
The Grimeli and Vågendal historic copper mines are located on opposite sides of a long hill forming a peninsular. The Grimeli copper
mines, the larger of the two mining areas, is located within three hundred metres of the coast while the smaller Vågendal mine is
located 7 km away to the east. The Company has traced a surface gossan for 1.6 km east toward Vågendal from Grimeli, encountering
several historic test pits in the process before losing the trace under superficial cover.
The Company explored all the accessible mine openings at Grimeli and Vågendal. It appears the mineralisation was typically 1.5 to
3.0 metres wide.
Previous Works and Reports
The Company has located a number of historic reports in Norwegian and German most of which have been translated. While of
interest and of some help in approximating the location of some physical features, the reports were on the whole of limited use due
to either their age and lack of relevant geological or engineering comment or the fact that the more recent ones were completed
after production had ended. No credible grade or production figures were obtained.
Of more interest was work completed by the Norwegian Geological Survey (NGU) in 1979 and 1981. The NGU conducted
geophysical surveys east from Grimeli and west from Vågendal but apparently did not connect the two surveys, with some 5 km of
untested ground between them. The diagram below shows the NGU geophysics and interpreted mineralised horizons over the old
Grimeli mining area.
Diagram 1: NGU geophysics data at Grimeli Project
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Geology
The mineralisation at Grimeli is hosted within the Solund-Stavfjord ophiolite complex and varies between massive sulphide and
disseminated mineralisation along a number of closely associated stratiform horizons, with chalcopyrite, sphalerite and pyrite being
the principal sulphides. At the time of acquiring the licences the Company believed there was potential for the recovery of both
copper and zinc from the area although there was no evidence of zinc mineralisation in the mine spoil dumps.
Exploration Programme and Results
A ground based geophysics programme (magnetics) was completed over the most accessible parts of the Grimeli Project in
September/October 2014. The results supported and expanded upon results from a survey completed by the Norwegian Geological
Survey in about 1980. In total the survey yielded 3,200 metres of anomalous results spread over multiple horizons.
Underground channel sampling was carried out in the old underground mines as announced in November 2014. Very encouraging
results were obtained including:
Interval (m)
% Copper
1.74
0.96
0.50
0.86
0.50
7.24
4.93
4.89
4.70
4.19
Table 1: Channel sample results at Grimeli.
Given the positive results from the geophysics and channel sampling, a 2,000 metre diamond drilling programme was started
in February 2015. The results of this programme were announced in March 2015 and August 2015. Zinc mineralisation was
encountered for the first time and the highest grades returned were 8.39% Copper and 6.98% Zinc (included within the intersections
below).
The results included the following intersections:
Interval (m)
% Copper
% Zinc
0.97
0.50
0.51
0.48
1.00
6.39
4.29
4.92
2.77
0.26
0.82
6.98
0.82
1.10
2.44
Table 2: Channel sample results at Grimeli.
A total of 21 holes were drilled from two groups of locations. The first group is adjacent to the access road to the site. The second
group is on a plateau approximately 200 vertical metres above the first location. The drilling positions were limited by rugged
topography.
The results listed in Table 2 above represent a previously un-mined, vein-like massive sulphide occurrence which has been defined
over 150 metres strike and remains open in all directions. This occurrence is positioned adjacent to the old mining areas and has no
surface expression. This confirms the potential for blind ore bodies nearby the former mines.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2015
As part of the drilling programme the Company re-established a vehicle track up the mountain and now has limited four wheel
drive access to the plateau rising from about 200 metres above sea level.
Future Plans
The recently completed drill programme on the Grimeli Project was designed to test a number of horizons defined by historic
geophysics and in the process provide the Company with information to guide future exploration efforts. Overall the programme
was successful with the earlier holes locating a new high grade copper and zinc occurrence and the later drilling higher up the
mountain returning wide intersections of iron sulphides which had negligible copper or zinc. However, the current geophysics does
not appear to distinguish between the high grade copper zinc zones and the non-economic disseminated iron sulphides. The Company
is currently assessing alternative techniques that may assist in targeting future drilling locations.
Kodal Project
Description of the Kodal Project
The Kodal Project is located in the Vestfold county of Norway and the boundary between the Andebu and Larvik municipalities
crosses the project area. It is a phosphorus (P) and iron (Fe) project and is situated in the Lågen valley, 20 km north of Larvik.
The Kodal Project forms part of the Vestfold-Ringerike Graben geological structure and is located approximately 85 km south-west
of Oslo.
The Kodal Project area is covered by three contiguous extraction licences issued by the Norwegian Directorate of Mining which
expire in July 2023. The location of the Kodal Project extraction licences is shown below.
Diagram 2: Location map of the Kodal Project concessions
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The Kodal Project’s mineralised zone has been subject to two phases of historic exploration and geological modelling since the
1960s. All historic exploration was undertaken by Norsk Hydro ASA (“Norsk Hydro”), a part state owned Norwegian energy and
resources group.
The first phase was completed between 1960 and 1963 with 40 shallow (less than 50 metres) diamond drill holes over 20 profiles
with subsequent follow-up drilling between 1974 and 1975 when an additional 20 diamond drill holes were drilled. These additional
holes are deeper, with depths ranging from 110 to 550 metres.
More recently, Kodal Minerals drilled seven diamond drill holes in 2012, comprising 918 metres of drilling designed to verify historical
drill data. A summary of drilling undertaken on the Kodal Project is set out in Table 3 below.
Years Metres Hole IDs Diameter
A 1961 2062.90 m BH01 – BH39, LH01 – LH02B EX 18.6 mm
B 1974 4198.20 m BH41 – BH58 BQ 36.5 mm
C 2012 918.40 m BH60 – BH68 BQTK 40.5 mm
Total 7179.5 m
Table 3: Drill results at the Kodal Project
Subsequent to drilling, Kodal Minerals undertook re-logging of all available historic core in 2013 and captured geological, mineralogical,
alteration and geotechnical characteristics including core preservation, sampling and core recovery.
Historic data has been validated in three ways:
● CSA Global (UK) Ltd (“CSA”) has validated hard-copy grade data versus the digital data supplied by Kodal Minerals.
● Kodal Minerals has undertaken a twin drilling programme, the results of which have been assessed by CSA.
● Kodal Minerals has undertaken re-sampling and analysis of a portion of the available historic core using current methods. This data
has been assessed by CSA.
Historical mineral processing and metallurgical test work has been completed on samples obtained from the Kodal Project and
reported as part of historical feasibility study work completed by Norsk Hydro in the 1970s. In addition, preliminary test work was
completed by Kodal Minerals in 2013 on a bulk composite sample (23kg) of drill core.
The Kodal Project has a JORC compliant total Indicated Resource of 14.6 million tonnes (Mt) at 2.26% P (5.18% P2O5) and 24.12%
Fe with an Inferred Resource of 34.3 Mt at 2% P (4.59% P2O5) and 20.38% Fe. Table 4 below sets out a summary of the Kodal
Project resource by status.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2015
Gross
Net attributable
–––––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––––
Tonnes
(millions)
Tonnes
(millions)
Grade
–––––––––––––––
Fe
P2O5
(%)
(%)
Contained
Metal
–––––––––––––––
Fe
P2O5
(Mt)
(Mt)
Grade
–––––––––––––––
Fe
P2O5
(%)
(%)
Contained
Metal
–––––––––––––––
Fe
P2O5
(Mt)
(Mt)
–
–
–
–
–
–
–––––––––––––––––––––––––––––––––––––––––––––
–
–––––––––––––––––––––––––––––––––––––––––––––
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–––––––––––––––––––––––––––––––––––––––––––––
–
–––––––––––––––––––––––––––––––––––––––––––––
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Category
Ore/Mineral
reserves per
asset
Proved
Probable
Sub-total
Mineral
resources
per asset
Measured
Indicated
14.6
5.18
24.1
0.76
3.52
14.6
5.18
24.1
0.76
3.52
Inferred
Sub-total
Total
6.99
20.0
34.3
–––––––––––––––––––––––––––––––––––––––––––––
1.58
4.59
6.99
20.0
34.3
–––––––––––––––––––––––––––––––––––––––––––––
1.58
4.59
10.51
21.49
48.9
–––––––––––––––––––––––––––––––––––––––––––––
4.77
2.34
10.51
21.49
48.9
–––––––––––––––––––––––––––––––––––––––––––––
2.34
4.77
10.51
21.49
48.9
–––––––––––––––––––––––––––––––––––––––––––––
4.77
2.34
10.51
21.49
48.9
–––––––––––––––––––––––––––––––––––––––––––––
4.77
2.34
Operator
Kodal
Minerals
Kodal
Minerals
Kodal
Minerals
Kodal
Minerals
Table 4: Summary resources at the Kodal Project by status
Exploration Permits
The Group holds seven exploration permits covering a total land area of 19.795 sq km which surround the three Kodal Project
extraction licences.
These licences include a reported positive magnetic and gravity anomaly identified by ground geophysics. The Company has three
reports detailing geophysics in the project area dated 1973, 1976 and 1983 by various authors including the Norwegian Geological
Survey (“NGU”).
Kodal Minerals has completed geological mapping of the entire exploration licence during the year and followed up with a limited
number of ground magnetic lines to check the response.
Exploration Results
The surface mapping identified two areas of anomalous mineralisation which were previously unknown. Grade data to date has
been obtained by using a handheld X-Ray Fluorescence unit (“XRF”) to test samples of surface outcrop taken from the anomalous
areas. Outcrop is limited and so these grades cannot be regarded as anything more than indicative.
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The XRF grade of the Western anomaly sample is 7.8% P2O5 which is substantially higher than the JORC compliant Indicated
Resource grade of 5.18 %P2O5.
A preliminary ground magnetic survey over the Southern anomaly revealed a 300 metre long magnetic high which is open to the
east. No detailed dimensions are available at this stage. A laboratory assay grade from the outcrop was 3.1% P2O5 .
Environmental Baseline Studies
Environmental baseline studies were completed during the year. These studies covered all areas thought to be required by the
Norwegian planning process and legislation. The areas of study were aquatic ecology, social baseline, community perception, fauna,
recreation, forestry/agriculture land use, flora and vegetation and insects. The results have broadly been within expectations.
Change of Land Use Application
In 2013, based on the advice of local planning consultants, the Group submitted applications to the Larvik and Andebu municipalities
(the two local municipalities in which the Kodal Project is located) for change of land use permission to allow mining operations to
be undertaken. This planning route is typically available for small projects. Given the scale of the Kodal Project, the municipalities
advised the Company that a more extensive process was required. This step in itself did not constitute a delay. Subsequently, the
Company has been engaging with both municipalities to agree the format of the ESIA prior to it being submitted to a public review.
If accepted then post review the Company has a defined list of requirements which, if satisfied, may lead to the granting of operational
permits. There is no prescribed duration for this process and so the timing of the approval is uncertain.
During the year the Company held two public meetings as part of the planning process, one in Larvik and one in Andebu. Both were
very well attended.
Future Capital Requirements
The Group will not commit substantial further funds to the development of the Kodal Project given the current market conditions.
The extraction licences at Kodal do not expire until July 2023 and the Company may be able to renew them for a further 10 years.
The Company will continue to monitor both iron ore and phosphate prices and will recommence development of the Kodal Project
once conditions support that decision. In the meantime the Kodal Project remains one of the most significant and technically advanced
phosphate resources in Europe.
Given the fall in iron ore prices the Kodal Project is not currently economically viable. Should iron ore prices recover to approximately
US$130 per tonne or above the Board will evaluate the project and may restart development. Until that time there is no capital
requirement at the Kodal Project.
Future Plans
The Company intends to retain the Kodal extraction licenses as they represent a very good option on world phosphate prices. They
have low holding costs and are well located.
Financing
Following the end of the financial year the Company raised £400,000 (before expenses) from the issue of 222,222,222 ordinary
shares of £0.0003125 in the Company at a price of 0.18 pence per share. The shares were placed with new investors and existing
shareholders of the Company. The net proceeds from the placing will be used to continue exploration work at the Grimeli Project
and for general corporate purposes.
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STRATEGIC REPORT (continued)
for the year ended 31 March 2015
Going concern and funding
The Group has not earned revenue during the year to 31 March 2015 as it is still in the exploration and development phases of its
business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new
shares.
As at 31 March 2015, the Group held cash balances of £307,000. In May 2015, the Group raised a further £400,000 by way of a
placing of new shares.The Group’s cash balances at 31 August 2015 were £293,000.
The Directors have prepared cash flow forecasts for the period ending 30 September 2016. The forecasts include the unavoidable
running costs of the Group and limited discretionary exploration and development expenditure. The forecasts demonstrate that the
Group has sufficient cash resources available to allow it to continue as a going concern and meets its liabilities as they fall due for a
period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising.
However, further fund raising will be required at an appropriate time in order to complete the Grimeli Project and the Kodal Project.
Accordingly, the financial statements have been prepared on a going concern basis.
Utilising key performance indicators (“KPIs”)
At this early stage of its exploration and development activities, Kodal Minerals does not consider KPIs to be a relevant performance
metric.
Outlook
In the light of the broad commodity sell off, it appears there may be a prolonged period of challenging conditions ahead for the
Group. The Board has reacted to this by diversifying its project risk and will continue cautiously to progress its projects whilst
continuing to appraise further low cost opportunities to create value. In light of the initial success at Grimeli Project, for example,
the Group may apply for additional exploration licences in Norway or elsewhere.
The results from the work completed at the Grimeli Project are very encouraging. Multiple high grade results from 4% to over 8%
seem to confirm the historic mines were very high grade by current standards. More importantly the discovery of a massive sulphide
body with up to over 8% copper and almost 7% zinc show the project has exploration potential. The Company will reassess the
geophysical data in the light of the drill results and consider how best to move forward.
Luke Bryan
CEO
3 September 2015
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REPORT OF THE DIRECTORS
for the year ended 31 March 2015
The Directors present their report, together with the audited consolidated financial statements for Kodal Minerals Plc for the year
ended 31 March 2015.
The Company is registered in England and Wales, having been incorporated on 13 April 2010 under the Companies Act 2006 with
registration number 07220790 as a private company limited by shares. On 30 December 2013 its shares were admitted to trading
on the AIM Market of the London Stock Exchange.
Principal activity
The Company was incorporated for the purposes of acquiring or discovering and developing mineral assets.
Domicile and principal place of business
Kodal Minerals Plc is domiciled in the United Kingdom. Its principal place of business as at 31 March 2015 was Norway.
Directors
The following Directors held office during the year:
David Jones
Luke Bryan
Markus Ekberg
Robert Wooldridge
Guy Eastaugh
Emin Eyi
Resigned 21 January 2015
Resigned 21 January 2015
Biographical details of the Directors
David Harold Jones CBE, (Chairman, Non-executive Director)
David was the group chief executive of National Grid plc, which was the owner and operator of the electricity power transmission
system of England and Wales from 1994 to 2010. David was involved in matters of national energy policy and he also advanced
National Grid plc’s acquisitions in North America and internationally. David was chairman of UK Coal plc from 2003 to 2010 and
held board positions at Teesside Power Ltd, United Utilities Group plc and Bull Information Systems Ltd. Mr Jones was formerly
Chief Executive of South Wales Electricity, having previously held senior engineering, commercial and management posts on the
South Western and Midlands Electricity Boards.
Luke Robert Bryan, (Chief Executive Officer)
Luke is a mining engineer with over 20 years of international experience. Most recently he was chief executive officer of North
River Resources plc, an AIM quoted mineral exploration company and prior to that he worked as an independent consultant. Luke
has worked in Africa, Australia, the Former Soviet Union and Europe. He holds degrees in Mining Engineering and Economics from
Auckland University. Luke is based in London and is a Fellow of the Geological Society.
Markus Ekberg, (Non-executive Director)
Mr Ekberg is a director and 50% shareholder of Tetra Minerals Oy (“Tetra”) which holds 250,000,000 shares in Kodal Minerals,
representing approximately 23.8% of the issued share capital, and was appointed as a representative of Tetra. Markus has nearly
30 years’ experience in the management and construction of mines and mining projects, particularly with projects involving base
metals, gold and chromium. His experience covers participation in various projects in Finland, Norway, Ireland and Australia. Since
2009 he has been the CEO of Endomines AB, a company listed on NASDAQ OMX in Helsinki and Stockholm, which owns a
producing gold mine in Finland.
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REPORT OF THE DIRECTORS (continued)
for the year ended 31 March 2015
Robert Ian Wooldridge, (Non-executive Director)
Robert is currently a partner at SP Angel Corporate Finance LLP. After graduating with a degree in Natural Sciences from Cambridge
University, he spent eight years at PricewaterhouseCoopers International Limited, qualifying as a chartered accountant in 1989. He
left in 1994 to join the international equity capital markets division of HSBC Investment Bank where he spent a further eight years
and was responsible for completing a number of landmark equity transactions across Europe, India and the Middle East & Africa. In
2003 he joined an investment banking boutique, to head up its corporate finance and securities operation and was then one of the
founding partners of SP Angel in 2006. SP Angel is an independent corporate finance and broking operation which focuses on
advising small and mid-cap companies in the mining, oil and gas, property and technology sectors.
Directors’ interests
The beneficial interests in the Company’s shares and share options of the current Directors and their families, as at 31 March 2015
are as follows:
Directors Shares Shares
31 March 2015 31 March 2014 Notes
David Jones 7,808,000 7,808,000
Luke Bryan 48,500,000 48,500,000 1 & 2
Markus Ekberg 250,000,000 250,000,000 3
Robert Wooldridge 50,417,949 50,081,477 4
Note 1:
Held by Novoco Mine Engineering Limited (“Novoco”), a company wholly owned by Luke Bryan.
Note 2:
Under an option agreement between the Group and Novoco, the Company has granted to Novoco options over
25,000,000 Shares (“Option Shares”) at an exercise price of 0.7 pence per share. The options become exercisable in
respect of one third of the total number of Option Shares on each of the first, second and third anniversaries of
30 December 2013. The options are exercisable for a period of ten years from the date on which they vest and become
exercisable.
Note 3:
These shares are held by Tetra Minerals Oy, a company in which Markus Ekberg is a director and 50% shareholder.
Note 4:
Robert Wooldridge is a partner of SP Angel Corporate Finance LLP which owns 34,950,857 shares.
Directors’ and Officers’ liability insurance
The Group has Directors’ and Officers’ liability insurance to cover claims up to a maximum of £1.0 million.
Statement as to disclosure of information to auditors
The Directors have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware.
Each of the Directors has confirmed that he has taken all the steps that he ought to have taken as a Director, in order to make
himself aware of any relevant audit information and to establish that it has been communicated to the auditor.
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Directors’ responsibilities statement
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 Group and Company financial statements for each financial year. The Directors are
required by the AIM Rules of the London Stock Exchange to prepare Group financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have elected under company law to prepare
the Company financial statements in accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS as adopted by the EU to present fairly the financial position of the Group and
the Company and the financial performance of the Group. The Companies Act 2006 provides in relation to such financial statements
that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a
fair presentation.
Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing the Group and Company financial statements, the Directors are required to:
● select suitable accounting policies and then apply them consistently;
● make judgments and accounting estimates that are reasonable and prudent;
● state whether they have been prepared in accordance with IFRS as adopted by the EU; and
● prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose, with reasonable accuracy at any time, the financial position of the Group and the Company
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 are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Auditors and Annual General Meeting
Baker Tilly UK Audit LLP offer themselves for reappointment as auditors in accordance with section 489(4) of the Companies Act
2006. A resolution to reappoint Baker Tilly UK Audit LLP will be proposed at the Annual General Meeting.
Approved by the board of directors and signed on behalf of the board on 3 September 2015.
Robert Wooldridge
Director
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CORPORATE GOVERNANCE REPORT
for the year ended 31 March 2015
Introduction
While not mandatory for an AIM company, the Directors take due regard, where practical for a company of this size and nature, of
certain provisions of the principles of good governance and code of best practices under the UK Corporate Governance Code. The
disclosures presented herein are limited and are not intended to constitute a corporate governance statement.
Directors
The Company supports the concept of an effective board leading and controlling the Group. The Board is responsible for approving
Group policy and strategy. It meets on a regular basis and has a schedule of matters specifically reserved for decision. Procedures
are in place for operational management to supply the Board with appropriate and timely information and the Directors are free to
seek any further information they consider necessary.
The Directors that served during the year are detailed on page 13. The Non-Executive Chairman of the Board is David Jones.
Relations with shareholders
The Company values the views of its shareholders and recognises their interest in the Group’s strategy and performance. The Annual
General Meeting will be used to communicate with private investors and they are encouraged to participate. The Directors will be
available to answer questions. Separate resolutions will be proposed on each issue so that they can be given proper consideration
and there will be a resolution to approve the annual report and accounts.
Internal control
The Board is responsible for maintaining a strong system of internal control to safeguard shareholders’ investments and the Group’s
assets and for reviewing its effectiveness. The system of internal financial control is designed to provide reasonable, but not absolute,
assurance against material misstatement or loss.
The Audit and Risk Committee comprises David Jones, Markus Ekberg and Robert Wooldridge and is chaired by David Jones. It
meets at least twice a year to consider the integrity of the financial statements of the Group, including its annual and interim accounts,
the effectiveness of the Group’s internal controls and risk management systems, auditor reports, and terms of appointment and
remuneration for the auditors.
The Remuneration Committee performs both remuneration and nomination functions and comprises David Jones, Markus Ekberg
and Robert Wooldridge and is chaired by David Jones. It meets as and when required. The purpose of the remuneration function is
to ensure that the executive directors are fairly rewarded for their individual contributions to the overall performance of the Group,
to determine all elements of the remuneration of the executive directors and to demonstrate to the Group’s shareholders that the
remuneration of the executive directors is set by a Board committee whose members have no personal interest in the outcome of
the committee’s decision and who will have appropriate regard to the interests of the shareholders.
The purpose of the nomination function is to identify and nominate new directors to the Board as considered necessary.
The Board has considered the need for an internal audit function but has decided the size and complexity of the Group does not
justify it at present. However, it will keep this decision under annual review.
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REPORT ON REMUNERATION
for the year ended 31 March 2015
Directors’ remuneration
The Board recognises that Directors’ remuneration is of legitimate concern to shareholders and is committed to following current
best practice. The Group operates within a competitive environment and its performance depends on the individual contributions
of the Directors.
Policy on Directors’ remuneration
The policy of the Board is to provide executive remuneration packages designed to attract, motivate and retain Directors of the
calibre necessary to maintain the Group’s position and to reward them for enhancing shareholder value and return. It aims to provide
sufficient levels of remuneration to do this, but to avoid paying more than is necessary. The remuneration will also reflect the Directors’
responsibilities and contain incentives to deliver the Group’s objectives.
The amounts shown as “Share option expense” relate to a theoretical calculation of the non-cash cost to the Group of the share
options granted to the directors, further details of which are provided in Note 5. These do not represent cash payments to the
Directors either made in the past or due in the future.
The remuneration of the Directors who served during the year ended 31 March 2015 was as follows:
Fees and Share based
salary year to payments year to Total year to Total year to
31 March 2015 31 March 2015 31 March 2015 31 March 2014
£ £ £ £
Luke Bryan * 50,000 55,347 105,347 28,472
Guy Eastaugh 16,154 – 16,154 5,000
Markus Ekberg 20,000 – 20,000 767
Emin Eyi ** 15,000 – 15,000 5,000
David Jones 30,000 – 30,000 7,500
Robert Wooldridge 20,000 – 20,000 5,000
151,154 55,347 206,501 51,739
* Novoco Mine Engineering Limited, a company wholly owned by Luke Bryan, provided consultancy services to the Group during
the year and received fees of £168,500 (2014: £100,000).
** The fee paid to Emin Eyi was settled by the allotment of 4,018,127 shares at various prices ranging from 0.743 pence per share
to 0.262 pence per share during the year to 31 March 2015.
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REPORT ON REMUNERATION (continued)
for the year ended 31 March 2015
Directors’ service contracts
Luke Bryan. The Service Agreement between the Company and Luke Bryan appointed him as an executive director of the Company
to hold office as Chief Executive on a salary of £50,000 per annum. His appointment is subject to six months’ notice of termination
by either party. In addition, the Company is obliged to make payments to Luke Bryan on termination of his Service Contract (which
are inclusive of compensation for termination of his employment): if Luke Bryan ceases to be employed as a result of wrongful
dismissal, illness or retirement, he is to be paid the sum of £150,000; if he ceases to be employed for other reasons, other than his
resignation, voluntary termination or dismissal for cause, he will be paid the sum of £75,000; and Luke Bryan will have no entitlement
to compensation if he leaves employment by resigning or giving notice voluntary or if he is dismissed for good cause and does not
have a valid claim for wrongful dismissal. Luke Bryan may also provide consultancy services to the Company.
Markus Ekberg. The letter of appointment for Markus Ekberg is for the position of non-executive Director with effect from 19 March
2014 with an annual fee of £20,000. He was originally appointed under the terms of the agreement between the Company, Allenby
Capital Limited and Tetra Minerals OY (“Tetra Minerals), which gave Tetra Minerals the right to appoint a representative to the Board
whilst Tetra Minerals together with any associate retained an interest of 30% or more of the voting rights in the Company.
David Jones. The letter of appointment for David Jones is for the position of non-executive Chairman of the Company. The terms of
this letter provide for a monthly fee of £2,500. The appointment is subject to 3 months’ notice of termination by either party. No
compensation will be payable for loss of office and the appointment may be terminated immediately if, among other things, Mr. Jones
is in material breach of the terms of the appointment.
Robert Wooldridge. The letter of appointment with Robert Wooldridge is for the position of non-executive Director of the Company.
The terms of this letter provide for an annual fee of £20,000 and is subject to 3 months’ notice of termination by either party. No
compensation will be payable for loss of office and the appointment may be terminated immediately if, among other things, Robert
Wooldridge is in material breach of the terms of the appointment.
Pensions
The Company does not operate a pension scheme for Directors or employees.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KODAL MINERALS PLC
We have audited the group and parent company financial statements (“the financial statements”) on pages 21 to 51. 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 more fully explained in the Directors’ Responsibilities Statement set out on page 15, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
http://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 the parent’s affairs as at 31 March 2015 and of
the group’s loss 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 financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and
as applied in accordance with the Companies Act 2006; and
● the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made
in the Principal Accounting Policies on page 26 to the financial statements concerning the company’s and the group’s ability to
continue as a going concern. The group incurred a net loss of £3,959,576 during the year ended 31 March 2015 and is dependent
on further fund raising to complete its Exploration and Evaluation Projects. These conditions, along with the other matters explained
in the Principal Accounting Policies to the financial statements, indicate the existence of a material uncertainty which may cast
significant doubt about the company’s and the group’s ability to continue as a going concern. The financial statements do not include
the adjustments that would result if the company and the group were unable to continue as a going concern.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KODAL MINERALS PLC (continued)
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in
our opinion:
● adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
● the parent company financial statements are not in agreement with the accounting records and returns; or
● certain disclosures of directors’ remuneration specified by law are not made; or
● we have not received all the information and explanations we require for our audit.
Graham Ricketts (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
3 September 2015
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2015
Note Year ended Year ended
31 March 31 March
2015 2014
£ £
Continuing operations
Revenue – –
Impairment of exploration and evaluation assets (3,411,664) –
Administrative expenses (459,435) (195,151)
Share based payments 5 (88,555) (33,056)
OPERATING LOSS (3,959,654) (228,207)
Finance costs – (4,500)
Finance income 78 2
LOSS BEFORE TAX 2 (3,959,576) (232,705)
Taxation 6 – –
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (3,959,576) (232,705)
Discontinued operations
Profit after tax for the year from discontinued operations 15 – 1,238
LOSS FOR THE YEAR (3,959,576) (231,467)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss
Currency translation gain/(loss) 3,287 (245)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (3,956,289) (231,712)
Loss per share
Basic and diluted – earnings per share on continuing operations
– pence per share 4 (0.5107) (0.0688)
Basic and diluted – earnings per share on total earnings
– pence per share 4 (0.5107) (0.0684)
The loss for the current and prior years and the total comprehensive income for the current and the prior years are wholly
attributable to equity holders of the parent company.
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CONSOLIDATED AND PARENT COMPANY STATEMENTS
OF FINANCIAL POSITION
as at 31 March 2015
Registered number: 07220790
Group Group Company Company
31 March 31 March 31 March 31 March
2015 2014 2015 2014
Note £ £ £ £
NON-CURRENT ASSETS
Intangible assets 7 298,741 2,944,069 – –
Property, plant and equipment 8 119,860 77,157 – –
Amounts due from
subsidiary undertakings – – – 2,554,211
Investments in subsidiary
undertakings 9 – – 476,752 900,010
418,601 3,021,226 476,752 3,454,221
CURRENT ASSETS
Other receivables 10 28,095 82,994 29,690 73,330
Cash and cash equivalents 306,843 1,501,343 301,431 1,332,834
334,938 1,584,337 331,121 1,406,164
TOTAL ASSETS 753,539 4,605,563 807,873 4,860,385
CURRENT LIABILITIES
Trade and other payables 11 (83,715) (97,930) (62,812) (85,120)
TOTAL LIABILITIES (83,715) (97,930) (62,812) (85,120)
NET ASSETS 669,824 4,507,633 745,061 4,775,265
EQUITY
Attributable to owners of the parent:
Share capital 12 243,186 240,700 243,186 240,700
Share premium account 12 4,562,017 4,527,078 4,562,017 4,527,078
Share based payment reserve 114,111 33,056 114,111 33,056
Translation reserve 3,042 (245) – –
Retained deficit (4,252,532) (292,956) (4,174,253) (25,569)
TOTAL EQUITY 669,824 4,507,633 745,061 4,775,265
The financial statements were approved and authorised for issue by the board of directors on 3 September 2015 and signed on its
behalf by
Robert Wooldridge
Director
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2015
Attributable to the owners of the Parent
Share Share based
Share premium Retained payment Translation Total
Note capital account deficit reserve reserve equity
£ £ £ £ £ £
GROUP
At 31 March 2013 54,804 249,825 (61,489) – – 243,140
Comprehensive income
Loss for the year – – (231,467) – – (231,467)
Other comprehensive income
Currency translation loss – – – – (245) (245)
Total comprehensive income
for the year – – (231,467) – (245) (231,712)
Transactions with owners
Proceeds from shares issued 12 81,722 2,474,212 – – – 2,555,934
Share issue expenses 12 – (416,933) – – – (416,933)
Shares issued to purchase
Kodal Phosphate AS 12 78,125 1,671,875 – – – 1,750,000
Shares in settlement of
services 12 26,049 548,099 – – – 574,148
Share based payment – – – 33,056 – 33,056
At 31 March 2014 240,700 4,527,078 (292,956) 33,056 (245) 4,507,633
Comprehensive income
Loss for the year – – (3,959,576) – – (3,959,576)
Other comprehensive income
Currency translation gain – – – – 3,287 3,287
Total comprehensive income
for the year – – (3,959,576) – 3,287 (3,956,289)
Transactions with owners
Shares in settlement of services 12 2,170 27,755 – – – 29,925
Transfer from share based
payments reserve 316 7,184 – (7,500) – –
Share based payment – – – 88,555 – 88,555
At 31 March 2015 243,186 4,562,017 (4,252,532) 114,111 3,042 669,824
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PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2015
Share Share based
Share premium Retained payment Total
Note capital account deficit reserve equity
£ £ £ £ £
COMPANY
At 31 March 2013 54,804 249,825 (61,489) – 243,140
Comprehensive income
Profit for the year – – 35,920 – 35,920
Other comprehensive income – – – – –
Total comprehensive income
for the year – – 35,920 – 35,920
Transactions with owners
Proceeds from shares issued 12 81,722 2,474,212 – – 2,555,934
Share issue expenses 12 – (416,933) – – (416,933)
Shares issued to purchase
Kodal Phosphate AS 12 78,125 1,671,875 – – 1,750,000
Shares in settlement of services 12 26,049 548,099 – – 574,148
Share based payment – – – 33,056 33,056
At 31 March 2014 240,700 4,527,078 (25,569) 33,056 4,775,265
Comprehensive income
Loss for the year – – (4,148,684) – (4,148,684)
Total comprehensive income
for the year – – (4,148,684) – (4,148,684)
Transactions with owners
Shares in settlement of services 12 2,170 27,755 – – 29,925
Transfer from share based
payments reserve 316 7,184 – (7,500) –
Share based payment – – – 88,555 88,555
At 31 March 2015 243,186 4,562,017 (4,174,253) 114,111 745,061
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CONSOLIDATED AND PARENT COMPANY STATEMENTS
OF CASH FLOWS
for the year ended 31 March 2015
Group Group Company Company
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2015 2014 2015 2014
Note £ £ £ £
Cash flows from operating activities
(Loss)/profit before tax 2 (3,959,576) (232,705) (4,148,684) 35,920
Adjustments for non-cash items:
Impairment of exploration
and evaluation assets 3,411,664 – 3,656,899 –
Share based payments 88,555 33,056 88,555 33,056
Equity settled transactions 37,425 – 37,425 –
Operating cash flow before
movements in working capital (421,932) (199,649) (365,805) 68,976
Movement in working capital
Decrease/(increase) in receivables 54,899 (77,518) 43,640 (67,854)
(Decrease)/increase in payables (14,215) (39,025) (22,308) (51,835)
Net movements in working capital 40,684 (116,543) 21,332 (119,689)
Net cash outflow from operating
activities (381,248) (316,192) (344,473) (50,713)
Cash flows from investing activities
Sale of intangible assets – – – 900,000
Purchase of property, plant and
equipment (75,051) (80,614) – –
Purchase of intangible assets (748,089) (441,950) – (153,848)
Disposal cost for discontinued
operation – (3,762) – –
Investment in subsidiary undertakings – – – (900,000)
Loans to subsidiary undertakings – – (686,930) (804,211)
Net cash outflow from investing activities (823,140) (526,326) (686,930) (958,059)
Cash flow from financing activities
Loan received – 900,000 – 900,000
Loan repaid – (900,000) – (900,000)
Interest received 78 2 – –
Interest paid – (4,500) – (4,500)
Net proceeds from share issues 12 – 2,326,501 – 2,326,501
Net cash inflow from financing activities 78 2,322,003 – 2,322,001
(Decrease)/increase in cash and
cash equivalents (1,204,310) 1,479,485 (1,031,403) 1,313,229
Cash and cash equivalents at
beginning of the year 1,501,343 19,605 1,332,834 19,605
Exchange gain on cash 9,810 2,253 – –
Cash and cash equivalents at end
of the year 306,843 1,501,343 301,431 1,332,834
Cash and cash equivalents comprise cash on hand and bank balances.
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PRINCIPAL ACCOUNTING POLICIES
for the year ended 31 March 2015
The Group has adopted the accounting policies set out below in preparation of the financial statements. All of these policies have
been applied consistently throughout the period unless otherwise stated.
Basis of preparation
The consolidated financial statements of Kodal Minerals Plc are prepared in accordance with the historical cost convention and in
accordance with International Financial Reporting Standards (“IFRSs”), as adopted by the European Union (“EU”) and in accordance
with the provisions of the Companies Act 2006. The Company’s ordinary shares are quoted on AIM, a market operated by the
London Stock Exchange.
Going concern
The Group has not earned revenue during the year to 31 March 2015 as it is still in the exploration and development phases of its
business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new
shares.
As at 31 March 2015, the Group held cash balances of £306,843. In May 2015, the Group raised a further £400,000 by way of a
placing of new shares.
The Directors have prepared cash flow forecasts for the period ending 30 September 2016. The forecasts include the unavoidable
running costs of the Group and limited discretionary exploration and development expenditure. The forecasts demonstrate that the
Group has sufficient cash resources available to allow it to continue as a going concern and meet all its liabilities as they fall due for
a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising.
However, further fund raising will be required at an appropriate time in order to complete the Grimeli Project and the Kodal Project.
Accordingly, the financial statements have been prepared on a going concern basis.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the statement
of financial position date. Subsidiary undertakings are entities over which the Group has the power to control the financial and
operating policies so as to obtain benefits from their activities. The Group obtains and exercises control through voting rights.
Unrealised gains on transactions between the Company and its subsidiaries are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the
Group.
Discontinued operations
The Group reports the results of discontinued operations in the period in which they occur separately within the consolidated
statement of income as “discontinued operations”. All prior period consolidated statements of income are adjusted to report the
results of the component within discontinued operations. In the consolidated statement of cash flows the cash flows resulting from
discontinued operations are presented separately from cash flows resulting from continuing operations with prior year presentation
adjusted accordingly.
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Foreign currency translation
Items included in the Group’s consolidated financial statements are measured using the currency of the primary economic
environment in which the Group operates (“the functional currency”). The financial statements are presented in pounds sterling
(“£”), which is the functional and presentational currency of the Parent Company and the presentational currency of the Group. End
of year balances in the Group’s Norwegian subsidiary undertakings were converted using an end of year rate of NOK 1 : £0.083780
(2014: NOK 1 : £0.099980).
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the reporting date and the gains or
losses on translation are included in profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the original transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Deferred taxation
Deferred 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. Deferred tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax is
realised or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the
temporary differences can be utilised.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand.
Other receivables
Other receivables are carried at amortised cost less provision made for impairment of these receivables. A provision for impairment
of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables. The amount of the provision is the difference between the assets’ carrying amount and the
recoverable amount. Provisions for impairment of receivables are included in profit or loss.
Trade and other payables
Trade payables and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these
goods and services. These amounts are carried at amortised cost. The amounts are unsecured and are usually paid within 30 days of
recognition.
Provisions
A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable
that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the
amount of the obligation.
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PRINCIPAL ACCOUNTING POLICIES (continued)
for the year ended 31 March 2015
When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting
period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value
amount arising from the passage of time is included in profit or loss.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation
is charged so as to write off the costs of assets, over their estimated useful lives, using the straight line method, on the following basis:
Plant and machinery
Motor vehicles
Fixtures, fittings and equipment
4 years
4 years
4 years
Where property, plant and equipment are used in exploration and evaluation activities, the depreciation of the assets is capitalised
as part of the cost of exploration and evaluation assets. The assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment. Where the recoverable amount of the investment is
less than the carrying amount, an impairment is recognised.
Exploration and evaluation expenditure
In accordance with IFRS 6 (Exploration for and Evaluation of Mineral Resources), exploration and evaluation costs incurred before
the Group obtains legal rights to explore in a specific area (a “project area”) are taken to profit or loss.
Upon obtaining legal rights to explore in a project area, the fair value of the consideration paid for acquiring those rights and
subsequent exploration and evaluation costs are capitalised as exploration and evaluation assets. The costs of exploring for and
evaluating mineral resources are accumulated with reference to appropriate cost centres being project areas or groups of project
areas.
Upon the technical feasibility and commercial viability of extracting the relevant mineral resources becoming demonstrable, the
Group ceases further capitalisation of costs under IFRS 6.
Exploration and evaluation assets are not amortised prior to the conclusion of appraisal activities, but are carried at cost less
impairment, where the impairment tests are detailed below.
Exploration and evaluation assets are carried forward until the existence (or otherwise) of commercial reserves is determined:
● where commercial reserves have been discovered, the carrying value of the exploration and evaluation assets are reclassified as
development and production assets and amortised on an expected unit production basis; or
● where a project area is abandoned or a decision is made to perform no further work, the exploration and evaluation assets are
written off in full to profit or loss.
Kodal Minerals Report & Accounts 2015 28
237728 Kodal pp21-pp33 04/09/2015 14:42 Page 29
Exploration and evaluation assets – impairment
Project areas, or groups of project areas, are determined to be cash generating units for the purposes of assessment of impairment.
With reference to a project area or group of project areas, the exploration and evaluation assets (along with associated production
and development assets) are assessed for impairment when such facts and circumstances suggest that the carrying amount of the
assets may exceed the recoverable amount.
Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 and include the point at which a
determination is made as to whether or not commercial reserves exist.
The aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of
the future net cash flows expected to be derived from production of the commercial reserves.
Intangible assets and impairment
Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.
Amortisation is charged so as to write off the costs of intangible assets, over their estimated useful lives, using the straight line method,
on the following basis:
Software
3 years
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
Equity settled transactions (Share based payments)
The Group has issued shares as consideration for services received. Equity settled share based payments are measured at fair value
at the date of issue.
The Group has granted equity settled options. The cost of equity settled transactions is measured by reference to the fair value at
the date on which they were granted and is recognised as an expense over the vesting period, which ends on the date the employee
becomes fully entitled to the award. Fair value is determined by using the Black-Scholes option pricing model.
In valuing equity settled transactions, no account is taken of any service and performance (vesting conditions), other than performance
conditions linked to the price of the shares of the Parent Company (market conditions). Any other conditions which are required
to be met in order for the Director and an external consultant to become fully entitled to an award are considered to be non-
vesting conditions. Market performance conditions and non-vesting conditions are taken into account in determining the grant value.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or
non-vesting condition, which are vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided
that all other performance or service conditions are satisfied.
At each reporting date before vesting, the cumulative expense is calculated; representing the extent to which the vesting period has
expired and management’s best estimate of the number of equity instruments that will ultimately vest. The movement in the cumulative
expense since the previous reporting date is recognised in the profit and loss, with a corresponding entry in equity.
Kodal Minerals Report & Accounts 2015 29
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PRINCIPAL ACCOUNTING POLICIES (continued)
for the year ended 31 March 2015
Where the terms of the equity-settled award are modified or a new award is designated as replacing a cancelled or settled award,
the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification.
No reduction is recognised if the difference is negative.
Where an equity based award is cancelled (including when a non-vesting condition within the control of the entity or employee is
not met), it is treated as if it had vested on the date of the cancellation, and the cost not yet recognised in profit and loss for the
award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is
deducted from equity, with any excess over fair value being treated as an expense.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors, which has
been identified as the Chief Operating Decision Maker. The Board of Directors is responsible for allocating resources and assessing
performance of the operating segments in line with the strategic direction of the company.
Financial instruments
IFRS 7 (Financial Instrument: Disclosures) requires information to be disclosed about the impact of financial instruments on the
Group’s risk profile, how the risks arising from financial instruments might affect the entity’s performance, and how these risks are
being managed.
Financial assets and financial liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the
contractual provisions of the instrument.
The Group’s policies include that no trading in derivative financial instruments shall be undertaken.
The required disclosures have been made in Note 14 to the accounts.
Critical accounting judgements and estimates
The preparation of these consolidated financial statements in accordance with International Financial Reporting Standards requires
the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
consolidated financial statements and the reported amounts of income and expenses during the reporting period. Although these
estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those
estimates. IFRSs also require management to exercise its judgement in the process of applying the Group’s accounting policies.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and
liabilities within the next financial year are addressed below.
Kodal Minerals Report & Accounts 2015 30
237728 Kodal pp21-pp33 04/09/2015 14:42 Page 31
Exploration and evaluation expenditure
The Group has capitalised all expenditure incurred in relation to exploration and evaluation of the Kodal Project and the Grimeli
Project.
The Kodal Project is a phosphate and titanomagnetite deposit in southern Norway which the Group is treating as a project area in
each period presented in the consolidated financial statements. The Company signed binding heads of terms in January 2012 to
acquire the legal and beneficial ownership to licences which granted the right to explore and evaluate mineral resources in the Kodal
Project area. Legal completion for this option agreement occurred in October 2012 and on 30 December 2013 the Company
exercised its option to complete the licence acquisition. The Directors consider it appropriate to capitalise costs directly attributable
to exploration and evaluation activities on the Kodal Project and has been doing so from January 2012 in accordance with the
accounting policy for these costs.
An economic model was prepared for the Kodal Project in 2013 based on a mine processing 1.6 million tonnes of ore per annum
for the initial estimated 19 year life of the mine and using a discount rate of 10 per cent. Capital and operating costs were based on
estimates and mine plans provided by third party consultants with levels of royalties and taxation based on current rates. Selling
prices were based on prevailing market prices for each of the two products, iron ore and phosphate, adjusted for the specific
properties of the sample Kodal Project ore. In the case of the iron ore, due to the presence of significant titanium in the ore, it was
assumed that the realisable selling price would be at a very significant discount to the prevailing spot price, based on indications of
the current selling price for similar ores in China and the additional transport cost that would be necessary. Under these assumptions,
the economic model indicated that the project had a positive net present value (“NPV”) of approximately US$250 million.
Since the model was prepared, the price of iron ore has fallen dramatically from a level of approximately US$112 per tonne in
March 2014 to its current level of less than US$50 per tonne. As a result, the Board has undertaken an impairment review of the
carrying cost of the Kodal Project by performing a value in use calculation.
The review identified that, although there are indications that would support the use of slightly lower capital and operating costs, the
key sensitivity is to the fall in commodity prices and specifically the fall in the price of iron ore. Using iron ore and phosphate prices
based on the prevailing prices, the model indicates that the project is uneconomic under current market conditions and accordingly
the Board has determined to impair in full the carrying value of the Kodal Project. This has resulted in an impairment charge in the
year to 31 March 2015 of £3,411,664 (2014: £nil). At 31 March 2015 the carrying value of the Kodal Project was £nil compared to
£2,921,137 in 2014.
The Grimeli Project is an early stage exploration project which has generated positive initial drill results indicating the possible
presence of further mineralisation. The carrying value of the project’s exploration and evaluation assets at 31 March 2015 was
£284,898 (2014: £nil) and the Board does not consider these assets to require impairment.
Going concern
The Group has not earned revenue during the year to 31 March 2015 as it is still in the exploration and development phases of its
business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new
shares.
As at 31 March 2015, the Group held cash balances of £306,843. In May 2015, the Group raised a further £400,000 by way of a
placing of new shares.
Kodal Minerals Report & Accounts 2015 31
237728 Kodal pp21-pp33 04/09/2015 14:42 Page 32
PRINCIPAL ACCOUNTING POLICIES (continued)
for the year ended 31 March 2015
The Directors have prepared cash flow forecasts for the period ending 30 September 2016. The forecasts include the unavoidable
running costs of the Group and limited discretionary exploration and development expenditure. The forecasts demonstrate that the
Group has sufficient cash resources available to allow it to continue as a going concern and meet all its liabilities as they fall due for
a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising.
However, further fund raising will be required at an appropriate time in order to complete the Grimeli Project and the Kodal Project.
Accordingly, the financial statements have been prepared on a going concern basis.
Share based payments
The Group has recorded charges for share based payments of £88,555 (2014: £33,056).
For option based share based payments, management estimate certain factors used in the option pricing model, including volatility,
exercise date of options and number of options likely to be exercised. If these estimates vary from actual occurrence, this will impact
the charges and reserves.
Further detailed analysis of the critical judgements and estimates relating to share based payments is addressed in Note 5.
Tetra option agreement (see note 5)
An agreement between the Group and Tetra Minerals Oy (“Tetra”), granted to Tetra an option to subscribe for new shares in the
Company. The maximum number of shares that are subject to the option is 714,285,714, corresponding to the number of shares
that would be issued for a total amount of £5 million at 0.7 pence per share. The options vest and become exercisable only once
the JORC indicated resource for phosphate minerals at the Kodal Project meets certain thresholds. Once vested, the options may
be exercised by Tetra at a subscription price of 10p per share for a period of three years after the date on which each tranche vests.
If Kodal Phosphate AS relinquishes or does not renew the Kodal Project extraction licences before any of the options vest then
those options will lapse.
The Board has reviewed the Tetra option arrangements and determined that the fair value of the Tetra options is nil on the grounds
that the option distribution is dependent on thresholds associated with the JORC phosphate mineral resources, the first of which,
90m tonnes, is well beyond the size of the current targeted ore body, which has a JORC mineral resource of 48.9m tonnes. Unless
and until further exploration of the Kodal Project identifies a further potential ore body the likelihood of the thresholds being met
is considered to be remote.
New standards and interpretations not applied
At the date of authorisation of these consolidated financial statements, certain new standards, amendments and interpretations to
existing standards have been published but are not yet effective, and have not been adopted early by the Group.
The Board anticipates that all of the pronouncements will be adopted in the Group’s accounting policy for the first period beginning
after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact
on the Group’s consolidated financial statements.
Kodal Minerals Report & Accounts 2015 32
237728 Kodal pp21-pp33 04/09/2015 14:42 Page 33
Annual periods
Standard Details of amendment beginning on or after
IFRS 9
Financial Instruments
Finalised version, incorporating requirements for classification and
measurement, impairment, general hedge accounting and de-recognition in
July 2014.
1 January 2018
IFRS 10
Consolidated Financial
Statements
Amendments regarding the application of the consolidation exception in
December 2014
1 January 2016
IFRS 11
Joint Arrangements
Amendments regarding the accounting for acquisitions of an interest in a
joint operation in May 2014
1 January 2016
IFRS 12
Disclosure of Interests in
Other Entities
IAS 1
Presentation of Financial
Statements
IAS 34
Interim Financial
Reporting
IAS 38
Intangible Assets
Amendments regarding the application of the consolidation exception in
December 2014
1 January 2016
Amendments resulting from the disclosure initiative in December 2014
1 January 2016
Amendments resulting from September 2014 Annual Improvements to
IFRSs in September 2014
1 January 2016
Amendments regarding the clarification of acceptable methods of
depreciation and amortisation in May 2014
1 January 2016
There are other standards in issue but not yet effective, which are not likely to be relevant to the Group which have therefore not
been listed.
Kodal Minerals Report & Accounts 2015 33
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NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2015
1.
SEGMENTAL REPORTING
The operations and assets of the Group are focused in the United Kingdom and Norway and comprise one class of business:
the exploration and evaluation of mineral resources. Management have determined that the Group has two operating segments
being the Kodal Project and the Grimeli Project. The Parent Company acts as a holding company. At 31 March 2015, the Group
had not commenced commercial production from its exploration sites and therefore had no revenue for the year.
The Group’s accounting policy is to capitalise exploration and evaluation expenditure on the Kodal Project and the Grimeli
Project in Norway. Consequently, the administrative expenses in the statement of comprehensive income reflect the
administration costs necessary to run the Group and maintain its listing on the AIM market in the UK.
Year ended 31 March 2015
Other income
Administration expenses
Impairment charge
Share based payments
Loss for the year
At 31 March 2015
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Intangible assets – software
Intangible assets – exploration and
evaluation expenditure
Property plant and equipment
Net assets
UK
£
–
(441,201)
–
(88,555)
(529,756)
21,514
301,514
(77,653)
–
–
–
245,375
Norway
Kodal Project
£
Norway
Grimeli Project
£
78
(13,676)
(3,411,664)
–
(3,425,262)
6,581
5,329
(6,062)
13,843
–
55,136
74,827
–
(4,558)
–
–
(4,558)
–
–
–
–
284,898
64,724
349,622
Total
£
78
(459,435)
(3,411,664)
(88,555)
(3,959,576)
28,095
306,843
(83,715)
13,843
284,898
119,860
669,824
Kodal Minerals Report & Accounts 2015 34
237728 Kodal pp34-imp 04/09/2015 14:41 Page 35
Year ended 31 March 2014
Other income
Administration expenses
Share based payments
Finance costs
Profit from discontinued operations
Loss for the year
At 31 March 2014
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Intangible assets – software
Intangible assets – exploration and
evaluation expenditure
Intangible asset – licence
Property plant and equipment
UK
£
2
(195,151)
(33,056)
(4,500)
1,238
(231,467)
82,994
1,332,839
(97,930)
–
–
–
–
Net assets
1,317,903
Norway
Kodal Project
£
Norway
Grimeli Project
£
–
–
–
–
–
–
–
168,504
–
22,932
1,087,842
1,833,295
77,157
3,189,730
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£
2
(195,151)
(33,056)
(4,500)
1,238
(231,467)
82,994
1,501,343
(97,930)
22,932
1,087,842
1,833,295
77,157
4,507,633
Kodal Minerals Report & Accounts 2015 35
237728 Kodal pp34-imp 04/09/2015 14:41 Page 36
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
2.
LOSS BEFORE TAX
The loss before tax from continuing activities is stated after charging:
Group Group
Year ended Year ended
31 March 2015 31 March 2014
£ £
Impairment charge (Note 1) 3,411,664 –
Audit services (Note 2) 27,500 20,000
Legal fees 11,888 29,351
Consultants 26,664 7,140
Other professional fees 119,883 55,030
Share based payment 88,555 33,056
Directors’ fees 151,154 35,767
Website costs – 13,115
Stock exchange fees 10,170 8,550
Share register costs 3,687 5,184
Foreign exchange losses 36,588 3,416
Other corporate expenses 37,281 –
Sundry 34,542 22,096
3,959,576 232,705
Notes:
1.
Following an impairment review of its carrying value, the Board has determined to impair the value of the Kodal Project in
full resulting in an impairment charge in the year to 31 March 2015 of £3,411,664 (2014: £nil).
2. Amounts payable to Baker Tilly UK Audit LLP and its associates in respect of both audit and non-audit services are as
follows:
Group Group
Year ended Year ended
31 March 2015 31 March 2014
£ £
Audit services
– statutory audit of parent and consolidated accounts 18,000 18,000
– statutory audit of subsidiaries 2,000 2,000
– review of interim accounts 7,500 –
Taxation advisory services 800 3,600
Services relating to corporate finance transactions entered into or proposed to be
entered into by or on behalf of the company or any of its associates (Note 3) – 42,500
28,300 66,100
Note 3:
These expenses were incurred as part of the admission of the Company’s shares to trading on AIM in December
2013.
Kodal Minerals Report & Accounts 2015 36
237728 Kodal pp34-imp 04/09/2015 14:41 Page 37
3.
EMPLOYEES’ AND DIRECTORS’ REMUNERATION
Apart from the Directors who are considered to be the Group’s key management personnel, there were no employees in the
years to 31 March 2015 and 2014 respectively.
Group Group
Year ended Year ended
31 March 2015 31 March 2014
£ £
Directors’ remuneration 151,154 35,767
Directors’ social security costs 9,054 2,996
Total 160,208 38,763
Directors’ Share based
salary and fees payments Total
year ended year ended year ended
31 March 2015 31 March 2015 31 March 2015
£ £ £
Luke Bryan (Note 1) 50,000 55,347 105,347
Guy Eastaugh 16,154 – 16,154
Markus Ekberg 20,000 – 20,000
Emin Eyi (Note 2) 15,000 – 15,000
David Jones 30,000 – 30,000
Robert Wooldridge 20,000 – 20,000
Total 151,154 55,347 206,501
Directors’ Share based
salary and fees payments Total
year ended year ended year ended
31 March 2014 31 March 2014 31 March 2014
£ £ £
Luke Bryan 12,500 15,972 28,472
Guy Eastaugh 5,000 – 5,000
Markus Ekberg 767 – 767
Emin Eyi 5,000 – 5,000
David Jones 7,500 – 7,500
Robert Wooldridge 5,000 – 5,000
Total 35,767 15,972 51,739
Note 1: Novoco Mine Engineering Limited, a company owned by Luke Bryan, provided consultancy services to the Group
during the year and received fees of £168,500 (2014: £100,000) in cash. No shares were issued to Novoco in the
year to 31 March 2015. In the year ended 31 March 2014 48,500,000 in shares were issued to Novoco, of which
43,500,000 shares were conditional on the completion of the Company’s admission to AIM.
Note 2:
The fee paid to Emin Eyi was settled by the allotment of 4,018,127 Shares at various prices ranging from 0.743 pence
per share to 0.262 pence per share during the year to 31 March 2015.
Kodal Minerals Report & Accounts 2015 37
237728 Kodal pp34-imp 04/09/2015 14:41 Page 38
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
4.
LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
The following reflects the income and share data used in the computations:
Loss per
share on Loss per Weighted Basic
continuing share on average number loss per
operations total earnings of shares share (pence)
£ £
Year ended 31 March 2015 (3,959,576) – 775,195,325 0.5107
Year ended 31 March 2015 – (3,959,576) 775,195,325 0.5107
Year ended 31 March 2014 (232,705) – 338,258,503 0.0688
Year ended 31 March 2014 – (231,467) 338,258,503 0.0684
Diluted loss per share is calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Options in issue are not
considered diluting to the loss per share as the Group is currently loss making. Diluted loss per share is therefore the same as
the basic loss per share.
5.
SHARE BASED PAYMENTS
The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees,
including key management personnel, as part of their remuneration.
Year ended Year ended
31 March 2015 31 March 2014
Share options outstanding £ £
Opening balance 40,000,000 –
Issued in the period – 40,000,000
Closing balance 40,000,000 40,000,000
Options issued in the year to 31 March 2014
Under an option agreement between the Company and Novoco Mine Engineering Limited (“Novoco”), a company wholly
owned by Luke Bryan, the Company granted to Novoco options over 25,000,000 Shares (“Option Shares”) at an exercise
price of 0.7 pence per Share. The options become exercisable in respect of one third of the total number of Option Shares on
each of the first, second and third anniversaries of 30 December 2013. The options are exercisable for a period of ten years
from the date on which they vest and become exercisable.
Under an option agreement between the Company and David Hakes, a consultant to the Group, the Company granted to
David Hakes options over 15,000,000 Shares (“Option Shares”) at an exercise price of 0.7 pence per Share. The options
becomes exercisable in respect of one third of the total number of Option Shares on each of the first, second and third
anniversaries of 30 December 2013. The options are exercisable for a period of ten years from the date on which they vest
and become exercisable.
Kodal Minerals Report & Accounts 2015 38
237728 Kodal pp34-imp 04/09/2015 14:41 Page 39
Details of share options outstanding at 31 March 2015:
Date of grant
Number of options Option price
Exercisable between
30 December 2013
30 December 2013
30 December 2013
13,333,333
13,333,333
13,333,333
0.7 pence
0.7 pence
0.7 pence
30 Dec 2014 – 30 Dec 2024
30 Dec 2015 – 30 Dec 2025
30 Dec 2016 – 30 Dec 2026
Included within administration expenses is a charge for issuing share options and making share based payments of £88,555
(2014: £33,056) which was recognised in accordance with the Group’s accounting policies.
Additional disclosure information:
Weighted average exercise price of share options:
● outstanding at the beginning of the period
● granted during the period
● outstanding at the end of the period
● exercisable at the end of the period
Weighted average remaining contractual life of
share options outstanding at the end of the period
Tetra Option Agreement
0.7 pence
N/A
0.7 pence
0.7 pence
10.76 years
The Group has granted to Tetra Minerals Oy (“Tetra”) an option to subscribe for new Shares. The maximum number of Shares
that are subject to the option is 714,285,714, corresponding to the number of Shares that would be issued for a total amount
of £5 million at the 0.7 pence per Share. The options vest and become exercisable only once the JORC indicated resource for
phosphate minerals at the Kodal Project meet certain thresholds. These are as follows:
JORC Indicated Mineral Resource
threshold reached of
Tonnes of phosphate minerals
Proportion of maximum number
Option Shares that will vest
(%)
90,000,000
110,000,000
130,000,000
150,000,000
170,000,000
20
20
20
20
20
Once vested, the option may be exercised by Tetra at a subscription price of 10p per Share for a period of three years after
the date on which each tranche vests. If Kodal Phosphate AS relinquishes or does not renew the Kodal Project extraction
licences before any of the options vest then those options will lapse.
The Board has reviewed the Tetra option arrangements and determined that the fair value of the Tetra options is nil on the
grounds that the option distribution is dependent on thresholds associated with the JORC phosphate mineral resources, the
first of which, 90m tonnes, is well beyond the size of the current targeted ore body, which has a JORC mineral resource of
48.9m tonnes. Unless and until further exploration of the Kodal Project identifies a further potential ore body the likelihood of
the thresholds being met is considered to be remote.
Kodal Minerals Report & Accounts 2015 39
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
6. TAXATION
Group Group
Year ended Year ended
31 March 2015 31 March 2014
£ £
Taxation charge for the year – –
Factors affecting the tax charge for the year
Loss from continuing operations before income tax (3,959,576) (232,705)
Tax at 20% (2014: 20% ) (791,915) (46,541)
Expenses not deductible 367,868 53,949
Overseas rate differences (5,388) (105)
Gain not taxable – (53,216)
Losses carried forward not deductible 92,570 40,801
Other temporary differences 332,899 3,760
Non-current assets temporary differences 3,966 1,351
Income tax expense – –
The Group has tax losses and other deferred tax assets totalling £463,000 (2014: £51,000) which will be able to be offset
against future income. No deferred tax asset has been recognised in respect of these losses as the timing of their utilisation is
uncertain at this stage.
Kodal Minerals Report & Accounts 2015 40
237728 Kodal pp34-imp 04/09/2015 14:41 Page 41
7.
INTANGIBLE ASSETS
Exploration and
evaluation Software Total
GROUP £ £ £
COST
At 1 April 2013 355,014 – 355,014
Additions in the year 2,566,060 27,295 2,593,355
Effects of foreign exchange 63 – 63
At 1 April 2014 2,921,137 27,295 2,948,432
Additions in the year 781,252 – 781,252
Effects of foreign exchange (5,827) – (5,827)
At 31 March 2015 3,696,562 27,295 3,723,857
AMORTISATION
At 1 April 2013 – – –
Amortisation charge – 4,363 4,363
At 31 March 2014 – 4,363 4,363
Amortisation charge – 9,089 9,089
Impairment 3,411,664 – 3,411,664
At 31 March 2015 3,411,664 13,452 3,425,116
NET BOOK VALUES
At 31 March 2015 284,898 13,843 298,741
At 31 March 2014 2,921,137 22,932 2,944,069
At 31 March 2013 355,014 – 355,014
The Group has capitalised all expenditure incurred in relation to exploration and evaluation of the Kodal Project and the
Grimeli Project. The additions to the Exploration and Evaluation category in the year ended 31 March 2014 represent the cost
of the exploration licences of £1,833,295 acquired through the purchase of Kodal Phosphate AS.
The price of iron ore has fallen dramatically from a level of approximately US$112 per tonne in March 2014 to its current level
of less than US$50 per tonne. As a result, the Board has undertaken an impairment review of the carrying value of the Kodal
Project by performing a value in use calculation. The review identified that, although there are indications that would support
the use of slightly lower capital and operating costs, the key sensitivity is to the fall in commodity prices and specifically the fall
in the price of iron ore. Using iron ore and phosphate prices based on the current prevailing market prices the model indicates
that the project is uneconomic under current market conditions and accordingly the Board has determined to impair in full the
carrying value of the Kodal Project. This has resulted in an impairment charge in the year to 31 March 2015 of £3,411,664
(2014: £nil). At 31 March 2015 the carrying value of the Kodal Project was £nil compared to £2,921,137 in 2014.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
7.
INTANGIBLE ASSETS (continued)
The Board has concluded that the Grimeli Project’s carrying value does not require impairment. This is covered in more detail
under “Critical accounting judgements and estimates” within the Principal Accounting Policies section.
Exploration and
evaluation Software Total
COMPANY £ £ £
COST
At 1 April 2013 355,014 – 355,014
Additions in the year 1,833,295 – 1,833,295
Disposals in the year (2,188,309) – (2,188,309)
At 31 March 2014 and 31 March 2015 – – –
AMORTISATION
At 31 March 2013, 31 March 2014 and 31 March 2015 – – –
NET BOOK VALUES
At 31 March 2014 and 31 March 2015 – – –
At 31 March 2013 355,014 – 355,014
The disposal in the year ended 31 March 2014 represented the sale by the Company of the Kodal Project assets to a subsidiary
undertaking.
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8.
PROPERTY, PLANT AND EQUIPMENT
Fixtures, fittings Plant and Motor
and equipment machinery vehicles Total
GROUP £ £ £ £
COST
At 1 April 2013 – – – –
Additions in the year 41,874 15,579 23,161 80,614
Effects of foreign exchange 143 27 417 587
At 1 April 2014 42,017 15,606 23,578 81,201
Additions in the year 57,194 17,857 – 75,051
Effects of foreign exchange (2,763) (2,790) (3,820) (9,373)
At 31 March 2015 96,448 30,673 19,758 146,879
DEPRECIATION
At 1 April 2013 – – – –
Depreciation charge 2,837 136 1,056 4,029
Effects of foreign exchange 4 2 9 15
At 1 April 2014 2,841 138 1,065 4,044
Depreciation charge 14,051 5,092 5,489 24,632
Effects of foreign exchange (509) (427) (721) (1,657)
At 31 March 2015 16,383 4,803 5,833 27,019
NET BOOK VALUES
At 31 March 2015 80,065 25,870 13,925 119,860
At 31 March 2014 39,176 15,468 22,513 77,157
At 31 March 2013 – – – –
The Company did not have any Property, Plant and Equipment as at 31 March 2013, 2014 and 2015.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
9.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
The consolidated financial statements include the following subsidiary companies:
Country of Equity Nature of
Company Subsidiary of incorporation holding Business
Kodal Norway (UK) Ltd Kodal Minerals Plc United Kingdom 100% Operating company
Kodal Mining AS Kodal Norway (UK) Ltd Norway 100% Mining exploration
Kodal Phosphate AS Kodal Norway (UK) Ltd Norway 100% Mining exploration
Year ended Year ended
31 March 2015 31 March 2014
Carrying value of investment in subsidiaries £ £
Opening balance 900,010 –
Additions – 900,010
Impairment charge (423,258) –
Closing balance 476,752 900,010
10. OTHER RECEIVABLES
Group Group Company Company
31 March 2015 31 March 2014 31 March 2015 31 March 2014
£ £ £ £
Other receivables 28,095 82,994 29,690 73,330
28,095 82,994 29,690 73,330
All receivables at each reporting date are current. No receivables are past due. The Directors consider that the carrying amount
of the other receivables approximates their fair value.
11. TRADE AND OTHER PAYABLES
Group Group Company Company
31 March 2015 31 March 2014 31 March 2015 31 March 2014
£ £ £ £
Trade payables 51,857 70,445 36,830 57,636
Other payables 31,858 27,485 25,982 27,484
83,715 97,930 62,812 85,120
All trade and other payables at each reporting date are current. The Directors consider that the carrying amount of the trade
and other payables approximates their fair value.
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12. SHARE CAPITAL
GROUP AND COMPANY
Allotted, issued and fully paid:
Nominal Number of
Value Ordinary Shares Share Capital Share Premium
£ £
At 31 March 2013 £0.0003125 175,372,142 54,804 249,825
Issue (Note 1) £0.0003125 7,500,000 2,344 72,656
Issue (Note 2) £0.0003125 18,654,500 5,828 300,105
Issue (Note 3) £0.0003125 2,750,000 859 41,041
Issue (Note 4) £0.0003125 2,821,150 882 18,866
Issue (Note 5) £0.0003125 43,500,000 13,594 236,406
Issue (Note 6) £0.0003125 26,785,715 8,371 179,129
Issue (Note 7) £0.0003125 250,000,000 78,125 1,671,875
Issue (Note 8) £0.0003125 142,857,240 44,643 955,358
Issue (Note 9) £0.0003125 100,000,000 31,250 1,218,750
Share issue costs – – (416,933)
At 31 March 2014 770,240,747 240,700 4,527,078
Issue (Note 10) £0.0003125 2,358,681 737 16,788
Issue (Note 11) £0.0003125 2,250,000 703 9,197
Issue (Note 12) £0.0003125 1,436,781 449 4,551
Issue (Note 13) £0.0003125 1,908,397 597 4,403
At 31 March 2015 778,194,606 243,186 4,562,017
Share issue costs have been allocated against the Share Premium reserve.
Note 1: On 8 April 2013 7,500,000 Shares were issued to two separate suppliers of the Company in settlement of their
services provided to the Company by the suppliers. These shares were issued at 1.0 pence each.
Note 2:
Between April and July 2013 a further 18,654,500 Shares were issued at a price of 1.64 pence, raising £305,933.80
in additional capital.
Note 3: On 18 July 2013 2,750,000 Shares were issued to a supplier of the Company in settlement of services provided to
the Company by that supplier. 500,000 Shares were issued at 1.0 pence and 2,250,000 Shares at 1.64 pence.
Note 4: On 25 November 2013, a total of 2,821,150 Shares were issued to two separate suppliers of the Company in
settlement of their services provided to the Company at an issue price of 0.7 pence per Share.
Note 5:
Note 6:
Under a consultancy agreement dated 8 November 2013 between Novoco Mine Engineering Limited and the
Company, 43,500,000 Shares were issued on 30 December 2013 at 0.5747 pence per Share for services provided
to the Company.
Under arrangements entered into by the Company with Thomas Eggar LLP, Allenby Capital limited and SP Angel
Corporate Finance LLP, a total of 26,785,715 Shares were issued on 30 December 2013 at 0.7 pence per Share for
services provided in relation to the admission of the Company to trading on AIM.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
12. SHARE CAPITAL (continued)
Note 7:
Under the share acquisition agreement dated 12 October 2012 between Tetra Minerals Oy and the Company, the
Company acquired all of the issued and to be issued share capital of Kodal Phosphate AS on completion of the
Company’s admission to AIM for a consideration consisting of:
(a) the sum of €100,000 payable in cash;
(b) the sum of £1,750,000 satisfied by the issue of 250,000,000 Shares at 0.7 pence per Share.
Note 8: On the 30 December 2013, 142,857,240 Shares were issued and allotted at 0.7 pence per Share in a placing at the
time of the admission of the Company’s Shares to trading on AIM.
Note 9: On 10 January 2014, 100,000,000 Shares were issued at 1.25 pence per Share in a placing.
Note 10: On 22 April 2014, a total of 2,358,681 Shares were issued to a supplier of the Company, Mr Eyi (a Director) and
Mr R Wooldridge (a Director) in settlement of their services provided to the Company at an issue price of 0.743
pence per Share.
Note 11: On 9 July 2014, a total of 2,250,000 Shares were issued to a supplier of the Company and Mr Eyi (a Director) in
settlement of their services provided to the Company at an issue price of 0.44 pence per Share.
Note 12: On 9 October 2014, a total of 1,436,781 Shares were issued to Mr Eyi (a Director) in settlement of his services
provided to the Company at an issue price of 0.348 pence per Share.
Note 13: On 9 January 2015, a total of 1,908,397 Shares were issued to Mr Eyi (a Director) in settlement of his services
provided to the Company at an issue price of 0.262 pence per Share.
13. RESERVES
Reserve
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value.
Share based payment reserve
Comprises the fair value of options and share rights recognised as an expense. Upon
exercise of options or share rights, any proceeds received are credited to share capital.
The share-based payment reserve remains as a separate component of equity.
Foreign exchange reserve
Gains/losses arising on re-translating the net assets of overseas operations into sterling.
Retained earnings
Cumulative net gains and losses recognised in the consolidated statement of financial
position.
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14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise cash and cash equivalents, other receivables and trade and other payables.
The main purpose of cash and cash equivalents is to finance the Group’s operations. The Group’s other financial assets and
liabilities such as other receivables and trade and other payables, arise directly from its operations.
It has been the Group’s policy, throughout the periods presented in the consolidated financial statements, that no trading in
financial instruments was to be undertaken, and no such instruments were entered in to.
The main risk arising from the Group’s financial instruments is market risk. The Directors consider other risks to be more minor,
and these are summarised below. The Board reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and market factors such as foreign exchange rates and interest rates will
affect the Group’s results or the value of its assets and liabilities.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters while
optimising the return.
Interest rate risk
The Group does not have any borrowings and does not pay interest.
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s cash and cash equivalents
with a floating interest rate. These financial assets with variable rates expose the Group to interest rate risk. All other financial
assets and liabilities in the form of receivables and payables are non-interest bearing.
In regard to its interest rate risk, the Group periodically analyses its exposure. Within this analysis consideration is given to
alternative investments and the mix of fixed and variable interest rates. The Group does not engage in any hedging or derivative
transactions to manage interest rate risk.
The Group in the year to 31 March 2015 earned interest of £78 (2014: £2). Due to the Group’s relatively low level of interest
bearing assets and the very low interest rates available in the market the Group is not exposed to any significant interest rate
risk.
Credit risk
Credit risk refers to the risk that a counterparty could default on its contractual obligations resulting in financial loss to the
Group. The Group’s principal financial assets are cash balances and other receivables.
The Group has adopted a policy of only dealing with what it believes to be creditworthy counterparties and would consider
obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s
exposure to and the credit ratings of its counterparties are continuously monitored. An allowance for impairment is made
where there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables concerned.
Other receivables consist primarily of prepayments and other sundry receivables and none of the amounts included therein
are past due or impaired.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
Financial instruments by category
Other financial
Loans and liabilities at
receivables amortised cost Total
31 March 2015 £ £ £
Assets
Other receivables 28,095 – 28,095
Cash and cash equivalents 306,843 – 306,843
Total 334,938 – 334,938
Liabilities
Trade and other payables – 83,715 83,715
Total – 83,715 83,715
31 March 2014
Assets
Other receivables 82,994 – 82,994
Cash and cash equivalents 1,501,343 – 1,501,343
Total 1,584,337 – 1,584,337
Liabilities
Trade and other payables – 97,930 97,930
Total – 97,930 97,930
Foreign exchange risk
Throughout the periods presented in the consolidated financial statements, the functional currency for the Group’s Norwegian
subsidiaries has been the Norwegian Kronor.
The Group incurs certain exploration costs in Norwegian Kronor on the Kodal Project and Grimeli Project, and has exposure
to foreign exchange rates prevailing at the dates when Sterling funds are transferred into Norwegian Kronor. The Group has
not hedged against this foreign exchange risk as the Directors do not consider that the level of exposure poses a significant
risk.
The Group continues to keep the matter under review as further exploration and evaluation work is performed on the Kodal
Project, and will develop currency risk mitigation procedures if the significance of this risk materially increases.
The Group’s consolidated financial statements are largely insensitive to a change in the Sterling to Norwegian Kroner exchange
rate due to the low value of assets and liabilities (principally cash balances) maintained in Norwegian Kroner. Furthermore for
the next 12 months the Group is expected to incur mainly Sterling denominated expenditure. Once the Kodal Project or
Grimeli Project moves into the development phase a greater proportion of expenditure is expected to be Kroner denominated
which may increase the foreign exchange risk.
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Financial instruments by currency
GBP NOK
denominated denominated Total
31 March 2015 £ £ £
Assets
Other receivables 21,514 6,581 28,095
Cash and cash equivalents 301,514 5,329 306,843
Total 323,028 11,910 334,938
Liabilities
Trade and other payables 77,653 6,062 83,715
31 March 2014
Assets
Trade and other receivables 73,330 9,664 82,994
Cash and cash equivalents 1,332,834 168,509 1,501,343
Total 1,406,164 178,173 1,584,337
Liabilities
Trade and other payables 85,121 12,809 97,930
Liquidity risk
Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due.
The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient liquidity to
meet its liabilities when they fall due, under both normal and stressed conditions.
The Group has established policies and processes to manage liquidity risk. These include:
● Monitoring the maturity profiles of financial assets and liabilities in order to match inflows and outflows;
● Monitoring liquidity ratios (working capital); and
● Capital management procedures, as defined below.
Capital management
The Group’s objective when managing capital is to ensure that adequate funding and resources are obtained to enable it to
develop its projects through to profitable production, whilst in the meantime safeguarding the Group’s ability to continue as a
going concern. This is to enable the Group, once projects become commercially and technically viable, to provide appropriate
returns for shareholders and benefits for other stakeholders.
The Group has historically relied on equity to finance its growth and exploration activity, raised through the issue of shares. In
the future, the Board will utilise financing sources, be that debt or equity, that best suits the Group’s working capital requirements
and taking into account the prevailing market conditions.
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NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 March 2015
14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)
Fair value
The fair value of the financial assets and financial liabilities of the Group, at each reporting date, approximates to their carrying
amount as disclosed in the Statement of Financial Position and in the related notes.
The fair values of the financial assets and liabilities are included at the amounts at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale.
The cash and cash equivalents, other receivables, trade payables and other current liabilities approximate their carrying value
amounts largely due to the short-term maturities of these instruments.
Disclosure of Financial Instruments and Financial Risk management for the Company has not been performed as they are not
significantly different from the Group’s position noted above.
15. DISCONTINUED OPERATIONS
During the year to 31 March 2013, the Group held a 74% shareholding in Clear Phosphate Minerals (Pty) Ltd (“CPM”) which
was established to explore for phosphate in South Africa and all of its funding was provided by the Group. CPM incurred costs
as a result of legal and consultancy work to secure an exploration licence, which was not subsequently granted. In early 2013
the Directors decided to close CPM. All balances due from CPM to the Group were written off as incurred and as at 31 March
2013 a £5,000 provision was made by the Group for closure costs of CPM. Finalisation of CPM’s tax position and the company
closure process took longer than expected with CPM formally being removed from the Registrar of Companies in South Africa
in December 2013. At 31 March 2013 CPM had assets of £177 comprising cash at bank. This balance was used to part settle
the costs of closure.
During the year to 31 March 2013 there was a charge to the accounts of Kodal Minerals Plc of £6,075 reflecting the costs of
operations and closure of a South African subsidiary, Clear Phosphate Minerals (Pty) Limited (“CPM”). During the year to
31 March 2014, an amount of £1,238 was written back to the income statement, representing the unused accrual from the
original £5,000 provision to close CPM. This amount has been shown on the consolidated statement of comprehensive income
as discontinued operations in line with the Group’s accounting policy.
16. RELATED PARTY TRANSACTIONS
Transactions with subsidiary companies
Prior to the setting up of bank accounts by its subsidiary companies, the Company made certain payments on behalf of its
subsidiaries and processed these through intercompany accounts. During the year ended 31 March 2015, the Company and its
subsidiaries have restructured these intercompany accounts by repaying existing loans and advancing new loans under new
loan facilities such that the Company now finances Kodal Norway (UK) Limited, which in turn finances the Norwegian
subsidiaries.
Consequently, during the year ended 31 March 2015, Kodal Mining AS repaid a loan of £211,734 from Kodal Minerals Plc which
then lent this same amount to Kodal Norway (UK) Limited which then lent this same amount to Kodal Mining AS.
Additionally, Kodal Phosphate AS repaid its loan of £1,370 from Kodal Minerals Plc, which then lent this same amount to Kodal
Norway (UK) Limited which then lent this same amount to Kodal Mining AS, which subsequently lent this same amount to
Kodal Phosphate AS.
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During the year ended 31 March 2015, Kodal Minerals Plc purchased assets for a cost of £519,781 (2014: £47,603) on behalf
of Kodal Norway (UK) Limited which it subsequently sold to Kodal Norway (UK) Limited at cost. This is in addition to a further
£633,921 of assets sold by the Company in December 2013 for £900,000 to Kodal Norway (UK) Limited generating a profit
of £266,079.
During the year ended 31 March 2015, Kodal Minerals Plc advanced a loan to Kodal Norway (UK) Limited £161,239 (2014: £nil)
to support ongoing activity. This together with the transfer of the assets of £519,781 were included in the impairment charge
to write-off the intercompany balance of £3,233,641 due from Kodal Norway (UK) Limited to Kodal Minerals plc including the
brought forward balance of £2,554,211.
Transactions with related parties
Robert Wooldridge, a Director, is a member of SP Angel Corporate Finance LLP (“SP Angel”) which acts as financial adviser
and broker to the Company. During the year ended 31 March 2015, the Company has paid fees to SP Angel of £25,000
(2014: £6,250) for its services as broker.
SP Angel was reimbursed by the Group for travel and other sundry expenses in the year ended 31 March 2015 of £3,408
(March 2014: £19,117).
Novoco Mine Engineering Limited (“Novoco”), a company wholly owned by Luke Bryan, a Director, provided consultancy
services to the Group during the year ended 31 March 2015 and received fees of £168,500 (2014: £100,000 in cash plus
£300,000 in share based payments). During the year ended 31 March 2015, Novoco was reimbursed £8,863 (2014: £32,783)
for expenses. At 31 March 2015, £11,034 (2014: £14,500) was owed by the group to Novoco this amount was paid in May 2015.
17. CONTROL
No one party is identified as controlling the Group.
18. CAPITAL COMMITMENT
In January 2015 the Company entered into a drilling contract with a contractor to undertake a 2,000 metre diamond drill
programme and reinstate 900 metres of historic access track over the Grimeli Project area. The contracted cost was US$400,000
(£264,000) of which US$267,000 (£176,000) was payable in cash and the balance in shares. At 31 March 2015 an amount of
£89,280 had been paid in cash to the contractor. The final payment under the contract was made in July 2015. There were no
capital commitments at 31 March 2014.
19. EVENTS AFTER THE REPORTING PERIOD
In May 2015, the Company raised £400,000 (before expenses) from the issue of 222,222,222 new shares at 0.18 pence per
share. The Shares were placed with new investors and existing shareholders of the Company. The net proceeds from the placing
are being used to continue exploration work at the Grimeli Project and for general corporate purposes.
Under the terms of the drilling contract entered into by the Company in January 2015, as subsequently amended in May 2015,
in relation to the drilling at the Grimeli Project, shares have been issued to the drill contractor as part payment for the services
provided. In May 2015, the Company issued 22,867,135 shares at a price of 0.185 pence per share and in June 2015 a further
26,570,886 Shares were issued at a price of 0.158 pence per share. Under a further agreement entered into in June 2015, a
final payment of £30,000 to be satisfied by the issue of 16,216,216 shares will be due to the contractor on completion of the
drill programme and satisfaction by the contractor of certain other terms.
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NOTICE OF ANNUAL GENERAL MEETING
Kodal Minerals plc
(Registered in England and Wales No. 07220790)
Notice is hereby given that the Annual General Meeting of Kodal Minerals plc (the “Company”) will be held at the offices of Field
Fisher Waterhouse LLP, 9th Floor, Riverbank House, 2 Swan Lane, EC4R 3TT on 29 September 2015 at 1.00 p.m. for the purposes
of considering and, if thought fit, passing the following resolutions, of which Resolutions 1 to 5 (inclusive) will be proposed as ordinary
resolutions and Resolution 6 will be proposed as a special resolution:
Ordinary Business
1. To receive and adopt the audited financial statements of the Company for the financial period ended 31 March 2015 and the
reports of the directors of the Company (the “Directors”) and the auditors thereon.
2. To re-appoint David Harold Jones as a Director, who retires in accordance with article 30.3 of the articles of association of the
Company (the “Articles”) and offers himself for re-appointment.
3. To re-appoint Robert Ian Wooldridge as a Director, who retires in accordance with article 30.3 of the Articles and offers himself
for re-appointment.
4. To re-appoint Baker Tilly UK Audit LLP as the auditors of the Company until the next Annual General Meeting and to authorise
the Directors to fix their remuneration.
Special Business
5. That the Directors, and any committee to which the Directors delegate relevant powers, be and they are hereby generally and
unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the “Act”) to allot shares in the Company
or grant rights to subscribe for or convert any security into shares in the Company (“Rights”) up to a maximum aggregate
nominal amount of £492,119.46 and this authority will (unless renewed, revoked or varied by the Company in general meeting)
expire at the conclusion of the Annual General Meeting of the Company to be held in 2016 but the Company may, before this
authority expires, make an offer or agreement which would or might require shares to be allotted or Rights to be granted after
the authority expires and the Directors may allot shares or grant Rights pursuant to such offer or agreement as if the authority
conferred hereby had not expired, such authority to be in substitution for any existing authorities conferred on the Directors
pursuant to section 551 of the Act.
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6. That, conditional on the passing of Resolution 5, the Directors, and any committee to which the Directors delegate relevant
powers, be and they are hereby generally empowered pursuant to section 570 of the Act to allot equity securities (as defined
in section 560 of the Act) for cash pursuant to the authority conferred by Resolution 5 above as if section 561(1) of the Act did
not apply to any such allotment, provided that this power shall be in substitution for any previous powers conferred on the
Directors pursuant to section 570 of the Act and shall be limited to:
(a)
the allotment of equity securities in connection with an issue in favour of the holders of ordinary shares of the Company
in proportion (as nearly as may be) to their respective holdings of ordinary shares, subject only to such exclusions or other
arrangements as the Directors may deem necessary or expedient to deal with fractional entitlements, legal or practical
problems arising in any overseas territory or the requirements of any regulatory body or stock exchange in any territory;
and
(b)
the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount
of £328,079.64,
and the power hereby granted shall expire at the conclusion of the Annual General Meeting of the Company to be held in
2016 save that the Company may before such expiry make an offer or agreement which would or might require equity securities
to be allotted after such expiry but otherwise in accordance with the foregoing provisions of this power in which case the
Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.
BY ORDER OF THE BOARD
Weaver Financial Limited
Company Secretary
4 September 2015
Registered Office:
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
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NOTICE OF ANNUAL GENERAL MEETING (continued)
Notes:
Entitlement to attend, speak and vote
1.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), the Company has specified that only those members entered on the
register of members at 1.00 p.m. on 25 September 2015 (or in the event that this meeting is adjourned, on the register of members 48 hours excluding
non-business days before the time of any adjourned meeting) shall be entitled to attend, speak and vote at the meeting in respect of the number of ordinary
shares in the capital of the Company held in their name at that time. Changes to the register after 1.00 p.m. on 25 September 2015 shall be disregarded in
determining the rights of any person to attend, speak and vote at the meeting.
Appointment of proxies
2. Members are entitled to appoint a proxy or proxies to exercise all or any of their rights to attend, speak and vote at the meeting. A proxy need not be a
shareholder of the Company. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed
to exercise the rights attached to a different share or shares held by that shareholder. Please see the instructions on the enclosed Form of Proxy.
3. The completion and return of a Form of Proxy whether in hard copy form or in CREST will not preclude a member from attending in person at the meeting
and voting should he or she wish to do so.
Appointment of proxies using hardcopy proxy form
4.
Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not
exceed the number of shares held by you) in the boxes indicated on the form. Please also indicate if the proxy instruction is one of multiple instructions being
given. To appoint more than one proxy please see the instructions on the enclosed Form of Proxy. All forms must be signed and should be returned together in
the same envelope.
5. To be valid, the Form of Proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy of such power or authority must
be lodged at the offices of the Company’s registrars, Share Registrars Limited, Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey GU9 7LL by hand, or sent
by post, so as to be received not less than 48 hours excluding non-business days before the time fixed for the holding of the meeting or any adjournment
thereof (as the case may be).
Appointment of proxies using CREST
6. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the meeting and any
adjournment(s) of it by using the procedures described in the CREST Manual (available from https://www.euroclear.com/site/public/EUI). CREST Personal
Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
7.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly
authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described
in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID: 7RA36) by 1.00pm on 25 September 2015. For this
purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which
the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
8. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make
available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST Personal Member or sponsored
member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary
to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their
CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings.
9. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations
2001.
Corporate representatives
10. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that
no more than one corporate representative exercises powers over the same share.
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Resolutions
11. Resolution 1 – This resolution seeks approval from shareholders of the directors’ and auditors’ reports and the financial statements for the year ended 31 March
2015.
12. Resolution 2 – This resolution seeks approval from shareholders to re-appoint David Harold Jones as a director of the Company who retires and offers himself
for re-appointment pursuant to Article 30.3 of the Company’s Articles of Association.
13. Resolution 3 – This resolution seeks approval from shareholders to re-appoint Robert Ian Wooldridge as a director of the Company who retires and offers
himself for re-appointment pursuant to Article 30.3 of the Company’s Articles of Association.
14. Resolution 4 – This resolution seeks approval from shareholders to reappoint Baker Tilly UK Audit LLP as the auditors of the Company and to authorise the
directors to fix their remuneration as they see fit.
15. Resolution 5 – This resolution, to be proposed as an ordinary resolution, relates to the grant to the Directors of the authority to allot ordinary shares and grant
rights to subscribe for or convert securities into ordinary shares with such authority expiring at the conclusion of the Annual General Meeting of the Company
to be held in 2016, unless the authority is renewed or revoked prior to such time. This authority is limited to the issue of a maximum of 1,574,782,272 ordinary
shares (representing approximately 150 per cent. of the Company’s entire issued share capital as at the date of this notice).
16. Resolution 6 – The Companies Act 2006 (the “Act”) requires that, if the Directors decide to allot ordinary shares in the Company for cash, the shares proposed
to be issued be first offered to existing shareholders in proportion to their existing holdings. These are known as shareholders’ pre-emption rights. However, to
act in the best interests of the Company the Directors may require flexibility to allot shares for cash without regard to the provisions of Section 561(1) of the
Act. Therefore this resolution, to be proposed as a special resolution, seeks authority to enable the Directors to allot equity securities for cash free of such
pre-emption rights, with such authority expiring at the conclusion of the Annual General Meeting of the Company to be held in 2016. This authority is limited
to the allotment of a maximum of 1,049,854,848 ordinary shares for cash, free of pre-emption rights (representing approximately 100 per cent. of the Company’s
entire issued share capital as at the date of this notice).
Issued shares and total voting rights
17. As at 6.00 p.m. on 4 September 2015, the Company’s issued share capital comprised 1,049,854,849 ordinary shares of £0.0003125 each fully paid. Each ordinary
share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at 6.00 p.m. on
4 September 2015 is 1,049,854,849. The Company does not hold any shares in treasury.
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