26603 3 April 2019 3:13 pm Proof 6FOR THE YEAR ENDED 31 DECEMBER 2018ANNUAL REPORT STOCK: ORRORIOLE AR2018.indd 303/04/2019 15:13:44 26603 3 April 2019 3:13 pm Proof 6ORIOLE RESOURCES PLC04WWW.ORIOLERESOURCES.COM Oriole Resources PLC is an AIM-listed exploration company, operating in Africa and Europe, focused on gold and high-value base metals.INVESTMENT CASE −Strong technical and corporate management team with proven track record −A number of interests and royalties in companies operating throughout Africa and Turkey −Quality exploration in gold-endowed terranes throughout Africa and Europe −Joint venture partnership on Dalafin gold project in Senegal, reducing financial exposure −Actively seeking further exploration opportunitiesORIOLE AR2018.indd 403/04/2019 15:13:47 ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
CONTENTS
Highlights
Company information
Major projects
Chairman’s statement
Strategic report
Directors’ report
Independent auditor’s report to the members
of Oriole Resources PLC
Financial statements:
Statement of consolidated comprehensive income
Statement of consolidated financial position
Statement of consolidated changes in equity
Statement of consolidated cash flow
Statement of company financial position
Statement of company changes in equity
Statement of company cash flows
Notes to the financial statements
Notice of AGM
Advisors & offices
01
02
04
08
11
19
22
27
28
29
30
31
32
33
34
62
65
Highlights
COMPANY RE-LAUNCH AND BOARD CHANGES
IAMGOLD is currently undertaking a c.13,000m Phase 2 AC
Repositioning of the Company during the year driven by
a focused investment strategy, the appointment of a new
Board of Directors and a rebrand to Oriole Resources PLC.
BIBEMI AND WAPOUZÉ, CAMEROON
Signing of an earn-in agreement allowing the Company
to earn up to a 90% interest in the Bibemi and Wapouzé
licences in Cameroon. The earn-in agreement calls for
spend of US$3.12m over 4 years. During 2018 our local
partner established a sample preparation laboratory in
Cameroon, and we have completed a rock-chip sampling
programme at Bibemi that demonstrated ‘bonanza’
grades. A Phase 1 trenching programme was started on
the licence in late 2018 and initial results announced in
March 2019 have confirmed multiple zones of orogenic-
style gold mineralisation, including 6m @ 3.02 g/t Au, with
individual veins returning up to 13.70 g/t Au.
DALAFIN, SENEGAL
Signing of an earn-in agreement with IAMGOLD Corporation
to fast-track exploration at the Dalafin gold project in
Senegal. This licence is currently 85%-owned by Oriole.
IAMGOLD can earn up to a 70% interest in the licence by
spending US$8m over 6 years and has already completed
initial AC, RC and DD drilling programmes during 2018 and
early 2019.
and RC drilling programme on the southernmost Madina
Bafé and Saroudia prospects as part of its year two earn-in.
MURATDERE
Our Turkish partner, Lodos, at the Muratdere copper-gold
porphyry project, has continued to invest into the project
through the completion of an Environmental Impact
Assessment and has informed us that we have been
diluted below a 10% interest in the joint venture company.
Lodos has advised us that they intend to exercise their
option to convert our remaining shareholding into a 1.2%
(post Turkish tax) net smelter return royalty and we are
currently agreeing the necessary legal documents to do so.
KARAAĞAC
Post year end the Company announced the triggering
of a US$0.5m success fee, receivable in instalments,
from our Turkish partners on the Karaağac gold project.
This supports the Company’s focus on developing projects
in conjunction with carefully chosen partners, which means
that we can expose investors to significant exploration
upside whilst also minimising the risk of dilution.
ORIOLE AR2018.indd 1
26603
3 April 2019 3:13 pm
Proof 6
01
03/04/2019 15:13:47
26603 3 April 2019 3:13 pm Proof 6ORIOLE RESOURCES PLC02WWW.ORIOLERESOURCES.COM Company informationOriole Resources PLC is an exploration and development company focusing primarily on gold and high-value base metals.The Company is incorporated and domiciled in the UK. The Company’s shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange (company number: 05601091).WHO WE AREThe Company’s strategic intent is to maximise shareholder value, through quality exploration in gold-endowed terranes throughout Africa (e.g. Birmian and Archean) and Europe (Tethyan). This includes our new projects in Cameroon, where we are earning up to a 90% interest in the Bibemi and Wapouzé projects, and our 85%-owned Dalafin project in Senegal, where IAMGOLD has the option to spend US$8m to acquire 70%.We have interests and royalties in several projects in Turkey and Africa and are actively seeking further exploration opportunities, particularly in West Africa, to consolidate our existing geographic footprint. −Fast-track exploration at Dalafin and reduce Oriole Resources’ financial exposure through the conclusion of a joint-venture arrangement to bring in third-party funding and additional expertise; −Earn-in or acquire interest in new projects where mineralisation has already been identified but where we can add value quickly through focused exploration, resource definition or expansion and progressive technical and economic studies; − Continue to monitor its investments in other companies and support further exploration as appropriate; −Continue with the realisation of value from existing lower-priority projects which are converting to royalty arrangements.OUR STRATEGYOBJECTIVESORIOLE AR2018.indd 203/04/2019 15:13:47 26603 3 April 2019 3:13 pm Proof 603ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRExperienced management team −Geologist with three decades’ experience in gold and base metals, with a focus on Africa, Europe and Asia −Broad range of experience in management, exploration, advanced project development, stakeholder engagement, and government relations −Strong track record of delivery, both at the technical and commercial level, within senior roles including exploration manager (Eurasia) for Barrick Gold Corp., Project Director (and later CEO) of Tethyan Copper Company Pty Ltd, Pakistan, COO of TSX.V-listed Reservoir Minerals Inc. and Managing Director of Rakita Exploration d.o.o., SerbiaTIM LIVESEYChief Executive Officer −Geologist and graduate of Cambourne School of Mines −Worked for many years in the mining industry before moving into consultancy −John served as the Chairman and CEO of Amara Mining plc until 2016 when it was sold for US$85m −He is currently a Non-Executive Director to Caledonia Mining Corporation plc and to Perseus Mining LimitedJOHN MCGLOINNon-Executive Chairman −Trained as a chartered accountant with Price Waterhouse, qualifying in 1992, and has a BSc in Geography from Durham University −Extensive experience of working for AIM-quoted companies, where he has been heavily involved in turnaround situations, fund raisings and acquisitions −Previously Group Finance Director of AIM-quoted Universe Group plc and its main trading subsidiary, HTEC LimitedBOB SMEETON Chief Financial Officer −Mineral geologist with over 35 years’ global exploration experience −He has overseen the discovery and early evaluation of multiple deposits, including +6Moz Chirano Gold Mine in Ghana and Hummingbird’s 4.2Moz Dugbe gold deposit in Liberia −Non-Executive Director to AIM-quoted Cora Gold Ltd since May 2017DAVID PELHAMIndependent Non-Executive DirectorORIOLE AR2018.indd 303/04/2019 15:13:48 26603 3 April 2019 3:13 pm Proof 6SENEGALTANZANIADJIBOUTIEGYPTTURKEYCAMEROONBURKINA FASOThani Stratex Resources (Hutite & Anbat-Shakoosh)DalafinBibemi & WapouzéAnadolu, Lodos & TET (Karaağac, Muratdere, Hasançelebi & Doğala) Aforo Resources (Niare, Sao & Yamane)Thani Stratex Resources (Pandora & Assaleyta)Tembo Gold Corporation (Tembo)ProjectsRoyalties/investmentsKEY −The Dalafin gold project lies in the Birimian-age Kédougou-Kéniéba gold belt in south-eastern Senegal; −Oriole owns 85% through its joint-venture with local partner Energy & Mining Corporation S.A; −Initial rotary air blast (‘RAB’) and aircore (‘AC’) drilling identified five geochemical targets at Dalafin. Follow-up trenching and reverse circulation (‘RC’) and diamond drilling (‘DD’) programmes identified promising intersections across the licence area, particularly at the Faré and Madina Bafé prospects; −In March 2018, the Company signed a joint-venture agreement with Canadian mid-tier IAMGOLD Corporation, allowing it to earn into 51% of the Dalafin project by spending US$4m over four years and a further 19% (total 70%) by spending an additional US$4m over the subsequent two years; −IAMGOLD’s initial focus is on the Madina Bafé prospect, located within 10 km of its 2.49 Moz Boto gold project and on which it has at Boto reported a positive Feasibility Study. Mine permitting is expected to be approved in H1-2019; −In H2-2018, a 2,528m AC drilling programme at Madina Bafé returned best results of 2.48 g/t Au and 0.66 g/t Au from quartz-tourmaline veins, and outlined a main >20 ppb Au WNW-trending anomaly over 1.5km in the south-east. A second 50-100 ppb Au anomaly extending over 400m was also defined 2.5km SW of an artisanal mining site; −A follow-up programme of RC (2,260m) and DD (507m) drilling commenced in November to test these anomalies and to validate previous best intersections reported by the Company, namely 9.6m @ 16.08 g/t Au (MDBB-002) and 15m @ 16.10 g/t Au (MBRC-117). Results, announced in February 2019, confirmed orogenic-style mineralisation and delivered a best intersection of 8m @ 2.56 g/t Au; −IAMGOLD is now progressing with its year-two earn-in for a planned c.US$1m spend. The programme will include a Phase 2 AC (5,000m) and RC (4,000m) drilling programme at Madina Bafé, as well as a maiden AC (2,500m) and RC (1,600m) drilling programme at the Saroudia prospect, located c.2km to the NW.ORIOLE RESOURCES PLC04WWW.ORIOLERESOURCES.COM Major projectsPROJECTSDalafin (Senegal):ORIOLE AR2018.indd 403/04/2019 15:13:49 26603 3 April 2019 3:13 pm Proof 6 −In 2014, Thani Emirates Resources Holdings and the Company combined their interests in North and East Africa. Each contributed US$1million of working capital and the Company’s initial share in the joint-venture was 40%; −In Q1-2018, the Company increased its investment in TSR from 30.1% to 30.4% by committing further funding of £156k. In May 2018, TSR saw the cancellation of its licences in Ethiopia which resulted in the impairment of the carrying value of the licences (approximately US$8.7 million) by TSR. The Company’s share of this write-off was approximately US$2.7 million and accordingly the carrying value of the Company’s investment in TSR was reduced by this amount (Announcement dated 10 May 2018); −The current portfolio comprises the following key projects: −Anbat (Egypt): Located within the Hodine licence, Anbat has a maiden Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au within porphyry sills (Announcements dated 6 and 13 December 2017). No work was completed at Anbat during the year. The Hodine licence also includes the Hutite project which hosts a non-JORC compliant gold resource of 520,000oz. −Pandora (Djibouti; 50% owned): Located in the Afar epithermal province of the Rift Valley. In H1-2018, TSR completed Phase 2 drilling for 3,036.5 m in 18 holes. The aim of this drilling was to test the depth-extension of previously drilled mineralisation and identify potential higher-grade ore shoots within the system that could lead to the definition of a resource. Results have demonstrated broad zones of multi-gram gold mineralisation towards the north-western end of the main Pandora vein, as well as narrower zones of higher-grade mineralisation. Best results (recalculated by Oriole using a 0.2 g/t Au cut-off) included: −8.30m @ 7.21 g/t Au from 144.55m, including 0.80m @ 26.10 g/t Au (Ok-D-25); −10.00m @ 1.20 g/t Au from 130.00m including 5.85m @ 1.90 g/t Au (Ok-D-29); −35.07m @ 1.28 g/t Au from 109.55m including 9.80m @ 3.06 g/t Au and 2.40m @ 1.75 g/t Au (Ok-D-31); −1.10m @ 5.10 g/t Au from 42.00m including 0.50 m @ 9.91 g/t Au, and 1.22m @ 55.40 g/t Au from 50.38m (Ok-D-32); −3.54m @ 2.35 g/t Au from 100.46m (Ok-D-33). −Bibemi and Wapouzé are early-stage gold exploration projects, covering highly prospective Neoproterozoic Pan-African greenstone belts in north-eastern Cameroon; −The Company’s interests in the projects are held 100% by local company BEIG3 through its wholly-owned subsidiary, RMC Cameroon SARL, formerly held in JV with Reservoir Minerals Corporation; −In June 2018, the Company entered into an option agreement to earn an initial 51% of both projects by funding US$1.56m of exploration over two years. Thereafter, Oriole can earn a further 39% for an additional U$1.56m exploration expenditure, or through the completion of a pre-feasibility study on at least one of the projects, over the subsequent two years; −In July and August, Oriole undertook mapping and a rock-chip sampling programme on the central Bakassi area. A total of 454 rock chips samples were taken from quartz and quartz-tourmaline veins, and the host wall rock. Best results included 135.4 g/t Au, 119.7 g/t Au, 117.2 g/t Au and 107.2 g/t Au, with 16 samples returning >10 g/t Au and 43 samples assaying >1 g/t Au. The results have extended the previously defined NE-trending ‘Zone 1’ gold anomaly to more than 4km in strike, as well as defining parallel zones of mineralisation (100-200 m to the east) extending over 500 m; −A Phase 1 trenching programme commenced in November to test two priority zones at Bakassi. Initial results (for 13 trenches) have confirmed multiple zones of orogenic-style gold mineralisation, including 6m @ 3.02 g/t Au, with individual veins returning up to 13.70 g/t Au; −At the earlier-stage Wapouzé project, c.20km to the north-east, systematic soil sampling has recently been completed and results for 2,119 soil samples and 146 rocks samples are expected later this month.05ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRROYALTIES & INVESTMENTSThani Stratex Resources Ltd (‘TSR’) (Djibouti and Egypt):Bibemi and Wapouzé (Cameroon):ORIOLE AR2018.indd 503/04/2019 15:13:53 26603 3 April 2019 3:13 pm Proof 6Importantly, hole OK-D-32 was drilled to intersect the west-northwest oriented Pyrrha vein, which appears to be part of the same structurally-controlled vein system as the Pandora vein, and returned 55.4 g/t Au over 1.22m from approximately 32m below surface (based on -50° drill hole inclination). The Pyrrha vein, though narrow on surface, has been mapped for over 400m and will be an important focus for additional drill testing. TSR plans to undertake preliminary metallurgical test work ahead of the next phase of drilling. −Assaleyta (Djibouti; 50% owned): Located c.16 km to the north of Pandora, low-sulphidation epithermal gold occurs as high-grade veins and disseminated mineralisation in rhyolite domes. A maiden drilling programme in 2016 confirmed vertical continuity of the system to a depth of at least 175 m and returned best intercepts of 17.38 m @ 2.25 g/t Au from surface (AY-DD-01) and 1.58 m @ 8.67 g/t Au from 177.19 m (AY-DD-03). No work was completed during 2018. −In February TSR announced its intention to spin-off of its Djibouti portfolio (Announcement dated 1 February 2018); −Progress on the TSR licences has been limited in 2018 as the company has focused on securing alternative sources of finance to fund its exploration programmes in Egypt and Djibouti; −At 31 December 2018, the Company’s interest in TSR was 29.0%.Tembo Gold (Tanzania): −The Tembo gold project is located adjacent to Acacia Mining’s 20 million oz Bulyanhulu mine, within the prospective gold belt of Tanzania; −Tembo has delivered strong drilling results in the past but, since the withdrawal of its major investor in 2014, the project was on care and maintenance until end-2018; −In January 2018, the company’s management outlined its strategy to restart the programme and this was supported by board-level changes in March 2018; −In February 2019, the company announced a proposed raising of C$1.5m to help deliver the new strategy. The proceeds raised from the financing will be used to support commencement of pre-feasibility study activities, utilising existing extensive drill hole data. This includes resource modelling, metallurgical testwork, preliminary process and mine design and financial modelling; −Before the proposed financing, Oriole holds a 10.75% interest in TSX(V) quoted company Tembo Gold Corp.Aforo (Burkina Faso): −In 2014, the Company signed a Purchase Agreement with Aforo Resources Limited for their Sinoe Gold Project in Liberia (Announcement dated 11 February 2014).; −Following preliminary exploration work and a total investment of £227,082, the Company decided not to invest further in Sinoe (Announcement dated 11 March 2015). The outstanding investment was converted into shares in Aforo and, following financings by Aforo in 2014 and 2015 to raise total funds of A$130,400, the Company’s interest stands at 7.84%; −In Q1-2018, Aforo advised the Company that it has allowed the Sinoe licence to lapse and that it had sold its project in Cote d’Ivoire for gross proceeds of US$225,000; −During the year it also signed JV/Option agreements for three prospective Birimian-hosted gold projects in Burkina Faso: −Niare: a former Nordgold project (‘Lagongo’) with an historical resource of 98,000 oz at 1.36 g/t Au (calculated using a 0.5 g/t Au cut-off). Aforo deems there to be the potential for a significant deposit at Niare and is currently seeking to obtain historical data to confirm the existing resource estimate and to identify next steps needed to possibly expand on this resource; −Yamane: contiguous with the Niare licence and covers the same Sabce Shear Zone host structure. Multiple structures +10 km in length identified for immediate testing; −Sao: located within the highly prospective Houndé Greenstone Belt in the western part of the country, which hosts a number of multi-million ounce gold deposits and producing mines, including Semafo’s 5.75 Moz Mana Mine producing 240,000 oz per annum. Licence-wide soil sampling during H2-2018 identified several weak gold anomalies; follow-up work is planned. −Financing is currently being sought to progress exploration of the licences.Muratdere (Turkey): −Muratdere is a substantial copper-molybdenum-gold porphyry system located west of Ankara with significant silver, molybdenum and rhenium credits. The project has a JORC-compliant resource of 186,000 tonnes Cu, 204,296oz Au, 3.9 million oz Ag, 6,390 tonnes Mo and 17,594kg; −In March, Lodos confirmed that the Company’s interest had fallen below 10%. This shareholding will be converted to a 1.2% (post Turkish tax) Net Smelter Return (‘NSR’)royalty once Lodos exercises its option to do so.ORIOLE RESOURCES PLC06WWW.ORIOLERESOURCES.COM Major projectsCONTINUEDORIOLE AR2018.indd 603/04/2019 15:13:54 26603 3 April 2019 3:13 pm Proof 6Other Turkish projects:Karaağac Gold project: −Karaağac is located 300 km west-south-west of Ankara. Mineralisation is hosted by an outcropping thrust zone and altered limestone; −In February 2015, the Company signed an agreement with Turkish company Anadolu, 96%-owned by Istanbul-listed ODAŞ Elektrik, and the licence was transferred to Anadolu in return for a commitment by them to spend up to US$1.5m on exploration and drilling at the project within two years. At the time of signing, the project had an inferred non-JORC resource of 156,789 oz Au and was valued in the Company’s financial accounts at around £53,000 (Announcement dated 2 February 2015); −Permitting delays led to an extension to the two-year exploration period (Announcement dated 21 December 2017) but in March 2019 Anadolu confirmed the definition of a JORC-2012 compliant Measured, Indicated and Inferred resource of 348,150 oz Au and 2,832,036 oz Ag (0.2 g/t cut-off); −Under the terms of the Agreement, definition of this JORC-resource has triggered the payment by Anadolu of a US$0.5m success-based fee. Oriole will now receive staged payments of US$25,000 per month for a period of 20 months, with the first payment received for February 2019; −On 10 September 2018, Anadolu submitted an Environmental Impact Assessment report to the Urban and Environment Ministry. Following review by the Ministry’s technical committee and a period of public review (ended 9 November 2018 with no objections), the report is now pending final approval; −Anadolu is yet to advise of its intentions regards to mine development but Oriole retains a 1.5% NSR royalty on any future mineral production.Hasançelebi and Doğala projects: −Hasançelebi is a high-sulphidation epithermal gold-silver project located 500 km south-east of Ankara. Doğala is a grassroots exploration project, located approximately 225 km to the west of Hasançelebi. It is prospective for high-sulphidation gold mineralisation; −In February 2018, the Company’s wholly-owned subsidiary, Stratex Madencilik Sanayi ve Ticaret Limited Şirketi (‘Stratex Madencilik’), signed an exploration agreement with TET Madencilik Ltd. Şti. (‘TET’) for the Hasançelebi and Dogala licences which will result in a US$0.5m success-based payment on delivery of a minimum 100,000 oz indicated or measured JORC-compliant gold resource (with a 0.3 g/t cut off), defined within the oxide and transition zones, at Hasançelebi (Announcement dated 15 February 2018); −The Company will also receive a 1.5% NSR royalty on any future precious metals production at the licences, and a 5% NSR royalty on future production of other metals or industrial raw minerals.Further details on the above Oriole projects and investments can be found on the Company’s website: www.orioleresources.com 07ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRORIOLE AR2018.indd 703/04/2019 15:13:54 26603 3 April 2019 3:13 pm Proof 62018 has been a year of transformation for the Company. Within the space of 12 months, the Company has changed its name, appointed a whole new Board of Directors and implemented a new strategy focused on early-stage exploration, building on the core strengths of the Company’s Directors and management team. The Company’s strategy is to develop a portfolio of exploration projects for gold and base metals, and identify potential partners to take them into the advanced exploration and mine development stages. To this end, we regularly review potential new projects and maintain an active dialogue with mining companies.New Management TeamTim Livesey was appointed Chief Executive Officer on 1 March 2018, replacing Dr Bob Foster. Tim brings a wealth of experience in the sector having spent three decades working from generative exploration, through to operations and mine production. He has been involved in the exploration and advancement of several world class deposits, with roles including: Project Director and later CEO of Tethyan Copper Company (at the Reko Diq JV between Barrick and Antofagasta); Managing Director, Saudi Arabia for Barrick Gold; Chief Operating Officer at Reservoir Minerals Inc; and Managing Director of Rakita Exploration (at the Nevsun ‘Cukaru Peki’ project). Tim has also successfully run his own consulting company and holds several Board and Advisory positions within the sector.Following the retirement of Perry Ashwood, Bob Smeeton was appointed Chief Financial Officer on 4 June 2018 and three months later David Pelham and I completed the full refresh of the Board, with Peter Addison and Chris Worcester stepping down. We thank Peter, Perry and Chris for their service and are pleased to have retained the technical services of Dr Bob Foster on a consultancy basis.The new Board brings many years of experience across the sector, and in global financial markets, and it is committed to delivering shareholder value. A key first step in that was to relaunch the Company under its new name, Oriole Resources PLC. This was accomplished in the General Meeting of the Company held on 4 September 2018. OperationsDalafin, SenegalOn 1 March 2018, the Company announced that it had successfully contracted with IAMGOLD Corporation (‘IAMGOLD’) for its Dalafin project in Senegal (‘Dalafin’). Oriole currently holds 85% equity in the company that owns the Dalafin licence and the agreement with IAMGOLD allows them to earn a 70% interest in the licence over a 6-year period by spending US$8.0m. Initial drilling work has commenced and the first year spend commitment of US$0.5m has been reached and exceeded. Drilling results announced so far have confirmed mineralisation within multiple zones at the Madina Bafé target in the south of the licence area. This target is a priority for IAMGOLD as it falls within 10 kilometres of its 2.49Moz Boto gold project, where they have applied for a mining licence.In February 2019, IAMGOLD outlined its year-two work programme. The US$1m exploration programme will continue to focus on Madina Bafé and will include 5,000m regional AC drilling, to extend the previous 2018 campaign northwards, and 4,000m RC drilling to follow-up on best results from the 2018 AC, RC and diamond drilling programmes. They will also step north to test the Saroudia prospect, located c.2km north-west of Madina Bafé. An initial 2,500m AC drilling programme will test the most prospective area as defined previously by Oriole. Subject to results of the AC drilling, a 1,600m RC programme is planned to follow-up on any trends identified.Bibemi and Wapouzé, CameroonWith the Dalafin project being operated by IAMGOLD from March, the Company’s experienced exploration teams could focus on new projects and opportunities and on 12 June 2018, we were delighted to announce the completion of an earn-in agreement with Bureau d’Etudes et d’Investigations Géologico-minières, Géotechniques et Géophysiques SARL (‘BEIG3’), a well-established Cameroonian company with strong in-country technical and logistic support, for its two early-stage gold exploration projects in northern Cameroon, Bibemi and Wapouzé. Strong progress has been made in Cameroon, with an in-country preparation lab established by BEIG3 and a steady stream of work, including rock-chip “We are confident we have achieved an efficient cost base model that allows us to focus our available funds on delivering shareholder value by maximising our exploration efforts.”ORIOLE RESOURCES PLC08WWW.ORIOLERESOURCES.COM Chairman’s statementJohn McGloinNon-Executive ChairmanORIOLE AR2018.indd 803/04/2019 15:13:56 26603 3 April 2019 3:13 pm Proof 6sampling and an 8,742m Phase 1 trenching programme at Bibemi and a systematic soil sampling programme at Wapouzé. At Bibemi, preliminary results have been encouraging, with bonanza grades reported on 27 November 2018 from the rock-chip sampling programme and initial results from the Phase 1 trenching confirming multiple zones of orogenic-style gold mineralisation, including 6m @ 3.02 g/t Au, and individual veins returning up to 13.70 g/t Au. The remaining results are anticipated in late Q1/early Q2 2019 and infill Phase 2 trenching is already underway on key zones for a planned 4,360m. At the Wapouzé project, results from the systematic soil sampling are expected later this month.Investments and Royalty positionsThe new Board has inherited a range of investment and potential royalty positions from the previous management team. We take an active interest in managing these positions, including taking Board positions where appropriate, with an ultimate goal of maximising shareholder value. These positions provide a potential source of funding for the Group which we aim to use to minimise future equity fund raisings, although timing and quantum of proceeds are not easily predictable. The most significant positions are set out below.Thani Stratex Resources Ltd(‘TSR’)Oriole maintains a monitoring role in the management of TSR and has non-Executive Board representation. In Egypt, TSR has 100% ownership of the Anbat project located within the Hodine licence. In December 2017, it announced a maiden JORC 2012-compliant Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au within porphyry sills (Announcements dated 6 and 13 December 2017). No work was completed at Anbat during the year. The Hodine licence also includes the Hutite project which hosts a non-JORC compliant resource of 520,000oz Au.TSR also has a 50% interest in two epithermal gold projects, in Djibouti: Pandora and Assaleyta. In the first half of 2018, TSR completed phase 2 drilling for 3,036.5 m in 18 holes. Results have demonstrated broad zones of multi-gram gold mineralisation towards the north-western end of the main outcropping Pandora vein, with narrower zones of higher-grade mineralisation (Announcement dated 19 April 2018). Progress in both Egypt and Djibouti has been limited during 2018 as TSR has been seeking funding for the drill programmes that are required to progress each of the projects. We understand management are continuing to pursue potential funding sources and we await developments in this regard.KaraaǧacAt the Company’s former Karaaǧac gold project in Turkey, the current owner, Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi (‘Anadolu’), has confirmed an Indicated resource significantly in excess of the 50,000 ounces of gold necessary to trigger the success-based payment due to Oriole upon reaching of that milestone. A payment agreement of US$25k per month over 20 months has been agreed and, with the payment for February 2019 having already been received, we expect to receive the majority of the US$0.5m due under the agreement during 2019.MuratdereAt the Muratdere gold project in Turkey, our joint-venture partner, Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. (‘Lodos’), has committed to ongoing expenditure throughout 2019, with a focus on developing the Environmental Impact Assessment programme. Consequently, we have been diluted to an interest of less than 10%, which enables Lodos to exercise an option to convert our position to a 1.2% (post Turkish tax) royalty, and that process is currently under way. Lodos has made good progress on the project and has been working on the Environmental Impact Assessment with a view to moving towards construction and mining over the next two years.Hasançelebi and DoğalaAt two of the Company’s gold projects in Turkey, Hasançelebi and Doğala, the Company has signed an exploration agreement with Turkish private company TET Madencilik Ltd Sti (‘TET’). Progress to date has been slow, however, we expect exploration work to increase during 2019. Oriole will manage the exploration programme and so its operational overheads in Turkey will be further reduced as costs will be recharged to TET. 09ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRORIOLE AR2018.indd 903/04/2019 15:14:01 26603 3 April 2019 3:13 pm Proof 6Financial ReviewWhilst we are reporting a loss for the year of £4.66m (2017: £5.40m), of that, £3.47m is related to our minority holding in TSR. Excluding TSR, the Group reported reduced administrative costs of £1.81m, 26% down on the prior year and a £0.52m credit relating to our successful VAT appeal. Looking forward, the conclusion of the VAT situation will reduce advisor costs by approximately £0.17m. Additionally, we recently announced the successful application for Research and Developments credits, relating to 2016, on our exploration activities which brought £0.04m cash back in February 2019 and should bring further income going forward. We are confident we have achieved an efficient cost base model that allows us to focus our available funds on delivering shareholder value by maximising our exploration efforts.OutlookIn 2019, we need to build on the foundations we have put in place during 2018. With a new Board and an excellent team of experienced geologists, there is a great opportunity for the Company to establish itself as a high-quality exploration company. Whilst funding has been difficult for the industry for many years, we have a good base of investment and royalty assets which we are gradually monetising, and exciting exploration projects in which to invest. We remain alert to other interesting projects that may become available and are encouraged by the recent rise in the gold price and potential opportunities arising from the merger of Barrick and Randgold, and the proposed acquisition of Goldcorp by Newmont.On behalf of Oriole’s Board of Directors, I would like to express our appreciation and thanks to all of our employees for their efforts and hard work during the past year.John McGloinNon-Executive Chairman12 March 2019ORIOLE RESOURCES PLC10WWW.ORIOLERESOURCES.COM Chairman’s statementCONTINUEDORIOLE AR2018.indd 1003/04/2019 15:14:07 26603 3 April 2019 3:13 pm Proof 6Oriole Resources PLC Company number: 05601091 Registered office: 180 Piccadilly, London, W1J 9HF, UK The Directors present their strategic report on the Group for the year ended 31 December 2018. Strategic managementPrincipal Activities: The principal activity of the Group is the exploration and development of gold and other high-value base metals projects.Strategic approach: The Board’s strategy is to establish the Company as a leading value-adding project-generator in our chosen mineral specialisations and in our geographic areas of operation. We seek to acquire exposure to new frontier districts throughout Africa and Europe, and continually review new opportunities in order to add to our exploration portfolio. The Board is committed to developing a portfolio of projects that cover a range of mineral deposits across multiple jurisdictions, thus mitigating sovereign, technical and operational risks.The Group finances its activities through the monetisation of more advanced projects and through periodic capital raisings.Organisation overview: Following the shareholder requisition in November 2017, the Company needed to put the events of 2017 behind it. Consequently, the Company has undergone significant managerial change, a strategy review and a rebrand. Managerial change started on 1 March with the appointment of Tim Livesey as Chief Executive Officer and the subsequent appointments of Bob Smeeton, John McGloin and David Pelham saw a full refresh of the Board of Directors during the year. The Board remains ably supported by a management team who, for many years, have delivered successful exploration projects across Turkey and Africa.The Board of DirectorsThe Board is responsible for providing strategic direction for the Group, setting objectives and management policies and agreement on performance criteria. The Board monitors compliance with objectives and policies of the Group through monthly performance reporting, budget updates and operation reviews. The current composition of the Board is two Executive Directors and two Non-Executive Directors. The Board believes the composition of the Board provides an appropriate mix to conduct the Group’s affairs at the present time.The Audit CommitteeThe Audit Committee provides a formal review of the effectiveness of the internal control systems, the Group’s financial reports and results announcements, and the external audit process. It comprises John McGloin (Non- Executive Chairman) and David Pelham (Independent Non-Executive Director). The external auditors and Bob Smeeton, the Chief Financial Officer, attend by invitation when appropriate. No internal control issues requiring disclosure were identified during 2018.The Remuneration CommitteeThe Remuneration Committee provides a formal and transparent review of the remuneration of the Executive Directors and senior employees and makes recommendations to the Board on individual remuneration packages. This includes the award of non-contractual performance-related bonuses and share options. Remuneration packages are designed to reward, motivate, retain and recruit individuals. Bonuses are only paid in recognition of performance.It comprises John McGloin (Non-Executive Director Chairman) and David Pelham (Independent Non-Executive Director). No Director took part in discussions concerning the determination of their own remuneration.Business environmentThe price of gold fell 2% during the year, from an opening position of US$1,303 per ounce, to US$1,281 at 31 December 2018. During the year, the price fell as low as US$1,177 per ounce in September but has rallied strongly since then and is above US$1,300 at the time of this report. With continued economic uncertainty, gold’s reputation as a safe haven is leading to upward pressure on its price. The junior sector will benefit from this increasing gold price. Since 2012, exploration budgets and teams have been cut in the major gold producers, and resource pipelines have not been replenished. The need to replenish resources will drive the need for funding into early-stage exploration. The junior exploration sector will benefit from this and with a rising gold price, we expect to see increased appetite for investment into our sector.11ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRStrategic reportORIOLE AR2018.indd 1103/04/2019 15:14:09 ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Strategic report
CONTINUED
Principal risks and uncertainties
Financial and liquidity risks:
The Group’s operations are exposed to a variety of risks,
many of which are outside of the Company’s control.
Exploration Industry Risks:
Mineral exploration is speculative in nature, involves
many risks and is frequently unsuccessful. Following any
discovery, it can take a number of years from the initial
phases of drilling and identification of mineralisation
until production is possible, during which time the
economic feasibility of production may change. Substantial
expenditures are required to establish mineral reserves and
to construct mining and processing facilities. As a result
of these uncertainties, no assurance can be given that the
exploration programmes undertaken by the Group will result
in any new commercial mining operations being brought
into operation. Government activity, which could include
The main financial risks facing the Group are the
availability of adequate funding and fluctuations
in foreign exchange rates.
The Group’s main source of finance is the monetisation
of projects, supported where necessary, by the issue
of share capital. Tight budgetary and financial controls
are maintained across the Group. The Group only deals
with high-quality banks. It does not hold derivatives,
does not trade in financial instruments, does not engage
in hedging arrangements and does not enter into binding
commitments for exploration expenditure.
Tight budgetary and financial controls are maintained
across the Group. The use of interest-bearing deposit
accounts is maximised and cash flow forecasts are
constantly updated and reviewed by the Board.
non-renewal of licences, may result in any income receivable
The financial exposure of the Group, for a number
by the Group being adversely affected. In particular, changes
of its exploration projects, is substantially reduced by
in the application or interpretation of mining and exploration
partnering with third parties in exploration joint ventures.
laws and/or taxation provisions in the countries in which
the Group operates could adversely affect the value of
its interests.
These risks are mitigated as much as possible by building
and maintaining a pipeline of projects at various stages
of development, by employing highly experienced and highly
trained geologists, both at Board level and at the operational
level and by maintaining good relationships with the
Governments of the countries in which we operate.
Political risks:
Foreign exchange risks:
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures,
primarily with respect to the Turkish Lira, Euro and US Dollar.
The Group’s exposure to foreign exchange movements is set
out in Note 21 of the Accounts. Risks to exchange movements
are mitigated by minimising the amount of funds held
overseas. All treasury matters are handled centrally in the UK.
All requests for funds from overseas operations are reviewed
and authorised by Board members. The Group does not
All of the Group’s operations are located in a foreign
hedge its exposure to foreign currencies and recognises the
jurisdiction. As a result, the Group is subject to political,
profits and losses resulting from currency fluctuations as and
economic and other uncertainties, including but not limited
when they arise.
to, changes in policies or the personnel administering them,
terrorism, nationalisation, appropriation of property without
fair compensation, cancellation or modification of contract
rights, foreign exchange restrictions, currency fluctuations,
export quotas, royalty and tax increases and other risks
arising from foreign governmental sovereignty over the areas
in which these operations are conducted, as well as risks
of loss due to civil strife, acts of war, guerrilla activities and
insurrection.
The Board only conducts operations in those countries with
a stable political environment and which have established
acceptable mining codes. The Company adheres to all local
laws and pays heed to local customs.
As the Group does not operate within the European Union,
the Directors currently anticipate that the impact on the
business of the UK’s exit from the European Union will be
limited to the effects of potential increased foreign exchange
fluctuations. As a result of these fluctuations, it is expected
that the reported results of the Group may decline in the
short-to medium-term. However, the Directors do not expect
there to be any significant lasting impact.
Liquidity risk:
The Group’s liquidity risk is considered to be insignificant.
The Group does not enter into binding commitments
for exploration expenditure. Cash forecasts are updated
continuously. The financial exposure of the Group
is substantially reduced by partnering with third parties
in exploration joint ventures.
12
ORIOLE AR2018.indd 12
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:09
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Business performance
The Group’s main operations are split between active
exploration projects and the management of our investment
and royalty positions.
Active Exploration projects:
At the Company’s former Karaaǧac gold project in Turkey,
Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi
(‘Anadolu’) has confirmed a JORC 2012-compliant Indicated
Resource of 156,798oz, which is the trigger for a success-
based payment of US$500k to Oriole. We have agreed
payment terms for this debt and expect the majority
The Group entered 2018 with one active exploration
to be received in 2019. Oriole also retains a 1.5% net smelter
project, namely the Dalafin gold project in eastern Senegal.
return royalty on any future mineral production. The Oriole
Exploration work in earlier years had advanced this
project to the point where significant further exploration
expenditure had become justified. On 1 March 2018,
the Company signed an agreement with Canadian-
listed gold miner IAMGOLD Corporation (‘IAMGOLD’),
giving them the option to earn up to 70% of the licence
in a two-stage process by spending up to US$8 million
on exploration. The earn-in is progressing at an encouraging
pace (announcements dated 31 May 2018, 25 October 2018,
6 February 2019 and 28 February 2019). The main exploration
targets currently being pursued by IAMGOLD are in the south
of the licence area, within 20 kilometres of their 2.49Moz Boto
gold project, where they have recently applied for a mining
licence (IAMGOLD Announcement 6 November 2018).
IAMGOLD is in the second year of its earn-in, with a planned
US$1m exploration programme currently underway on the
Madina Bafé and Saroudia prospects.
In line with the strategic intent to expand and diversify the
exploration portfolio, on 12 June the Company signed an earn
in agreement with BEIG3 to gain an interest in the Bibemi
and Wapouzé licences in northern Cameroon. Early-stage
exploration work has commenced on both licences, with
the rock-chip sampling programme at Bibemi delivering
high-grade gold (announcement dated 19 November 2018).
Final results from a Phase 1 trenching programme at Bibemi
are pending and results are also expected shortly from
a recently-completed soil sampling programme at Wapouzé.
Investment and royalty positions:
The Company invested a further £156k in Thani Stratex
Resources Ltd (‘TSR’) during the year to maintain its c.30%
shareholder interest. From June 2018 the Board decided not
to continue funding TSR and accepted that its shareholding
would be diluted down to 29% at the year end. Progress on
the TSR licences has been limited in 2018 as the company
has focused on securing alternative sources of finance to
fund its exploration programmes in Egypt and Djibouti.
We maintain a position on the TSR Board of Directors and
actively engage with the management team to ensure
we are fully aware of their plans and operations.
team in Turkey are assisting with the exploration.
In February 2016, the Board took the decision not
to contribute its pro rata share of financing in the Muratdere
copper-gold project in northern Turkey.
Our joint-venture partner, Lodos Maden Yatırım Sanayii ve
Ticaret A.Ş. (‘Lodos’) has continued to develop the project and
we have consequently been diluted to below a 10% interest,
which under the terms of the joint-venture agreement will
trigger dilution to a royalty position, of 1.2% post-Turkish tax,
once Lodos exercise their option to do so.
Financial Review:
The Group’s loss after tax for the year was £4,661k (2017: loss
of £5,402k). This figure includes a loss of £2,042k arising
from our investment in TSR, following the relinquishment
of TSR’s licences in Ethiopia in May. In addition, the Board has
recognised an impairment provision of £1,430k against the
carrying value of TSR.
Administration expenses of £1,806k (2017: £2,442k) were
26% lower than the previous year, reflecting the Group’s
reduced cost base and its return to a focus on earlier-stage
exploration.
A number of one-off costs impacted the 2017 results,
with £5,060k of one-off items recognised, somewhat offset
by the recognition of £2,883k profit on the sale of the interest
in the Altintepe mine in Turkey. The 2017 one-off items
included a provision for a VAT repayment of £557k which
was the subject of a long-running dispute with the UK tax
authorities. This dispute has now been successfully resolved
and £516k of that accrual has been released to the Income
Statement in 2018, with the cash expected to be received
from HMRC early in Q2 of 2019.
The Group ended the year with a cash balance of £1,287k,
a decrease in the year of £752k. Incoming funds included
a net £1,061k from the share placing in June 2018 and
£821k from the repayment of the loan made to Crusader
Resources Limited in 2017. £229k was invested into our early
stage exploration projects in Cameroon. A further £156k was
invested in TSR to maintain our c.30% interest early in the
year, although the Board decided not to contribute to further
funding rounds from June onwards.
ORIOLE AR2018.indd 13
26603
3 April 2019 3:13 pm
Proof 6
13
03/04/2019 15:14:10
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Strategic report
CONTINUED
Future developments
The Company regularly reviews potential new exploration
Principle 1: Establish a strategy and business model which
promotes long-term value for shareholders
projects at various stages of development, and based within
The Company is a gold and base metals exploration
the European and African time-zones.
Key performance indicators
specialist, with operations in Africa and Turkey. Our goal
is to deliver long-term value for our shareholders. We aim
to do this by identifying good quality grassroots and early-
The Board monitors the following KPIs on a regular basis:
stage exploration projects. Consequently we:
Finance related:
− Share price versus its peer group;
− Funding and cash flow forecasts;
− Overheads as a percentage of total expenditure.
Project related:
− Metres drilled;
− Acquisition of new licence areas;
− Exploration expenditure by project.
Corporate Governance
− use our expertise to identify those areas with economically
feasible deposits;
− assess the business environment of the target country
and its attractiveness for prospecting and eventual
mining operation;
− understand existing interests in a licence area in order
to ensure we can earn-in to existing interests on terms
favourable to our shareholders.
Early-stage mineral exploration is by its nature speculative
and we aim to reduce the risks inherent in the industry by
careful application of funds throughout individual projects.
The Chairman of the Board of Directors of Oriole Resources
We do that by:
PLC (‘Oriole’ or ‘the Company’ or’ the Group’ or ‘we/our’) has
− Reviewing existing exploration data;
a responsibility to ensure that Oriole has a sound corporate
− Establishing close in-country partnerships for our projects;
governance policy and an effective Board.
The Board has adopted the Quoted Companies Alliance
(QCA) Corporate Governance Code in line with the London
Stock Exchange’s recent changes to the AIM Rules
requiring all AIM-quoted companies to adopt and comply
with a recognised corporate governance code. The QCA
code identifies ten principles to be followed in order for
companies to deliver growth in long-term shareholder
− Applying the most appropriate cost-effective exploration
techniques in order to determine whether further work,
using increasingly expensive exploration techniques,
is justified; and
− Appreciating the likely realisation routes that will be
available to us as the project moves towards development.
Principle 2: Seek to understand and meet shareholder needs
value, encompassing effective management with regular
and expectations
and timely communication to shareholders. This report
follows the structure of those principles and explains how
we have applied the guidance as well as disclosing any
areas of non-compliance.
We will provide annual updates on our compliance with the
code. The Board considers that the Group complies with the
QCA code so far as is practicable having regard to the size,
nature and current stage of development of the Company.
The Company is committed to engaging with its
shareholders to ensure that its strategy, operational
results and financial performance are clearly understood.
We engage with our shareholders via roadshows, attending
investor conferences and through our regular reporting
on the London Stock Exchange. Roadshows are typically
timed to follow the release of interim and final results.
The Company regularly takes part in investor conferences,
The sections below set out how the Group applies the
both in the UK and internationally. LSE announcements
ten principles of the QCA code and sets out areas of
include details of the website, Twitter page and include
non-compliance.
phone numbers to contact the Company and its
Key governance changes during the year include the formal
professional advisors.
adoption of the QCA code.
14
ORIOLE AR2018.indd 14
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:10
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Private shareholders
Employees
The AGM is the main forum for dialogue with retail
We maintain only a small permanent staff across the UK,
shareholders and the Board. The Notice of Meeting
Africa and Turkey and as such employee engagement
is sent to shareholders at least 21 days before the meeting.
with the Executive Directors is frequent with a scheduled
All Directors attend the AGM and are available to answer
weekly team call as well as daily meetings and discussions.
questions raised by shareholders. For each vote, the
We aim to provide an environment which will attract, retain
number of proxy votes received for, against and withheld
and motivate our team and monitor the effectiveness by
is announced at the meeting. The results of the AGM are
regular one-on-one discussions and a recently introduced
announced via the London Stock Exchange. In addition,
annual appraisal system. We have recently published a new
the Executive Directors regularly attend investor forums
employee handbook in order to provide a comprehensive
specific to the mining industry and engage with
document detailing all the policies and procedures covering
shareholders at those events. Investors can contact
us via our website (https://www.orioleresources.com)
or by email (info@orioleresources.co.uk).
all aspects of employment with Oriole Resources PLC. Our
key value underpinning the Employee Handbook is to treat
all employees fairly and equally and to promote ethical
Retail shareholders also regularly attend investor evenings
behaviour, diversity and non-discrimination.
held by our brokers or other industry bodies and we publicise
Relevant, cost-effective training courses are available to
our attendance via LSE announcements and Twitter.
all employees and are discussed during the bi-annual
In addition, our up-to-date corporate presentation is made
appraisal process.
available on our website.
Institutional shareholders
Local partners and communities
Our operations provide employment in remote areas
The Directors actively seek to build a relationship with
of developing countries. Essential to our success is the
institutional shareholders. Shareholder relations are
establishment of close working relationships with local
managed primarily by the Chief Executive Officer and
partners. We seek local partners who have a good
Chief Financial Officer. The Chief Executive Officer and
understanding of the local exploration and mining
Chief Financial Officer make presentations to institutional
industry and regulations within their country, and with
shareholders and analysts throughout the year, mainly
the capacity and capability to assist with the management
in London and Cape Town through events such as Mines
and maintenance of the project.
and Money and 121 Group. We also have ad-hoc meetings
with our shareholders via conference call and email.
The Board as a whole is kept informed of the views and
concerns of major shareholders by the Chief Executive
Officer. Any significant investment reports from analysts
are also circulated to the Board. The Non-Executive Chairman
and Non-Executive Director are available to meet with major
shareholders if required to discuss issues of importance
to them and are considered to be Independent from
the executive management of the Company.
We are mindful of our obligations to the local environment
and operate to high levels of health and safety in respect
of both our local workers and the local community.
Employee training focuses on operating safely and
considerately in these communities. Engagement with
local communities is dependent on jurisdiction and
the stage of exploration but is typically by public forum
or with local or regional leaders, including site visits and
workshops. Social projects in the local communities are
dependent on local need and also the stage of exploration/
Principle 3: Take into account wider stakeholder and social
level of project investment. Examples of our previous social
responsibilities and their implications for long term success.
projects include drilling new boreholes for drinking water,
Aside from our shareholders, our most important stakeholder
groups are our employees, local partners and those local
provision of medical clinics, supply of equipment to a local
school and building a new road.
communities that may be impacted by our exploration
As projects move forward, towards potential mining activities,
activities. The Board is regularly updated on stakeholder
we seek to bring in partners who can credibly make the
issues and their potential impact on our business to
investments to move towards mine production. In doing so
enable the Board to understand and consider these issues
we have regard for their ability and desire to move projects
in decision-making. The Board understands that maintaining
forward, their industry reputation and their commitment
the support of all its stakeholders is paramount for the
to treating the local communities fairly and protecting
long-term success of the Company.
the environment. We enter agreements that allow us to
monitor their activities and have monthly updates on
project progress.
ORIOLE AR2018.indd 15
26603
3 April 2019 3:13 pm
Proof 6
15
03/04/2019 15:14:10
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Strategic report
CONTINUED
Principle 4: Embed effective risk management, considering
Non-financial controls
both opportunities and threats, throughout the organisation
Audit, risk and internal control
Financial controls
The Company has an established framework of internal
financial controls, the effectiveness of which is regularly
reviewed by the Executive Management, the Audit
Committee and the Board. The key financial controls are:
− The Board is responsible for reviewing and approving
overall Company strategy, approving new exploration
projects and budgets, and for determining the financial
structure of the Company including treasury, tax and
dividend policy. Monthly results and variances from plans
and forecasts are reported to the Board;
− The Audit Committee, comprising the two Non-
Executive Directors, assists the Board in discharging its
duties regarding the financial statements, accounting
policies and the maintenance of proper internal business,
and operational and financial controls;
The Board has ultimate responsibility for the Group’s system
of internal control and for reviewing its effectiveness.
However, any such system of internal control can provide
only reasonable, but not absolute, assurance against material
misstatement or loss. The Board considers that the internal
controls in place are appropriate for the size, complexity
and risk profile of the Group. The principal elements of the
Group’s internal control system include:
− Close management of the day-to-day activities of the
Group by the Executive Directors
− An organisational structure with defined levels
of responsibility, which promotes entrepreneurial
decision-making and rapid implementation
while minimising risks; and
− Central control over key areas, such as capital expenditure
authorisation and banking facilities.
The Group reviews at least annually the effectiveness
of its system of internal control, whilst also having regard
− Regular budgeting and forecasting is performed to
monitor the Company’s ongoing cash requirements
to its size and the resources available. As part of the Group’s
plans, we continue to review a number of non-financial
and cash flow forecasts are circulated to the Board
controls covering areas such as regulatory compliance,
on a monthly basis;
− Actual results are reported against budget and prior
year and are circulated to the Board;
− The Company has an investment appraisal system that
considers expected costs against a range of potential
business integrity, health and safety, and corporate social
responsibility. All employees are aware of their obligations
under anti-bribery and corruption legislation and detailed
information is provided in the Employee Handbook.
In addition, whistle-blowing procedures have been
established and publicised to all employees.
outcomes arising from the exploration opportunities that
Principle 5: Maintaining the Board as a well-functioning,
we are invited to participate in;
balanced team led by the Chair
− Regular reviews of exploration results are performed
as the basis for decisions regarding future expenditure
commitment;
− Due to the international nature of the business there are,
at times, significant foreign exchange rate movement
exposures. Cash flow forecasting is done at the ‘required
currency’ level and foreign currency balances are
maintained to meet expected requirements; and
The Board comprises the Non-Executive Chairman,
two Executive Directors and one Non-Executive Director.
During the current financial year, Peter Addison,
Non-Executive Chairman, retired and was replaced by John
McGloin, as Independent Non-Executive Chairman. David
Pelham was appointed as an independent Non-Executive
Director following the retirement of Chris Worcester from
that role. Both Non-Executive Directors have extensive
experience in the mining industry, are qualified geologists
and have considerable experience of serving on the Board
− For exploration projects, we manage the risk of failure
of public companies.
to find economic deposits by low cost early stage
exploration techniques, with detailed analysis of results.
Moving projects to more expensive exploration techniques
requires a rigorous review of results data prior to deciding
whether to proceed with further work.
The Board is satisfied that it has a suitable balance between
independence on the one hand, and knowledge of the
Company and industry on the other, to enable it to discharge
its duties and responsibilities effectively. All Directors are
encouraged to use their independent judgement and
to challenge all matters, whether strategic or operational.
16
ORIOLE AR2018.indd 16
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:10
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
The Board aim to meet at least monthly. The agenda is set
New Directors are selected having regards to the
by the Company Secretary in consultation with the Chairman
Company’s needs for a balance of operational, industry,
and CEO. The standard agenda points include:
legal and financial skills. Experience of the Mining industry,
− Review of previous meeting minutes and actions arising
there from;
and in particular the exploration sector, is important but
not critical, as is experience of running a public company.
All Directors retire by rotation at regular intervals
− A report by the CEO covering all operational matters;
in accordance with the Company’s Articles of Association.
− A report from the CFO covering all financial matters;
− Any other business, including update of Register
of Conflicts
Directors’ conflict of interest
The Company has effective procedures in place to monitor
and deal with conflicts of interest. The Board is aware
of the other commitments and interests of its Directors,
and changes to these commitments and interests are
reported to and, where appropriate, agreed with the rest
of the Board. A Register of Conflicts is maintained and is a
Appointment, removal and re-election of Directors
The Board makes decisions regarding the appointment
and removal of Directors, and there is a formal, rigorous and
transparent procedure for appointments. The Company’s
Articles of Association require that one-third of the Directors
must stand for re-election by shareholders annually
in rotation; that all Directors must stand for re-election
at least once every three years; and that any new Directors
appointed during the year must stand for re-election at the
AGM immediately following their appointment.
Independent advice
standard agenda item at each Board Meeting. The Board has
All Directors are able to take independent professional
access to the Company’s nominated adviser, its brokers and
advice in the furtherance of their duties, if necessary, at the
its lawyers. The advisors do not typically provide materials for
Company’s expense from lawyers, the nominated adviser,
Board meetings except if requested to do so for the purposes
brokers and other professional advisers that they deem
of discussing upcoming regulations and other issues.
Board meetings are deemed quorate if two Board members
are present and providing 7 days’ notice of such meeting has
been given and waived by the non-attending Directors.
Directors and Officers Liability insurance is maintained for
all Directors and key employees.
The table below sets out the attendance statistics for all
current Board members through 2018:
Meetings attended
Meetings held
since appointment
as a Director
Tim Livesey
Bob Smeeton
John McGloin
David Pelham
12
9
4
4
12
9
4
4
Principle 6: Ensure that between them the Directors have
the necessary up-to-date experience, skills and capabilities
The Board is satisfied that, between the Directors,
it has an effective and appropriate balance of skills and
experience, particularly so in the area of gold and base
metal exploration and development. All Directors receive
regular and timely information on the Group’s operational
and financial performance. Relevant information is circulated
to the Directors in advance of meetings by the Company
Secretary. Contracts are available for inspection at the
Company’s registered office and at the Annual General
Meeting (‘AGM’).
relevant. In addition, the Directors have direct access to
the advice and services of the Company Secretary and
Chief Financial Officer.
Principle 7: Evaluate Board performance based on clear
and relevant objectives, seeking continuous improvement
During 2018 the Board of Directors has been fully
refreshed. Over the next 12 months we intend to review
the performance of the team as a unit to ensure that
the members of the Board collectively function in an
efficient and productive manner. Over the same period
the Non-Executive Directors will be seeking to set clear
and relevant objectives for the Executive Directors, and
for the Board as a whole.
Principle 8: Promote a culture that is based on ethical values
and behaviours
The Board aims to lead by example and do what is in
the best interests of the Company. We operate in remote
and under-developed areas and ensure our employees
understand their obligations towards the environment
and in respect of anti-bribery and corruption.
Details of the Company’s values are set out in the Employee
Handbook that was published to all employees during 2018.
This document brings together various policies that have
been distributed to all employees previously. A weekly call
attended by all employees serves to refresh and re-iterate
the Company’s’ ethical standards as they apply to the
operational issues that are discussed on that call.
ORIOLE AR2018.indd 17
26603
3 April 2019 3:13 pm
Proof 6
17
03/04/2019 15:14:10
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Strategic Report
CONTINUED
Principle 9: Maintain governance structures and processes
Board committees
that are fit for purpose and support good decision-making
by the Board
Board programme
The Board aims to meet monthly and as and when required.
The Board sets direction for the Company through a formal
schedule of matters reserved for its decision. During the
The Board is supported by the Audit and Remuneration
committees. Each committee has access to such resources,
information and advice as it deems necessary, at the cost
of the Company, to enable the committee to discharge
its duties. The two committees comprise both of the
Non-Executive Directors.
year to December 2018, the Board met for twelve scheduled
The Audit Committee provides a formal review of the
meetings. The Board and its Committees receive appropriate
effectiveness of the internal control systems, the Group’s
and timely information prior to each meeting; a formal agenda
financial reports and results announcements and the
is produced for each meeting and Board and Committee
papers are distributed by the Company Secretary several
external audit process. The Committee meets twice per year
to review the published financial information and to meet
days before meetings take place. Any Director may challenge
with the Auditors.
Company proposals and decisions are taken democratically
The Remuneration Committee provides a formal
after discussion. Any Director who feels that any concern
and transparent review of the remuneration of the
remains unresolved after discussion may ask for that concern
Executive Directors and senior employees and makes
to be noted in the minutes of the meeting, which are then
recommendations to the Board on individual remuneration
circulated to all Directors. Any specific actions arising from
packages. The Committee met once during the year.
such meetings are agreed by the Board or relevant Committee
and are then followed up by the Company’s management.
The committees have not provided separate reports
for the current financial period, but intend to do so for
Roles of the Board, Chairman and Chief Executive Officer.
next year’s report.
The Board is responsible for the long-term success
Principle 10: Communicate how the Company is governed
of the Company. There is a formal schedule of matters
and is performing by maintaining a dialogue with
reserved to the Board. It is responsible for overall Group
shareholders and other relevant stakeholders
strategy; approval of exploration projects; approval of the
annual and interim results; annual budgets; dividend policy;
and Board structure. It monitors the exposure to key business
risks. There is a clear division of responsibility at the head
of the Company. The Chairman is responsible for running
the business of the Board and for ensuring appropriate
strategic focus and direction.
The Company communicates with shareholders through
the Annual Report and Accounts, full-year and half-year
results announcements, the Annual General Meeting (‘AGM’)
and one-to-one meetings with large existing or potential
new shareholders. The Company regularly posts LSE
announcements covering operational and corporate matters,
such as drilling results and significant changes in ownership
The Chief Executive Officer (‘CEO’) is responsible
positions across historic projects in which it still retains an
for proposing the strategic focus to the Board, implementing
investment. A range of corporate information (including all
it once it has been approved and overseeing the
Company announcements and a corporate presentation)
management of the Company. The CEO, together with the
is also available to shareholders, investors and the public on
Chief Financial Officer (‘CFO’) and other senior employees,
the Company’s corporate website, www.orioleresources.com
is responsible for establishing and enforcing systems
and also on its Twitter feed @OrioleResources.
and controls, and liaison with external advisors. The CEO
has responsibility for communicating with shareholders,
assisted by the CFO and other senior employees.
The Board receives regular updates on the views
of shareholders through briefings and reports from
Investor Relations, the CEO, CFO and the Company’s
All Directors receive regular and timely information
brokers. The Company communicates with institutional
on the Group’s operational and financial performance.
investors frequently through briefings with management.
Relevant information is circulated to the Directors in
In addition, analysts’ notes and brokers’ briefings are
advance of meetings. The business reports monthly on its
reviewed to achieve a wide understanding of investors’ views.
headline performance against its agreed budget, and the
Board reviews the monthly update on performance and
any significant variances are reviewed at each meeting.
Senior executives below Board level attend Board meetings
when deemed appropriate by the CEO or Chairman,
to present business updates.
18
Events after the Reporting Period
This Strategic Report was approved by the Board of Directors
on 12 March 2019.
Tim Livesy
Chief Executive Officer
ORIOLE AR2018.indd 18
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:10
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Directors’ report
Oriole Resources PLC
Company number: 05601091
The Directors present their report, together with the
Financial Statements and auditor’s report, for the
year ended 31 December 2018.
Change of Name
On 4 September 2018 the Company changed its name
from Stratex International PLC to Oriole Resources PLC
General Information
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the Financial
Statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company
and Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The maintenance and integrity of the website is the
responsibility of the Directors. The work carried out by the
Certain information required by the Companies Act 2006
auditors does not involve consideration of these matters
relating to the information to be provided in the Directors’
and, accordingly, the auditors accept no responsibility for
Report is set out in the Group Strategic Report and
any changes that may have occurred to the information
includes: principal activities, future developments, principal
contained in the Financial Statements since they were
risks and uncertainties and events after the end of the
reporting period.
Statement of Directors’ Responsibilities
initially presented on the website. Legislation in the United
Kingdom governing the preparation and dissemination
of the Financial Statements and other information included
in annual reports may differ from legislation in other
The Directors are responsible for preparing the Annual
jurisdictions.
Report and the Financial Statements in accordance
with applicable law and regulations. Under that law the
Directors have prepared the Group and Parent Company
Financial Statements in accordance with International
Financial Reporting Standards (IFRS’s) as adopted by
the European Union.
The Company is compliant with AIM Rule 26 regarding
the Company’s website.
Directors and their interests
The current Directors are listed on page 3.
Changes to the Board are set out below:
Under company law the Directors must not approve the
Peter Addison (resigned 3 September 2018)
Financial Statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company
and Group as at the end of the financial year and of the profit
and loss of the Group for that period. In preparing these
Dr Robert Foster (resigned 1 March 2018)
Perry Ashwood (resigned 4 June 2018)
Christopher Worcester (resigned 3 September 2018)
Financial Statements, the Directors are required to:
Tim Livesey (appointed 1 March 2018)
− select suitable accounting policies and then apply them
Robert Smeeton (appointed 4 June 2018)
John McGloin (appointed 3 September 2018)
David Pelham (appointed 3 September 2018)
In compliance with the Company’s Articles of Association,
Robert Smeeton, John McGloin and David Pelham, all having
been appointed since the last AGM, will retire and, being
eligible, offer themselves for re-election.
consistently;
− make judgements and accounting estimates that are
reasonable and prudent;
− state whether the Financial Statements comply with IFRSs
as adopted by the European Union, subject to any material
departures disclosed and explained in the Financial
Statements;
− prepare the Financial Statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business. The Directors confirm that they have
complied with the above requirements in preparing the
Financial Statements.
ORIOLE AR2018.indd 19
26603
3 April 2019 3:13 pm
Proof 6
19
03/04/2019 15:14:10
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Directors’ Report
CONTINUED
Those Directors serving at the end of the year, or at the date of this report, had beneficial interests in the issued share capital
and share options of the Company as follows:
As at 31 December 2018
As at 31 December 2017
Ordinary
shares
Share
options
Ordinary
shares
Share
options
Tim Livesey
Robert Smeeton
John McGloin
David Pelham
Total
4,746,800
6,000,000
2,000,000
2,000,000
–
–
–
–
6,746,800
8,000,000
–
–
–
–
–
The remuneration paid to Directors was:
2018
Salaries and other
short-term benefits
Termination
benefits
Post-employment
benefits
–
–
–
–
–
Total
£
36,070
25,000
Salary
£
26,320
2
Taxable
benefits
£
Severance
pay
£
Pension
£
Share based
payments
£
–
–
9,750
–
–
24,998
–
–
53,463
1,492
67,427
–
1,145
123,527
20,921
125,000
66,923
12,000
9,333
313,962
–
–
–
–
–
7,750
496
3,434
32,601
–
–
–
–
2,375
11,259
138,634
1,338
2,276
70,537
–
–
–
–
12,000
9,333
1,492
84,927
29,207
18,114
447,702
Peter Addison
(resigned 3 September
2018)
Dr Bob Foster
(resigned 1 March 2018)
Perry Ashwood
(resigned 4 June 2018)
Chris Worcester
(resigned 3 September
2018)
Tim Livesey
(appointed 1 March 2018)
Robert Smeeton
(appointed 4 June 2018)
John McGloin
(appointed 3
September 2018)
David Pelham
(appointed 3
September 2018)
Total
20
ORIOLE AR2018.indd 20
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:10
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
2017
Salaries and other short-term benefits
Termination
benefits
Post-employment
benefits
Peter Addison
Dr Bob Foster
(appointed 7
November 2017)
Perry Ashwood
Chris Worcester
Marcus Engelbrecht
(resigned 6
November 2017)
Emma Priestley
(resigned 17 October 2017)
Total
Substantial shareholdings
Salary
£
39,000
22,885
128,312
31,000
Bonus
£
9,750
–
32,078
7,250
169,744
50,000
21,496
412,437
6,750
105,828
Taxable
benefits
£
Severance
pay
£
Pension
£
Share based
payments
£
3,370
1,237
3,880
7,637
Total
£
52,120
24,122
167,799
46,269
–
–
–
–
–
–
–
382
100,000
3,197
48,084
371,025
3,529
100,000
–
282
3,861
3,321
67,529
31,849
693,184
–
–
3,529
–
–
–
As at 12 March 2019, the Company was aware of the following holdings of 3% or more in the Company’s issued share capital:
Shareholder
Preston Road Limited
Blackrock Investment Management
Teck Cominco Limited
Orion Trust
Hawk Investment Holdings Limited
Provision of information to Auditor
Number of
shares
% of issued
share capital
53,710,219
37,150,904
35,727,487
26,469,925
26,000,000
7.65
5.29
5.09
3.77
3.71
The Directors who held office at the date of this report confirm that, so far as they are individually aware, there is no relevant
audit information of which the Company’s auditors are unaware and the Directors have taken all the steps that they ought
to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of
that information.
Auditor
PKF Littlejohn LLP has signified its willingness to continue in office as auditor.
Approved by the Board on 12 March 2019 and signed on its behalf.
Robert Smeeton
Company Secretary
ORIOLE AR2018.indd 21
26603
3 April 2019 3:13 pm
Proof 6
21
03/04/2019 15:14:10
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Independent
auditor’s report
Opinion
Conclusions relating to going concern
We have audited the financial statements of Oriole
We have nothing to report in respect of the following
Resources Plc (the ‘Parent Company’) and its subsidiaries
matters in relation to which the ISAs (UK) require us to
(the ‘Group’) for the year ended 31 December 2018 which
report to you where:
comprise the Statement of Consolidated Comprehensive
Income, the Statement of Consolidated and Parent Company
Financial Position, the Statement of Consolidated and Parent
Company Changes in Equity, the Statement of Consolidated
and Parent Company Cash Flows and the notes to the
financial statements, including a summary of significant
accounting policies. 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.
In our opinion:
− the financial statements give a true and fair view of the
state of the Group’s and of the parent company’s affairs
as at 31 December 2018 and of the Group’s and parent
company’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 directors’ use of the going concern basis of accounting
in the preparation of the financial statements is not
appropriate; or
− the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the Group’s or the
parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve
months from the date when the financial statements are
authorised for issue.
Our application of materiality
Group
materiality 2018
Group
materiality 2017
£250k
£250k
Basis for
materiality
2% of gross
assets
Our calculation of materiality has remained in line with 2017.
Despite a decrease in the Group’s assets, we consider there
to be a lower level of inherent risk in the current year due
to a decline in operations and exploration activities, as well
− the parent company financial statements have been
as minimal changes in Group structure and shareholdings
properly prepared in accordance with IFRSs as adopted
within the Group. We therefore consider that this level
by the European Union and as applied in accordance
of materiality remains appropriate.
with the provisions of the Companies Act 2006; and
− the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the Group and parent company
in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
We consider gross assets to be the most significant
determinant of the Group’s financial position and
performance used by shareholders, with the key financial
statement balances being exploration and evaluation assets,
investments in associates, and cash levels. The going concern
of the Group is dependent on its ability to fund operations
going forward, as well as on the valuation of its assets,
which represent the underlying value of the Group.
We have therefore based our assessment of materiality
on the gross asset basis.
Whilst materiality for the financial statements as a whole
was set at £250k, each significant component of the Group
was audited to a headline materiality ranging between
£35k - £250k with a performance materiality set at 70%.
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect of
misstatements. At the planning stage materiality is used to
determine the financial statement areas that are included
within the scope of our audit and the extent of sample sizes
during the audit.
22
ORIOLE AR2018.indd 22
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:10
26603 3 April 2019 3:13 pm Proof 6We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of £12.5k (2017: £12.5k). There were no misstatements identified during the course of our audit that were individually, or in aggregate, considered to be material.An overview of the scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgements by the Directors and considered future events that are inherently uncertain. As in all of our audit, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.Our Group audit scope focused on the principal areas of operation, being East & West Africa, Turkey, and UK. The Group comprises 7 components and we assessed the significance of each component to the Group audit. On this basis, 4 components were subject to full scope audits. For the remaining 3 entities we performed specific audit procedures to address the significant and identified risks at Group level. The audits of each of these components were principally performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing mining exploration entities and publicly listed entities. The Turkish component was audited by a component auditor and the Group audit team issued group reporting instructions, reviewed and challenged their findings. Impairment considerations were performed at Group level for all entities and their underlying assets.Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 23ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRORIOLE AR2018.indd 2303/04/2019 15:14:13 ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Independent
auditor’s report
CONTINUED
Key Audit Matter
How the scope of our audit responded to the key audit matter
Capitalisation and impairment of exploration and
Our work included the following:
evaluation expenditure under IFRS 6
GROUP & COMPANY
The Group holds exploration and evaluation assets of
− Reviewing the exploration and evaluation expenditures to assess
their eligibility for capitalisation under IFRS 6 by corroborating
to source documentation;
− Obtaining the current exploration licenses to ensure that they
£6.8m which relate to the Dalafin project in Senegal and
remain valid;
the new Bibemi & Wapouzé projects in Cameroon in
respect of which the Group has undertaken exploration
work during the year.
There is a risk that the costs capitalised do not meet the
recognition criteria under IFRS 6, and that the carrying
value of exploration assets is overstated.
− Considering the Group’s future plans for each license area and
ensuring that activity and expenditure thereto was planned and
in line with any minimum spend requirements;
− Enquiries of management over the future plans for each license,
including obtaining cashflow projections where necessary and
corroborating to minimum spend requirements attached to licences;
− Considering the indicators of impairment listed in IFRS 6 to ascertain
whether these have been triggered;
− Reviewing costs incurred in relation to new projects in Cameroon
during the year and ensuring these costs have been capitalised as
exploration assets in accordance with the Group’s accounting policy.
Based on the audit work performed we do not consider
Intangible assets to be materially misstated in the financial
statements and we consider the disclosures made thereon
to be appropriate.
Valuation of investments in associates and subsidiaries
Our work included the following:
(including intercompany receivables)
GROUP & COMPANY
There is a risk of material misstatement regarding
the recoverability of investments in associates and
investments in subsidiaries (including intercompany
receivables i.e. the net investment in each subsidiary).
The carrying value of investments in associates and
net investment in subsidiaries is ultimately dependent
on the value of the underlying assets. Many of the
underlying assets are exploration projects which are
at an early stage of exploration making it difficult to
− Reviewing management’s impairment considerations and
calculations for all investments held and corroborating to supporting
source documents;
− Reviewing the draft audit report of Thani Stratex Resources Limited
(also audited by PKF Littlejohn LLP) and obtaining an understanding
of the work performed, including corroborating information included
in management’s impairment assessment;
− Reviewing component auditor responses in relation to Stratex
Madencilik to ensure that no impairment indicators exist;
− Reviewing the value of the net investment in subsidiaries against
the underlying assets and corroborating the judgements/estimates
used by management to assess the recoverability of investments
and intercompany receivables; and
definitively determine their value. Valuations for these sites
are therefore based on judgments and estimates made
by the Directors - which leads to a risk of misstatement.
− Consideration of the IFRS 6 impairment indicators in relation
to the exploration and evaluation assets on which the valuation
of investments largely depends.
Similar considerations apply to the recoverability of loans
to Group undertakings disclosed as investments.
Based on the audit work performed we do not consider
investment balances to be materially misstated.
24
ORIOLE AR2018.indd 24
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:13
26603 3 April 2019 3:13 pm Proof 6Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information. Our opinion on the Group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: −the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and −the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report. We have nothing to report in respect of the following matters in relation to which 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. 25ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRORIOLE AR2018.indd 2503/04/2019 15:14:15 26603 3 April 2019 3:13 pm Proof 6Responsibilities of Directors As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the Group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Group and parent company financial statements, the Directors are responsible for assessing the Group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our reportThis 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.Joseph Archer (Senior Statutory Auditor)For and on behalf of PKF Littlejohn LLP Statutory Auditor 1 Westferry Circus Canary Wharf London E14 4HD12 March 2019ORIOLE RESOURCES PLC26WWW.ORIOLERESOURCES.COM Independentauditor’s report CONTINUEDORIOLE AR2018.indd 2603/04/2019 15:14:18 26603 3 April 2019 3:13 pm Proof 6Continuing operationsNotesYear ended 31 December 2018£’000Year ended 31 December 2017£’000Revenue– –Administration expenses9(1,806)(2,442)Other (losses)/profits7(741)(5,060)Operating loss(2,547)(7,502)Finance income67 46Share of losses of associates15(2,042) (141)Loss on change of ownership interest6(98) (14) Profit on sale of investment assets8–2,883Loss before income tax(4,620) (4,728)Income tax charge11(41) (20)Loss for the year from continuing operations(4,661) (4,748)Loss from discontinued operation, net of tax17–(654)Loss for the year (4,661) (5,402)Other comprehensive income for the yearItems that may be subsequently reclassified to profit or lossExchange differences on translating foreign operations134(924)Items that may not be subsequently reclassified to profit or lossChange in fair value of equity investments at fair value through other comprehensive income(167)–Other comprehensive income for the year, net of tax(33) (924)Total comprehensive income for the year (4,694) (6,326)Loss for the year attributable to:Owners of the Parent Company(4,574) (5,282)Non-controlling interests26(87) (120)Loss for the year (4,661) (5,402)Total comprehensive income for the year attributable to:Owners of the Parent Company - continuing operations(4,607) (5,184)Owners of the Parent Company - discontinued operations–(890)Owners of the Parent Company(4,607)(6,074)Non-controlling interests(87) (252)Total comprehensive income for the year (4,694) (6,326)Earnings per share for losses from continuing and discontinued operations attributable to the owners of the Company (expressed in pence per share). −basic and diluted, continuing operations23(0.77)(1.01) −basic and diluted, discontinued operations23–(0.12)The notes on pages 34 to 61 form part of these financial statements.27ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRStatement of consolidatedcomprehensive incomeORIOLE AR2018.indd 2703/04/2019 15:14:20 ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Statement of consolidated
financial position
Company number: 05601091
ASSETS
Non-Current Assets
Property, plant and equipment
Intangible assets
Investments in equity-accounted associates
Financial assets at fair value through other comprehensive income
Financial assets at fair value through profit and loss
Available-for-sale financial assets
Trade and other receivables
Deferred tax asset
Current Assets
Trade and other receivables
Cash and cash equivalents
Total Assets
EQUITY
Capital and reserves attributable to owners of the Company
Share capital
Share premium
Other reserves
Retained earnings
Total equity attributable to owners of the Company
Non-controlling interest
Total Equity
LIABILITIES
Non-Current Liabilities
Employee termination benefits
Current Liabilities
Trade and other payables
Total Liabilities
Total Equity and Liabilities
As at 31
December
2018
£’000
As at 31
December
2017
£’000
Notes
14
13
15
16
16
16
18
19
18
20
22
22
25
26
27
27
6,780
2,250
414
–
–
–
111
8
6,484
5,524
–
–
581
29
198
9,582
12,824
783
1,287
2,070
11,652
4,908
21,253
1,701
(16,427)
11,435
(103)
11,332
30
290
320
976
2,039
3,015
15,839
4,673
20,427
1,683
(11,853)
14,930
(16)
14,914
35
890
925
11,652
15,839
The notes on pages 34 to 61 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 12 March 2019 and were signed
on its behalf by:
John McGloin
Non-Executive Chairman
28
Robert Smeeton
Chief Financial Officer
ORIOLE AR2018.indd 28
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:20
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Statement of consolidated
changes in equity
Attributable to owners of the Company
Share
premium
£’000
Other
reserves
(see note 25)
£’000
Retained
earnings
£’000
Share capital
£’000
Non-
controlling
interest
£’000
Total
£’000
Total equity
£’000
Balance at 1 January 2017
4,673
20,427
2,589
–
–
(6,757)
(5,282)
20,932
(5,282)
2,860
(120)
23,792
(5,402)
–
(792)
–
(792)
(132)
(924)
Loss for the year
Other comprehensive
income
Total comprehensive
income for the year
–
–
Share-based payments
–
–
Share options cancelled
–
–
–
–
(5,282)
(6,074)
(252)
(6,326)
(792)
72
(186)
–
186
72 –
– –
(114)
186
Total contributions by
and distributions to
owners of the Company
Transaction with
Non-controlling interest
Total changes in
ownership interests in
subsidiaries that do not
result in a loss of control
Total transactions with
owners, recognised
directly in equity
Balance at 31 December
2017 and 1 January 2018
Loss for the year
Other comprehensive
income
Total comprehensive
income for the year
Issue of share capital net
of expenses
Share-based payments
Total contributions by
and distributions to
owners of the Company
Balance at
31 December 2018
–
–
–
–
–
–
4,673
20,427
–
–
–
235
–
–
–
–
826
–
235
826
–
72
–
–
–
–
72
–
72
(2,624)
(2,624)
(2,624)
(2,624)
–
–
–
–
(114)
186
72
(2,624)
(2,552)
1,683
–
(11,853)
(4,574)
14,930
(4,574)
–
(33)
(16)
(87)
–
14,914
(4,661)
(33)
(33)
(33)
–
51
51
(4,574)
(4,607)
(87)
(4,694)
–
–
–
1,061
51
1,112
–
–
–
1,061
51
1,112
4,908
21,253
1,701
(16,427)
11,435
(103)
11,332
The notes on pages 34 to 61 form part of these financial statements.
ORIOLE AR2018.indd 29
26603
3 April 2019 3:13 pm
Proof 6
29
03/04/2019 15:14:20
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Statement of consolidated
cash flows
Cash flow from operating activities:
Net cash used in operating activities
Cash flow from investing activities:
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Purchase of intangible assets
Investment in associate company
Costs related to aborted acquisition
Loan to third parties
Tax paid on former joint venture
Proceeds from sale of available-for-sale financial assets
Proceeds from disposal of discontinued operation
Interest received
Net cash generated from investing activities
Cash flow from financing activities:
Funds from the issue of shares
Funds received from partners
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
The notes on pages 34 to 61 form part of these financial statements.
Year ended
31 December
2018
£’000
Year ended
31 December
2017
£’000
Notes
28
(2,259)
(2,593)
14
13
15
7
18
17
20
(25)
2
(229)
(156)
–
787
–
–
–
67
446
1,061
–
1,061
(752)
2,039
1,287
(7)
–
(32)
(451)
(1,621)
(906)
(796)
6,047
547
46
2,827
–
116
116
350
1,689
2,039
30
ORIOLE AR2018.indd 30
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:20
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Statement of company
financial position
Company number: 05601091
ASSETS
Non-Current Assets
Property, plant and equipment
Intangible assets
Financial assets at fair value through other comprehensive income
Available-for-sale financial assets
Investments in equity-accounted associates
Investment in subsidiaries
Current Assets
Trade and other receivables
Cash and cash equivalents
Total Assets
EQUITY
Capital and reserves attributable to owners of the Company
Share capital
Share premium
Other reserves
Retained earnings
Total Equity
LIABILITIES
Current Liabilities
Trade and other payables
Total Equity and Liabilities
As at 31
December
2018
£’000
As at 31
December
2017
£’000
Notes
14
13
16
16
15
12
18
20
22
22
25
32
27
25
186
227
–
1,458
3,762
5,658
665
1,243
1,908
7,566
4,908
21,253
527
(19,296)
7,392
2
–
–
227
1,302
6,177
7,708
986
2,004
2,990
10,698
4,673
20,427
476
(15,570)
10,006
174
174
692
692
7,566
10,698
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been
separately presented in these accounts. The Parent Company loss for the year was £3,726,000 (2017: £12,760,000).
The notes on pages 34 to 61 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 12 March 2019 and were signed
on its behalf by:
John McGloin
Non-Executive Chairman
Robert Smeeton
Chief Financial Officer
ORIOLE AR2018.indd 31
26603
3 April 2019 3:13 pm
Proof 6
31
03/04/2019 15:14:20
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Statement of company
changes in equity
Share
capital
£’000
Share
premium
£’000
Other
Reserves
(see note 25)
£’000
Retained
earnings
£’000
Total equity
£’000
Balance at 1 January 2017
4,673 20,427
590
(2,996)
22,694
Comprehensive income for the year:
- loss for the year
Total comprehensive income for the year
Share-based payments
Share options cancelled
Total contributions by and distributions
to owners of the Company
–
–
–
–
–
–
–
–
–
–
–
–
72
(186)
(114)
(12,760)
(12,760)
(12,760)
(12,760)
–
186
186
72
–
72
Balance at 31 December 2017 and 1 January 2018
4,673 20,427
476
(15,570)
10,006
Comprehensive income for the year:
- loss for the year
Total comprehensive income for the year
Issue of share capital net of expenses
Share-based payments
Total contributions by and distributions
to owners of the Company
–
–
235
–
235
–
–
826
–
826
–
–
–
51
51
(3,726)
(3,726)
–
–
–
(3,726)
(3,726)
1,061
51
1,112
Balance at 31 December 2018
4,908
21,253
527
(19,296)
7,392
The notes on pages 34 to 61 form part of these financial statements.
32
ORIOLE AR2018.indd 32
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:20
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Statement of company
cash flows
Cash flow from operating activities:
Net cash used in operating activities
Cash flow from investing activities:
Purchase of property, plant and equipment
Investment in intangible assets
Funding of subsidiary exploration companies
Investment in associated company
Proceeds from sale of available-for-sale financial asset
Costs related to aborted acquisition
Loan to third party
Interest received
Net cash used in investing activities
Cash flow from financing activities
Dividend received from subsidiary
Net proceeds from share issue
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
The notes on pages 34 to 61 form part of these financial statements.
Year ended
31 December
2018
£’000
Year ended
31 December
2017
£’000
Notes
28
14
13
15
18
20
(1,771)
(1,591)
(25)
(186)
(572)
(156)
–
–
821
67
(51)
–
1,061
1,061
(761)
2,004
1,243
(5)
–
(619)
(451)
547
(1,620)
(906)
45
(3,009)
5,076
–
5,076
476
1,528
2,004
ORIOLE AR2018.indd 33
26603
3 April 2019 3:13 pm
Proof 6
33
03/04/2019 15:14:20
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the financial
statements
1. GENERAL INFORMATION
The principal activity of Oriole Resources PLC (‘the Company’)
and its subsidiaries (together ‘the Group’) is the exploration
and development of precious and high-value base metals.
The Company’s shares are quoted on the AIM Market of the
London Stock Exchange. The Company is incorporated and
domiciled in the UK.
The address of its registered office is
180 Piccadilly, London, W1J 9HF.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the
preparation of these financial statements are set out below.
These policies have been consistently applied to all the
years presented.
2.1 Basis of preparation
These financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union
(EU), IFRIC interpretations and those parts of the
Companies Act 2006 applicable to companies reporting
under IFRS. The financial statements were prepared
under the historical cost convention as modified by
the measurement of certain investments at fair value.
Going Concern
It is the prime responsibility of the Board to ensure
the Company and the Group remains a going concern.
At 31 December 2018 the Group had cash and cash
equivalents of £1.3m and no borrowings. In early 2019,
the Group expect to receive £0.5m from HMRC in relation
to a VAT refund. Having considered the prepared cashflow
forecasts and Group budgets and considering current cash
levels following receipt of the VAT refund, the Directors
consider it appropriate to continue to adopt the going
concern basis in the preparation of the financial statements.
Changes in Accounting Policies
Standards /
interpretations
IFRS 15
Application
Revenue from contracts with
customers
Annual Improvements 2014 – 2016 Cycle (IFRS 1 & IAS 28)
IFRIC 22 - revisions
Foreign Currency Transactions and
Advance Consideration
IFRS 9
Financial Instruments
IFRS 2 amendments Measurement of share-based
payment transactions
31 December
2017 as
presented
£’000
–
581
1 January
2018 as
restated
£’000
581
–
IFRS9
£’000
581
(581)
Financial assets
at FVOCI
Available for sale
financial assets
b) New and amended standards not yet adopted
by the Group
Standards /
interpretations
IFRS 16
IFRIC 23
IFRS 9 amendments
Application
Leases: Effective 1 January 2019
Uncertainty over tax treatments:
Effective 1 January 2019
Prepayment Features with Negative
Compensation:
Effective 1 January 2019
IFRS 28 amendments Long-term Interests in Associates
and Joint Ventures:
Effective 1 January 2019*
Annual Improvements 2015 – 2017 Cycle:
Effective 1 January 2019*
IFRS 19 amendments Plan Amendment, Curtailment or
Settlement: Effective 1 January 2019*
IFRS 3 amendments
IAS 1 & IAS 8
amendments
Business Combinations:
Effective 1 January 2020*
Definition of Material:
Effective 1 January 2020*
a) New and amended standards adopted by the Group
*Subject to EU endorsement
The following IFRs or IFRIC interpretations were effective
for the first time for the financial year beginning 1 January
There are no IFRSs or IFRIC interpretations that are not yet
effective that would be expected to have a material impact
2018. Their adoption has not had any material impact on the
on the Company or Group.
disclosures or on the amounts reported in these financial
statements:
34
ORIOLE AR2018.indd 34
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:20
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
2.2 Basis of consolidation
Acquisition related costs are expensed as incurred.
Oriole Resources PLC was incorporated on 24 October
2005 as Stratex International PLC. On 21 November 2005
the Company acquired the entire issued share capital of
Stratex Exploration Ltd by way of a share-for-share exchange.
The transaction was treated as a Group reconstruction and
was accounted for using the merger accounting method.
Subsidiaries are entities controlled by the Group. Control
is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee. Specifically, the Group controls an investee if,
and only if, the Group has:
− Power over the investee (i.e. existing rights that give
it the current ability to direct the relevant activities
of the investee).
− Exposure, or rights, to variable returns from its involvement
with the investee
− The ability to use its power over the investee to affect
its returns.
Generally, there is a presumption that a majority of voting
rights result in control. To support this presumption and
when the Group has less than a majority of the voting or
similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power
over an investee, including:
− The contractual arrangement with the other vote holders
of the investee.
− Rights arising from other contractual arrangements.
− The Group’s voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group
The Group measures goodwill at the acquisition date as
the excess of the fair value of the consideration transferred,
plus the recognised amount of any non-controlling interests,
less the recognised amount of the identifiable assets
acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting
policies used into line with those used by other members
of the Group. All significant intercompany transactions
and balances between group entities are eliminated
on consolidation.
When the Group ceases to consolidate a subsidiary as
a result of losing control and the Group retains an interest
in the subsidiary and the retained interest is an associate,
the Group measures the retained interest at fair value
at that date and the fair value is regarded as its cost on
initial recognition. The difference between the net assets
de-consolidated and the fair value of any retained interest
and any proceeds from disposing of a part interest in the
subsidiary is included in the determination of the gain
or loss on disposal. In addition, the Group accounts for
all amounts previously recognised in other comprehensive
income in relation to that associate on the same basis as
would be required if that subsidiary had directly disposed
of the related assets or liabilities.
Associates are all entities over which the Group has
significant influence but not control over the financial
and operating policies.
References to joint venture agreements do not refer
to arrangements which meet the definition of joint
ventures under IFRS 11 “Joint Arrangements” and therefore
loses control of the subsidiary. Assets, liabilities, income and
these Financial Statements do not reflect the accounting
expenses of a subsidiary acquired or disposed of during the
treatments required under IFRS 11.
year are included in the consolidated financial statements
from the date the Group gains control until the date the
Group ceases to control the subsidiary. The acquisition
Investments in associates and jointly controlled entities
are accounted for using the equity method of accounting
and are initially recognised at cost. The Group’s share of
method is used to account for the acquisition of subsidiaries.
its associates’ post-acquisition profits or losses is recognised
Any contingent consideration is recognised at fair value
in profit or loss, and its share of post-acquisition movements
at the acquisition date. Subsequent changes to the fair value
in reserves is recognised in other comprehensive income.
of the contingent consideration that is deemed to be an
The cumulative post-acquisition movements are adjusted
asset or a liability is recognised in accordance with IAS 39
against the carrying amount of the investment.
either in profit or loss or as a change in other comprehensive
income. The unwinding of the discount on contingent
consideration liabilities is recognised as a finance charge
within profit or loss.
When the Group’s share of losses exceeds its interest
in an equity-accounted investee the carrying amount of
the investment, including any other unsecured receivables,
is reduced to zero, and the recognition of further losses
is discontinued, unless the Group has incurred obligations
or made payments on behalf of the investee.
ORIOLE AR2018.indd 35
26603
3 April 2019 3:13 pm
Proof 6
35
03/04/2019 15:14:20
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
2.3 Foreign currency translation
POLICIES (CONTINUED)
2.2 Basis of consolidation (continued)
Unrealised gains on transactions between the Group
and equity–accounted investees are eliminated to the
extent of the Group’s interest in the investee. Unrealised
losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of equity-accounted investees have
been changed where necessary to ensure consistency with
the policies adopted by the Group. Dilution gains and losses
arising in investments in equity-accounted investees are
recognised in profit or loss.
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions.
Gains or losses on disposals to non-controlling interests are
recorded in equity.
The Group discontinues the use of the equity method
from the date when the investment ceases to be an
associate or when the investment is classified as held for
sale. When the Group retains an interest in the former
associate or joint venture and the retained interest is a
financial asset, the Group measures the retained interest
at fair value at that date and the fair value is regarded as its
fair value on initial recognition. The difference between the
carry amount of the associate at the date the equity method
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(the ‘functional currency’). The consolidated financial
statements are presented in sterling, which is the Group’s
presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
(c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different
from the presentation currency are translated into
the presentation currency as follows:
− assets and liabilities for each statement of financial
position presented are translated at the closing rate
at the date of that statement of financial position.
was discontinued, and the fair value of any retained interest
− income and expenses in profit or loss for each statement
and any proceeds from disposing of a part interest in the
of comprehensive income presented are translated
associate is included in the determination of the gain or loss
at average exchange rates (unless this average is not
on disposal. In addition, the Group accounts for all amounts
a reasonable approximation of the cumulative effect
previously recognised in other comprehensive income in
of the rates prevailing on the transaction dates, in which
relation to that associate on the same basis as would be
case income and expenses are translated at the dates
required if that associate had directly disposed of the related
of the transactions); and
assets of liabilities.
When the Group reduces its ownership interest in an
associate but the Group continues to use the equity method,
the Group reclassifies to profit or loss the proportion
of the gain or loss that had previously been recognised
in other comprehensive income relating to that reduction
in ownership interest if that gain or loss would be reclassified
to profit or loss on the disposal of the related assets
or liabilities.
− all resulting exchange differences are recognised in other
comprehensive income. On consolidation, exchange
differences arising from the translation of the net
investment in foreign entities, and of monetary items
receivable from foreign subsidiaries for which settlement
is neither planned nor likely to occur in the foreseeable
future are taken to other comprehensive income.
When a foreign operation is sold, exchange differences
that were recorded in equity are recognised in profit
or loss as part of the gain or loss on sale.
36
ORIOLE AR2018.indd 36
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
2.4 Intangible assets-Exploration
2.6 Impairment of non-financial assets
and evaluation assets
A financial asset is impaired if there is objective evidence
The Group capitalises expenditure in relation to exploration
of impairment as a result of one or more events that occurred
and evaluation of mineral assets when the legal rights are
after the initial recognition of the asset, and that loss event(s)
obtained. Expenditure included in the initial measurement
had an impact on the estimated future cash flows of that
of exploration and evaluation assets and which are classified
asset that can be estimated reliably.
as intangible assets relate to the acquisition of rights
to explore, research into the topographical, geological,
geochemical and geophysical characteristics of the asset,
exploratory drilling, trenching, sampling and activities to
research the technical feasibility and commercial viability
of extracting a mineral resource.
Exploration and evaluation assets are not amortised but
are assessed for impairment, with an impairment test being
required when facts and circumstances suggest that the
carrying amount of an asset may exceed its recoverable
amount. The assessment is carried out by allocating
exploration and evaluation assets to cash generating units,
which are based on specific projects or geographical areas.
Whenever the exploration for and evaluation of mineral
resources does not lead to the discovery of commercially
viable quantities of mineral resources or the Group has
decided to discontinue such activities of that unit, the
associated expenditures are written off to profit or loss.
2.5 Segment reporting
The Group considers evidence of impairment for financial
assets measured at amortised cost at both a specific asset
and collective level.
An impairment loss in respect of a financial asset measured
at amortised cost is calculated as the difference between
its carrying amount and the present value of the estimated
future cash flows discounted at the asset’s original effective
interest rate. Losses are recognised in profit or loss.
The carrying amount of the Group’s non-financial assets
are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated.
An impairment loss is recognised if the carrying amount
of an asset exceeds its recoverable amount.
In assessing the carrying values of its major exploration
and evaluation assets, the Directors have used cash flow
projections for each of the projects where a JORC- compliant
resource has been calculated.
Certain of the other exploration projects are at an early
Operating segments are reported in a manner consistent
stage of development and no JORC-compliant resource
with the internal reporting provided to the chief operating
estimate has been completed. In these cases, the Directors
decision makers. The chief operating decision makers,
have assessed the impairment of the projects based on
who are responsible for allocating resources and assessing
future exploration plans and estimates of geological and
performance of the operating segments, have been
economic data. The Board does not believe that the key
identified as the executive Board of Directors.
assumptions will change so as to cause the carrying values
to exceed the recoverable amounts.
To date impairment losses recognised have followed
the decision of the Board not to continue exploration
and evaluation activity on a particular project licence area
where it is no longer considered an economically viable
project or where the underlying exploration licence has
been relinquished.
2.7 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and
in hand, and demand deposits with banks and other
financial institutions.
ORIOLE AR2018.indd 37
26603
3 April 2019 3:13 pm
Proof 6
37
03/04/2019 15:14:21
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
Equity instruments
POLICIES (CONTINUED)
2.8 Financial instruments
(a) Classification
The Group subsequently measures all equity investments
at fair value. Where the Group’s management has elected
to present fair value gains and losses on equity investments
in OCI, there is no subsequent reclassification of fair value
From 1 January 2018, the Group classifies its financial assets
gains and losses to profit or loss following the derecognition
in the following measurement categories:
− those to be measured subsequently at fair value (either through
OCI or through profit or loss); and
− those to be measured at amortised cost.
The classification depends on the Group’s business
model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will
be recorded either in profit or loss or in OCI. For investments
of the investment. Dividends from such investments
continue to be recognised in profit or loss as other income
when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL
are recognised in other gains/(losses) in the statement
of profit or loss as applicable. Impairment losses (and
reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from
other changes in fair value.
in equity instruments that are not held for trading, this will
(d) Impairment
depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive
income (FVOCI). See Note 16 for further details.
From 1 January 2018, the Group assesses, on a forward-
looking basis, the expected credit losses associated
with its debt instruments carried at amortised cost.
The impairment methodology applied depends on
(b) Recognition
Purchases and sales of financial assets are recognised
on trade date (that is, the date on which the Group
commits to purchase or sell the asset). Financial assets
are derecognised when the rights to receive cash flows
whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified
approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition
of the receivables.
from the financial assets have expired or have been
(e) Accounting policies applied until 31 December 2017
transferred and the Group has transferred substantially
(i) Classification
all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that
The Group classifies its financial assets in the following
categories: loans and receivables, and available-for-sale.
The classification depends on the purpose for which the
financial assets were acquired. Management determines
the classification of its financial assets at initial recognition.
are directly attributable to the acquisition of the financial
− Loans and receivables
asset. Transaction costs of financial assets carried at FVPL
are expensed in profit or loss.
Debt instruments
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They are included in current assets,
Amortised cost: Assets that are held for collection of
except for maturities greater than 12 months after the end
contractual cash flows, where those cash flows represent
of the reporting period. These are classified as non-current
solely payments of principal and interest, are measured
assets. The Group’s loan and receivables comprise Trade
at amortised cost. Interest income from these financial
and Other Receivables and Cash and Cash Equivalents
assets is included in finance income using the effective
in the Statement of Financial Position.
interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented
as a separate line item in the statement of profit or loss.
− Available-for-sale financial asset
Available-for-sale financial assets are non-derivatives
that are either designated in this category or not
classified in any of the other categories. They are
included in non-current assets unless management
intends to dispose of the asset within 12 months of
the end of the reporting period.
38
ORIOLE AR2018.indd 38
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
(ii) Recognition and Measurement
(iv) Impairment of Financial Assets
Regular purchases and sales of financial assets are
− Assets Carried at Amortised Cost
recognised on the trade date, i.e. the date on which
the Group commits to purchasing or selling the asset.
Investments are initially recognised at fair value plus
transaction costs. Financial assets are derecognised
when the rights to receive cash flows from the investments
have expired or have been transferred, and the Group
has transferred substantially all of the risks and rewards
of ownership.
The Group assesses at the end of each reporting period
whether there is objective evidence that a financial asset,
or a Group of financial assets, is impaired. A financial asset,
or a Group of financial assets, is impaired, and impairment
losses are incurred, only if there is objective evidence of
impairment as a result of one or more events that occurred
after the initial recognition of the asset (a “loss event”), and
that loss event (or events) has an impact on the estimated
Fair value is the price that would be received on the
future cash flows of the financial asset, or Group of financial
sale of an asset or paid to transfer a liability in an
assets, that can be reliably estimated.
orderly transaction between market participants at the
measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset
or transfer the liability takes place either in the principal
market for the asset or liability or, in the absence of
a principal market, in the most advantageous market
for the asset or liability.
For the loans and receivables category, the amount of the
loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not
been incurred), discounted at the financial asset’s original
effective interest rate. The asset’s carrying amount is reduced,
and the loss is recognised in profit or loss. If a loan or
All assets and liabilities for which fair value is measured
held-to-maturity investment has a variable interest rate,
or disclosed in the financial statements are categorised
the discount rate for measuring any impairment loss is
within the fair value hierarchy, described as follows,
the current effective interest rate determined under the
based on the lowest level input that is significant to
contract. As a practical expedient, the Group may measure
the fair value measurement as a whole:
impairment on the basis of an instrument’s fair value using
− Level 1 – quoted market prices in active markets for
identical assets or liabilities
− Level 2 – valuation techniques for which the lowest level
input that is significant to the fair value measurement
is directly or indirectly observable
− Level 3 – valuation techniques for which the lowest level
input that is significant to the fair value measurement
is unobservable
an observable market price.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such
as an improvement in the debtor’s credit rating), the reversal
of the previously recognised impairment loss is recognised
in profit or loss.
− Assets Classified as Available-for-Sale
The Group assesses at the end of each reporting period
Available-for-sale financial assets are subsequently carried
whether there is objective evidence that a financial asset,
at fair value. Loans and receivables are subsequently carried
or a Group of financial assets, is impaired. A significant
at amortised cost using the effective interest method.
or prolonged decline in the fair value of the security below
When securities classified as available-for-sale are sold or
impaired, the accumulated fair value adjustments recognised
in equity are included in profit or loss as “gains and losses
from investment securities”.
(iii) Offsetting Financial Instruments
its cost is also evidence that the assets are impaired.
If any such evidence exists for available-for-sale financial
assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously
recognised in profit or loss – is removed from equity and
Financial assets and liabilities are offset and the net amount
recognised in profit or loss. Impairment losses recognised
reported in the Statement of Financial Position when
in profit or loss are not reversed through profit or loss.
there is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis,
or realise the asset and settle the liability simultaneously.
ORIOLE AR2018.indd 39
26603
3 April 2019 3:13 pm
Proof 6
39
03/04/2019 15:14:21
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING
2.10 Share-based payments
POLICIES (CONTINUED)
2.9 Deferred taxation
Deferred tax is accounted for using the liability method
in respect of temporary differences arising from differences
between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used
in the computation of taxable profit. In principle, deferred tax
liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
The fair value of the services received from employees
and third parties in exchange for the grant of share options
is recognised as an expense. The fair value of the options
granted is calculated using the Black-Scholes pricing
model and is expensed over the vesting period. At each
reporting period the Group revises its estimate of the
number of options that are expected to become exercisable.
It recognises the impact of the revision of original estimates,
if any, in profit or loss, and a corresponding adjustment to
equity over the remaining vesting period. The proceeds
received net of any directly attributable transaction costs
are credited to share capital (nominal value) and share
Deferred tax is calculated at the tax rates that are expected
premium when the options are exercised.
to apply to the period when the asset is realised or the
liability settled. Deferred tax is charged or credited in profit
2.11 Share capital
or loss, except when it relates to items credited or charged
Ordinary shares are classified as equity. Incremental costs
directly to equity, in which case the deferred tax is also dealt
directly attributable to the issue of new shares or options
with in equity.
are shown in equity as a deduction from the proceeds.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis. No liability to UK corporation tax
arose on ordinary activities for the current period or prior
periods. The Group has losses to be carried forward on which
no deferred tax asset is recognised. Deferred tax assets are
recognised on tax losses carried forward to the extent that
the realisation of the related tax benefit through future
taxable profits is probable.
2.12 Finance income
Finance income comprises bank interest receivable. Interest
revenue is recognised using the effective interest method.
2.13 Other income
Other income represents income from activities other
than normal business operations. Royalty payments, arising
from the involvement of exploration partners, are recognised
as other income once payment has been received.
Current and deferred tax is charged or credited in the profit
2.14 Post-employment benefits
or loss, except when it relates to items charged or credited
directly to equity, in which case the related tax is also dealt
with in equity.
Retirement benefit costs are calculated by applying the
Projected Unit Credit Method and the resulting adjustments
are recognised in profit or loss.
2.15 Leases
Lease payments for operating leases, where substantially all
the risks and benefits remain with the lessor, are recognised
as expenses in the periods in which they are incurred.
40
ORIOLE AR2018.indd 40
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
3. RISK MANAGEMENT
3.1 Financial risk management
The main financial risks facing the Group are the availability
of adequate funding, movements in interest rates and
fluctuations in foreign exchange rates. Constant monitoring
of these risks ensures that the Group is protected against any
potential adverse effects of such risks so far as it is possible
and foreseeable. The Group only deals with high-quality
banks. It does not hold derivatives, does not trade in financial
instruments and does not engage in hedging arrangements.
4. CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
The preparation of the financial statements requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the reporting date,
most importantly the carrying values assigned to intangible
assets, associates, and financial assets designated as fair
value through other comprehensive income. Actual results
may vary from the estimates used to produce these financial
statements. The most significant judgement for the Group
In keeping with similar sized mineral exploration groups,
is the assumption that exploration at the various sites will
its continued future operations depend on the ability to raise
ultimately lead to a commercial mining operation, which
sufficient working capital. The Group finances itself through
includes the assumption that any licenses held will be
the monetisation of exploration assets and the issue of equity
renewed as required upon expiry. Failure to do so could
share capital and has no borrowings. Management monitors
lead to the write-off of the intangible assets relating to the
its cash and future funding requirements through the use of
particular site (see Note 2.6). It should be noted that certain
on-going cash flow forecasts. All cash, with the exception of
licenses are due for renewal in 2019.
that required for immediate working capital requirements,
is held on short term deposit.
The Group is subject to income taxes in numerous
jurisdictions. Judgement is required in determining the
The Group’s only exposure to interest rate fluctuations is
worldwide provision for such taxes. The Group recognises
restricted to the rates earned on its short-term deposits.
liabilities for anticipated tax issues based on estimates
These deposits returned an interest rate of between 0.1%
of whether additional taxes will be due. Where the final tax
and 1.15% during the past year.
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures,
primarily with respect to the Turkish Lira, Euro and US
Dollar, (see note 21). Foreign exchange risk arises from future
commercial transactions and net investments in foreign
operations. The Group does not hedge its exposure to foreign
currencies and recognises the profits and losses resulting
outcome of these matters is different from the amounts
that were initially recorded, such differences will affect the
current and deferred income tax assets and liabilities in the
period in which such determination is made. A deferred tax
asset of £111,000 has been recognised in respect of temporary
timing differences relating to the Group’s intangible assets.
Should these timing differences not reverse, the Group
may need to revise the carrying value of this asset.
from currency fluctuations as and when they arise.
Estimates and judgements are continually evaluated
The Group will continue to make substantial expenditures
related to its exploration and development activities.
and are based on historical experience and other factors,
including expectations of future events that are believed
The financial exposure of the Group has been substantially
to be reasonable under the circumstances.
reduced as a result of entering into agreements with
third parties.
3.2 Capital risk management
The Company’s objectives when managing capital are
to safeguard the Company’s ability to continue as a going
concern, in order to provide returns for shareholders and
benefits for other stakeholders, and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure,
the Company may adjust the amount of dividends paid
to shareholders, return capital to shareholders, or issue
new shares.
ORIOLE AR2018.indd 41
26603
3 April 2019 3:13 pm
Proof 6
41
03/04/2019 15:14:21
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
5. SEGMENT REPORTING
The Group’s main exploration operations are located in Turkey, East Africa and West Africa. The Group’s head office is located
in the UK and provides corporate and support services to the Group and researches new areas of exploration opportunities.
The management structure and the management reports received by the Directors and used to make strategic decisions
reflect the split of operations.
a) The allocation of assets and liabilities by segment is as follows:
At 31 December 2018
Intangible assets
Property, plant and equipment
Investment in associate companies
Cash and other assets
Liabilities
Inter-segment
Net assets
Additions to property, plant and equipment
At 31 December 2017
Intangible assets
Property, plant and equipment
Investment in associate companies
Cash and other assets
Liabilities
Inter-segment
Net assets
Additions to property, plant and equipment
Exploration
Turkey
East Africa West Africa
UK support
& other
£’000
£’000
£’000
£’000
–
1
–
203
(136)
(2,422)
(2,354)
–
–
–
2,250
187
–
–
2,437
–
6,780
1
–
284
(3)
(1,967)
5,095
–
–
25
–
1,921
(181)
4,389
6,154
25
Exploration
Turkey
East Africa West Africa
UK support
& other
£’000
£’000
£’000
£’000
–
4
–
263
(209)
(2,010)
(1,952)
–
–
–
5,524
354
–
–
5,878
–
6,484
1
–
240
(16)
(1,468)
5,241
1
–
3
–
2,966
(700)
3,478
5,747
5
Group
total
£’000
6,780
27
2,250
2,595
(320)
-
11,332
25
Group
total
£’000
6,484
8
5,524
3,823
(925)
–
14,914
6
The capitalised cost of the principal projects and the additions during the year are as follows:
Capitalised cost
Additions in year
2018
£’000
6,551
229
–
6,780
2017
£’000
2018
£’000
2017
£’000
6,484
–
–
6,484
67
229
–
296
–
–
32
32
West Africa
Dalafin
Bibemi/Wapouzé
Homase/Akrokerri
Total Intangible assets
42
ORIOLE AR2018.indd 42
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
b) The allocation of profits and losses for the year by segment is as follows:
2018
Administration expenses
Depreciation charge
Other income/(losses)
Share of associate company losses
Exchange gains/(losses)
Inter-segment charges
Income tax
Profit/(loss) for year
2017
Administration expenses
Depreciation charge
Other income/(losses)
Share of associate company losses
Exchange gains/(losses)
Discontinued operation
Inter-segment charges
Income tax
Profit/(loss) for year
Exploration
Turkey
East Africa West Africa
UK support
& other
£’000
£’000
£’000
£’000
Group
total
£’000
(281)
(1)
120
–
(65)
(131)
(41)
–
–
(1,430)
(2,140)
–
–
–
(399)
(3,570)
Exploration
(197)
(1,324)
(1,802)
(1)
–
–
77
(209)
–
(330)
(2)
698
–
(74)
340
–
(4)
(612)
(2,140)
(62)
–
(41)
(362)
(4,661)
Turkey
East Africa West Africa
UK support
& other
£’000
£’000
£’000
£’000
Group
total
£’000
(423)
(2)
1,959
–
45
–
(101)
(20)
–
–
(14)
(141)
–
–
–
–
(297)
(1)
(1,754)
–
(78)
(654)
(402)
–
(1,718)
(2,438)
(1)
(2,132)
–
(171)
–
503
–
(4)
(1,941)
(141)
(204)
(654)
–
(20)
1,458
(155)
(3,186)
(3,519)
(5,402)
6. LOSS ON CHANGE OF OWNERSHIP INTEREST
Loss for the year on change of ownership interest
2018
£’000
(98)
2017
£’000
(14)
Small changes to the Company’s interest in Thani Stratex Resources Limited during the year have resulted in a loss of £98,000,
which has been recognised in the consolidated statement of comprehensive income.
ORIOLE AR2018.indd 43
26603
3 April 2019 3:13 pm
Proof 6
43
03/04/2019 15:14:21
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
7. OTHER (LOSSES)/INCOME
Exchange losses
Costs related to aborted acquisition
Write-off loan to related party
Miscellaneous tax on former joint venture
Impairment of investments (see note 15, 16)
VAT release/(provision)
Other profits/(losses)
Net (loss)/profit for the year
2018
£’000
(62)
–
–
–
(1,430)
631
120
2017
£’000
(204)
(1,621)
(1,261)
(796)
(492)
(558)
(128)
(741)
(5,060)
In the prior year, costs related to the aborted acquisition consist of associated fees and services for the planned Crusader
acquisition, which was terminated on 1 November 2017.
In the prior year, related party loan balances with EMC SA were written off.
In the prior year, a tax balance was paid to the Turkish Tax Authorities to resolve a historic dispute with a previous
operating partner over tax payments related to a former Oriole joint venture. Oriole is undertaking legal proceedings
to reclaim this amount.
In the prior year a provision was made to reflect a VAT dispute with HMRC. In addition, VAT was expensed to the Income
Statement to reflect HMRC’s view that VAT was not recoverable. During the current year HMRC have agreed on the
basis for VAT recovery and consequently the provision has been released and expensed VAT has been credited to the
Income Statement.
8. PROFIT ON SALE OF INVESTMENT ASSETS
Profit for the year from disposal of available-for-sale assets
9. EXPENSES BY NATURE
Administration expenses comprise:
Personnel expenses (see note 10)
Legal and professional expenses
Amounts paid to the Company’s auditors (see below)
Other exploration related expenses
Consultant geologists
Office costs
Travel costs
Contract staff fees
Depreciation expense
Other expenses
Total for year
44
2018
£’000
–
2018
£’000
870
291
40
224
131
60
49
27
4
110
2017
£’000
2,883
2017
£’000
1,198
382
151
156
127
93
91
65
4
175
1,806
2,442
ORIOLE AR2018.indd 44
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
During the year the Group obtained the following services from the Company’s auditor:
2018
£’000
2017
£’000
Auditor’s remuneration:
Fees payable for the audit of parent and consolidated financial statements
Fees payable for corporate finance services
Fees payable for tax compliance
Total for year
10. PERSONNEL EXPENSES
35
–
5
40
Wages and salaries
Social security costs
Share options granted to Directors and employees
Employee benefits-in-kind
Employee termination benefits
Employee pensions
Compensation for loss of office
Total for year
Average number of employees, including Directors
Group
Company
2018
£’000
683
56
18
1
(5)
32
85
870
13
2017
£’000
905
100
73
9
5
6
100
1,198
13
2018
£’000
454
56
18
1
–
32
85
646
8
38
109
4
151
2017
£’000
707
88
73
4
–
6
100
978
9
Employee termination benefits relate to Stratex Madencilik Sanayi Ve Ticaret Ltd. Şti and has been calculated using the
projected unit credit method.
Details of the Directors’ remuneration is shown in the Directors’ Report.
11. INCOME TAX
Analysis of income tax expense:
Current taxation:
UK Corporation tax charge for the year
Deferred taxation:
Deferred tax charge for the year
Total tax on loss for the year
2018
£’000
2017
£’000
–
(41)
(41)
–
(20)
(20)
The Group does not anticipate a UK corporation tax charge for the year due to the availability of tax losses.
The Group did not recognise deferred income tax assets of approximately £1,400,000 (2017: £1,000,000).
ORIOLE AR2018.indd 45
26603
3 April 2019 3:13 pm
Proof 6
45
03/04/2019 15:14:21
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
11. INCOME TAX (CONTINUED)
Reconciliation of tax charge:
Loss before tax
Current tax credit at 19% (2017:20%)
Effects of:
Expenses not deductible for tax purposes
Non-taxable income
Tax losses carried forward – UK
Tax losses carried forward – outside UK
Origination and reversal of temporary differences
Tax credit
12. INVESTMENT IN SUBSIDIARIES
The cost of shares in subsidiary companies is as follows:
Company
Cost of investment at 1 January
Impairment provision
Disposal
Loans to subsidiary companies
At 31 December
2018
£’000
(4,620)
878
(676)
–
(15)
(187)
(41)
(41)
2018
£’000
2,699
(1,000)
–
1,699
2,063
3,762
2017
£’000
(5,382)
1,076
–
–
(1,076)
–
(20)
(20)
2017
£’000
4,264
–
(1,565)
2,699
3,478
6,177
During the year the Company made a provision for impairment against its investment in Oriole Exploration Limited.
During the prior year the Company sold its interest in Goldstone Resources Limited (see note 17).
There are no significant restrictions in relation to the subsidiaries.
46
ORIOLE AR2018.indd 46
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Investments in subsidiaries are stated at cost and are as follows:
Oriole Exploration Ltd
Stratex Gold AG
Stratex West Africa Limited
Stratex Madencilik Sanayi Ve Ticaret Ltd. Şti
Stratex EMC SA
Oriole Exploration Ltd
Stratex Gold AG
Stratex West Africa Limited
Stratex Madencilik Sanayi Ve Ticaret Ltd. Şti
Stratex EMC SA
Country of
incorporation
% owned by
the Company
% owned by
subsidiary
Nature of
Business
UK
Switzerland
UK
Turkey
Senegal
100
100
100
–
–
–
–
–
100
85
Holding
company
Holding
company
Exploration
Exploration
Exploration
Registered office
180 Piccadilly, London, W1J 9HF, UK
St Gallen, Goethestrasse 61 St Gallen, 9008, Switzerland
Wessex House, Upper Market Street, Eastleigh,
Hampshire, SO50 9FD, UK
Çukurambar Mahallesi 1458. Sokak, Elit Aprt.
No: 17/6, Ankara, Turkey
Wessex House, Upper Market Street, Eastleigh,
Hampshire, SO50 9FD, UK
13. INTANGIBLE ASSETS
The Group’s intangible assets comprise entirely of exploration assets.
Cost at 1 January
Exchange movements
Additions
De-consolidation of Goldstone Resource Limited (see note 17)
At 31 December
Group
2018
£’000
6,484
67
229
–
6,780
2017
£’000
10,491
1
32
(4,040)
6,484
Company
2018
£’000
2017
£’000
–
–
186
–
186
–
–
–
–
–
Goldstone Resources Limited (“GRL”) ceased to be accounted for as a fully consolidated subsidiary on 2 June 2017 and was
subsequently sold.
ORIOLE AR2018.indd 47
26603
3 April 2019 3:13 pm
Proof 6
47
03/04/2019 15:14:21
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
14. PROPERTY, PLANT, AND EQUIPMENT
Group
Gold
Samples
Motor
Vehicles
Field
Equipment
Office
furniture
and
equipment
£’000
£’000
£’000
£’000
Total
£’000
478
(33)
7
(197)
255
(25)
25
(19)
236
(464)
32
(4)
189
(247)
25
(4)
17
Company
Office
furniture
and
equipment
£’000
80
–
5
(4)
81
–
25
–
106
(80)
–
(1)
2
(79)
–
(2)
–
(81)
–
2
25
52
(6)
–
(16)
30
–
–
–
30
(52)
6
–
16
(30)
–
–
–
65
(2)
–
(44)
19
–
–
–
19
(65)
2
–
44
(19)
–
–
–
357
(25)
7
(133)
206
(25)
25
(19)
187
(347)
24
(4)
129
(198)
25
(4)
17
(30)
(19)
(160)
(209)
–
–
–
–
–
–
10
8
27
14
8
27
4
–
–
(4)
–
–
–
–
–
–
–
–
–
–
–
–
–
-
4
–
–
Cost
At 1 January 2017
Exchange movements
Additions
Disposals
At 31 December 2017
Exchange movements
Additions
Disposals
At 31 December 2018
Depreciation
At 1 January 2017
Exchange movements
Additions
Disposals
At 31 December 2017
Exchange movements
Additions
Disposals
At 31 December 2018
Net Book Value
at 1 January 2017
at 31 December 2017
at 31 December 2018
48
ORIOLE AR2018.indd 48
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:21
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
15. INVESTMENT IN EQUITY-ACCOUNTED ASSOCIATES
At 1 January
Exchange movements
Share of losses
Additions
Loss on change of ownership interest
Provision for impairment
Transfer to assets held for sale
Fair value of subsidiary deconsolidated
At 31 December
Group
Company
2018
£’000
5,524
140
(2,042)
156
(98)
(1,430)
–
–
2017
£’000
5,758
(536)
(151)
451
(365)
–
(952)
1,319
2018
£’000
1,302
–
–
156
–
–
–
–
2017
£’000
851
–
–
451
–
–
–
2,250
5,524
1,458
1,302
The Company’s shareholding interest in Thani Stratex Resources Limited (“TSRL”) reduced from 30.1% to 29.0% during
the course of the year. A further £156,000 (2017: £451,000) was invested in during the year.
The following entity has been included in the consolidated financial statements using the equity accounting method:
Thani Stratex Resources Limited
Other
Total
%
29.0
–
2018
Value
£’000
2,250
–
2,250
Change
£’000
(3,274)
–
(3,274)
%
30.1
2017
Value
£’000
5,524
–
5,524
2017
£’000
(141)
(10)
(151)
Thani Stratex Resources Limited has a reporting date of 31 December and its registered office is PO Box 173,
Kingston Chambers, Road Town, Tortola, British Virgin Islands.
Summarised financial information for investments accounted for using an equity accounting method is shown below.
This information reflects the amounts presented in the draft financial statements of the associates (and not Oriole Resources
PLC’s share of those amounts) adjusted for differences in accounting policies between the Group and associates:
Statement of financial position for Thani Stratex Resources Limited
As at 31 December
Current Assets
Cash and equivalents
Net current assets/(liabilities)
Total current assets
Non-current assets
Furniture, fittings and equipment
Intangible assets
Associated companies
Total non-current assets
Non-current liabilities
Net assets
ORIOLE AR2018.indd 49
26603
3 April 2019 3:13 pm
Proof 6
2018
£’000
2017
£’000
6
(331)
(325)
2
14,834
2,322
17,158
(4,132)
12,701
275
(100)
175
2
20,291
1,860
22,153
(3,975)
18,353
49
03/04/2019 15:14:22
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
15. INVESTMENT IN EQUITY-ACCOUNTED ASSOCIATES (CONTINUED)
Statement of comprehensive income for Thani Stratex Resources Limited
As at 31 December
Administration expenses
Depreciation
Other income
Exchange gains/(losses)
Loss from continuing operations
Income tax expenses
Loss after tax for continuing operations
Share of associated company loss
Total comprehensive income
16. FINANCIAL ASSETS AND LIABILITIES
a) Financial Assets
Financial assets at amortised cost:
Trade and other receivables
Deposits and guarantees
Cash and cash equivalents
Financial assets at fair value through other comprehensive income
Available for sale financial assets
Total
b) Financial Liabilities
Financial liabilities at amortised cost:
Trade creditors
Amounts due to related parties and employees
Social security and other taxes
Accrued expenses
Total
2018
£’000
2017
£’000
(353)
(1)
4
(1)
(351)
(1)
(352)
(121)
(473)
Group
Company
2018
£’000
633
26
1,287
414
–
2017
£’000
921
29
2,039
–
581
2018
£’000
600
–
1,243
227
–
2,360
3,570
2,070
(472)
(45)
(137)
(8)
(662)
–
(662)
–
(662)
2017
£’000
985
–
2,004
–
227
3,216
Group
2018
£’000
Company
2017
£’000
2018
£’000
2017
£’000
87
52
30
151
320
41
118
19
712
890
87
–
20
67
174
32
2
11
648
693
50
ORIOLE AR2018.indd 50
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:22
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
c) Assets by quality
Trade Receivables:
Trade receivables includes VAT due from the Turkish government of £9,000 (2017: £6,000) and receivables from exploration
partners of £22,000 (2017: £Nil). None of the exploration partners have external credit ratings.
Cash and cash equivalents:
External ratings of cash at bank and short-term deposits:
A
Ba, Bb & Bbb
Cash-in-hand
Total
d) Financial assets previously classified as available for sale financial assets
At 1 January
Exchange movements
Transfer from Associates
Impairment
Disposal
At 31 December
Group
2018
£’000
–
–
–
–
–
–
2017
£’000
2,913
52
445
(492)
(2,337)
581
2018
£’000
1,256
31
–
1,287
Company
2018
£’000
–
–
–
–
–
–
2017
£’000
1,807
232
–
2,039
2017
£’000
227
–
–
–
–
227
On the 23 April 2017 the Company completed the sale of its 45% shareholding in Altintepe Madencilik Sanayi ve Ticaret AS.
A profit of £2,883,352 was realised on sale. An overall disposal of £1,891,830 was recognised.
In the prior year, the Directors recognised an impairment provision of £439,000 on its investment in Muratdere Madencilik
Sanayi ve Ticaret SA, following the decision not to provide further funding to the Company. In addition, an impairment
provision of £53,000 was recognised on the Company’s holding in Tembo Gold Corporation following a prolonged reduction
in the quoted value of its shares.
The available for sale assets at 31 December 2017 comprised:
Tembo Gold Corporation – Listed Security
Aforo Resources Limited – Unlisted Security
At 31 December
Group
2018
£’000
–
–
–
2017
£’000
354
227
581
Company
2018
£’000
–
–
–
2017
£’000
–
227
227
Investments were classified as available for sale financial assets if they did not have fixed maturities and management
intended to hold them for the medium to long term. The financial assets were presented as non-current assets unless they
matured or management intended to dispose of them within 12 months of the balance sheet date. A security was considered
to be impaired if there had been a significant or prolonged decline in the fair value below its cost.
e) Financial Assets at Fair Value Through Other Comprehensive Income (‘FVOCI’)
At 1 January
Fair value adjustment
At 31 December
Group
Company
2018
£’000
581
(167)
414
2017*
£’000
–
–
–
2018
£’000
227
–
227
2017*
£’000
–
–
–
51
ORIOLE AR2018.indd 51
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:22
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
16. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
e) Financial Assets at Fair Value Through Other Comprehensive Income (‘FVOCI’) (continued)
Equity investments at FVOCI comprise the following individual investments:
Group
Company
2018
£’000
187
227
414
2017*
£’000
–
–
–
2018
£’000
–
227
227
2017*
£’000
–
–
–
Tembo Gold Corporation – Listed Security
Aforo Resources Limited – Unlisted Security
At 31 December
*These investments were classified as available-for-sale in 2017, see (d) above.
Financial assets at fair value through other comprehensive income comprise:
− a 10.75% investment in Tembo Gold Corporation: and
− an 8% investment in Aforo Resources Limited.
On disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained earnings.
In the prior financial year, the Group had designated equity investments as available for sale where management intended
to hold them for the medium to long term.
During the year the following losses were recognised in profit or loss and other comprehensive income:
Losses recognised in other comprehensive income
(2017: relating to available for sale financial assets)
Group
2018
£’000
167
2017
£’000
–
Information about the methods and assumptions used in determining fair value is provided in (g) below. The assets are held
in non-sterling currencies but there are no significant exchange rate risks associated with these investments.
Financial assets at fair value through other comprehensive income comprise equity securities which are not held for
trading, and which the Group has irrevocably elected at initial recognition to recognise in this category. These are strategic
investments and the Group considers this classification to be more relevant.
f) Financial Assets at Fair Value Through Profit and Loss (‘FVPL’)
The Group classifies the following financial assets at fair value through profit or loss:
1. Equity instruments for which the entity has not elected to recognise fair value gains and losses through OCI.
The Group’s investment in Muratdere Madencilik Sanayi ve Ticaret AS (‘Muratdere’) is held at £Nil (2017: £Nil) following its write
down in 2017. Due to the decision in the prior year not to provide further funding for Muratdere, the Company’s interest will
revert to a 1.2% net smelter royalty. Muratdere has been treated as FVPL as the Group retains an option to contribute directly
into the Company and are therefore actively involved in funding decisions.
52
ORIOLE AR2018.indd 52
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:22
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
g) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of financial instruments that are
recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs
used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under
Accounting Standards, as set out and explained below:
Recurring fair value measurements
As at 31 December
Financial assets at fair value through other comprehensive income:
Canadian listed equity securities
Australian unlisted equity securities
Total Financial Assets
At 31 December 2017
Available for sale financial assets
Canadian listed equity securities
Australian unlisted equity securities
Total Financial Assets
Level 1
£’000
Level 3
£’000
Total
£’000
187
–
187
354
–
354
–
227
227
–
227
227
187
227
414
354
227
581
There were no transfers of assets between levels for recurring fair value measurements during the year. The Group has no level
2 financial instruments.
Level 1 – the fair value of financial instruments traded in active markets is based on quoted market prices at the end
of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price.
These instruments are held at level 1.
Level 3 – if one or more of the significant valuation inputs is not based on observable market data, the instrument is held
at level 3. This is the case for unlisted securities.
Specific valuation techniques used to value financial instruments include:
− The use of quoted market prices either to provide:
− Direct market pricing for Level 1 instruments;
− Comparative pricing for Level 3 instruments when reviewed against comparable companies at similar stages of asset development.
− Cost of asset development work to date, together with a review of exploration results and a view of market values
of similar companies.
17. DISCONTINUED OPERATION
In the prior year, on 2 June 2017, the Group’s representation on the Board of Directors of Goldstone Resources Limited (“GRL”)
was reduced, at which point the Directors consider the Group had relinquished full control of the subsidiary and GRL was
de-consolidated from the Group and measured at fair value as an equity-accounted associate. To this effect, a fair value
of £1,318,884 was attributed to the investment in the associate, which was equal to the Group’s share of the net assets of GRL
at that date. On the same day, the Group’s shareholding in GRL was diluted from 30.4% to 23.4%, which resulted in a loss
of £79,493 and is recognised in the consolidated statement of comprehensive income.
ORIOLE AR2018.indd 53
26603
3 April 2019 3:13 pm
Proof 6
53
03/04/2019 15:14:22
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
17. DISCONTINUED OPERATION (CONTINUED)
On 1 July 2017, the Directors made the decision that the investment in GRL should be reclassified as an asset held-for-sale
and measured at fair value less costs of disposal. The carrying value of the investment in associate of GRL was £951,858 and
the Directors assessed the fair value, under level 1 of the fair value hierarchy at £444,761 based on the value of GRL shares
on the AIM stock market on that date. This resulted in a loss of £507,097 being recognised in the Consolidated statement
of comprehensive income.
Subsequently, a GRL fund raise resulted in a further dilution of the Group’s shareholding to 13.7% and the investment was
eventually disposed on 17 October 2017 for proceeds of £547,287. A profit on disposal of £96,703 was recognised in the
consolidated statement of comprehensive income.
An analysis of the discontinued operation and the result of the above changes in ownership in the Group financial statements
is as follows:
a) Net loss on disposal of discontinued operation
Operating loss from discontinued operations
Loss on dilution
Loss on reclassification as an asset held for sale
Profit on disposal of interest
Loss on discontinued operation at 31 December
b) Operating loss
Revenue
Administration expenses
Other (losses)/income
Operating loss
Share of loss of associate
Loss before income tax
Income tax charge
Operating Loss for the year
Non-controlling interest
Loss attributable to owners of the Parent Company
c) Profit on disposal of interest
Fair value on deconsolidation of subsidiary
Dilution of interest in Goldstone
Share of losses in period
Translation reserve
Carrying value of associate at 30 June 2017
Loss on reclassification as held-for-sale asset at 1 July 2017
Value of held-for-sale asset after reclassification
Proceeds from sale of interest in Goldstone at 17 October 2017
Eliminate translation reserve
Profit from disposal of interest
54
Group
2018
£’000
–
–
–
–
–
2017
£’000
(165)
(79)
(507)
97
(654)
2018
£’000
2017
£’000
–
–
–
–
–
–
–
–
–
–
2018
£’000
–
–
–
–
–
–
–
–
–
–
–
(158)
3
(155)
(10)
(165)
–
(165)
103
(62)
2017
£’000
1,319
(351)
(10)
(6)
952
(507)
445
(547)
5
(97)
ORIOLE AR2018.indd 54
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:22
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
18. TRADE AND OTHER RECEIVABLES
The fair value of trade and other receivables equate to their carrying values, which also represents the Group’s maximum
exposure to credit risk. No collateral is held as security.
Receivables from exploration partners
Deposits and guarantees given
Loans
Amounts due from Group companies
VAT recoverable
Pre-payments and other current assets
Total
Non-current
Current
Total
Group
2018
£’000
Company
2017
£’000
2018
£’000
2017
£’000
22
26
46
–
611
78
783
–
783
783
–
29
906
–
–
70
1,005
29
976
1,005
–
–
–
–
600
65
665
–
665
665
–
–
906
76
–
4
986
–
986
986
There were no receivables past due in 2018 (2017: nil).
During the year the loan advanced to Crusader Resources Limited totaling A$1,500,000 was repaid along with 12% interest.
19. DEFERRED TAX ASSET AND LIABILITIES
Group
Deferred tax assets
Temporary timing differences arising on:
Intangible assets
Employee termination benefits
Other
Total
The movement in the year on the net deferred tax assets is:
At 1 January
Exchange movements
Movement in year
At 31 December
20. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
Total
2018
£’000
2017
£’000
95
6
10
111
2018
£’000
198
(46)
(41)
111
Group
Company
2018
£’000
495
792
1,287
2017
£’000
248
1,791
2,039
2018
£’000
271
972
1,243
181
7
10
198
2017
£’000
255
(37)
(20)
198
2017
£’000
213
1,791
2,004
55
03/04/2019 15:14:22
ORIOLE AR2018.indd 55
26603
3 April 2019 3:13 pm
Proof 6
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
21. CURRENCY RISK
The Group’s exposure to foreign currency is as follows:
In GBP £’000
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Net exposure
The following year-end spot rates
to sterling have been applied
A 20% fluctuation in the sterling
exchange rate would have affected
profit and loss as follows:
Profit/(loss) due to the
strengthening of sterling
Profit/(loss) due to the
weakening of sterling
US$
–
179
–
179
1.2769
2018
AUD$
Turkish Lira
–
–
–
–
–
70
22
(136)
(44)
6.7529
US$
–
470
–
470
1.35
2017
AUD$
Turkish Lira
906
–
–
906
1.73
52
13
(209)
(144)
5.11
£’000
£’000
£’000
£’000
£’000
£’000
(31)
44
–
–
(11)
8
508
226
(18)
(151)
(36)
24
The Group’s exposure to foreign currency at 31 December 2017 was US$ cash deposits and Turkish Lira receivables
shown above.
22. SHARE CAPITAL AND SHARE PREMIUM
Group and Company
At 31 December 2017
Share split (see below)
Shares issued
Expenses of issue
Costs related to share issue
At 31 December 2018
Number of
Ordinary
shares
467,311,276
–
234,490,000
–
–
Ordinary
shares
£’000
4,673
(4,206)
235
–
–
Deferred
shares
£’000
Share
premium
£’000
–
20,427
4,206
–
–
–
–
938
(80)
(32)
Total
£’000
25,100
–
1,173
(80)
(32)
701,801,276
702
4,206
21,253
26,161
On 19 April 2018 the Company sub-divided its existing 467,311,276 Ordinary 1p shares into 467,311,276 Ordinary 0.1p shares
and 467,311,276 Deferred 0.9p shares. The new Ordinary 0.1p shares carry all the rights to voting and dividends previously
vested in the old Ordinary 1p shares. The Deferred 0.9p shares carry limited rights except in the event of a return of capital
upon a winding up.
On 19 June 2018 the Company issued 234,490,000 Ordinary 0.1p shares at a price of 0.5p.
56
ORIOLE AR2018.indd 56
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:22
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
23. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the loss attributable to the equity holders of the Company
and a weighted average number of Ordinary shares in issue during the year, as follows:
Loss attributable to owners of the Company from continuing operations
Loss attributable to owners of the Company from discontinued operation
Weighted average number of ordinary shares in issue
Basic and diluted loss per share from continued operations (pence per share)
Basic and diluted loss per share from discontinued operations (pence per share)
2018
£’000
(4,574)
–
2017
£’000
(4,958)
(551)
592,586,755
467,311,276
(0.77)
–
(1.01)
(0.12)
There is no difference between basic and diluted loss per share as the effect on the exercise of the options would
be to decrease the earnings per share.
At 31 December 2018 there were 25,755,144 (2017: 17,755,144) share options and 13,470,000 warrants that could potentially
dilute the earnings per share in the future.
Deferred shares have no rights to dividends or retained profits and are excluded from the calculation of earnings per share.
24. SHARE OPTIONS AND WARRANTS
Share options
The Directors have discretion to grant options to Group employees to subscribe for Ordinary Shares up to a maximum of 10%
of the Company’s issued share capital. The Company runs two schemes, one is the Enterprise Management Incentive scheme
and the other is the Unapproved Share Option scheme.
As at 31 December 2018, the Company had in issue 8,678,000 (2017: 10,801,567) options to Group employees granted under the
Enterprise Management Incentive scheme and 1,950,000 (2017: 1,950,000) to Group employees granted under the unapproved
scheme. In addition, there are 15,227,144 (2017: 5,003,577) unexercised options held by past employees. All options vest over one
to three years from the grant date and lapse on the tenth anniversary of the grant date.
The granting of the share options has been accounted for as equity-settled share-based payment transactions. The total
expenses recognised in the loss for the year arising from share-based payments was £51,000 (2017: £ 73,000). The Group has
no legal or constructive obligation to repurchase or settle the options in cash.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2018
2017
Group and Company
Outstanding at 1 January
Cancelled
Granted
Outstanding at 31 December
Exercisable at 31 December
Weighted
average
exercise
price pence
Weighted
average
exercise
price pence
Number
of options
Number
of options
17,775,144
3.0
30,005,144
–
–
(35,615,562)
8,000,000
25,775,144
16,843,811
0.8
2.4
3.1
23,365,562
17,755,144
15,882,478
2.8
3.7
0.8
3.0
3.2
57
03/04/2019 15:14:22
ORIOLE AR2018.indd 57
26603
3 April 2019 3:13 pm
Proof 6
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
24. SHARE OPTIONS AND WARRANTS (CONTINUED)
The weighted average contractual life of the outstanding options at 31 December 2018 was 4.7 years (2017: 3.6 years).
Details of share options outstanding at 31 December 2017 are as follows:
Life of option
Start date
30 April 2009
Expiry date
30 April 2019
28 September 2009
28 September 2019
1 June 2011
12 March 2013
5 December 2014
4 June 2015
2 September 2016
1 March 2018
4 June 2018
Total options outstanding
1 June 2021
12 March 2023
5 December 2024
4 June 2025
2 September 2026
1 March 2028
4 June 2028
Outstanding
31 December
2018
10,446,000
24,000
1,117,144
300,000
2,984,000
150,000
2,734,000
6,000,000
2,000,000
25,755,144
Option
Price
pence
3.0
4.3
7.0
4.4
2.7
1.5
2.0
0.9
0.62
During the year 6,000,000 share options were issued at a price of 0.9p per option share with a fair value of 0.37p per option
share and 2,000,000 share options were issued at a price of 0.62p per option share with a fair value of 0.26p per option
share. The fair value for these options has been measured by use of the Black-Scholes pricing model, using a price volatility
of 35% and a risk-free interest rate of 3%. The expected volatility was determined by calculating the historical volatility
of the Company’s share price over the previous two years.
Share Warrants
On 13 June 2018 the Company issued 13,470,000 warrants to Turner Pope Investments in connection with the June share
placement. The warrants are exercisable at a price of 0.5p per warrant share any time before 13 June 2021 at which point they
lapse. The fair value for these warrants has been measured as 0.24p by use of the Black-Scholes pricing model, using a price
volatility of 35% and a risk-free interest rate of 3%. The expected volatility was determined by calculating the historical volatility
of the Company’s share price over the previous two years. The resultant warrant charge of £32,000 has been recognised in full
in 2018 and debited to the Share Premium Account.
25. OTHER RESERVES
Group
At 1 January 2017
Share based payments
Share options cancelled
Other comprehensive income
At 31 December 2017
Share based payments
Other comprehensive income
At 31 December 2018
58
Merger
reserve
£’000
(485)
–
–
–
(485)
–
–
(485)
FVOCI
reserve
£’000
Share option
reserve
£’000
–
–
–
–
–
–
(167)
(167)
590
72
(186)
–
476
51
–
527
Translation
reserve
£’000
2,484
–
–
(792)
1,692
–
134
1,826
Total
£’000
2,589
72
(186)
(792)
1,683
51
(33)
1,701
ORIOLE AR2018.indd 58
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:22
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Company
At 1 January 2017
Share based payments
Share options cancelled
Other comprehensive income
At 31 December 2017
Share based payments
Other comprehensive income
At 31 December 2018
Share option
reserve
£’000
590
72
(186)
–
476
51
–
527
Total
£’000
590
72
(186)
–
476
51
–
527
The Merger reserve arose on consolidation as a result of the merger accounting for the acquisition of the entire issued
share capital of Stratex Exploration Limited during 2005 and represents the difference between the nominal value of
shares issued for the acquisition and that of the share capital and share premium account of Stratex Exploration Limited.
The Translation reserve comprises the exchange differences from translating the net investment in foreign entities and
of monetary items receivable from subsidiaries for which settlement is neither planned nor likely in the foreseeable future
(see Note 2.3).
The Share option reserve balance relates to the fair value of outstanding share options measured using the Black
Scholes method.
The Group has elected to recognise changes in the fair value of certain investments in equity securities through Other
Comprehensive Income, as explained in Note 16 and the accounting policies. These changes are accumulated within
the FVOCI reserve within equity. The Group transfers amounts from this reserve to retained earnings when the relevant
equity securities are derecognised.
Available-for-sale financial assets – until 31 December 2017
Changes in the fair value of investments that were classified as available-for-sale financial assets (equity securities)
were recognised in OCI and accumulated in a separate reserve within equity. Amounts were reclassified to profit or loss
when the associated assets were sold or impaired.
26. NON-CONTROLLING INTEREST
Effect on equity of transactions with Non-controlling interests:
Balance attributable to NCI
At 1 January 2017
Exchange movements
Losses for the year
Share capital increase
At 31 December 2017
Losses for the year
At 31 December 2018
Goldstone
Resources
Limited
£’000
2,859
(132)
(103)
(2,624)
–
–
–
Stratex
EMC SA
£’000
1
–
(17)
–
(16)
(87)
(103)
Total
£’000
2,860
(132)
(120)
(2,624)
(16)
(87)
(103)
ORIOLE AR2018.indd 59
26603
3 April 2019 3:13 pm
Proof 6
59
03/04/2019 15:14:22
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notes to the
financial statements
CONTINUED
27. TRADE AND OTHER PAYABLES
Trade payables
Amounts due to subsidiary company
Amounts due to related parties and employees
Social security and other taxes
Accrued expenses
At 31 December
Group
2018
£’000
Company
2017
£’000
2018
£’000
2017
£’000
87
–
52
30
121
290
41
–
118
19
712
890
87
–
–
20
67
174
32
–
2
11
647
692
All financial liabilities, except those for accrued expenses, are stated where material at amortised cost.
28. CASH FLOW FROM OPERATING ACTIVITIES
Group
2018
£’000
Company
2017
£’000
2018
£’000
2017
£’000
(4,620)
(5,382)
(3,726)
(12,760)
51
4
1,430
–
2,141
–
(5)
(67)
–
–
–
46
72
4
–
2
151
(1,674)
5
4,549
–
–
–
(404)
(639)
(600)
188
(104)
(2,259)
(2,593)
51
2
1,000
–
–
–
–
(67)
(230)
(140)
2,400
85
(661)
(485)
(1,771)
72
1
–
2
–
1,018
–
(2,471)
(433)
(64)
13,231
(78)
33
(142)
(1,591)
Transaction value for the year
ended 31 December
Receivable/(Payable) as at
31 December
2018
£’000
206
64
36
2017
£’000
178
–
–
2018
£’000
46
21
(38)
2017
£’000
–
(116)
(Loss)/profit before income tax
Adjustments for:
Issue of share options
Depreciation
Impairment write-offs on intangible assets
Fixed asset write-offs
Share of losses of associates
Net (gain)/loss on sale of related companies
Increase in Employee termination benefit fund
Other (Income) and deductions
Interest income on intercompany indebtedness
Intercompany management fees
Write-off intercompany balances
Foreign exchange movements on operating activities
Changes in working capital, excluding the effects of exchange
differences on consolidation:
Trade and other receivables
Trade and other payables
Cash used in operations
29. RELATED PARTY TRANSACTIONS
a) Transactions with operational partners:
Energy and Mining Corporation SA
TET Madencilik Sti
Anadolu Export Maden Sanayi ve Ticaret A.Ş.
60
ORIOLE AR2018.indd 60
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:23
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Energy and Mining Corporation SA is the operational partner for the Dalafin project in Senegal. Anadolu Export Maden
Sanayi ve Ticaret A.Ş. is the operational partner for the Karaağac project in Turkey. TET Madencilik is the operational partner
for the HasanÇelebi and Dogla projects in Turkey.
b) Transactions with non-controlling interests:
There have been no transactions with non-controlling interests during the year. (2017: £Nil.)
c) Parent company and ultimate controlling party:
In the opinion of the Directors there is no ultimate controlling party.
d) Amounts provided to subsidiaries:
During the year the Company provided funds amounting to £571,000 (2017: £180,000) to its subsidiaries and charged
its subsidiary companies £140,000 (2017: £64,000) for the provision of management services. The total net receivable
from subsidiaries at 31 December 2018 was £4,462,000 (2017: £3,520,000).
e) Transactions with Directors and Key Management Personnel:
During the year the Directors were remunerated for services performed on behalf of the Company. Details of this
remuneration are included in the Directors’ report. All Directors during the year were remunerated through the UK payroll.
There are not considered to be any key management personnel other than Directors.
30. CONTINGENCIES AND CAPITAL COMMITMENTS
There are no contingencies or capital commitments at 31 December 2018.
31. LEASE COMMITMENTS
There are no future commitments under Finance or Operating leases.
32. PARENT COMPANY STATEMENT OF COMPREHENSIVE INCOME
As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the parent company
is not presented as part of these financial statements.
ORIOLE AR2018.indd 61
26603
3 April 2019 3:13 pm
Proof 6
61
03/04/2019 15:14:23
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notice of annual
general meeting
The Annual General Meeting of Oriole Resources PLC (the “Company”) will be held at the offices of Grant Thornton UK LLP,
30 Finsbury Square, London, EC2P 2YU on 16 May 2019, at 3:00pm. The business of the meeting will be to consider and,
if thought fit, pass the following resolutions:
Ordinary resolutions
1. To receive the Directors’ Report and Financial Statements for the year ended 31 December 2018.
2. To re-elect Director John McGloin, who was appointed during the period and retires in accordance with the Company’s
Articles of Association, and being eligible, offers himself for re-appointment.
3. To re-elect Director David Pelham, who was appointed during the period and retires in accordance with the Company’s
Articles of Association, and being eligible, offers himself for re-appointment.
4. To re-elect Director Robert Smeeton, who was appointed during the period and retires in accordance with the Company’s
Articles of Association, and being eligible, offers himself for re-appointment
5. To re-appoint PKF Littlejohn LLP as auditors and to authorise the Directors to fix their remuneration.
6. THAT, in addition to the existing authorities, and in accordance with section 551 of the Companies Act 2006 (the “Act”) the
Directors be and they are hereby generally and unconditionally authorised to allot shares in the Company or grant rights
to subscribe for or convert any securities into rights (“Rights”) up to an aggregate nominal amount of £230,000 and such
power shall expire (unless previously revoked, varied or extended by the Company at a general meeting) at the conclusion
of the next Annual General Meeting, save that the Company may before such expiry make an offer or agreement which
would or might require shares or Rights to be granted in pursuance of such offer or agreement as if the power conferred
hereby had not expired.
Special resolution
7. THAT, in addition to the existing authorities, the Directors be and they are hereby empowered to allot equity securities
(as defined in section 560 of the Act) for cash pursuant to the authority conferred by the previous resolution as if section
561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity
securities up to an aggregate nominal amount of £70,000 and such power shall expire (unless previously revoked, varied
or extended by the Company at a general meeting) at the conclusion of the next Annual General Meeting, save that the
Company may before such expiry make an offer or agreement which would or might require such equity securities to
be granted in pursuance of such offer or agreement as if the power conferred hereby had not expired.
By order of the Board
Robert Smeeton
Company Secretary
180 Piccadilly, London, W1J 9HF
12 March 2019
62
ORIOLE AR2018.indd 62
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:23
ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018
STOCK CODE: ORR
Notes:
Eligibility to attend and vote
1. To be entitled to attend and vote at the Annual General
Meeting (and for the purpose of determining the number
of votes a member may cast), members must be entered
on the Register of Members of the Company by 3:00pm
on 14 May 2019
Appointment of proxies
2. As a member of the Company, you are entitled to appoint
a proxy to exercise all or any of your rights to attend, speak
and vote at the Meeting and you should have received
Appointment of proxy by joint members
8. In the case of joint holders, where more than one
of the joint holders purports to appoint a proxy, only
the appointment submitted by the most senior holder
will be accepted. Seniority is determined by the order
in which the names of the joint holders appear in the
Company’s register of members in respect of the joint
holding (the first-named being the most senior).
Changing proxy instructions
9. To change your proxy instructions simply submit a new
proxy appointment using the methods set out above.
a proxy form with this notice of meeting. You can only
Note that the cut-off time for receipt of proxy appointments
appoint a proxy using the procedures set out in these
(see above) also applies in relation to amended instructions;
notes and the notes to the proxy form.
3. A proxy does not need to be a member of the Company
but must attend the Meeting to represent you. Details of
how to appoint the Chairman of the Meeting or another
person as your proxy using the proxy form are set out in
the notes to the proxy form. If you wish your proxy to speak
on your behalf at the Meeting you will need to appoint
any amended proxy appointment received after the relevant
cut-off time will be disregarded. Where you have appointed
a proxy using the hard-copy proxy form and would like
to change the instructions using another hard-copy proxy
form, please contact Share Registrars Limited. If you submit
more than one valid proxy appointment, the appointment
received last before the latest time for the receipt of proxies
your own choice of proxy (not the Chairman) and give your
will take precedence.
instructions directly to them.
Termination of proxy appointments
4. You may appoint more than one proxy provided each
proxy is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to
10. In order to revoke a proxy instruction you will need to
inform the Company using one of the following methods:
exercise rights attached to any one share.
− By sending a signed hard copy notice clearly stating your
5. If you do not give your proxy an indication of how to vote
on any resolution, your proxy will vote or abstain from
voting at his or her discretion. Your proxy will vote (or
abstain from voting) as he or she thinks fit in relation to
any other matter which is put before the Meeting.
intention to revoke your proxy appointment to Share
Registrars Limited, The Courtyard, 17 West Street, Farnham,
Surrey, GU9 7DR.
− In the case of a member which is a company,
the revocation notice must be executed under
Appointment of proxy using hard copy proxy form
its common seal or signed on its behalf by an officer
6. The notes to the proxy form explain how to direct your
proxy how to vote on each resolution or withhold their
vote. To appoint a proxy using the proxy form, the form
must be completed and signed and sent or delivered
to the Company’s registrars, Share Registrars Limited,
The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR,
to be received by Share Registrars Limited no later than
3:00pm on 14 May 2019. Proxy forms may also be faxed to
01252 719232 or emailed to voting@shareregistrars.uk.com
7. In the case of a member which is a company, the proxy
form must be executed under its common seal or
signed on its behalf by an officer of the company or an
attorney for the company. Any power of attorney or any
other authority under which the proxy form is signed
(or a duly certified copy of such power or authority)
must be included with the proxy form.
of the company or an attorney for the company.
− Any power of attorney or any other authority under which
the revocation notice is signed (or a duly certified copy
of such power or authority) must be included with the
revocation notice. In either case, the revocation notice
must be received by Share Registrars Limited no later than
3:00pm on 14 May 2019.
− If you attempt to revoke your proxy appointment but
the revocation is received after the time specified then,
subject to the paragraph directly below, your proxy
appointment will remain valid. Appointment of a proxy
does not preclude you from attending the Meeting and
voting in person. If you have appointed a proxy and attend
the Meeting in person, your proxy appointment will
automatically be terminated.
ORIOLE AR2018.indd 63
26603
3 April 2019 3:13 pm
Proof 6
63
03/04/2019 15:14:23
ORIOLE RESOURCES PLC
WWW.ORIOLERESOURCES.COM
Notice of annual
general meeting
CONTINUED
Communication
11. Except as provided above, members who have
general queries about the Meeting should contact
Share Registrars Limited on 01252 821390 or by email
enquiries@shareregistrars.uk.com (no other methods
of communication will be accepted).
12. You may not use any electronic address provided either
in this notice of Annual General Meeting or any related
documents (including the proxy form) to communicate
with the Company for any purposes other than those
expressly stated.
Documents available for inspection
13. The following documents will be available for inspection
during normal business hours at the Company’s registered
office up until the date of the Annual General Meeting and
at the place of the meeting from 1:00pm on 16 May 2019
until: the end of the meeting:
− the audited consolidated accounts of the Company
for the financial period ended 31 December 2018;
− the Register of Directors’ interests in the capital of the
Company and copies of the service contracts of the
Directors of the Company.
64
ORIOLE AR2018.indd 64
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:23
26603 3 April 2019 3:13 pm Proof 6ANNUAL REPORT & ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018STOCK CODE: ORRNOMINATED ADVISOR Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YUGROUP AUDITORS PKF Littlejohn LLP Statutory Auditor 1 Westferry Circus Canary Wharf London E14 4HDCO-BROKERS Hannam & Partners (Advisory) LLP 2 Park Street London W1K 2HX Turner Pope Investments 6th Floor, Beckett House 36 Old Jewry London EC2R 8DD GROUP SOLICITORS Edwin Coe LLP 2 Stone Buildings Lincoln’s Inn London WC2A 3THBANKERS Lloyds TSB Bank plc High Street Slough Berkshire SL1 1DHREGISTERED OFFICE 180 Piccadilly London W1J 9HF UKUK EXPLORATION OFFICE Oriole Resources PLC Wessex House Upper Market Street Eastleigh Hampshire SO50 9FD UKTURKISH OFFICE Stratex Madencilik Sanayi ve Ticaret Ltd. Sti. Çukurambar Mahallesi 1458. Sk. Elit Apt. 1716 Çankaya Ankara TurkeyWEST AFRICA OFFICE Stratex EMC SA c/o Energy & Mining Corporation S.A. Sacré Coeur 111/VON No 9231 Dakar BP. 45.409 SenegalAdvisors & Offices ORIOLE AR2018.indd 603/04/2019 15:14:23 Phone: +44 (0)207 830 9650
Fax: +44 (0)207 830 9651
Email: info@orioleresources.co.uk
www.orioleresources.com
180 Piccadilly,
London, W1J 9HF
ORIOLE AR2018.indd 1
26603
3 April 2019 3:13 pm
Proof 6
03/04/2019 15:14:23