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2023 ReportAnnuAl RepoRt 2016 OrmOnde Annual Report & Accounts 2016 Contents Our business our business 2 ormonde at a glance 3 Chairman’s Review Review of Activities 6 8 Report of the Directors 12 Independent Auditors’ Report 18 Consolidated Statement of Comprehensive Income 20 Consolidated Statement of Financial position Company Statement of Financial position Consolidated Statement of Cashflows Company Statement of Cashflows Consolidated Statement of Changes in equity 21 22 23 24 25 Company Statement of Changes in equity 26 notes to the Financial Statements 27 notice of Annual General Meeting 50 Form of proxy Directors and other Information 53 55 2 1 Barruecopardo Tungsten Project: Having successfully defined, designed, permitted and funded the Project, or m o n d e i s n ow a d va n c i n g t h e development of a low cost tungsten mining project. the funding for the project was agreed with oaktree Capital Management in 2015 and consists of a robust package of equity – uS$44.4 million and debt – $55.5 million. ormonde retains 30% with oaktree holding 70%. 2 Gold Projects: ormonde holds various exploration licenses in Spain which are prospective for Gold (most of which are held in joint venture with Shearwater plc.) 3 La Zarza Copper Project: la Zarza is a large “massive sulphide” deposit containing significant copper, gold and zinc resources, located in the Iberian pyrite Belt mining district of southwest Spain. the project is no longer seen as core to the Company’s growth strategy and therefore ormonde is seeking to realise value through divestment. OrmOnde Annual Report & Accounts 2016 Ormonde at a glance ormonde Mining plc is a mineral resource company currently developing a world-class tungsten mining project and carrying out other mineral exploration in Spain. is as manager ormonde’s key activity (30%) of the transformational Barruecopardo tungsten project alongside its partner oaktree Capital Management (70%). the mine is estimated to account for ~11% of current non-Chinese global supply of tungsten concentrate once operational from 2018. the Company also has a participation in several highly prospective areas of gold exploration in western Spain and has rights to the la Zarza copper-gold project which has significant copper, gold and zinc potential. ormonde Mining plc is listed on the Alternative Investment Market (AIM) in london and the enterprise and Securities Market (eSM) in Dublin. ormonde operates its tungsten interests through a project company Saloro Slu. the ormonde Group is headquartered in the Republic of Ireland. Salamanca & Zamora Salamanca & Zamora Salamanca & Zamora Gold Project Gold Exploration Gold Exploration 2 1 Barruecopardo Barruecopardo Barruecopardo Tungsten Project Tungsten Project Tungsten Project Madrid Madrid Madrid Lisbon Lisbon SpAIn SPAIN SPAIN 3 la Zarza La Zarza La Zarza Copper Project Copper-Gold Project Copper-Gold Project 3 About Tungsten tungsten is among the toughest elements found in nature. possessing the highest melting point and highest tensile strength ensures it is the strongest and most durable of metals. these exceptional properties make tungsten an ideal element for use in alloys and composite hard metals. woodworking, mining, petroleum, construction and electronics industries. So from the mobile phones we use to communicate, to the cars and planes in which we journey in, from sports and leisure equipment to the ball point pen, Tungsten plays a largely unseen but vital role in our everyday lives. tungsten carbide is an essential component of drills, circular saws, welding, milling and turning tools that are used extensively in the metalworking, Tungsten is also inert, helping to ensure there is an environmentally sustainable path to its mining and ultimate end-uses. ~80% Chinese share of global primary production (2016) W 183.84 tungsten 3,422° melting point 4.2% Decrease in global primary supply 2016 v’s 2015 53% of consumption (2016) was in hardmetals/ cemented carbides Tungsten in numbers Source: Roskill Tungsten Market Report 2017 OrmOnde Annual Report & Accounts 2016 e u h g o n o D . J l e a h c M i non-executive Chairman 6 Chairman’s Review We are pleased to report that during 2016 your Company successfully advanced the Barruecopardo project through the compulsory land acquisition stage and into the construction stage. As guided during the year, progress was somewhat reduced compared to original schedules with construction contracts having been rescheduled to run consecutively rather than concurrently. this strategy has proved timely as metal markets are now showing signs of a sustained recovery, leading in June 2017 to the Project company, Saloro SLU (“Saloro”), authorising the issuance of outstanding approvals on various equipment and plant construction contracts, such that Barruecopardo should now be coming on stream into a more favourable global economic environment. Barruecopardo During 2016, the Barruecopardo operating subsidiary Saloro SLU completed the acquisition of land for which title was clear and for which lease with option to purchase arrangements were in place. Most of the remaining land blocks required for construction had title or boundary were required to be addressed through the court compulsory acquisition procedures. As this could be a lengthy process, Saloro sought to expedite matters by requesting the Administration in Castilla y leon to declare the remaining blocks of land as required for the common good and in need of “urgent occupation”. this process required a vote of the Regional Legislative Assembly, which was forthcoming. It was most satisfying to see this strong commitment and support from the Government for the project. A few procedural steps remained after this vote, but by December 2016, Saloro was the legal owner of all of the land required for the development of a mine at Barruecopardo. As this land acquisition process was being pursued, activity on the engineering design, equipment manufacture contracts and construction contracts was being advanced, albeit at a pace to match the expected land acquisition process. All main, longer lead time, processing plant has been identified and sized and contracts let for manufacture. procurement of most of the secondary items of plant is similarly well advanced. Fairport Engineering, the company expediting the plant design and procurement, has also been awarded the Plant Construction Management Contract. These activities, when synchronised with the recent decision by Saloro to issue the outstanding approvals on various equipment and plant construction contracts, advances the Project into an accelerated construction and implementation phase, which sees mine plant commissioning during Q3 2018. this timing leaves a healthy interval in which to allow the commodity markets to consolidate their recent gains and move onwards. A short five-hole exploratory drilling programme around the northern and central section of the proposed Barruecopardo open pit was completed during 2016. The main objective of this programme was to confirm extension to the tungsten mineralisation at depth beneath the main central part of the planned open pit, whilst also following up on a potentially expanded zone of mineralisation under the shallow northern end of the open pit. the results of this initial drilling program were most encouraging, lending support to the concept of a future Stage 2 underground mine at the project OrmOnde Annual Report & Accounts 2016 Tungsten market Other Projects the focus of your Company during the year has been the advancement of the Barruecopardo project. the Company’s Gold projects are being maintained, whilst the La Zarza project remains under a review of disinvestment options with the directors deciding it appropriate for the holding value of this asset to be impaired by €2 million, to a book value of €3 million, to reflect their current assessment of the asset’s present value. Corporate and Financials The Company has reported a loss for the year of €2.41M, compared with a profit of €2.07M for 2015. Although the Group made a small operating profit for the year, however the effects of the €2M impairment of its La Zarza asset and the share of loss in its associate investment (the Barruecopardo Joint Venture B.V., in which the Barruecopardo Project is held, and which is incurring losses during the project’s developed stage), resulted in the reported loss for the period. Finally, I would like to thank shareholders, management, staff and other stakeholders for your support during the last year; we believe there is long-term value to be realised through the Barruecopardo asset and we thank you for your patience as we journey towards First production. Michael J. Donoghue Chairman As the impediments to mine development are progressively removed and we advance construction, it is perhaps timely to look forward at the commodity markets and pricing. tungsten pricing has traditionally followed the business cycle and, given the long lead times for mining projects, the base metal market may be a useful guide to the market place. Copper had undergone a long decline from $10,000/t in 2011 to around $4,500/t in late 2015, but a recovery kicked in during 2016 and pricing is now approaching the $6,000/t level. there has also been recoveries in the prices of other base metals including zinc, lead, tin, and to a lesser extent nickel and aluminium. Clearly, the overall story is that Barruecopardo is now being developed in a time of metal price recovery. In looking at the standalone tungsten market, the situation at the start of 2016 was somewhat confusing. the largest tungsten producer in the west, the Canadian mine Cantung, closed in 2015 and a number of the larger tungsten mines were clearly struggling with limited reserves, technical issues and profitability. Moreover, practically all advanced or resource based tungsten projects, previously being touted for development, were either abandoned or effectively mothballed. Against this background, there was an upswing in tungsten Apt prices from $160/mtu early in 2016 to $220/ mtu in May before dropping back to around $180/mtu during August 2016. the reason for this became more evident as the year progressed. the forecast primary supply shortage was indeed developing, with tungsten concentrates very clearly being sought as feedstock by the main APT producers, but it was equally clear that there was a surplus of Apt in the market place, depressing prices. As industry practice is that mine produced concentrates are priced relative to the Apt prices, anomalies in the latter are imposed on the former. It became clear that until the surplus of APT, presumably largely produced pre-2016 from China, is consumed, that the fundamental true market supply-demand realities, based on primary mine production, would not dictate pricing. This process appears to be underway; tungsten Apt prices have seen a slow but steady increase to its current level of $223/ mtu, with many indicators now pointing towards a sustained increase in the tungsten price into the future. What is clear is that tungsten concentrates are in tight supply and are likely to become tighter as global economic activity increases and no new tungsten mines are developed. China’s efforts to tighten up its tungsten industry, to enforce a crackdown on illegal mining and to ensure cut-backs in tungsten mine production, will also tend to reinforce this trend. In summary, tungsten supply-demand dynamics and pricing now look more favourable in advance of Barruecopardo coming on stream. 7 OrmOnde Annual Report & Accounts 2016 Review of activities 2016 was a year of significant progress across a range of activities at the Barruecopardo tungsten project. Following the successful completion in 2015 of a robust $100 million financing package for the Project with OCM Luxembourg Tungsten Holdings S.À.R.L., funds managed by Oaktree Capital Management, L.P. (“Oaktree”), the Project was advanced into the engineering and procurement, and pre-construction preparatory stages. In parallel, the Project Company “Saloro” was also heavily focused on the critical area of land acquisition of the remaining plots required to enable full development of the project. We were pleased to be in a position to announce by year end that Saloro had achieved full access to and ownership of all lands necessary to construct the project and commence production. Land Access – a Key Priority With virtually all of the land blocks that were under option- to-purchase agreements (75% of required blocks) having been acquired by Saloro by early 2016, attention then focused on obtaining the remaining lands required to enable development of the project. this involved the requirement to complete the compulsory acquisition process commenced by Saloro in early 2015. Spanish law allows for either a ‘normal’ or a ‘Fast track’ compulsory acquisition route to be applied for, with the Fast track option enabling Saloro to own and occupy the required lands prior to the details and pricing of such compulsory acquisition being finalised. Saloro had requested, in its submissions and through continued lobbying, for the second option to be applied. Early in 2016, whilst the compulsory acquisition process was advancing, notification was received of an appeal lodged by a third party against an administrative step in the process. After careful consideration and following detailed legal advice, it was decided to optimise the project construction schedule to one that balanced the most likely scenarios with regard to compulsory acquisition timelines, whilst also aligning the Project targeted first production date with expectations for a more favourable Apt price environment. the third party appeal was subsequently rejected at the initial administrative level, reinforcing the Company’s belief that the basis of the appeal had always been entirely without merit. Shortly after this rejection, Saloro received the final major approval relating to the Fast-Track process, being the Declaration of urgent occupation. this step required a vote of the Regional Government of Castilla y leon and the fact that it was approved promptly, and ahead of the date expected, reflects the support that the Barruecopardo Project enjoys, both publicly and politically, in the region. This legal declaration represented the completion of the main legal prerequisite required to allow for immediate access to, and use of, the lands without having to await the completion 8 of the compulsory purchase process. There were, however, still a few procedural steps remaining to be completed prior to physical access to the lands being achieved. these steps in the process included a public meeting with parties interested in the process, the placement by Saloro of financial bonds equal to the estimated value of the lands to be compulsory purchased, and the subsequent issue of the Final Acts of occupation for the lands concerned by the Salamanca Provincial Industry Department, all of which were completed in the second half of the year. this enabled the Company to report towards the end of 2016 that Saloro had become the legal owner of these land blocks, resulting in it having full rights to access and utilise all of the lands necessary to develop the project. ownership of these remaining lands was achieved well ahead of forecast. This was a significant achievement and an important milestone to reach, representing as it did the removal of the final obstacle to Saloro being in a position to advance the full construction development schedule for the project on a timeline determined to be in the best interests of all stakeholders. Certain appeals were also commenced against the Administration in Castilla y leon in relation to the completed Fast-track land access process. these appeals are not lodged against Ormonde or Saloro, although Saloro has been included in the appeal process as an interested party. Saloro’s lawyers do not consider these appeals to represent any material risk to the project. Preparations for First Production An extensive range of activities are required to be conducted and completed prior to commissioning a mining plant. In 2015, Fairport Engineering Limited (‘’Fairport’’) commenced detailed construction engineering design works for the process plant and infrastructure, and significant further progress was achieved in 2016. OrmOnde Annual Report & Accounts 2016 these activities included the placing of orders for priority equipment for the Project, including the award of the turnkey crushing and screening plant supply and Install contract to Metso Minerals portugal; the award of the turnkey water treatment plant contract to the Spanish subsidiary of Veolia Water technologies; and the award of the contract for supply of the jig pre-concentration circuit. orders were also placed for the tungsten dryer and cooler, dewatering units, rod and ball mill, and the fines filter press, followed by orders for the pre-concentrate screen (a most critical component for the correct functioning of the processing plant) as well as for the thickeners. Placement of these orders enabled finalisation of the construction civils designs, by Fairport. During this period, Saloro also awarded the Construction Management Contract for the Project to Fairport, whose performance and professionalism had impressed during the basic and detailed engineering stages of the project. included Key onsite activities completed during 2016 completion of final geotechnical site investigations, preparation of the construction designs for the water management system, completion of dams compaction trials, installation of the potable waterline and HV powerline conduit, completion of a compensating by-pass road, installation of a site perimeter road and perimeter fencing, construction of all site access roads, laydown areas and principle drainage controls, in addition to advancing all of the pre-construction environmental works as required by project environmental approvals. the latter included the establishment of rabbit breeding colonies and alternative white stork nesting sites, the removal of old overhead power poles and lines, the removal of existing contaminations at the site, the reconstruction of existing stone fences, and the continuation of annual wildlife breeding period monitoring and census activities in the areas surrounding the project site. Later in the year, construction site clearing and levelling activities were also commenced. there were also many important secondary permissions received during the year, notable amongst which was the water-use license, required for pumping and use of the historical pit lake waters, whilst all required environmental bonds were also put in place. Revised Construction Schedule in mid-2011 and tungsten prices peaked thereafter prices suffered similar declines to that seen in most other commodities, reaching a low of US$162 per metric tonne unit (“mtu”) in January 2016. However, a sustained recovery appears now to be taking hold, with prices having recently reached uS$223 per mtu by mid-June 2017. the prognosis reported by independent metal research firms is for this recovery to continue during 2017, with many indicators now pointing towards continued increases in the tungsten price over the coming years. In light of the above, and following a period of review of the construction schedule, the Board of Saloro has now authorised the issuance of outstanding approvals on various equipment and plant construction contracts, thus advancing the project into an accelerated construction and 9 OrmOnde Annual Report & Accounts 2016 Review of activities implementation phase, with an updated schedule allowing for mine commissioning in the third quarter of 2018. Against the backdrop of rising tungsten APT prices, and increasing demand for tungsten concentrates, this updated timeline should result in lower risk, when compared with the timing of prior schedules. In line with these adjustments to the Project schedule, Saloro has agreed amendments to the project’s debt facility with the debt provider to reflect the new schedule, thus ensuring continued compliance with this agreement. Enhancing Value at Barruecopardo the Barruecopardo project has always displayed clear potential for increased resources and mine life, with drilling prior to 2015 having been focused near surface above a depth of c. 250 metres, but with potentially economic tungsten mineralisation having been encountered in many of the deeper holes. Given the above, Saloro decided in late 2015 to initiate a limited (5 hole, 2000m) drilling program with the objective of confirming extensions to the mineralisation at depth beneath the main central zone of the planned nine year open pit, whilst also following up a potentially expanded zone of mineralisation under the shallow northern end of the pit, which was identified by drilling in 2012. Results from the program completed in early 2016 were very encouraging, with the main objective being realised, showing the central zone mineralisation continuing with depth, suggesting that the objective of the Saloro partners to eventually develop Barruecopardo into a longer life underground mine appears well based. Excellent results obtained from 2,000m drilling program commenced during Q4 2015 (as reported in May 2016), including: BAR 83 BAR 83 BAR 85 BAR 86 23m @ 0.26% WO3 from 172m (including 4m @ 1.23% Wo3) 5m @ 1.95 % WO3 from 404m 25m @ 0.21% WO3 from 334m (including 5m @ 0.59% Wo3) 6m @ 2.59% WO3 from 253m These results support the current resource interpretation, whilst continuing to confirm the significant potential to extend mineralisation at depth. Saloro remains committed to the objective of increasing the value of the Barruecopardo asset through both extensions to the mine life and/or increases in the eventual production rate. Further drilling to pursue this objective will be carried out during the development and early production stages, with the ultimate aim of extending the Barruecopardo mine life substantially through the development of a “Stage 2” underground mine at the project. 10 OrmOnde Annual Report & Accounts 2016 Under the terms of the Joint Venture, Ormonde can elect to contribute or not to any particular 6-month work program, with dilution ensuing in the case of non-contribution. At the end of 2016, Ormonde’s interest in the Joint Venture was 42% in the Zamora permits and 47% in the Salamanca permits. La Zarza no work activities were carried out at la Zarza during the year. the Company continues to seek to obtain value from a divestment of its interest in the project. Gold Projects An independent geological review of the Aurum (now Shearwater Group plc.) – ormonde Joint Venture gold properties was commissioned by the Joint Venture in early 2016, aimed at taking a fresh look at the results of past exploration work on these gold exploration projects and in particular the nature of the controlling structures and the general geological models, to assist in developing new ideas aimed at: (a) adding significant project value; and (b) advancing each project towards initial reportable resource estimation. This review both reaffirmed the potential of these projects to host significant gold mineralisation, whilst at the same time identifying potential new drilling targets. Follow-up work has been planned on the JV properties and is awaiting finalisation of renewals of the associated investigation permits by the Regional Government to enable works to commence. 11 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Directors’ Report The Directors present their Annual Report and Audited Financial Statements, for the year ended 31 December 2016, of Ormonde Mining plc (“the Company”) and its subsidiaries (collectively “the Group”). Principal Activity the Company is listed on the enterprise Securities Market (eSM) of the Irish Stock exchange and the Alternative Investment Market (AIM) on the london Stock exchange. The principal activity of the Company and its subsidiaries comprises acquisition, exploration, and development of mineral resource projects in Spain. Review of Business and Future Developments A detailed review of activities for the year and future prospects of the Group is contained in the Chairman’s Review and Review of Activities section of this report. Principal Risks and Uncertainties the Group’s activities are carried out in Spain and Ireland. Accordingly the principal risks and uncertainties are considered to be the following: Exploration Risk exploration and development activities may be delayed or adversely affected by factors outside the Group’s control, in particular; climatic conditions, performance of joint venture partners or suppliers, availability, delays or failures in installing and commissioning plant and equipment; unknown geological conditions; remoteness of location; actions of host governments or other regulatory authorities (relating to, inter alia, the grant, maintenance or renewal of any required authorisations, environmental regulations or changes in law). Commodity Price Risk The demand for, and price of, tungsten, gold, copper, base metals and other minerals is dependent on global and local supply and demand, actions of governments or cartels and general global economic and political developments. Political Risk As a consequence of activities in different parts of the world, the Group may be subject to political, economic and other uncertainties, including but not limited to terrorism, war or unrest, changes in national laws and energy policies and exposure to different legal systems. Financial Risk Financial risk is explained in greater detail in note 24. 12 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Share Price the share price movement in the year ranged from a low of €0.01130 to a high of €0.0300 (2015 : €0.0100 to €0.0500). the share price at the year end was €0.0175 (2015 : €0.0180). Results and Dividends the results for the year ended 31 December 2016 are set out in the Consolidated Statement of Comprehensive Income on page 20 of this Annual Report. no dividends are recommended. Directors the names of the current Directors are set out on the inside back cover. In accordance with the Articles of Association, John Carroll retires from the Board and being eligible offers himself for re-election. Details of Executive Directors Mr. Stephen J. Nicol is a mining engineer with some 30 years experience in the mining industry, initially in operations and subsequently in mine evaluation and development projects. He has held production supervisory roles in various underground and open pit mines in Australia and Europe, culminating in a two year period as Managing Director of an Italian based gold mining and exploration operation. Prior to joining Ormonde, he had been operating as an independent consultant working on gold and base metal mine evaluation projects in Romania, Greece, Italy, Guinea, Kazakhstan, Canada and the Congo. Stephen was appointed to the Board in April 2008, and served as Chief Operating Officer until September 2015 when he was appointed to the position of Managing Director. Details of Non-Executive Directors Mr. Michael J. Donoghue is a mining engineer by profession and has wide experience in the evaluation, funding, development and operation of mines in Europe, Africa, South-East Asia, Australia and the Americas. His executive management experience includes an eight-year period as General Manager - Operations for Delta Gold NL, Australia. Michael was appointed Chairman of ormonde in April 2004 and he is a member of the Audit Committee and Remuneration Committee. Mr. John A. Carroll is a chartered secretary by profession, and has over 30 years experience including seven years as a manager with KPMG in the Investment Company Department. He has widespread business contacts in Ireland and significant experience in the resource sector. He was appointed Company Secretary in March 2005 and is a member of the Audit Committee. Mr. Jonathan Henry is currently President and Chief Executive Officer of TSX-listed Gabriel Resources Ltd. Between 1994 and 2010 he worked with Avocet Mining plc, now a West African gold mining and exploration company operating the Inata Gold Mine in Burkina Faso, in a variety of senior management capacities including Finance Director and Chief Executive Officer of the Company. During his tenure at Avocet he oversaw successful exploration, feasibility study, mine development and capital funding activities, plus a number of acquisitions and disposals of mine assets in Portugal, Peru, USA, Tajikistan, Burkina Faso, Malaysia and Indonesia. Avocet’s activities during Mr Henry’s tenure also included the redevelopment and operation of tungsten mining and processing operations in Portugal, Peru and USA. Mr Henry has an honours degree in Natural Sciences from Trinity College, Dublin. Jonathan is on the Remuneration Committee. Directors John Carroll Michael Donoghue Jonathan Henry Stephen nicol 19/06/16 31 Dec ‘16 1 Jan ‘16 Ordinary Shares Ordinary Shares Ordinary Shares 2,184,251 3,595,233 - 192,105 2,184,251 3,595,233 - 192,105 2,184,251 3,595,233 - 192,105 13 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Directors’ Report Directors John Carroll John Carroll John Carroll Michael Donoghue Michael Donoghue Michael Donoghue Stephen nicol Stephen nicol Stephen nicol 19/06/17 31/12/16 01/01/16 Shares Options Shares Options Shares Options - + 750,000 # 750,000 \ - ^ 750,000 # 1,000,000 \ 1,000,000 “ 2,000,000 \ 3,000,000 * - + 750,000 # 750,000 \ - ^ 750,000 # 1,000,000 \ 1,000,000 “ 2,000,000 \ - * 750,000 + 750,000 # 750,000 \ 300,000 ^ 750,000 # 1,000,000 \ 1,000,000 “ 2,000,000 \ - * No change in the above share options has occurred between 31 December 2016 and the date of approval of these financial statements. + - Share options were exercisable at a price of €0.041 and expired on 11 May 2016 ^ - Share options were exercisable at a price of €0.21 and expired on 26 october 2016 # - Share options are exercisable at a price of €0.034 at any time up to 13 August 2018. “ - Share options are exercisable at a price of €0.109 at any time up to 14 April 2018. \ - Share options are exercisable at a price of €0.068 at any time up to 3 october 2020. * - Share options are exercisable at a price of €0.025 at any time up to 4 october 2025. All the above shareholdings are beneficially held. No Director, Secretary or any member of their immediate families had an interest in any subsidiary. See Note 21 for details of the share option scheme. In addition, the rules of the Company’s share option schemes are available for inspection at the registered office of the Company. Transactions Involving Directors There have been no contracts or arrangements of significance during the year in which Directors of the Company were interested other than as disclosed in Note 22 to the financial statements. Significant Shareholders The Company has been informed or is aware that, in addition to the interests of the Directors, at 31 December 2016 and the date of this report, the following shareholders own 3% or more of the issued share capital of the Company: M & G Investment Managers thomas Anderson Goodbody Stockbrokers nominees limited Rathbone Brothers plC Percentage of issued share capital 19/06/17 31/12/16 8.97% 8.38% 6.75% 4.98% 8.97% 8.38% 6.45% 4.98% the Directors are not aware of any other holding of 3% or more of the share capital of the Company. Subsidiary Undertakings Details of the Company’s subsidiaries are set out in Note 14 to the financial statements. Political Donations There were no political donations during the year (31 December 2015 : Nil) as defined by the Electoral Act 1997. 14 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Directors’ Responsibility Statement The Directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. As required by AIM and ESM rules and as permitted by company law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the eu (eu IFRS) and have elected to prepare the Company financial statements in accordance with EU IFRS, as applied in accordance with the provisions of the Irish Companies Act, 2014 (“the Companies Acts”). The Group and Company financial statements are required by law and EU IFRS to present fairly the financial position and performance of the Group; the Companies Acts provide, in relation to such financial statements, that references in the relevant part of the Acts to financial statements giving a true and fair view are references to their achieving a fair presentation. In preparing each of the Group and Company financial statements, the Directors are required to: - select suitable accounting policies and apply them consistently; - make judgements and estimates that are reasonable and prudent; and - state whether the financial statements have been prepared in accordance with IFRS as adopted by the european union and as regards the Company as applied in accordance with the Companies Act 2014; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business. the Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial statements of the Group are prepared in accordance with IFRS, as adopted by the EU and comply with the provisions of the Companies Act 2014. they have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Under applicable law, the Directors are also responsible for preparing a director’s report that complies with the Companies Act 2014. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Going Concern As further disclosed in Note 2 the Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review, are confident that the Company and the Group should be in a position to have adequate financial resources to continue in operational existence for a period of twelve months from the date the financial statements were approved by the Directors. the Group is in receipt of revenue relating to services provided to the Barruecopardo Joint Venture BV Group (which holds the Barruecopardo Tungsten Project). The revenue provides sufficient cash flow to meet the Group’s annual operating costs. To the extent that revenue no longer provided sufficient cashflow to meet the Group’s annual operating costs, the Group may be required to seek alternative sources of funding such as equity finance. the future of the Company and the Group is also dependent on the successful future outcome of its exploration interests and of the availability of further funding to bring these interests to production. The Directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. Consequently, they consider that it is appropriate to prepare the financial statements on the going concern basis. 15 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Directors’ Report Corporate Governance The Directors are committed to maintaining the highest standards of corporate governance commensurate with the size, stage of development and financial status of the Group. the Board is responsible for the supervision and control of the Company and is accountable to the shareholders. the Board has reserved decision-making on a variety of matters, including determining strategy for the Group, reviewing and monitoring executive management performance and monitoring risks and controls. The Board currently has four Directors, comprising one executive director and three non-executive directors. The Board met formally on eight occasions during the year ended 31 December 2016. An agenda and supporting documentation was circulated in advance of each meeting. All the Directors bring independent judgement to bear on issues affecting the Group and all have full and timely access to information necessary to enable them to discharge their duties. non-executive directors are not appointed for specific terms, with one third of non-executive directors up for re-election each year and each new director is subject to election at the next Annual General Meeting following the date of appointment. The following committees deal with the specific aspects of the Group affairs: Audit Committee this Committee comprises two non-executive directors. the external auditors have the opportunity to meet with members of the Audit Committee without executive management present at least once a year. the duties of the Committee include the review of the accounting principles, policies and practices adopted in preparing the financial statements, external compliance matters and the review of the Group’s financial results. Nominations Committee Given the current size of the Group a nominations Committee is not considered necessary. the Board reserves to itself the process by which a new director is appointed. Remuneration Committee This Committee comprises two non-executive directors. This Committee determines the contract terms, remuneration and other benefits of the executive Directors, Chairman and non-executive Directors. Further details of the Group’s policies on remuneration, service contracts and compensation payments are given in the Remuneration Committee Report below. the Group’s policy on senior executive remuneration is designed to attract and retain individuals of the highest calibre who can bring their experience and independent views to the policy, strategic decisions and governance of the Group. In setting remuneration levels, the Remuneration Committee takes into consideration the remuneration practices of other companies of similar size and scope. A key philosophy is that staff must be properly rewarded and motivated to perform in the best interests of the shareholders. Total remuneration to Directors during the year ended 31 December 2016 was €305,607 (31 December 2015: €442,720): Executive Directors Stephen nicol Kerr Anderson (deceased 31 July 2015) Total Executive Directors' remuneration Non-Executive Directors Michael Donoghue John Carroll Jonathan Henry Total Non-executive Directors' remuneration Total Directors' remuneration 16 31/12/16 31/12/15 € € 159,880 - 159,880 75,524 35,203 35,000 145,727 305,607 180,607 116,346 296,953 99,642 37,375 8,750 145,767 442,720 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Communications the Group maintains regular contact with shareholders through publications such as the annual and interim report via press releases and the Group’s website, www.ormondemining.com. Management is responsive to shareholder telephone and e-mail enquiries throughout the year. the Board regards the Annual General Meeting as a particularly important opportunity for shareholders, Directors and management to meet and exchange views. Internal Control the Board is responsible for maintaining the Group’s system of internal control to safeguard shareholders investments and Group assets. the Directors have overall responsibility for the Group’s system of internal control and have delegated responsibility for the implementation of this system to Executive Management. This system includes financial controls that enable the Board to meet its responsibilities for the integrity and accuracy of the Group’s accounting records. The Group’s system of internal financial control provides reasonable, though not absolute, assurance that assets are safeguarded, transactions authorised and recorded properly and that material errors or irregularities are either prevented or detected within a timely period. Having made appropriate enquiries, the Directors consider that the system of internal financial, operational and compliance controls and risk management operated effectively during the period covered by the financial statements and up to the date on which the financial statements were signed. The internal control system includes the following key features, which have been designed to provide internal financial control appropriate to the Group’s businesses: - budgets are prepared for approval by the Board; - expenditure and income are compared to previously approved budgets; - a detailed investment approval process which requires Board approval of all major capital projects and regular review of the physical performance and expenditure on these projects. - all commitments for expenditure and payments are compared to previously approved budgets and are subject to approval by personnel designated by the Board of Directors. - cash flow forecasting is performed on an ongoing basis to ensure efficient use of cash resources. - the Directors, through the Audit Committee, review the effectiveness of the Group’s system of internal financial control. Accounting Records the measures taken by the Directors to ensure compliance with the requirements of Sections 281 to 285 of the Companies Act 2014 with regard to the keeping of accounting records, are the employment of appropriately qualified accounting personnel and the maintenance of computerised accounting systems. the Company’s accounting records are maintained at Bracetown Business Park, Clonee, Co Meath, Ireland. Auditor The Auditors, LHM Casey McGrath Limited have indicated their willingness to continue in office. on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 __________________ Michael Donoghue director and non executive Chairman 17 OrmOnde Annual Report & Accounts 2016 Independent Auditors’ Report We have audited the financial statements of Ormonde Mining plc, for the year ended 31 December 2016, which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Cash Flows, Company Statement of Cash Flows, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity and related notes. The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (IFRSs) as adopted by the european union and, as regards the company financial statements, as applied in accordance with provisions of the Companies Act 2014. this report is made solely to the Company’s members as a body in accordance with the requirements of Section 391 of the Companies Act 2014. our audit work has been undertaken so that we might state to the Company’s members those matters that we are required to state to them in the Audit 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 or the Company’s members as a body for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditors As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements giving a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (uK and Ireland). those standards require us to comply with the Financial Reporting Council’s ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statement sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed: the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. In addition, we read all the financial and non-financial information in the Chairman’s Report, Review of Activities and Directors Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion In our opinion - The Group financial statements give a true and fair view, in accordance with IFRS as adopted by the European Union, of the state of the Group’s affairs as at 31 December 2016 and of its profit and cash flows for the year then ended; and - The Company financial statements give a true and fair view of the state of the Company’s affairs as at 31 December 2016 ; and - The Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; and - the Company statement of financial position has been properly prepared in accordance with IFRS as adopted by the european union and as applied in accordance with the provision of the Companies Act 2014; and - The Group and Company financial statements have been properly prepared in accordance with the Companies Act 2014. 18 OrmOnde Annual Report & Accounts 2016 Matters on which we are required to report by the Companies Act 2014. - We have obtained all the information and explanations which we considered necessary for the purpose of our audit. - In our opinion the accounting records of the parent company were sufficient to permit the financial statements to be readily and properly audited. - the parent Company Statement of Financial position is in agreement with the books of account. - In our opinion the information given in the Directors Report is consistent with the financial statements Matters on which we are required to report by exception We have nothing to report, in respect of the provisions, in the Companies Act 2014, to you if, in our opinion, the disclosures of directors’ remuneration and transactions specified by section 305 to 312 of the Act are not made. _____________________ Brendan Murtagh Statutory auditor For and on behalf of LHM Casey McGrath Limited Chartered Certified Accountants Statutory Audit Firm 6 Northbrook Road, Dublin 6, Ireland. Date: 19 June 2017 19 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Consolidated Statement of Comprehensive Income Continuing Operations turnover - Continuing operations Administrative expenses Investment income Amounts written off intangible assets Finance costs Profit/(loss) for the year before taxation Income tax expense Profit/(loss) on ordinary activities after taxation Group share of loss on associate investment Total comprehensive income/(loss) for the year (Loss)/Profit attributable to: owners of the Company Total comprehensive income/(loss) attributable to: owners of the Company Earnings/(loss) per share from continuing operations Basic (loss)/profit per share (in cent) Diluted (loss)/profit per share (in cent) Notes 2016 € 000's 2015 € 000's 1,000 (856) - (2,000) - (1,856) (1) (1,857) (552) (2,409) (2,409) (2,409) (2,409) (2,409) (0.51) (0.51) 527 (1,443) 3,397 - (42) 2,439 - 2,439 (368) 2,071 2,071 2,071 2,071 2,071 0.44 0.44 5 6 7 11 14 10 10 All activities derive from continuing operations. All profits/ losses and total comprehensive profit/ loss for the year are attributable to the owners of the Company. the Company had no recognised gains or losses other than those dealt with in the Statement of Comprehensive Income. The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. __________________ Michael Donoghue director and non executive Chairman on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 20 Consolidated Statement of Financial Position Notes 2016 € 000's 2015 € 000's OrmOnde Annual Report & Accounts 2016 as at 31 December 2016 ASSetS Non-Current Assets Intangible assets Property, plant and equipment Financial assets Total Non-Current Assets Current Assets trade and other receivables Cash and cash equivalents Total Current Assets Total Assets EQUITy AND LIABILITIES Capital and Reserves Issued capital Share premium account Share based payment reserve Capital conversion reserve fund Capital redemption reserve fund Foreign currency translation reserve Retained loss Equity Attributable to Owners of the Company Total Equity Current Liabilities trade and other payables total Current liabilities Total Liabilities Total Equity and Liabilities 12 13 14 15 16 18 18 19 19 19 18 20 17 3,300 - 16,026 19,327 36 694 730 20,057 13,485 29,932 837 29 7 1 (24,497) 19,795 19,795 264 264 264 20,057 The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 __________________ Michael Donoghue director and non executive Chairman 5,279 1 16,579 21,859 35 653 688 22,547 13,485 29,932 837 29 7 1 (22,089) 22,202 22,202 345 345 345 22,547 21 OrmOnde Annual Report & Accounts 2016 as at 31 December 2016 Company Statement of Financial Position Notes 2016 € 000's 2015 € 000's ASSetS Non-Current Assets Property, plant and equipment Investment in subsidiaries Total Non-Current Assets Current Assets trade and other receivables Cash and cash equivalents Total Current Assets Total Assets EQUITy AND LIABILITIES Capital and Reserves Issued capital Share premium account Share based payment reserve Capital conversion reserve fund Capital redemption reserve fund Retained loss Equity Attributable to Owners of the Company Total Equity Current Liabilities trade and other payables total Current liabilities Total Liabilities Total Equity and Liabilities 13 14 15 16 18 18 19 19 19 20 17 - 8,780 8,780 8,295 520 11,068 17,595 13,485 29,932 837 29 7 (26,905) 17,385 17,385 210 210 210 1 5,965 5,966 13,207 423 13,630 19,596 13,485 29,932 837 29 7 (24,919) 19,371 19,371 225 225 225 17,595 19,596 The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. __________________ Michael Donoghue director and non executive Chairman on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 22 Consolidated Statement of Cashflows OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes 2016 € 000's 2015 € 000's (1,856) 2,439 Cashflows from operating activities Profit for the year before taxation Adjustments for: Depreciation Write down of intangible assets Finance costs recognised in profit or loss Cashflow from operating activities Movement in working capital Movement in debtors Movement in creditors Net cash generated by operating activities Cashflows from financing activities Interest paid other equity movement Cashflow from financing activities Cashflows from investing activities net expenditure on intangible assets Interest received Acquisitions and disposals Net cash generated by / (used in) investing activities Share of loss in associate Cashflow from investing activities Net movement in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 15 15 The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 __________________ Michael Donoghue director and non executive Chairman 1 2,000 - 145 (1) (82) 62 - - 62 (21) - 552 465 (552) (21) 41 653 694 - 42 2,481 186 133 2,800 (42) 1,074 3,832 (16) - (3,306) (3,322) (368) (3,690) 142 511 653 23 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Company Statement of Cashflows Notes 2016 € 000's 2015 € 000's Cashflows from operating activities loss for the year before taxation Adjustments for: Depreciation Finance costs recognised in profit or loss Cashflow from operating activities Movement in working capital Movement in debtors Movement in creditors Net cash generated by / (used in) operating activities Cashflows from investing activities Investment in subsidiary undertakings Interest received taxation Net cash generated by investing activities Net movement in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 16 16 (1,986) 1 - (1,985) 2,097 (15) 97 - - - - 97 423 520 (849) - 41 (808) (1,868) 132 (2,544) 2,613 (41) (1) 2,571 27 396 423 The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 __________________ Michael Donoghue director and non executive Chairman 24 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Consolidated Statement of Changes in Equity Share Capital Share Premium Share Based Payment Reserve Other Reserves Retained Losses Total € 000's € 000's € 000's € 000's € 000's € 000's Balance at 1 January 2015 13,485 29,932 Profits for the year Derecognition of subsidiaries - - - - Balance at 31 December 2015 13,485 29,932 Balance at 1 January 2016 loss for the year 13,485 29,932 - - Balance at 31 December 2016 13,485 29,932 837 - - 837 837 - 837 37 - - 37 37 - 37 (25,234) 19,057 2,071 1,074 2,071 1,074 (22,089) 22,202 (22,089) (2,409) (24,498) 22,202 (2,409) 19,793 The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 __________________ Michael Donoghue director and non executive Chairman 25 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Company Statement of Changes in Equity Share Capital Share Premium Share Based Payment Reserve Other Reserves Retained Losses Total € 000's € 000's € 000's € 000's € 000's € 000's Balance at 1 January 2015 13,485 29,932 loss for the year Recognition of share based payments - - - - Balance at 31 December 2015 13,485 29,932 Balance at 1 January 2016 13,485 29,932 loss for the year Recognition of share based payments - - - - Balance at 31 December 2015 13,485 29,932 837 - - 837 837 - - 837 36 - - 36 36 - - 36 (24,070) (849) - 20,220 (849) - (24,919) 19,371 (24,919) (1,986) - 19,371 (1,986) - (26,905) 17,385 The accompanying notes on pages 27 - 49 form an integral part of of these financial statements. on behalf of the Board __________________ John Carroll director and Company Secretary Date: 19 June 2017 __________________ Michael Donoghue director and non executive Chairman 26 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 1. Statement of accounting policies Ormonde Mining plc (“the Company”) is a company incorporated in Ireland. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The Group and Company financial statements were authorised for issue by the Directors on (19 June 2017). Basis of preparation The Group and Company financial statements (together the “financial statements”) have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The financial statements have been prepared on the historical cost basis. The accounting policies have been applied consistently to all financial periods presented in the Consolidated Financial Statements. Statement of Compliance As permitted by the European Union and in accordance with AIM and ESM Rules, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board (IASB) as adopted by the EU (IFRS). The individual financial statements of the Company (“Company Financial Statements”) have been prepared in accordance with IFRS as adopted by the eu and as applied in accordance with the Companies Act, 2014 which permits a company, that publishes its company and group financial statements together, to take advantage of the exemption in Section 304(2) of the Companies Act, 2014, from presenting to its members its Company Statement of Comprehensive Income and related notes that form part of the approved Company Financial Statements. The IFRS adopted by the EU as applied by the Company and the Group in the preparation of these financial statements are those that were effective on or before 31 December 2016. New accounting standards and interpretations for the year ending 31 December 2016 The following standards, amendments and interpretations apply from 1 January 2016: - IFRS 2 Share Based Payments - effective for periods beginning on or after 1 February 2015 - IFRS 8 Operating Segments - effective for periods beginning on or after 1 February 2015 - IAS 16 Property Plant and Equipment - effective for periods beginning on or after 1 January 2016 - IAS 24 Related Party Disclosures - effective for periods beginning on or after 1 February 2015 - IAS 38 Intangible Assets - Acceptable methods of depreciation and amortisation - effective for periods beginning on or after 1 January 2016 There was no material impact to the financial statements in the current year from these standards, amendments and interpretations. The following standards, amendments and interpretations are not yet required and have not been adopted early by the Group: - IFRS 9 Financial Instruments - effective for periods beginning on or after 1 January 2018 - IFRS 15 Revenue from Contracts with Customers - effective for periods beginning on or after 1 January 2018 - IFRS 16 Leases - effective for periods beginning on or after 1 January 2019 - IAS 12 Income Tax - effective for periods beginning on or after 1 January 2017 - IAS 39 Financial Instruments: Recognition and Measurement - effective for periods beginning on or after 1 January 2018 There would not have been a material impact on the financial statements if these standards had been applied in the current year. 27 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements Functional and Presentation Currency These Consolidated Financial Statements are presented in Euro (€), which is the Company’s functional currency. Use of Estimates and Judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. the estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. In particular, there are significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements in the following areas: - note 10 - Income tax expense - Deferred tax - note 11 - Intangible Assets Consolidation The Consolidated Financial Statements comprise the financial statements of Ormonde Mining plc and its subsidiaries for the year ended 31 December 2016. Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intragroup balances and transactions including any unrealised gains or losses or income or expenses arising from intragroup transactions are eliminated in preparing the Group financial statements, except to the extent that they provide evidence of impairment. Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, and non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the income statement. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date control is lost. Subsequently, it is accounted for an equity-accounted investee or as an available for sale financial asset, depending on the level of influence retained. The statutory financial statements of subsidiary companies have been prepared under the accounting policies applicable in their country of incorporation with adjustments made to the results and financial position of such companies to bring their accounting policies into line with those of the Group for consolidation purposes. Accounting for associates Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s share of post-acquisition profit or loss is recognised in the Statement of Comprehensive Income, and its share of post-acquisition movements in the Statement of other Comprehensive Income is recognised in the Group Statement of other Comprehensive Income with a corresponding adjustment to the carrying amount of the investment. the Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss)’ of associates in the Statement of Comprehensive Income. Investment in associates is shown separately on the Statement of Financial position. Investment in subsidiaries are shown in the Company’s own Statement of Financial position. Investments in subsidiaries are stated at cost less provisions for any permanent diminution in value. 28 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Exploration and Evaluation Assets In accordance with International Financial Reporting Standard 6 - Exploration for and Evaluation of Mineral Resources, the Group uses the cost method of recognition. Exploration costs include licence costs, survey, geophysical and geological analysis and evaluation costs, costs of drilling and project-related overheads. exploration expenditure in respect of properties and licences not in production is capitalised and is carried forward in the Statement of Financial position under intangible assets in respect of each area of interest where:- (i) the operations are ongoing in the area of interest and exploration or evaluation activities have not reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves; or (ii) such costs are expected to be recouped through successful development and exploration of the area of interest or alternatively by its realisation. Exploration costs include licence costs, survey, geographical and geological analysis on evaluation costs, costs of drilling and project related overheads. When the Directors decide that no further expenditure on an area of interest is worthwhile, the related expenditure is written off or down to an amount which it is considered representative of the residual value of the Group’s interest therein. Impairment The carrying amounts of the Group’s non-financial assets, other than deferred tax 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. For intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that is expected to generate cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the Statement of Comprehensive Income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. the recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount Property, Plant and Equipment Property, Plant and Equipment are stated at cost or valuation, less accumulated depreciation. Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group. Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows: Computer equipment - 33% Straight line Fixtures and fittings - 33% Straight line Motor vehicles - 20% Straight line The residual value and useful lives of the property, plant and equipment are reviewed annually and adjusted if appropriate at each Statement of Financial position date. On disposal of property, plant and equipment the cost and the related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the Statement of Comprehensive Income. 29 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised. Foreign Currencies Monetary assets and liabilities denominated in a foreign currency are translated into euro at the exchange rate ruling at the Statement of Financial Position date. Revenues, costs and non monetary assets are translated at the exchange rates ruling at the dates of the transactions. All exchange differences are dealt with through the Statement of Comprehensive Income. Share Based Payments the fair value of share options granted to directors and employees under the Company’s share option scheme is recognised as an expense with a corresponding credit to the share based payment reserve. the fair value is measured at grant date and spread over the period during which the awards vest. the fair value is measured using the Black-Scholes-Merton formula. the options issued by the Group are subject to both market-based and non-market based vesting conditions. Market conditions are included in the calculation of fair value at the date of the grant. non-market vesting conditions are not taken into account when estimating the fair value of awards as at grant date; such conditions are taken into account through adjusting the equity instruments that are expected to vest. the proceeds received net of any directly attributable transaction costs will be credited to share capital (nominal value) and share premium when options are converted into ordinary shares. Share Capital Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a reduction in equity. Earnings per Share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees. Operating Leases operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight line basis over the lease term. 30 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Financial Instruments Cash and cash equivalents Cash and cash equivalents in the Statement of Financial position comprise of cash at bank and in hand and short term deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form part of the Group’s cash management are included as a component of cash and cash equivalents for the purposes of Statement of Cashflows. Trade and other receivables and payables Trade and other receivables and payables are stated at cost less impairment, which approximates fair value given the short dated nature of these assets and liabilities. Provisions provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where the Group expects some or all of a provision to be reimbursed, for example, under the insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. the expense relating to any provision is presented in the Consolidated Statement of Comprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Contingencies A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events or where the amount of obligation cannot be measured with reasonable reliability. Contingent assets are not recognised, but are disclosed when an inflow of economic benefit is probable. 31 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 2. Going Concern The Group made a loss of €2,409,351 and has cash and cash equivalents of €694,216 as at 31 December 2016. The Company entered into a management services agreement in connection with Barruecopardo Joint Venture BV which provides for an annual fee of €1,000,000 (€750,000 in 2017, with €250,000 deferred). The Directors are in a position to manage the activities of the Group such that existing funds available to the Group together with contracted income will be sufficient to meet the Group’s obligations and continue as a going concern for a period of at least 12 months from the date of approval of the financial statements. On that basis, the Directors do not consider that a material uncertainty exists in relation to going concern and have deemed it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern. 3. Segment Information In the opinion of the Directors the operations of the Group comprise one class of business, being the exploration and development of mineral resources. The Group’s main operations are located in Spain. The information reported to the Group’s Managing Director, who is the chief operating decision maker, for the purposes of resource allocation and assessment of segmental performance is specifically focussed on the exploration areas in Spain. It is the opinion of the Directors, therefore, that the Group has only one reportable segment under IFRS 8 Operating Segments, which is exploration carried out in Spain. other operations “Corporate” includes cash resources held by the Group and other operational expenditure incurred by the Group. These assets and activities are not within the definition of an operating segment. Information regarding the Group’s reportable segment is presented below. Segment Revenues and Results the following is an analysis of the Group’s revenue and results from continuing operations by reportable segment: Segment Revenue Segment Profit/(Loss) Exploration - Spain total for continuing operations Finance Income Profit on disposal of subsidiaries Amounts written off intangible assets Profit/(loss) before tax (continuing operations) Segment assets and liabilities Segment Assets Corporate - Group Asset exploration - Spain Consolidated assets Segment Liabilities Corporate - Group liabilities exploration - Spain Consolidated liabilities 32 2016 € 000's 1,000 1,000 2015 2016 2015 € 000's € 000's € 000's 527 527 143 143 - - (2,000) (1,857) (916) (916) - 3,397 - 2,439 2016 2015 € 000's € 000's 537 19,520 20,057 210 54 264 444 22,103 22,547 225 120 345 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Other segment information exploration - Spain Depreciation and amortisation Additions to non-current assets 2016 € 000's 1 2015 2016 2015 € 000's € 000's € 000's - 21 16 Revenue from major products and services Substantially all revenue that the Group received during the period related to the Barruecopardo tungsten project in Spain. Geographical information the Group operates in two principal geographical areas - Ireland (country of residence of ormonde Mining plc) and Spain (country of residence of Ormonde Espana S.L., Ormonde Mineria Iberica S.L.U., Valomet S.L.U. (currently non operational) and Orillum S.l.u.). ormonde Mining B.V. which is incorporated in the netherlands and the holding company for an associate investment with operations in Spain. Information about its non-current assets by geographical location are detailed below: Ireland Spain 4. Statutory Information Auditors' remuneration Auditors' remuneration from non-audit work and after crediting: Profit on foreign currencies Non-Current Assets 2016 2015 € 000's € 000's - 19,327 19,327 1 21,858 21,859 2016 2015 € 000's € 000's 25 3 28 3 3 25 12 37 46 46 As permitted by Section 304 of the Companies Act 2014, the Company Income Statement and Statement of Other Comprehensive Income have not been separately presented in these financial statements. 33 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 5. Income from Investments Profit on disposal of subsidiaries 6. Amounts written off intangible assets Amounts written off intangible assets 7. Interest Payable and Similar Charges on loans and overdrafts 8. employees Number of employees the average monthly numbers of employees (including the Directors) during the year were: Directors Administration / technical Employment costs (Including Directors) Wages and salaries Social welfare 2016 2015 € 000's € 000's - 3,397 2016 2015 € 000's € 000's 2,000 2016 2015 € 000's € 000's - - 42 42 2016 2015 € 000's € 000's 4 3 7 4 7 11 2016 2015 € 000's € 000's 494 21 515 743 52 795 During the year wages and salaries of €25,070 (2015 : €67,200) were capitalised as intangible assets. 34 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 9. Key management Compensation Key management includes the Directors of the Company, all members of the company management, and the Company Secretary. the compensation paid or payable to key management for employee service is shown as below: Salaries and other short-term employee benefits 10. earnings per share 31/12/16 31/12/15 € 000's € 000's 381 381 570 570 Basic earnings per share the basic and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 2016 2015 Profit / (loss) for the year attributable to equity holders of the parent € 000’s (2,409) 2,071 Weighted average number of ordinary shares for the purposes of basic earnings per share Shares 472,507,482 472,507,482 Basic profit / (loss) per ordinary share (in cent) € (0.51) 0.44 Diluted earnings per share the earnings used in the calculation of the diluted earnings per share are the same as those for the basic earnings per share as outlined above. the weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: 2016 2015 Weighted average number of shares used in the calculation of basic earnings per share 472,507,482 472,507,482 Shares deemed to be issued for no consideration in respect of: employee options - - Weighted average number of ordinary shares used in the calculation of diluted earnings per share 472,507,482 472,507,482 Diluted profit / (loss) per ordinary share (in cent) € (0.51) 0.44 the following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share: 2016 2015 employee options 15,500,000 12,250,000 35 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 11. Income Tax expense Current tax Profit on disposal of subsidiaries total tax charge 2016 2015 € 000's € 000's - - - - The difference between the total current tax shown above and the amount calculated by applying the standard rate of Irish corporation tax of 12.5% to the loss before tax is as follows: Profit/(loss) from continuing operations Income tax expense calculated at 12.5% (31 December 2015: 12.5%) Effects of: Impairment on intangible assets tax relief granted at source on medical insurance Profit on disposal of investments Investment income taxable at a different rate expenses not allowable unused tax losses not recognised as deferred tax assets Income tax expense recognised in the profit or loss 2016 2015 € 000's € 000's (1,856) (232) 250 1 - (100) - 82 1 2,439 305 - - (425) (43) - 163 - the tax rate used for the year end reconciliations above is the corporate rate of 12.5% payable by entities in Ireland on taxable profits under tax law in that jurisdiction. At 31 December 2016, the Company had unused tax losses of €10,016,697 (2015 : €9,606,518) available for offset against future profits which equates to a deferred tax asset of €1,252,087 (2015 : €1,200,815). No deferred tax asset has been recognised due to the unpredictability of the future profit streams. Losses may be carried forward indefinitely. 36 12. Intangible Assets - Group Cost Cost At 1 January 2015 Additions Disposals Impairment At 31 December 2015 Additions Disposals Impairment At 31 December 2016 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 31/12/16 31/12/15 01/01/15 € 000's € 000's € 000's 3,300 3,300 5,279 5,279 18,535 18,535 Exploration & evaluation assets € 000's 18,535 16 (13,272) - 5,279 21 - (2,000) 3,300 expenditure on exploration and evaluation activities is deferred on areas of interest until a reasonable assessment can be determined of the existence or otherwise of economically recoverable reserves. no amortisation has been charged in the period. the Directors have reviewed the carrying value of the exploration and evaluation assets and consider it to be fairly stated at 31 December 2016. the Directors have recorded an impairment during the year in the amount of €2 million (nil - 2015). the recoverability of the intangible assets is dependent on the future realisation or disposal of the mineral resources. 37 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 13. Property, Plant and Equipment Property, Plant and equipment - Group Cost or Valuation At 1 January 2015 Additions Disposals At 31 December 2015 Disposals At 31 December 2016 Accumulated Depreciation and Impairment At 1 January 2015 Disposals Depreciation expense At 31 December 2015 Disposals Depreciation expense At 31 December 2016 Net Book Value Cost or Valuation Accumulated depreciation and impairment Net Book Value Fixtures & fittings Computer equipment Net Book Value Fixtures & Fittings Computer Equipment Motor Vehicles Total € 000's € 000's € 000's € 000's 26 - (6) 20 (12) 8 26 (6) - 20 (12) - 8 29 - - 29 - 29 27 - 1 28 - 1 29 18 - (18) - - - 18 (18) - - - - - 73 - (24) 49 (12) 37 72 (24) - 48 (12) 1 37 31/12/16 31/12/15 € 000's € 000's 37 (37) - - - - 49 (48) 1 - 1 1 38 Property, Plant and equipment - Company Cost or Valuation At 1 January 2015 Additions At 31 December 2015 Additions At 31 December 2016 Accumulated Depreciation and Impairment At 1 January 2015 Depreciation expense At 31 December 2015 Depreciation expense At 31 December 2016 Net Book Value Cost or Valuation Accumulated depreciation and impairment Net Book Value Fixtures & fittings Computer equipment Net Book Value OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Fixtures & Fittings Computer Equipment Total € 000's € 000's € 000's 20 - 20 - 20 20 - 20 - 20 20 - 20 - 20 18 1 19 1 20 40 - 40 - 40 38 1 39 1 40 31/12/16 31/12/15 € 000's € 000's 40 (40) - - - - 40 (39) 1 - 1 1 39 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 14. Financial Assets Financial Assets - Group Cost At 1 January 2016 Additions Group’s share of losses in the associate At 31 December 2016 31/12/16 31/12/15 € 000's € 000's 16,579 - (552) 16,027 - 16,947 (368) 16,579 the Group’s investment in Barruecopardo Joint Venture BV is deemed to be an associate investment under IFRS and is accounted for using equity accounting. A summary of the Group’s associate is set out below :- Associate Activity Incorporated in Proportion of ownership held Barruecopardo Joint Venture BV Mineral exploration the netherlands 30% Summarised financial information of the associate has been set out below. The summarised financial information shown represents amounts from the associate’s financial statements. The statutory financial statements of the associate have been prepared under the accounting policies applicable in the country of incorporation with adjustments made, as appropriate, to the results and financial position to bring their accounting policies into line with those of the Group for consolidation purposes. non current assets Current assets Current liabilities non current liabilities The following amounts have been included in the amounts above Cash and cash equivalents Current financial liabilities Non current financial liabilities loss from continuing operations total comprehensive loss The following amounts have been included in the amounts above Depreciation and amortisation Interest income Interest expense taxation credit carried forward 31/12/16 31/12/15 € 000's € 000's 37,742 20,515 (1,404) (1,359) 24,246 31,911 (964) - 2,498 11,405 - - (1,840) (1,840) 10 9 0 173 - - (1,226) (1,226) 18 10 8 98 The summarised financial information is not the entity’s share but the actual amount included in the separate IFRS financial statements of the associate. the main risks arising from the Group investment in the Associate are as follows:- 40 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Investment valuation risk the value of the investment is dependent on the successful development of evaluation and exploration assets. Should the development of the evaluation and exploration assets prove unsuccessful, the carrying value in the Statement of Financial position of the Group’s investment in the associate will reduce accordingly. Financial Assets - Company Cost At 1 January 2015 Additions Disposals At 31 December 2015 Additions Disposals At 31 December 2016 Accumulated Amortisation and Impairment At 1 January 2015 Impairment losses recognised in profit and loss At 31 December 2015 Impairment losses recognised in profit and loss At 31 December 2016 Net Book Values At 31 December 2016 At 31 December 2015 Subsidiary undertakings shares € 000's 14,949 - (2,612) 12,337 2,815 - 15,152 (6,372) - (6,372) - (6,372) 8,780 5,965 Subsidiary Activity Incorporated in Proportion of ownership interest and voting power held Ormonde Espana, S.L.U. Mineral exploration orillum S.l.u. Mineral exploration Ormonde Minerica Iberica, S.L.U. Mineral exploration Valomet S.l.u. Mineral exploration Spain Spain Spain Spain ormonde Mining B.V. Holding Company the netherlands 2016 100% 100% 100% 100% 100% 2015 100% 100% 100% 100% 100% the value of the investments is dependent on future realisation or disposal. Should the future realisation or disposal prove unsuccessful, the carrying value in the Statement of Financial Position will be written off. In the opinion of the Directors’ the carrying value of the investments at 31 December 2016 is appropriate. no impairment was recognised in 2016 or 2015 in respect of the above investments. 41 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 15. Trade and Other Receivables Amounts falling due within one year: Amounts owed by Group undertakings other debtors prepayments and accrued income 16. Cash and Cash equivalents Cash at bank Group 2016 Group Company Company 2015 2016 2015 € 000's € 000's € 000's € 000's - - 36 36 - 17 18 35 8,254 13,187 4 37 2 18 8,295 13,207 Group 2016 Group Company Company 2015 2016 2015 € 000's € 000's € 000's € 000's 694 694 653 653 520 520 423 423 42 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 17. Trade and Other Payables trade creditors other taxes and social welfare costs Accruals and deferred income Group 2016 Group Company Company 2015 2016 2015 € 000's € 000's € 000's € 000's 28 24 212 264 62 53 230 345 25 8 177 210 49 52 124 225 Some trade creditors had reserved title to goods supplied to the Company. Since the extent to which such creditors are effectively secured depends on a number of factors and conditions, some of which are not readily determinable, it is not possible to indicate how much of the above amount is secured under reservation of title. Other taxes and social welfare costs: V.A.t. P.A.y.E./P.R.S.I. Corporation tax Group 2016 Group Company Company 2015 2016 2015 € 000's € 000's € 000's € 000's 16 8 - 24 - 53 - 53 - 8 - 8 - 53 (1) 52 the Group’s exposure to currency and liquidity risks related to trade and other payables is set out in note 24. 43 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 18. Share capital - Group and Company Authorised equity 650,000,000 Ordinary shares of 2.5 cent each 100,000,000 Deferred shares of 3.809214 cent each Issued capital Share capital Share premium Issued capital comprises: 472,507,483 ordinary shares of 2.5 cent each (31/12/15 : 472,507,483 and 01/01/15 : 472,507,483) 43,917,841 fully paid deferred shares (31/12/15 : 43,917,841 and 01/01/15 : 43,917,841) Fully paid ordinary shares Balance at 1 January 2015 Issue of shares for cash Share issue costs Balance at 31 December 2015 Issue of shares for cash Share issue costs Balance at 31 December 2016 31/12/16 31/12/15 01/01/15 € 000's € 000's € 000's 16,250 3,809 20,059 13,485 29,932 43,417 16,250 3,809 20,059 13,485 29,932 43,417 16,250 3,809 20,059 13,485 29,932 43,417 11,812 11,812 11,812 1,673 13,485 1,673 13,485 1,673 13,485 Number of shares Share Capital Share Premium ‘000's 472,507 € 000's € 000's 11,812 29,932 - - - - - - 472,507 11,812 29,932 - - - - - - 472,507 11,812 29,932 Fully paid ordinary shares, which have a par value of €0.025, carry one vote and carry a right to dividends. 44 Deferred shares Balance at 1 January 2015 Issue of shares for cash Balance at 31 December 2015 Issue of shares for cash Balance at 31 December 2016 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Number of shares Share Capital Share Premium ‘000’s 3,809 - 3,809 - 3,809 € 000's € 000's 1,673 - 1,673 - 1,673 - - - - - The holders of the Deferred Shares shall not have the right to receive notice of any general meeting of the Company, or the right to attend, speak or vote at any general meeting. The holders of the deferred shares shall not be entitled to any dividend or other distribution. The Deferred Shares shall, on a return of assets in a winding up, entitle the holder only to the repayment of the amounts paid up on such shares after repayment of the capital paid on the ordinary shares plus the payment of €12,697 per ordinary share. The Company may, at its option at any time purchase all or any of the Deferred Shares in issue, at a price not exceeding €0.0127 for all the Deferred Shares so purchased. Capital Management The Board’s policy is to maintain a strong capital base so as to maintain investor and market confidence and to sustain future developments of the business. there were no changes in the Group’s approach to capital management during the year. the Group deems its shareholders’ funds to be its capital. It is Group Policy to incentivise the Directors through the award of share options. At the year end, the Directors hold 1.05% of ordinary shares, or 2.16% assuming that all outstanding share options vest and are exercised. The upper limit on the number of share options that can be granted, including options granted under the existing scheme (see Note 21), is 10% of issued share capital. neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 45 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 19. Other reserves - Group and Company Balance at 1 January 2015 Recognition of share based payments Balance at 31 December 2015 Recognition of share based payments Balance at 31 December 2016 20. retained Losses Deficit at beginning of year Profit/(Loss) for the year Derecognition of subsidiary Deficit at end of year Share Based Payment Reserve Capital Conversion Reserve Capital Redemption Reserve Foreign Currency Translation Reserve € 000's € 000's € 000's € 000's 837 - 837 - 837 29 - 29 - 29 7 - 7 - 7 1 - 1 - 1 Group 2016 € 000's (22,089) (2,409) - Group Company Company 2015 2016 2015 € 000's (25,234) 2,071 1,074 € 000's € 000's (24,919) (1,986) - (24,070) (849) - (24,498) (22,089) (26,905) (24,919) In accordance with the provisions of the Companies Act 2014, the Company has not presented the Company Statement of Comprehensive Income. The Company loss for the period of €1,986,000 (2015 - loss of €849,000) has been dealt with in the Statement of Comprehensive Income of the Group. 46 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 21. Share-based payments Employee share option plan the Group has an ownership-based compensation scheme for executives and senior employees of the Group. In accordance with the provisions of the plan, as approved by shareholders at a previous general meeting, executives and senior employees may be granted options to purchase ordinary shares. each share option converts into one ordinary share of ormonde Mining plc on exercise. no amounts are paid or payable by the recipient on receipt of the option. the options carry neither rights to dividends nor voting rights. options may be exercised at any time from the date of vesting to the date of their expiry. the following reconciles the outstanding share options granted under the employee share option plan at the beginning and end of the financial year: Balance at beginning of the financial year Expired during the financial year extended during the year Granted during the year Forfeited during the financial year Exercised during the financial year Balance at the end of the financial year Exercisable at the end f the financial year During the year 2,700,000 options were forfeited. option series 2 option series 5 option series 6 option series 7 31 December 2016 31 December 2015 Number of options Weighted average exercise price 000's 12,250 (2,700) - 5,950 - - 15,500 15,500 €0.076 €0.11 - €0.025 - - €0.049 €0.049 Number of options 000's 12,250 Weighted average exercise price €0.076 - - - - - - - - - - 12,250 12,250 €0.076 €0.076 Number of Share Options Outstanding 000's 2,550 1,000 6,000 5,950 Exercise Price €0.034 €0.109 €0.068 €0.025 the options outstanding at 31 December 2016 had a remaining average contractual life of 5.6 years. 47 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Notes to the Financial Statements 22. related party transactions The Details of subsidiary undertakings are shown in Note 14. Related Party Disclosures, transactions between Group entities that have been eliminated on consolidation are not disclosed. The Group hold a 30% shareholding in Barruecopardo Joint Venture B.V. In the year, an amount of €1,000,000 (2015: €527,070) was invoiced to Barruecopardo Joint Venture B.V and paid in full. Stephen Nicol is a director of Simprenta S.L. At 31 December 2015, Ormonde Mining plc owed €70,240 to Simprenta S.L. During the year Simprenta S.L provided services and expenses to the value of €98,968 to the Ormonde Mining Group. At 31 December 2016 Simprenta S.L was owed €46,875 by the Ormonde Mining Group. 23. events after the reporting date On 2nd June 2017, Ormonde announced that, following a period of review of the construction schedule for the Barruecopardo Tungsten Project, the Board of the Project company, Saloro SLU, authorised the issuance of outstanding approvals on various equipment and plant construction contracts, thus advancing the Project into an accelerated construction and implementation phase, with an updated schedule allowing for mine commissioning in the third quarter of 2018. As part of facilitating the advancement of the Project, Ormonde has agreed, subject to the latest development schedule being implemented as planned, for the remaining component of the equity investment owed by Oaktree to the Project group, of circa €16 million, to be drawn on a pro rata basis with the debt (rather than ahead of the debt draws) during the development period, with any residual equity amounts being drawn on commissioning. In addition, Ormonde announcement that Steve Nicol, its current Managing Director, would step down at its upcoming AGM to focus fully on the implementation and initial operating stages of the Barruecopardo project. 24. Financial Instruments and Financial risk management The Group and Company’s principal financial instruments comprise cash and cash equivalents. The main purpose of these financial instruments is to provide finance for the Group and Company’s operations. The Group has various other financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and has been throughout 2016 and 2015, the Group and Company’s policy that no trading in derivatives be undertaken. The main risks arising from the Group and Company’s financial instruments are foreign currency risk, credit risk, liquidity risk, interest rate risk and capital risk. Management reviews and agrees policies for managing each of these risks which are summarised below. Foreign currency risk The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. exchange rate exposures are managed within approved policy parameters utilising forward exchange contracts where appropriate. The exposure to exchange rate fluctuations is limited as the Company’s subsidiaries operate mainly within the Euro Zone. At the years ended 31 December 2016 and 31 December 2015, the Group had no outstanding forward exchange contracts. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group and Company’s financial assets comprise receivables and cash and cash equivalents. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Group and Company’s exposure to credit risk arise from default of its counterparty, with a maximum exposure equal to the carrying amount of cash and cash equivalents in its Consolidated Statement of Financial position. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected entities. 48 OrmOnde Annual Report & Accounts 2016 For the Year Ended 31 December 2016 Liquidity risk management Liquidity risk is the risk that the Group will not have sufficient funds to meet liabilities. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group and Company’s short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Cash forecasts are regularly produced to identify the liquidity requirements of the Group. The Group and Company’s financial liabilities as at 31 December 2016 and 31 December 2015 were all payable on demand. The expected maturity of the Group and Company’s financial assets (excluding prepayments) as at 31 December 2016 and 31 December 2015 was less than one month. The Group expects to meet its other obligations from operating cash flows. The Group further mitigates liquidity risk by maintaining an insurance programme to minimise exposure to insurable losses. The Group had no derivative financial instruments as at 31 December 2016 and 31 December 2015. Interest rate risk the Group and Company’s exposure to the risk of changes in market interest rates relates primarily to the Group and Company’s holdings of cash and short term deposits. It is the Group and Company’s policy as part of its disciplined management of the budgetary process to place surplus funds on short term deposit in order to maximise interest earned. Capital risk management the Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. the Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust its capital structure, the Group may adjust or issue new shares or raise debt. No changes were made in the objectives, policies or processes during the years ended 31 December 2016 and 31 December 2015. the capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses, as disclosed in the Consolidated Statement of Changes in equity. Fair values The carrying amount of the Group and Company’s financial assets and financial liabilities is a reasonable approximation of the fair value. Hedging At the year ended 31 December 2016 and 31 December 2015, the Group had no outstanding contracts designated as hedges. 25. Approval of Financial Statements The financial statements were approved by the Board on 19 June 2017. 49 OrmOnde Annual Report & Accounts 2016 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of ormonde Mining plc (the “Company”) will be held at the Crowne Plaza Hotel, The Blanchardstown Centre, Blanchardstown, Dublin 15 on 18 September 2017 at 11am for the purpose of considering and, if thought fit, passing the following resolutions of which Resolutions numbered 1 to 6 inclusive will be proposed as Ordinary Resolutions and Resolutions 7 and 8 will be proposed as Special Resolutions. Ordinary Business 1) To receive and consider the accounts for the year ended 31 December 2016, together with the reports of the Directors and Auditors thereon (Resolution 1). 2) to re-elect Mr. John Carroll as a Director who is recommended by the Board for re-election as a Director and who retires in accordance with the Articles of Association (Resolution 2). 3) To authorise the Directors to fix the remuneration of the auditors for the year ending 31 December 2016 (Resolution 3). 4) As an ordinary resolution (Resolution 4): that the Directors be and are hereby generally and unconditionally authorised pursuant to Section 1021 of the Companies Act 2014 (the “2014 Act”) to exercise all powers of the Company to allot relevant securities (as defined by Section 1021 of the 2014 Act) up to an amount equal to the authorised but as yet unissued share capital of the Company from time to time. the authority hereby conferred shall expire at the close of business on the earlier of the date of the next annual general meeting of the Company held after the date of the passing of this Resolution 4 and 18 December 2018 unless previously renewed, varied or revoked by the Company in general meeting, provided however that the Company may make an offer or agreement before the expiry of this authority which would or might require relevant securities to be allotted after this authority has expired and the Directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired. the authority hereby conferred shall be in substitution for any such existing authority. 5) As an ordinary resolution (Resolution 5): That the issued, and authorised but unissued, share capital of the Company be amended by the subdivision and re-designation of each issued and unissued ordinary Share of €0.025 into two (2) ordinary Shares of €0.005 each (the “ordinary Subdivided Shares”) and three (3) “A” Deferred Shares of €0.005 each in the capital of the Company (the “A Deferred Subdivided Shares”). 6) As an ordinary resolution (Resolution 6): That, subject to the passing of Resolution 5 in the notice convening this meeting, every two (2) Ordinary Subdivided Shares be consolidated into one (1) ordinary Share of €0.01 each in the capital of the Company and every three (3) “A” Deferred Subdivided Shares be consolidated into one (1) “A” Deferred Share of €0.015 each in the capital of the Company. Special Business 7) As a special resolution (Resolution 7) That, subject to the passing of Resolutions 5 and 6 in the notice convening this meeting, (a) the memorandum of association of the Company be and is hereby altered by the deletion of the existing clause 5 and the substitution therefor of the following new clause 5: “The authorised share capital of the Company is €20,059,200 divided into 650,000,000 Ordinary Shares of €0.01 each, 100,000,000 Deferred Shares of €0.038092 each and 650,000,000 “A” Deferred Shares of €0.015 each.” (b) the articles of association produced to the meeting (a copy of which has been initialled “A” for identification by the Chairman) be adopted as the new articles of association of the Company in substitution for and to the exclusion of the existing articles of association of the Company; 50 OrmOnde Annual Report & Accounts 2016 8) As a special resolution (Resolution 8): That, subject to the passing of Resolution 4 in the notice convening this meeting, the Directors be and are hereby empowered pursuant to Section 1023 of the 2014 Act to allot equity securities (as defined by Section 1023 of the 2014 Act) for cash pursuant to the authority conferred by Resolution 4 above as if Subsection (1) of Section 1022 of the 2014 Act did not apply to any such allotment provided that this power shall be limited to the allotment of equity securities: (a) in connection with the grant of any options or warrants by the Company or the exercise thereof; and (b) (in addition to the authority conferred by paragraph (a) of this Resolution 8), up to an aggregate nominal value of ten per cent of the issued share capital of the Company at the date of passing of this Resolution, which power shall expire at the close of business on the earlier of the date of the next annual general meeting of the Company held after the date of the passing of this Resolution 8 and 18 December 2018, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if the power conferred hereby had not expired. 28 June 2017 By ORDER OF THE BOARD John Carroll Secretary Registered Office: 6 northbrook Road Dublin 6 Ireland 51 OrmOnde Annual Report & Accounts 2016 Notice of Annual General Meeting Notes 1. Any member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend, speak and vote on his/ her behalf. A proxy need not be a member of the Company. 2. The instrument of proxy, to be valid, must be received by the Company’s Registrars, Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland not less than 48 hours before the time appointed for the holding of the meeting. 3. 4. In the case of a corporation this instrument may be either under the common seal or under the hand of an officer or attorney authorised in that behalf. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other registered holders and for this purpose seniority shall be determined by the order in which the name stands in the Register of Members in respect of the joint holding. 5. If a proxy is executed under a Power of Attorney such Power of Attorney must be deposited at the Registrar’s office along with the instrument of proxy. 6. Completing and returning a Form of proxy shall not preclude a member from attending and voting at the meeting should he /she so wish. 52 OrmOnde Annual Report & Accounts 2016 FORM OF PROXY FOR USE AT THE ANNUAL GENERAL MEETING TO BE HELD AT 11AM ON 18 SEPTEMBER 2017 AT THE CROWNE PLAZA HOTEL, THE BLANCHARDSTOWN CENTRE, BLANCHARDSTOWN, DUBLIN 15 AND AT ANy ADJOURMENT THEREOF ORMONDE MINING PUBLIC LIMITED COMPANY (THE “COMPANY”) For* Against* I/We.............................................................................................. 1 2 3 4 5 6 7 8 to receive and consider the accounts for the year ended 31 December 2016, together with the reports of the Directors and Auditors thereon to re-elect Mr. John Carroll as a Director who is recommended by the Board for re-election as a Director To authorise the Directors to fix the remuneration of the auditors for the year ended 31 December 2016 to authorise the Directors to allot relevant securities to authorise the sub-division of share capital of the Company to authorise the consolidation of share capital of the Company to approve the amendments to and adopt the new Memorandum and Articles of Association of the Company to authorise the Directors to allot equity securities for cash and to dis-apply Section 1022 (1) of the Companies Act 2014 o f. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . being (a) member(s) of the above Company HEREBY APPOINT: __________________of__________________or failing him __________________of__________________or failing him, the Chairman of the meeting to be my / our proxy to vote for me / us and on my / our behalf at the Annual General Meeting of the Company convened for the 18 September 2017 at 11am, at the Crowne Plaza Hotel, The Blanchardstown Centre, Blanchardstown, Dublin 15 and at any adjournment thereof. I / We direct the proxy to vote for / against* the resolutions to be proposed thereat by indicating with an “X” in the boxes below as to how my / our vote for each resolution is to be cast. *please indicate with an ‘x’ in the boxes below how you wish your votes to be cast, i.e. for or against the resolution. If you do not do so, the proxy will vote or abstain as he/she thinks fit DATED THIS .......................................................................................................................... day of ................................................................................................ 2017 SIGNATURE .............................................................................................................................................................................................................................................................. NAME IN FULL (BloCK letteRS) ...................................................................................................................................................................................................................................................... Notes 1. Any member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend, speak and vote on his/her behalf. A proxy need not be a member of the Company. 2. The instrument of proxy, to be valid, must be received by the Company’s Registrars, Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland not less than 48 hours before the time appointed for the holding of the meeting. 3. 4. In the case of a corporation this instrument may be either under the common seal or under the hand of an officer or attorney authorised in that behalf. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other registered holders and for this purpose seniority shall be determined by the order in which the name stands in the Register of Members in respect of the joint holding. 5. If a proxy is executed under a Power of Attorney such Power of Attorney must be deposited at the Registrar’s office along with the instrument of proxy. 6. Completing and returning a Form of proxy shall not preclude a member from attending and voting at the meeting should he/she so wish. 53 FolD 2 The Company Registrar, Ormonde Mining Plc, Computershare Investor Services (Ireland) Ltd., Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland. 1 D l o F FolD 3 Directors and other information Directors Registered Office Stephen nicol (managing director) Michael Donoghue (non-executive Chairman) John Carroll (non-executive director) Jonathan Henry (non-executive director) 6 northbrook Road Dublin 6 Ireland Secretary John Carroll Group Auditors Business Address Bankers Solicitors lHM Casey McGrath limited Chartered Certified Accountants Statutory Audit Firm 6 northbrook Road Dublin 6 Ireland Bracetown Business park Clonee Co. Meath Ireland DI5 yN2p Allied Irish Bank plc Market Square navan Co. Meath Ireland la Caixa Centro de empresas de Salamanca C. Rector Lucena, 11 B 37002 Salamanca Spain Mason Hayes & Curran Solicitors South Bank House Barrow Street Dublin 4 Ireland Brokers Registrars Financial PR OrmOnde Annual Report & Accounts 2016 Argali Abogados Paseo De La Castellana, 21 28046 Madrid Spain Dominic Dowling Solicitors 37 Castle Street Dalkey Co. Dublin Ireland NOMAD, ESM Adviser, Joint Broker & Financial Advisor Davy Davy House 49 Dawson Street Dublin 2 Ireland uK Joint Broker Sp Angel Corporate Finance llp prince Frederick House 35 Maddox Street london W1S 2pp uK Computershare Investor Services (Ireland) ltd Heron House Corrig Road Sandyford Industrial estate Dublin 18 Ireland Capital M Consultants 1 Royal exchange Avenue london eC3V 3lt uK Registered Number 96863 Republic of Ireland Date of Incorporation 13 September 1983 Website www.ormondemining.com ORMONDE MINING PLC B17, Bracetown Business Park, Clonee, Co. Meath, Ireland phone: +353 (0)1 8014184 email: info@ormondemining.com www.ormondemining.com
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