REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
REPORT OF THE DIRECTORS AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2010 FOR
RAMBLER METALS AND MINING PLC
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Company Information
Chairman’s Statement
Management’s Discussion and Analysis
Report of the Directors
Statement of Directors’ responsibilities
Corporate Governance
Independent Auditors’ reports
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Company Statement of Comprehensive Income
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
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32
RAMBLER METALS AND MINING PLC
COMPANY INFORMATION
FOR THE YEAR ENDED 31 JULY 2010
Directors:
J A Baker
B F Dalton
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts
J S Thomson
Secretary:
L Little
Registered office:
Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number:
5101822 (England and Wales)
Auditors:
PKF (UK) LLP
20 Farringdon Road
London
EC1M 3AP
Page 1
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 31 JULY 2010
We are pleased to report the results for the year ended 31 July 2010.
The principal activity of the Group is the development and exploration of the Ming Mine copper and gold property
located on Newfoundland and Labrador’s Baie Verte Peninsula.
The parent Company’s Ordinary Shares trade on the London AIM market under the symbol “RMM” and on the
TSX Venture Exchange under the symbol “RAB”.
The presentational currency of the Group’s financial statements is Canadian dollars ($).
OPERATIONAL HIGHLIGHTS
Key achievements during the year include:
•
•
•
In October 2009, the Group announced the purchase of the Nugget Pond Mill from Crew Gold
Corporation (“Crew”). Under the terms of the agreement the mill was leased back to Crew until 30 June
2010.
In March 2010, the Company announced that the Group had entered into an agreement with Sandstorm
Resources Ltd. (TSX-V:SSL) to sell a portion of the life-of-mine gold production from its Ming Copper-
Gold Mine, located in Baie Verte, Newfoundland referred to as the “Gold Loan”. Under the terms of the
agreement, Sandstorm Resources Ltd. will make staged upfront cash payments for the gold to the
Group totalling US$20 million of which US$7 million had been received at the date of this statement.
In June 2010 the Company announced it had received final environmental approval and project release
from the Federal Government and Government of Newfoundland and Labrador for its Ming Copper-Gold
mine.
FINANCIAL HIGHLIGHTS
The consolidated loss after taxation of the Group in respect of the year ended 31 July 2010 amounted to
$2,425,885 (a loss per share of $0.029) versus a loss of $2,048,467 for the year ended 31 July 2009 (a loss per
share of $0.034)
The Group’s only source of income during the period was bank interest which amounted to $18,627.
The net assets of the Group amounted to $46,823,427 as at the end of the year. This included intangible assets
of $37,050,910 which consisted of accumulated deferred exploration expenditures on the copper and gold
property in Newfoundland and Labrador. The Group’s policy is to capitalise these costs as intangibles until the
feasibility of the project is determined and capital funding has been secured.
On 21 October 2009, the Group placed 27,500,000 Ordinary Shares raising approximately $8.9 million, after
expenses. The net proceeds of this fundraising were used to fund the acquisition of the Nugget Pond Mill,
associated engineering and ongoing working capital requirements.
On 31 March 2010 the Group placed a further 8,600,000 Ordinary Shares raising an additional $4 million after
expenses to provide additional working capital as the Group embarks on the construction phase required to bring
its Ming copper‐gold mine into production.
Management has been successful in meeting key milestones and is well positioned to continue moving the
project forward. My thanks to our employees, officers and directors of the Group for the progress which has been
made during the year and I look forward to the Mine being brought into production in 2011.
DHW Dobson
Chairman
15 October 2010
Page 2
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
The following management’s discussion and analysis (“MD&A”) of Rambler Metals & Mining plc (the “parent
Company”) and its subsidiaries (the “Group” or “Rambler”) contains forward-looking statements that involve
numerous risks and uncertainties. Our actual results could differ materially from those discussed in such
forward-looking statements as a result of these risks and uncertainties, including those set forth in this MD&A.
The following discussion provides information that management believes is relevant to an assessment and
understanding of our consolidated results of operations and financial condition. This discussion should be read in
conjunction with our audited financial statements for the year ended 31 July 2010 and the related notes thereto.
These consolidated statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) and their interpretations adopted by the International Accounting Standards Board (“IASB”),
as adopted by the European Union and with IFRS and their interpretations adopted by the IASB.
This MD&A, which has been prepared as of15 October 2010, is intended to supplement and complement our
audited consolidated financial statements and notes thereto for the year ended 31 July 2010 prepared in
accordance with IFRS. The presentation currency is Canadian dollars. This is a change from previous MD&As
which were presented in United Kingdom pounds sterling (GB pounds). Amounts previously reported in GB
pounds have been translated at the closing exchange rate for balance sheet items and the average rate for
income statement and cash flow items.
OUR BUSINESS & OPERATIONS REVIEW
The principal activity of the Group is the development and exploration of the Ming Mine copper and gold property
located on Newfoundland and Labrador’s Baie Verte Peninsula.
The parent Company’s Ordinary Shares trade on the London AIM market under the symbol “RMM” and the TSX
Venture Exchange under the symbol “RAB”.
Operational highlights include:
• On 21 October 2009 the Group placed 27,500,000 Ordinary Shares at $0.346 (20 pence) each to raise
approximately $8.9 million net of expenses. Some of the proceeds from this fundraising were used to
complete the acquisition of the Nugget Pond Facility in October 2009. The remainder of the proceeds
were used to finance ongoing engineering projects and fund working capital requirements.
• On 27 October 2009 the Group announced that the purchase of the Nugget Pond Facility from Crew
Gold Corporation (“Crew”) has been completed and included arrangements for the lease back of the
facility to Crew until 30 June 2010. Effective 1 July 2010 the facility reverted back to the Group at which
time an environmental bond valued at $1.4 million was secured with the Government of Newfoundland
and Labrador.
•
In January 2010 the Group announced it was starting to investigate the resource potential within the
mining lease at the recently purchased Nugget Pond Mine. Highlights included:
o Exploration target of 13,000 to 15,000 ounces of gold contained within 50,000 to 66,000 tonnes
grading at 7 to 9 g/t gold.
o Low capital development and operating costs.
o Permitted mill and tailings impound.
o Crown pillar amenable to open pit mining methods.
The Geology Department evaluated the resources in the Nugget Pond Crown Pillar and underground
zone and the Engineering Department is now evaluating the resource from a mining perspective.
Page 3
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
OUR BUSINESS & OPERATIONS REVIEW (CONTINUED)
•
In March 2010 the Company announced that the Group had entered into an agreement with Sandstorm
Resources Ltd. (TSX-V:SSL) to sell a portion of the life-of-mine gold production from its Ming Copper-
Gold Mine, located in Baie Verte, Newfoundland referred to as the “Gold Loan”.
Under the terms of the agreement Sandstorm Resources Ltd. (“Sandstorm”) will make staged upfront
cash payments for the gold production from the Ming Copper-Gold Mine to the Group totalling US$20
million. Payment milestones are as follows:
• US$5 million available immediately and received on 10 March 2010;
• US$2 million on completion of a NI43-101 feasibility study received on 8 September 2010; and
• US$13 million when Rambler is awarded all permits required for the Ming mine to start
production.
For this, the Group has agreed to sell 25% of the first 175,000oz of payable gold and thereafter 12% of
all subsequent payable gold for the balance of the period ending 40 years after the date of the
agreement. After the expiry of the 40 year term, the agreement is renewable in 10 year blocks at the
option of Sandstorm Resources Ltd.
A 4.5% cash commission is payable with each payment received under the agreement.
•
•
•
In March 2010 the Company announced the placement of 8.6 million shares at $0.49 (32 pence) to raise
$4 million net of expenses. The funds were used to finance the advancement of ongoing engineering
projects and to fund working capital requirements.
In April 2010 the Company announced its intention to exercise its right to buyback 3% of the total 4.5%
Net Smelter Return (“NSR”) royalty held on the Ming property.
In June 2010 the Company announced it had received final environmental approval and project release
from the Federal Government and Government of Newfoundland and Labrador for its Ming Copper Gold
mine.
• During the year, Mr Norman Williams was promoted to Chief Financial Officer and a number of other key
appointments were made, specifically in the engineering department, to strengthen the management
structure as the project moves towards entering production.
• Safety performance continued to be exemplary during the year with no accidents, injuries or incidents
reported. There were no environmental incidents.
SELECTED FINANCIAL INFORMATION
The following selected financial information should be read in conjunction with the Group’s consolidated financial
statements.
Change of presentational currency
The Group’s principal operations are based in Canada and there will be further significant expenditure
associated with bringing the Group’s Mine into production in 2011. As a result the Directors have changed the
Group’s presentational currency from GB pounds to Canadian dollars.
On the change of the Group’s presentational currency, comparative figures previously reported in GB pounds
were translated into Canadian dollars as follows:
Page 4
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
SELECTED FINANCIAL INFORMATION (CONTINUED)
Change of presentational currency (continued)
•
income and expenses were translated at the average exchange rate for the relevant period;
• assets and liabilities were translated at the closing exchange rate on the relevant balance sheet date;
and
• equity items were translated at historical exchange rates.
The exchange rates used were as follows:
Average rate
Closing rate
2009
2008
2007
2006
£1=CAD$
£1=CAD$
£1=CAD$
£1=CAD$
1.91
1.79
2.09
2.03
2.13
2.16
2.12
2.11
As a result of the change of the Group’s presentational currency, a currency translation difference of $419,757
was recognised in equity as at 31 July 2009 which represented the difference between the Group’s assets and
liabilities translated from GB pounds into Canadian dollars at the closing exchange rate on that date of £1 =
$1.79 and the equity items recognised in the consolidated financial statements that were translated from GB
pounds to Canadian dollars at historical exchange rates.
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
SELECTED FINANCIAL INFORMATION (CONTINUED)
Selected Annual Financial Information
All amounts in $,000, except shares and per
share amounts
Revenue
Administrative Expenses
Exploration expenses
Bank Interest Receivable
Net loss
Per share (basic and diluted)
Cash Flow used for operating activities
Cash Flow used for investing activities
Cash Flow
(used
financing activities
Net increase/(decrease) in cash
Cash & Cash Equivalents at end of period
Restricted cash
Total Assets
Total Liabilities
Working Capital
Weighted average number of shares
outstanding
for)/provided
from
12 months
ended
31 July
2010
-
2,320
91
19
(2,426)
(0.029)
(2,107)
(9,705)
17,725
5,913
8,000
1,365
54,162
7,338
7,096
83,581,438
12 months
ended
31 July
2009
-
2,076
82
(2,048)
(0.034)
(1,670)
(6,419)
(124)
(8,213)
2,089
-
37,731
1,554
1,494
59,385,000
12 months
ended
31 July
2008
-
1,986
389
(1,538)
(0.0293)
(1,904)
(12,322)
10,987,972
(3,239)
10,356
-
40,641
2,659
9,003
51,516,712
Review of years ending 31 July 2010 and 31 July 2009
The Group’s only source of income since incorporation has been bank deposit interest.
The Group reported a net loss for the year ended 31 July 2010 of $2,425,885 which is an increase of $377,418
from the year ending 31 July 2009. The loss per share decreased from $0.034 to $0.029. Losses were higher
as administrative expenses increased $243,385 to $2,319,528 as follows:
•
Administrative staff costs reduced by $54,753 to $1,141,755 due mainly to the strengthening of the
Canadian dollar against the GB pound.
• Recruitment costs of $46,353 were incurred during the year compared with $nil in 2009.
•
Legal and professional fees increased by $54,353 compared to fiscal 2009 mainly as a result of costs
incurred in connection with various financing opportunities.
Expenditure on public relations increased $21,614 due to increased news flow as the company’s
development continues.
•
• Depreciation charges increased by $37,469 due to an increase in the value of fixed assets
• Office rental costs reduced by $34,689 as a result of relocating the UK office.
•
Exchange losses increased $149,754 due to unrealised losses arising on the translation of the US dollar
denominated Gold Loan received from Sandstorm during the year.
Interest income was $63,654 lower at $18,627 as a result of lower cash balances and reductions in interest
rates.
Cash flows used for operating activities increased by $437,893 to $2,107,185 as a result of increased cash
operating losses. Cash flows used for investing activities increased by $3,286,281 to $9,705,459 as a result of
an increase of $3,790,446 in the acquisition of property, plant and equipment following the acquisition of Nugget
Pond Mill for $3,500,000, an increase of $1,364,980 in restricted cash following the issue of a letter of credit in
favour of the Government of Newfoundland and Labrador in respect of the reclamation and closure liability for
Page 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
SELECTED FINANCIAL INFORMATION (CONTINUED)
the Nugget Pond Mill, offset by a reduction of $1,936,618 in exploration and evaluation expenditure due to cash
flow preservation resulting from the care and maintenance programme implemented in January 2009.
Cash flows provided by/ (used for) financing activities increased by $17,849,532 to $17,725,306 due to proceeds
from placings in October 2009 and March 2010 totalling $12,843,029 and the receipt of the first instalment of the
Gold Loan amounting to $5,139,000 (US$5 million).
Total assets which include accumulated deferred exploration expenditures which increased $16,430,306 to
$54,161,651. This increase was funded from placings in October 2009 and March 2010.
Review of the quarter ending 31 July 2010 compared to the quarter ended 31 July 2009:
Selected Quarterly Financial Information
All amounts in $,000, except shares and per
share amounts
Revenue
Administrative Expenses
Exploration expenses
Bank Interest Receivable
Net (loss)
Loss per share in pence (basic and diluted)
Cash Flow (used) for operating activities
Cash Flow (used) for investing activities
Cash Flow (used) for financing activities
Net (decrease) in cash
3 months
ended
31 July
2010
-
672
13
11
(676)
(0.008)
(813)
(3,479)
(93)
(3,952)
3 months
ended
31 July
2009
-
480
-
1
(470)
(0.008)
(523)
(902)
(14)
(1,191)
• Administrative expenses increased by $192,258 to $671,998 mainly as a result of an unrealised exchange
loss of $145,464 arising on the translation of the US dollar denominated Gold Loan received from Sandstorm
Resources and an increased share based payment charge of $30,668 arising from the grant of additional
share options in May and July 2010.
• The Group recorded a loss of $676,388 for the fourth quarter, an increase of $205,969. Losses were higher
mainly as a result of increased administrative expenses and exploration expenses.
• Cash flow used for operating activities increased by $289,797 to $813,260 as a result of increased cash
operating losses and a reduction in current liabilities.
• Cash flow used for investing activities increased by $2,576,183 to $3,478,624 reflecting increased
expenditure on evaluation and exploration of $379,188 related mainly to the feasibility study and on property,
plant and equipment of $842,269 comprising of equipment purchased for the expansion of the Nugget Pond
mill and an increase of $1,364,980 in restricted cash following the issue of a letter of credit in favour of the
Newfoundland Provincial Government in respect of the reclamation and closure liability for the Nugget Pond
Mill.
• Cash flow used for financing activities increased by $79,107 to $93,390 as a result of increased capital
repayments on finance and hire purchase agreements.
• Overall, cash and cash equivalents decreased $3,952,070 during the quarter compared with a decrease of
$902,441 during the three months ended 31 July 2009.
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
SELECTED FINANCIAL INFORMATION (CONTINUED)
Compared to the third quarter 2010:
• Administrative expenses increased by $42,338 to $671,998 mainly as a result of the unrealised exchange
loss of $145,464 arising on the translation of the US dollar denominated Gold Loan offset by a reduction in
legal costs of $44,795, salaries and recruitment costs of $14,999 and $26,532 respectively.
• Cash and Cash equivalents decreased $3,952,070 to $7,999,751 reflecting an increase in intangible and
tangible assets to $37,050,910 and $7,814,362 respectively as the Group completed its feasibility study and
started the expansion of the Nugget Pond Mill in preparation for the development of the Ming Mine.
SUMMARY OF QUARTERLY RESULTS
(all amounts in $,000 except loss per share)
Fiscal 2010
Revenue
Net loss
Loss per share basic & diluted
Fiscal 2009
Revenue
Net Loss
Loss per share basic & diluted
4th
Quarter
-
(676)
(0.008)
3rd
Quarter
2nd
Quarter
1st
Quarter
-
(644)
(0.008)
-
(591)
(0.007)
-
(470)
(0.008)
-
(520)
(0.009)
-
(631)
(0.010)
-
(515)
(0.006)
-
(427)
(0.007)
The increase in losses in the second quarter of 2009 is due to a reduction in bank interest received and an
increase in administrative salaries together with the issue of additional share options. Losses for the third and
fourth quarters of 2009 started to fall as a result of a cost reduction programme. Losses for the first quarter of
2010 increased slightly mainly as a result of the weakening of the GB Pound against the Canadian Dollar.
Losses for the second quarter of 2010 further increased as a result of increased legal and professional charges
in connection with financing options and the AGM. The continued weakening of the GB Pound against the
Canadian Dollar resulted in a further increase in losses in the third quarter of 2010. Losses in the fourth quarter
of 2010 increased as a result of an unrealised exchange loss offset by reductions in legal and professional
charges and staff costs.
OUTLOOK
In the near future management expects to:
• Commence retrofit work on the Nugget Pond Mill
• Start rehabilitation work in the Ming Mine Shaft, install a manway to act as a second means of egress,
commence surface construction at the Minesite and order underground equipment.
• Begin an active recruitment drive for key management positions and underground personnel for the
Ming Mine.
• Submit the Mine Development Plan to the Department of Natural Resources to receive permits to begin
underground construction and development of port facilities.
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
OUTLOOK (CONTINUED)
• Complete the geology determination at Nugget Pond and develop a detailed mine plan to exploit the
resource.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
Prior to Q3 2010 the Group had relied on shareholder funding to finance its operations. During Q3, 2010 the
Group entered into a financing arrangement in US dollars. With finite cash resources and no material income,
the liquidity risk is significant. This risk is managed by controls over expenditure and concentrating on achieving
the payment milestones under the financing arrangement. Success will depend largely upon the outcome of
ongoing and future exploration and development programmes. Given the nature of the Group’s current activities
the entity will remain dependent on a mixture of debt and equity funding in the short to medium term until such
time as the Group becomes self-financing from the commercial production of mineral resources.
Although the majority of the Group's expenses are incurred in the Canadian dollars approximately 30% of the
Group’s operating costs were incurred in GB pounds during Fiscal 2010. The Group's principal exchange rate
exposure is related to movements between the Canadian dollar, US dollar and GB pound.
The Group's cash reserves are held in GB pounds and Canadian dollars. The Group has a downside exposure
to any strengthening of the GB pound as this would increase expenses in Canadian dollar terms. This risk is
mitigated by reviewing the holding of cash balances in GB pounds. Any weakening of the GB pound would
however result in the reduction of the expenses in Canadian dollar terms and preserve the Group's cash
resources. In addition, any such movements would affect the Consolidated Balance Sheet when the net assets
of the Parent company are translated into Canadian dollars.
Previously the Group’s results had been presented in GB Pounds. Since the Group’s main assets and its
subsidiary are held in Canada which has a Canadian dollar functional currency, the Directors and management
decided to change the presentational currency to Canadian dollars for Fiscal 2010. This significantly reduces
the effect on the Group’s balance sheet of movements in the GB pound to the Canadian dollar. The Group does
not hedge its exposure of investments held in foreign currencies.
Exchange rate fluctuations may adversely affect the Group`s financial position and results. The following table
details the Group`s sensitivity to a 10% strengthening and weakening in the GB pound/US dollar against the
Canadian dollar. 10% represents management’s assessment of the reasonable possible exposure.
10% strengthening of GB pound
10% weakening of GB pound
10% strengthening of US dollar
10% weakening of US dollar
Equity
2010
$’000
2009
$’000
53
(47)
(515)
468
33
(30)
-
-
Credit risk
With effect from July 2007, the Group has held the majority of its cash resources in Canadian Dollars given that
the majority of the Group’s outgoings are denominated in this currency. As at 31 July 2010, 85% of the Group’s
cash resources were invested in short dated term deposits and bankers acceptances. Given the current
climate, the Group has taken a very risk averse approach to management of cash resources and management
and Directors monitor events and associated risks on a continuous basis. There is little perceived credit risk in
respect of trade and other receivables. The Group’s maximum exposure to credit risk at 31 July 2010 was
represented by receivables and cash resources.
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION (CONTINUED)
Interest rate risk
The Group's policy is to invest its surplus cash at the most advantageous rates available whilst respecting the
risk averse strategy set by the Board.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group’s reported
result.
Cash and short dated term deposits and bankers acceptances (expressed in Canadian$,000) were as follows:
At 31 July 2010
Currency
British Pound
Canadian Dollars
Total
At 31 July 2009
Currency
British Pound
Canadian Dollars
Total
Fixed Rate
Assets
Floating Rate
Assets
Total
484
6,351
6,835
67
1,098
1,165
551
7,449
8,000
Fixed Rate
Assets
Floating Rate
Assets
Total
-
1,700
1,700
41
348
389
41
2,048
2,089
Interest rate risk has been eliminated on leases and bank loans by entering into fixed rate arrangements. The
average fixed interest rate for the finance leases and hire purchase contracts outstanding at 31 July 2010 was
5.50%.
Commodity price risk
Commodity price risk is the risk that the Group’s future earnings will be adversely impacted by changes in the
market prices of commodities. The Group is exposed to commodity price risk as its future revenues will be
derived based on contracts with customers at prices that will be determined by reference to market prices of
copper at the delivery date.
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows
arising from the sale of payable gold. In estimating the cash flows the following table details the Group’s
sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent
management’s assessment of the reasonable possible exposure
10% increase in the price of gold
25% decrease in the price of gold
Gross assets
2009
2010
$
(37,445)
105,693
$
-
-
Cash flows
The Group utilised $2,107,185 (2009: $1,669,292) to finance operating cash flows during the year.
Cash flows used for investing activities increased by $3,286,281 to $9,705,459 as a result of an increase of
$3,790,446 in the acquisition of property, plant and equipment following the acquisition of Nugget Pond Mill for
$3,500,000, an increase of $1,364,980 in restricted cash following the issue of a letter of credit in favour of the
Government of Newfoundland and Labrador in respect of the reclamation and closure liability for the Nugget
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
Cash flows (continued)
Pond Mill, offset by a reduction of $1,936,618 in exploration and evaluation expenditure due to cash flow
preservation resulting from the ongoing care and maintenance programme implemented in January 2009.
Cash flows provided by/ (used for) financing activities increased by $17,849,532 to $17,725,306 due to placings
in October 2009 and March 2010 and the receipt of the Gold Loan amounting $5,139,000 (US$ 5 million).
Interest received reduced in line with lower cash balances on deposit during the first three quarters of the year.
Average interest rates were 0.25% and 0.35% on British Pound and Canadian Dollar deposits respectively.
(2009: 0.35%, 0.84%)
Management continue to evaluate possible sources of finance to provide sufficient working capital for the
forthcoming 12 months and are confident that such funds will be raised. At 15 October 2010, the Group has $7.9
million in cash and cash equivalents with the proportion invested in short dated term deposits and bankers
acceptances remaining consistent with year end.
SUBSEQUENT EVENTS
On 3 August 2010 the Group announced it had entered into a Toll Processing Agreement with Tenacity Gold
Mining Co. Ltd. (“Tenacity”). Tenacity will deliver ore for processing from its Deer Cove and Stog’er Tight Gold
Mines to the Group’s Nugget Pond Mill. This processing arrangement officially commenced on 1 September
2010.
On 10 August 2010 the Group received permission from the Government of Newfoundland and Labrador to
proceed with retrofit construction at the Nugget Pond Mill and the Mine Shaft Manway at the Ming mine.
On 26 August 2010 the Group released its final Feasibility Study for the Ming Mine indicating pre-tax operating
cash flow of US$71.0 million, Net Present Value of US$14.3 million discounted at 6%, payback of 1.5 years and
an Internal Rate of Return of 23.7% over a 6 year Life of Mine. Initial capital costs were projected at US$25.5
million with Sustaining Capital estimated at US$27.9 million.
On 31 August 2010, following Sandstorm’s review and acceptance of the Feasibility Study, the Group signed an
amended agreement which provides for a higher percentage gold payment to Sandstorm in the first year and
also adds protective measures for Sandstorm on the throughput rates at the Ming Mine. On 8 September 2010
the second payment of US$2.0 million (CAD$2.03 million after commission) was received by the Group.
COMMITMENTS AND LOANS
The Group has commitments totalling CAD$1.24 million with various vendors relating to the purchase of
equipment for the Nugget Pond Mill upgrade.
These commitments together with the ongoing evaluation and development of the mine will be partially financed
from existing cash reserves from earlier equity fund raisings and cash provided under the terms of the Gold Loan
agreement with Sandstorm Resources Ltd.
At 31 July 2010, the Group had outstanding obligations, including interest, relating to bank loans and leases of
$829,543 and an amount of $5,149,566 under the Sandstorm financing agreement (‘Gold Loan’).
The bank loan is secured by way of a fixed charge over a property and is repayable in monthly instalments of
$384 over 12 years.
Page 11
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
COMMITMENTS AND LOANS (CONTINUED)
The bank loans and leases are repayable by fixed monthly instalments and are repayable as follows:
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
Due after five years
2010
$
387,877
374,104
22,144
23,797
5,214
16,407
2009
$
262,795
399,995
359,504
20,634
22,066
19,802
829,543 1,084,796
The leases are secured on the assets subject to those leases.
The Gold Loan is repayable by the delivery of 25% of the first 175,000 oz of payable gold and thereafter 12% of
all subsequent payable gold for the balance of the period ending 40 years after the date of the agreement. After
the expiry of the 40 year term, the agreement is renewable in 10 year blocks at the option of Sandstorm
Resources Ltd.
Under the terms of this agreement Sandstorm will make staged upfront cash payments for the gold to the Group
totalling US$20 million. Payment milestones are as follows:
• US$5 million available immediately and received on 10 March 2010;
• US$2 million on completion of a NI43-101 feasibility study (subsequently received on 8 September
2010); and
• US$13 million when Rambler is awarded all permits required for the Ming mine to start production
(outstanding at the date of this report).
For this, the Group has agreed to sell 25% of the first 175,000oz of payable gold and thereafter 12% of all further
payable gold up to 40 years, renewable in 10 year blocks.
A 4.5% commission is payable with each payment received under the agreement.
There are certain circumstances in which the gold loan may be repaid earlier than by the delivery of payable gold
as follows:
(i)
If within 18 months of 4 March 2010 (the date of the agreement) the Ming mine has not started
producing gold any amounts advanced will become repayable on demand together with interest at a rate
of 8% per annum.
(ii) If within 24 months of the date that gold is first produced, the Ming mine has not produced and sold a
minimum of 24,000oz of payable gold then a portion of the US$20 million will be repayable based on the
shortfall of payable gold.
(iii) Within the first 36 months of Commercial production of gold any shortfall in payable gold below the
following amounts will be required to be paid in cash:
• within the first 12 months – US$3.6 million
• within the second 12 months – US $3.6 million
• within the third 12 months – US$3.1 million
Page 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
COMMITMENTS AND LOANS (CONTINUED)
The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective
interest rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end based
on management’s best estimates of the time of delivery of payable gold, the total amount of gold expected to be
produced over the mine life and the timing of that production.
Interest accrued of $218,595 during the year has been capitalised and included in exploration and evaluation
expenditure.
The Gold Loan is secured by a fixed and floating charge over the Group’s assets.
FINANCIAL INSTRUMENTS
The Board of Directors determines, as required, the degree to which it is appropriate to use financial instruments
and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are
foreign exchange risk, interest rate risk, credit risk and liquidity risk. With effect from July 2007, the Group has
held the majority of its cash resources in Canadian Dollars given that the majority of the Group’s outgoings are
denominated in this currency. The directors take a very risk averse approach to management of cash resources
and continue to closely monitoring events and associated risks. There were no derivative instruments
outstanding at 31 July 2010.
RELATED PARTY TRANSACTIONS
A total of $503,969 (2009:$513,884) was paid to key management personnel during the year. Payments of fees
to non-executive directors were suspended during the year in order to preserve cash. At 31 July 2010 fees of
$50,843 remained outstanding (2009: $39,797)
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
Going Concern
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent
on the copper and gold prices, its ability to fund its development and exploration programs, and to manage and
generate positive cash flows from operations in the future. These financial statements do not reflect the
adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet
classifications that would be necessary should the going concern assumption be inappropriate, and these
adjustments could be material.
In common with many exploration companies, the Group raises finance for its exploration and appraisal
activities in discrete tranches. In August 2010, the Group released its final NI43-101 Feasibility Study for the
Ming Mine Copper Gold Project. This enabled the Group to draw down the second instalment of the Gold Loan
(see commitments and loan section above) of US$2 million. Under the Gold Loan agreement a further amount
of US$13 million will be available as soon as the permits to start production for the Ming mine have been
awarded. The Directors and management continue to evaluate possible sources of finance to provide sufficient
project finance and working capital for the forthcoming 12 months. Whilst they and are confident that such
funds will be raised and have therefore concluded that the Group is a going concern, there is no certainty that
such funds will be available when needed.
Impairment Assessment of Exploration Properties
The Directors have assessed whether the exploration and evaluation costs have suffered any impairment by
considering the Group’s business plan which includes resource estimates, future processing capacity, the
forward market and longer term price estimates for copper and gold. Management’s estimates of these factors
are subject to risk and uncertainties affecting the recoverability of the Group’s exploration and evaluation costs.
Any changes to these estimates may result in the recognition of an impairment charge with a corresponding
reduction in the carrying value of such assets.
Stock Based Compensation
In the 2010 fiscal year, the parent company granted a number of individuals employee stock options. The
number of share options being granted is considered by the directors to be consistent with companies of a
similar size and profile to Rambler. The parent company is likely to grant individuals employee stock options
again in the future. The Group calculates the cost of share based payments using the Black-Scholes model.
Inputs into the model in respect of the expected option life and the volatility are subject to management estimate
and any changes to these estimates may have a significant effect on the cost.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows arising
from the sale of payable gold (see note 18).The cash flows will be dependent on the production of gold and its
selling price at the time of delivery which have been estimated in line with the mine plan, future prices of gold
and reserve estimates. Management’s estimates of these factors are subject to risk and uncertainties affecting
the amount of the interest charge. Any changes to these estimates may result in a significantly different interest
charge which would affect the carrying value of the exploration and evaluation costs and the corresponding Gold
Loan liability.
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
CHANGES IN ACCOUNTING POLICIES
In the current year, the following new and revised standards have been adopted and have affected the
disclosures presented in these financial statements:
IAS1 (revised 2007) Presentation of Financial Statements
IAS1 has introduced a number of changes in the format and content of the financial statements. This resulted in
the Company presenting a Statement of Comprehensive Income and a Statement of Changes in Equity.
Previously the statements had been presented together in a Statement of Recognised Income and Expense.
IFRS 8 Operating Segments
IFRS 8 is a disclosure standard. Its adoption has not resulted in any changes to the classification of the Group’s
segments; however additional segmental disclosures have been included.
Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments
Disclosures)
The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity
risk. The Group has elected not to provide comparative information for these expanded disclosures in the
current year in accordance with the transitional reliefs offered in these amendments.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or amended but are not yet effective
have not been adopted for the annual reporting period ended 31 July 2010:
IFRS
/Amendment
Various
Title
Annual
Improvements to
IFRSs
IAS 24 revised Related Party
Nature of change to
accounting policy
No change to accounting
policy, therefore, no impact
Application date
of standard
Various
Application
date for Group
1 August 2010
IAS 32
amendment
IAS 39
amendment
IFRS 1
amended
IFRS 2
amended
IFRS 9
IFRIC 19
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
Disclosures
Financial
instruments:
Presentation
Financial instruments No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
First time adoption of
IFRS
Share-based
payment
Financial
instruments:
Classification and
Measurement
Extinguishing
financial liabilities
with Equity
Instruments
Page 15
1 January 2011
1 August 2011
1 February 2010
1 August 2010
1 January 2010
1 August 2010
1 January 2010
1 August 2010
1 January 2010
1 August 2010
1 January 2013
1 August 2013
1 July 2010
1 August 2010
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 JULY 2010
(CONTINUED)
CHANGES IN ACCOUNTING POLICIES (CONTINUED)
Management have reviewed the impact of the above standards and interpretations and have concluded that they
will not result in any material changes to reported results.
OUTSTANDING SHARE DATA
As at the date of this MD&A the following securities are outstanding:
Ordinary Shares
Options
Total
95,485,000
3,952,000
99,437,000
FORWARD-LOOKING INFORMATION
This MD&A contains “forward-looking information” which may include, but is not limited to, statements with
respect to the future financial or operating performance of the Group, its subsidiaries and its projects, exploration
expenditures, costs and timing of the development of new deposits, costs and timing of future exploration,
requirements for additional capital, government regulation of mining exploration, environmental risks, title
disputes or claims and limitations of insurance coverage. Often, but not always, forward-looking statements can
be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and
phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or
be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the parent company and/or its subsidiaries
to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, general business, economic, competitive,
political and social uncertainties; the actual results of current exploration activities; conclusions of economic
evaluations; fluctuations in the relative value of United States dollars, Canadian dollars and British Pounds;
changes in planned parameters as plans continue to be refined; future prices of metals and commodities;
possible variations of ore grade or recovery rates; failure of equipment; accidents and other risks of the mining
exploration industry; political instability, insurrection or war; delays in obtaining governmental approvals or
financing or in the completion of development or construction activities, as well as those factors discussed in the
section entitled “Risk Factors” in this MD&A. Although the Group has attempted to identify important factors that
could cause actual actions, events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results to differ from those anticipated,
estimated or intended. Forward-looking statements contained herein are made as of the date of this MD&A and
the Group disclaims any obligation to update any forward-looking statements, whether as a result of new
information, future events or results or otherwise. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on the Group’s web site at
www.ramblermines.com.
Page 16
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 JULY 2010
The Directors present their report with the audited financial statements of the Group for the year ended 31 July
2010.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development and exploration programme of the Ming Mine copper and
gold property in Baie Verte, Newfoundland, Canada. The principal activity of the parent company is that of a
holding company.
REVIEW OF BUSINESS
A review of the Group’s business and prospects is set out in the Management’s Discussion and Analysis.
FUTURE DEVELOPMENTS
The Group is looking forward to starting retrofit work on the Nugget Pond Mill which will process base metal
sulphides from the Mine. Plans are also being finalized to resume exploration activity and pre-production
development which will result in the Mine being brought into production during 2011.
DIVIDENDS
No dividends will be distributed for the year ended 31 July 2010.
DIRECTORS
The Directors during the period under review were:
J A Baker
B F Dalton
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts
J Thomson
POLICY ON PAYMENT OF CREDITORS
It is the Group's and Company’s policy to settle all amounts due to creditors in accordance with agreed terms of
supply and market practice in the relevant country.
The Group's average creditor payment period at 31 July 2010 was 20 days (2009: 21 days). The Company’s
average creditor payment period at 31 July 2010 was 9 days (2009: 20 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $2,355 (2009: $99) to various charities in the Baie
Verte Newfoundland area.
Page 17
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 JULY 2010 (CONTINUED)
SUBSTANTIAL SHARE INTERESTS
At 15 October 2010 the parent Company was aware of the following substantial share interests:
Number of Ordinary Shares
% of Share Capital
Altius Resources Inc.
CDS & Co.
Chase Nominees Limited
Zila Corporation
Hanover Nominees Limited
The Bank of New York (Nominees) Limited
Nortrust Nominees Limited
HSBC Global Custody Nominee (UK) Limited
12,000,000
9,290,922
7,738,200
6,499,999
6,004,500
5,140,542
4,662,000
3,000,000
FINANCIAL INSTRUMENTS
12.57%
9.73%
8.10%
6.81%
6.29%
5.38%
4.88&
3.14%
The Board of Directors determines, as required, the degree to which it is appropriate to use financial instruments
and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are
foreign exchange risk, interest rate risk, credit risk and liquidity risk each of which is discussed in note 20 to the
Financial Statements. There were no derivative instruments outstanding at 31 July 2010.
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Management’s Discussion and Analysis.
RISKS AND UNCERTAINTIES
An investment in Rambler should be considered highly speculative due to its present stage of development, the
nature of its operations and certain other factors. An investment in Rambler’s securities should only be made by
persons who can afford the total loss of their investment. The risk factors which should be taken into account in
assessing Rambler’s activities and an investment in securities of Rambler include, but are not limited to, those
set out below. Should any one or more of these risks occur, it could have a material adverse effect on the value
of securities of Rambler and the business, prospects, assets, financial position or operating results of Rambler,
any one of which may have a significant adverse effect on the price or value of any securities of Rambler.
The risks noted below do not necessarily comprise all those faced by Rambler and are not intended to be
presented in any assumed order of likelihood or magnitude of consequences.
Mining risks
Mining operations are inheriting risky. These operations are subject to all hazards and risks encountered in the
exploration for, and development and production of underground ore, including formation pressures, seismic
activity, rock bursts, fires, power outages, cave-ins, flooding, explosions and other conditions involved in the
drilling and removal of material. Any of these events could result in serious damage to the mine and other
infrastructure, damage to life or property, environmental damage and possible legal liability.
The Company’s profitability will depend, in part, on the economic returns and actual costs of developing its
mining projects, which may differ from the estimates made by the Company. Events such as delays in
construction, commissioning, and technical difficulties may result in the Company’s current or future project
target dates being delayed or additional capital expenditure being incurred.
Page 18
Copper and Gold Price Volatility
The Group’s revenues, if any, are expected to be derived from the extraction and sale of copper and gold
concentrate. The prices of copper and gold have fluctuated widely, particularly in recent years, and are affected
by numerous factors beyond the Group’s control including international, economic and political trends,
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 JULY 2010 (CONTINUED)
RISKS AND UNCERTAINTIES (CONTINUED)
expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns,
speculative activities and increased production due to new extraction developments and improved extraction and
production methods. In recent years the price of copper has been affected by changes in the worldwide balance
of copper supply and demand, largely resulting from economic growth and political conditions in China and other
major developing economies. While this demand has resulted in higher prices for copper in recent years, if
Chinese economic growth slows, it could result in lower demand for copper. The effect of these factors on the
price of copper and gold cannot be accurately predicted. Any material decrease in the prevailing price of copper
in particular for any significant period of time would have an adverse and material impact on the economic
evaluations contained in this MD&A and on the Group’s results of operations and financial condition.
Additional Requirement for Capital
The Group will need to raise additional capital in due course to fund anticipated future development and ongoing
operations. Future development of the Ming Mine, future acquisitions, base metal prices, environmental
rehabilitation or restitution, revenues, taxes, capital expenditures and operating expenses and geological and
processing successes are all factors which will have an impact on the amount of additional capital required.
Any additional equity financing may be dilutive to shareholders and debt financing, if available, may involve
restrictions on financing and operating activities. There is no assurance that additional financing will be available
on terms acceptable to the Group. If the Group is unable to obtain additional financing as needed, it may be
required to reduce the scope of its operations or anticipated expansion, forfeit its interests in some or all of its
properties, incur financial penalties and reduce or terminate its operations.
Uncertainty in the estimation of mineral resources and mineral reserves
The calculation of mineral reserves and mineral resources and related grades mined has a degree of
uncertainty. Until such a time as the mineral reserves and mineral resources are actually mined and processed,
the quantity of grades must be considered as estimates only. The mineral reserves estimates of the Company
have been determined based on assume metal prices, cut-off grades and costs that may prove to be inaccurate.
Any material change in these variables, along with differences in actual metal recoveries when compared to
laboratory test results, may affect the economic outcome of current and future projects.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Group’s Auditors for the purposes of their audit and to establish that the Auditors
are aware of that information. The Directors are not aware of any relevant audit information of which the
Auditors are unaware.
AUDITORS
The auditors, PKF (UK) LLP, will be proposed for re-appointment in accordance with Section 489 of the
Companies Act 2006.
ON BEHALF OF THE BOARD:
L Little
Company Secretary
15 October 2010
Page 19
RAMBLER METALS AND MINING PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the directors' report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have, as required by the AIM Rules of the London Stock Exchange, elected to prepare the group
financial statements in accordance with International Financial Reporting Standards as adopted by the European
Union and have also elected to prepare the parent company financial statements in accordance with those
standards. Under company law the directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of
the group for that period. In preparing these financial statements the directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgments and estimates that are reasonable and prudent;
•
state whether the financial statements have been prepared in accordance with IFRSs as adopted by the
European Union; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company and the group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company's transactions and disclose with reasonable accuracy at any time the financial position of the
company and the group and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company's website. Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements and other information included in annual reports may differ from
legislation in other jurisdictions.
Page 20
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 31 JULY 2010
In formulating the Group's corporate governance procedures the Board of Directors takes due regard of the
principles of good governance set out in the Revised Combined Code issued by the Financial Reporting Council
in June 2008 (as appended to the Listing Rules of the Financial Services Authority) and the size and
development of the Group. The Group also has regard to the Quoted Companies Alliance (QCA) Guidelines on
Corporate Governance for AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director and seven non-executive
Directors. D H W Dobson is the senior non-executive director and G Ogilvie is the Group's President and Chief
Executive. It is the Board's policy to maintain independence by having at least half of the Board comprising non-
executive directors. The structure of the Board ensures that no one individual or group dominates the decision
making process.
The Board ordinarily meets no less than quarterly providing effective leadership and overall control of the
Group's affairs through the schedule of matters reserved for its decision. This includes the approval of budgets
and business plans, items of major capital expenditure, risk management policies and the approval of the
financial statements. Formal agendas, papers and reports are sent to the directors in a timely manner, prior to
Board meetings. The Board also receives a summary financial report before each Board meeting. The Board
delegates certain of its responsibilities to Board committees which have clearly defined terms of reference.
Between the Board meetings, the executive Director, the Chief Financial Officer and some of the non-executive
directors meet on a regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary, who is responsible for ensuring
that all Board procedures are followed. Any Director may take independent professional advice at the Group's
expense in the furtherance of his duties.
The Audit Committee meets not less than quarterly and considers the Group's financial reporting (including
accounting policies) and internal financial controls, is chaired by J M Roberts, the other members being L
Goodman and J A Baker. The committee receives reports from management and from the Group's auditors.
The Group has in place a series of procedures and controls designed to identify and prevent the risk of loss.
These procedures are formally documented and are reported on regularly. The Audit Committee has reviewed
the systems in place and considers these to be appropriate.
The Remuneration Committee meets at least once a year and is responsible for making decisions on directors'
remuneration packages is chaired by L Goodman. J M Roberts and J A Baker are the other committee
members.
Remuneration of executive Directors is established by reference to the remuneration of executives of equivalent
status both in terms of time commitment, level of responsibility of the position and by reference to their job
qualifications and skills. The Remuneration Committee will also have regard to the terms which may be required
to attract an executive of equivalent experience to join the Board from another company. Such packages include
performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all
price sensitive information is released to all shareholders at the same time in accordance with AIM and Toronto
Stock Exchange-Venture market rules. The Group's principal communication is through the Annual General
Meeting and through the annual report and accounts, quarterly and interim statements.
Page 21
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
RAMBLER METALS AND MINING PLC
We have audited the financial statements of Rambler Metals and Mining plc for the year ended 31 July 2010
which comprise the consolidated income statement and the consolidated and company statements of
comprehensive income, balance sheets, statements of changes in equity, statements of cash flows and the
related notes. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members
those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors.
Scope of the audit
An audit involves obtaining evidence about the amounts and disclosures in the financial statements 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 groups
and the parent 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.
Opinion on financial statements
In our opinion;
•
•
the financial statements give a true and fair view of the state of the group's and the parent company's
affairs as at 31 July 2010 and of the group's loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union as applied in accordance with the provisions of the Companies Act
2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Separate opinion in relation to IFRSs
As explained in Note 2 to the group financial statements the group, in addition to applying IFRSs as adopted by
the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Page 22
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
RAMBLER METALS AND MINING PLC (CONTINUED)
Emphasis of matter — adequacy of project finance and going concern
In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note
1 to the financial statements concerning the Group's ability to continue as a going concern and the adequacy of
project finance. The current funding position as explained in the note indicates the existence of a material
uncertainty which may cast significant doubt about the Company and the Group's ability to continue as a going
concern. If the company is unable to secure such additional funding, this may have a consequential impact on
the carrying value of the related assets and the investments of the parent company. The outcome of any future
fundraising cannot presently be determined, and no adjustments to asset carrying values that may be necessary
should the company be unsuccessful have been recognised in the financial statements.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
•
certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
64(4( cr
Jason Homewood (Senior statutory auditor)
for and on behalf of PKF (UK) LLP, Statutory auditors
London, UK
15 October 2010
Page 23
RAMBLER METALS AND MINING PLC
INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS OF RAMBLER METALS AND MINING PLC IN
RESPECT OF COMPATIBILITY WITH CANADIAN GAAS
In accordance with the requirement contained in National Instrument 52-107 we report below on the
compatibility of Canadian Generally Accepted Auditing Standards ("Canadian GAAS") and International
Standards on Auditing (UK and Ireland).
We conducted our audit for the year ended 31 July 2010 in accordance with International Standards of Auditing
(UK and Ireland). There are no material differences in the form or content of our audit report, except as noted
below, as compared to an auditors' report prepared in accordance with Canadian GAAS and if this report were
prepared in accordance with Canadian GAAS it would not contain a reservation.
An audit report issued in accordance with Canadian GAAS does not require the Emphasis of Matter paragraph
that is included in the United Kingdom Independent Auditors' Report for the year ended 31 July 2010 given
above. In all other respects, there are no material differences in the form and content of the above noted
auditors' report.
///(w)(ki°
PKF (UK) LLP
London, UK
15 October 2010
Page 24
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended 31 July 2010
(EXPRESSED IN CANADIAN DOLLARS)
Revenue
Cost of sales
Gross profit
Administrative expenses
Exploration expenses
Operating loss
Bank interest receivable
Finance costs
Net financing (expense)/income
Loss before tax
Income tax credit
Note
2010
$
2009
$
-
-
-
-
-
-
(2,319,528)
(90,772)
(2,410,300)
(2,076,143)
-
(2,076,143)
4
18,627
(64,721)
(46,094)
82,281
(66,228)
16,053
(2,456,394)
(2,060,090)
6
30,509
11,623
Loss for the year and attributable to owners of the parent
(2,425,885)
(2,048,467)
Loss per share
Basic and diluted loss per share
Note
2010
$
2009
$
16
(0.029)
(0.034)
Page 25
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended 31 July 2010
(EXPRESSED IN CANADIAN DOLLARS)
Loss for the year
Exchange differences on translation of foreign operations (net of tax)
Other comprehensive loss for the year
2010
$
2009
$
(2,425,885)
(2,048,467)
(24,741)
(24,741)
(5,700)
(5,700)
Total comprehensive loss for the year and attributable to the owners of the parent
(2,450,626)
(2,054,167)
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended 31 July 2010
Loss for the year
Exchange differences on translation into presentation currency
Other comprehensive loss for the year
Total comprehensive loss for the year
2010
$
2009
$
(715,870)
(801,211)
(3,426,740)
(4,316,381)
(3,426,740)
(4,316,381)
(4,142,610)
(5,117,592)
Page 26
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED BALANCE SHEET
As at 31 July 2010
(EXPRESSED IN CANADIAN DOLLARS)
Assets
Property, plant and equipment
Intangible assets
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total current assets
Total assets
Equity
Issued capital
Share premium
Merger reserve
Translation reserve
Accumulated losses
Total equity
Liabilities
Interest-bearing loans and borrowings
Provision
Total non-current liabilities
Interest-bearing loans and borrowings
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
ON BEHALF OF THE BOARD:
Note
2010
$
2009
$
2008
$
8
9
12
13
14
15
18
19
18
17
7,461,137
37,050,910
44,512,047
4,029,411
31,476,116
35,505,527
5,315,164
24,586,176
29,901,340
284,873
7,999,751
1,364,980
9,649,604
54,161,651
136,987
2,088,831
-
2,225,818
37,731,345
384,003
10,356,138
-
10,740,141
40,641,481
1,862,613
51,531,884
214,472
25,245
(6,810,787)
46,823,427
1,255,060
39,296,408
214,472
49,986
(4,638,707)
36,177,219
1,255,060
39,296,408
214,472
55,686
(2,838,842)
37,982,784
5,591,232
558,739
6,149,971
387,877
800,376
1,188,253
7,338,224
54,161,651
822,001
-
822,001
921,296
-
921,296
262,795
469,330
732,125
1,554,126
37,731,345
277,110
1,460,291
1,737,401
2,658,697
40,641,481
Director
Approved and authorised for issue by the Board on 15 October 2010
Page 27
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY BALANCE SHEET
As at 31 July 2010
(EXPRESSED IN CANADIAN DOLLARS)
Assets
Property, plant and equipment
Investments
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Issued capital
Share premium
Translation reserve
Accumulated losses
Total equity
Liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
ON BEHALF OF THE BOARD:
Note
8
10
12
13
2010
$
2009
$
2008
$
649
39,999,602
40,000,251
1,176
31,834,467
31,835,643
2,859
34,276,414
34,279,273
68,266
553,015
621,281
40,621,532
39,227
40,653
79,880
31,915,523
73,220
2,656,506
2,729,726
37,008,999
1,862,613
51,531,884
(9,075,740)
(3,845,055)
40,473,702
1,255,060
39,296,408
(5,649,000)
(3,162,365)
31,740,103
1,255,060
39,296,408
(1,332,619)
(2,403,206)
36,815,643
17
147,830
147,830
147,830
40,621,532
175,420
175,420
175,420
31,915,523
193,356
193,356
193,356
37,008,999
Director
Approved and authorised for issue by the Board on 15 October 2010
Page 28
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Group
Balance at 1 August 2008
Comprehensive loss
Loss for the year
Foreign exchange translation differences
Total other comprehensive loss
Total comprehensive loss for the year
Transactions with owners
Share-based payments
Transactions with owners
Balance at 31 July 2009
Balance at 1 August 2009
Comprehensive loss
Loss for the year
Foreign exchange translation differences
Total other comprehensive loss
Total comprehensive loss for the year
Transactions with owners
Issue of share capital
Share issue expenses
Share-based payments
Transactions with owners
Balance at 31 July 2010
Share
capital
$
Share
premium
$
Merger
reserve
$
Translation
reserve
$
Accumulated
Losses
$
Total
$
1,255,060
39,296,408
214,472
55,686
(2,838,842) 37,982,784
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,255,060
-
-
39,296,408
-
-
214,472
-
(5,700)
(5,700)
(5,700)
-
-
49,986
(2,048,467)
-
-
(2,048,467)
(2,048,467)
(5,700)
(5,700)
(2,054,167)
248,602
248,602
248,602
248,602
(4,638,707) 36,177,219
1,255,060
39,296,408
214,472
49,986
(4,638,707)
36,177,219
-
-
-
-
-
-
-
-
-
-
-
-
-
(24,741)
(24,741)
(24,741)
(2,425,885)
-
-
(2,425,885)
(2,425,885)
(24,741)
(24,741)
(2,450,626)
607,553
-
-
607,553
1,862,613
13,127,835
(892,359)
-
12,235,476
51,531,884
-
-
-
-
214,472
-
-
-
-
25,245
-
-
253,805
253,805
13,735,388
(892,359)
253,805
13,906,384
(6,810,787) 46,823,427
Page 29
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Balance at 1 August 2008
Comprehensive loss
Loss for the year
Foreign exchange translation differences
Total other comprehensive loss
Total comprehensive loss for the year
Share-based payments
Balance at 31 July 2009
Balance at 1 August 2009
Comprehensive loss
Loss for the year
Foreign exchange translation differences
Total other comprehensive loss
Total comprehensive loss for the year
Issue of share capital
Share issue expenses
Share-based payments
Balance at 31 July 2010
Share
capital
$
Share
premium
$
Translation
reserve
$
Accumulated
losses
$
Total
$
1,255,060
39,296,408
(1,332,619)
(2,403,206) 36,815,643
-
-
-
-
-
1,255,060
-
-
-
-
-
39,296,408
-
(4,316,381)
(4,316,381)
(4,316,381)
-
(5,649,000)
(801,211)
-
-
(801,211)
42,052
(801,211)
(4,316,381)
(4,316,381)
(5,117,592)
42,052
(3,162,365) 31,740,103
1,255,060
39,296,408
(5,649,000)
(3,162,365) 31,740,103
(715,870)
-
(715,870)
(3,426,740)
(3,426,740)
(4,142,610)
13,735,388
(892,359)
33,180
(3,845,055) 40,473,702
(715,870)
-
-
33,180
-
-
-
-
607,553
-
-
1,862,613
-
-
-
-
13,127,835
(892,359)
-
51,531,884
-
(3,426,740)
(3,426,740)
(3,426,740)
-
-
-
(9,075,740)
Page 30
RAMBLER METALS AND MINING PLC
STATEMENTS OF CASH FLOWS
For the Year Ended 31 July 2010
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating loss
Depreciation
Share based payments
(Increase)/decrease in debtors
Increase/(decrease) in creditors
Cash utilised in operations
Interest paid
Tax received
Net cash from operating activities
Cash flows from investing activities
Interest received
Loans to subsidiaries
Purchase of bearer deposit note
Acquisition of evaluation and exploration assets
Acquisition of property, plant and equipment
Net cash from investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Payment of transaction costs
Proceeds from issue of share options
Proceeds from Gold Loan (note 18)
Capital element of finance lease payments
Net cash from financing activities
Group
Company
2010
$
2010
$
Group
2009
$
Company
2009
$
(2,410,300)
150,751
247,076
(146,477)
85,977
(2,072,973)
(64,721)
30,509
(2,107,185)
(716,929)
961
26,449
(29,039)
(27,590)
(746,148)
-
-
(746,148)
(2,076,143)
113,282
257,442
211,225
(120,494)
(1,614,688)
(66,227)
11,623
(1,669,292)
(826,773)
1,938
34,672
23,196
5,322
(761,645)
-
-
(761,645)
18,627
1,060
- (11,567,136)
-
(1,364,980)
-
(3,704,106)
(4,655,000)
(525)
(9,705,459) (11,566,601)
86,100
29,380
- (1,730,277)
-
-
-
(5,640,724)
(502)
(864,554)
(6,419,178) (1,701,399)
13,735,388 13,735,388
(892,359)
6,731
-
-
17,725,306 12,849,760
(892,359)
6,731
5,139,000
(263,454)
-
-
7,380
-
(131,606)
(124,226)
-
-
7,380
-
-
7,380
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
5,912,662
2,088,831
(1,742)
7,999,751
537,011
(8,212,696) (2,455,664)
40,653 10,356,138 2,656,506
(160,189)
(24,649)
(54,611)
40,653
2,088,831
553,015
Page 31
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS
1 Nature of operation and going concern
The principal activity of the Group is the development and exploration programme of the Ming Mine copper
and gold property in Baie Verte, Newfoundland, Canada.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is
dependent on the copper and gold prices, its ability to fund its development and exploration programs, and
to manage and generate positive cash flows from operations in the future. These financial statements do
not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and
balance sheet classifications that would be necessary should the going concern assumption be
inappropriate, and these adjustments could be material.
In common with many exploration companies, the Group raises finance for its exploration and appraisal
activities in discrete tranches. In August 2010, the Group released its final NI43-101 Feasibility Study for
the Ming Mine Copper Gold Project. This enabled the Group to draw down the second instalment of the
Gold Loan (see note 18) of US$2 million. Under the Gold Loan agreement a further amount of US$13
million will be available as soon as the permits to start production for the Ming mine have been awarded.
The Directors and management continue to evaluate possible sources of finance to provide sufficient
project finance and working capital for the forthcoming 12 months. Whilst they and are confident that such
funds will be raised and have therefore concluded that the Group is a going concern, there is no certainty
that such funds will be available when needed.
2 Significant accounting policies
Rambler Metals and Mining Plc (the “Company”) is a company registered in England and Wales. The
consolidated financial statements of the Company for the year ended 31 July 2010 comprise the Company
and its subsidiaries (together referred to as the “Group”).
These financial statements are presented in Canadian dollars. Although the parent company has a
functional currency of GB pounds the majority of the Group’s operations are carried out by its operating
subsidiary which has a functional currency of Canadian dollars. Foreign operations are included in
accordance with the policies set out in note 2(d). At 31 July 2010 the closing rate of exchange of Canadian
dollars to 1 GB pound was 1.61 (31 July 2008: 1.79) and the average rate of exchange of Canadian dollars
to 1 GB pound for the year was 1.70 (2009: 1.91).
Statement of compliance
(a)
The consolidated financial statements of Rambler Metals and Mining plc have been prepared in accordance
with International Financial Reporting Standards (“IFRS”) and their interpretations adopted by the
International Accounting Standards Board (“IASB”), as adopted by the European Union and with IFRS and
their interpretations adopted by the IASB. There are no material differences on application to the Group. The
consolidated financial statements have also been prepared in accordance with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
In the current year, the following new and revised standards have been adopted and have affected the
disclosures presented in these financial statements:
IAS1 (revised 2007) Presentation of Financial Statements
IAS1 has introduced a number of changes in the format and content of the financial statements. This
resulted in the Company presenting a Statement of Comprehensive Income and a Statement of Changes in
Equity. Previously the statements had been presented together in a Statement of Recognised Income and
Expense.
Page 32
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(a)
Statement of compliance (continued)
IFRS 8 Operating Segments
IFRS 8 is a disclosure standard. Its adoption has not resulted in any changes to the classification of the
Group’s segments.
Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments
Disclosures)
The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and
liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures
in the current year in accordance with the transitional reliefs offered in these amendments.
There have been no standards issued but not yet effective that have been adopted early.
International Financial Reporting Standards that have recently been issued or amended but are not yet
effective have not been adopted for the annual reporting period ended 31 July 2010:
IFRS
/Amendment
Various
Title
Annual
Improvements to
IFRSs
IAS 24 revised Related Party
Nature of change to
accounting policy
No change to accounting
policy, therefore, no impact
Application date
of standard
Various
Application
date for Group
1 August 2010
IAS 32
amendment
IAS 39
amendment
IFRS 1
amended
IFRS 2
amended
IFRS 9
IFRIC 19
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
Disclosures
Financial
instruments:
Presentation
Financial instruments No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
No change to accounting
policy, therefore, no impact
First time adoption of
IFRS
Share-based
payment
Financial
instruments:
Classification and
Measurement
Extinguishing
financial liabilities
with Equity
Instruments
1 January 2011
1 August 2011
1 February 2010
1 August 2010
1 January 2010
1 August 2010
1 January 2010
1 August 2010
1 January 2010
1 August 2010
1 January 2013
1 August 2013
1 July 2010
1 August 2010
Management have reviewed the impact of the above standards and interpretations and have concluded that
they will not result in any material changes to reported results.
Page 33
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Basis of preparation
(b)
The financial statements are presented in Canadian dollars, rounded to the nearest dollar.
Change of presentational currency
The Group’s principal operations are based in Canada and there will be further significant expenditure
associated with bringing the Group’s Mine into production in 2011. As a result the Directors have changed
the Group’s presentational currency from GB pounds to Canadian dollars.
The change of the Group’s presentational currency has been accounted for in accordance with IAS 21 ‘The
Effects of Changes in Foreign Exchange Rates’.
On the change of the Group’s presentational currency, comparative figures previously reported in GB
pounds were translated into Canadian dollars as follows:
•
income and expenses were translated at the average exchange rate for the relevant period;
• assets and liabilities were translated at the closing exchange rate on the relevant balance sheet
date; and
• equity items were translated at historical exchange rates.
The exchange rates used were as follows:
Average rate
Closing rate
2009
2008
2007
2006
£1=CAD$
£1=CAD$
£1=CAD$
£1=CAD$
1.91
1.79
2.09
2.03
2.13
2.16
2.12
2.11
As a result of the change of the Group’s presentational currency, a currency translation difference of
$419,757 was recognised in equity as at 31 July 2009 which represented the difference between the
Group’s assets and liabilities translated from GB pounds into Canadian dollars at the closing exchange rate
on that date of £1 = $1.79 and the equity items recognised in the consolidated financial statements that
were translated from GB pounds to Canadian dollars at historical exchange rates.
The currency translation difference arose as follows:
Ordinary share capital
Share premium account
Retranslation of net assets from GB pounds to Canadian dollars
$
193,689
5,875,068
(5,649,000)
419,757
Page 34
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(b)
Basis of preparation (continued)
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and
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 the judgements about carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in
note 24.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
Basis of consolidation
Subsidiaries
(c)
(i)
Subsidiaries are entities controlled by the Company. Control exists when the Company 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 presently are exercisable or convertible are
taken into account. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
Transactions eliminated on consolidation
(ii)
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
Foreign currency
Foreign currency transactions
(d)
(i)
Transactions in foreign currencies are translated to the functional currency at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to the functional currency at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary
assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to the functional currency at foreign exchange rates
ruling at the dates the fair value was determined.
Page 35
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Foreign currency
Translation into presentation currency
(d)
(ii)
The assets and liabilities of the UK parent are translated to Canadian dollars at foreign exchange rates
ruling at the balance sheet date. The revenues and expenses of the parent company are translated to
Canadian dollars at rates approximating to the foreign exchange rates ruling at the dates of the transactions.
Net investment in foreign operations
(iii)
Exchange differences arising from the translation of the net investment in foreign operations are taken to
translation reserve. They are released into the income statement upon disposal.
Property, plant and equipment
Owned assets
(e)
(i)
Items of property, plant and equipment are stated at cost. The cost of self-constructed assets includes the
cost of materials, direct labour and the initial estimate, where relevant, of the costs of dismantling and
removing the items and restoring the site on which they are located.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items of property, plant and equipment.
Leased assets
(ii)
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are
classified as finance leases.
Subsequent costs
(iii)
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of
replacing part of such an item when that cost is incurred if it is probable that the future economic benefits
embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other
costs are recognised in the income statement as an expense as incurred.
Depreciation
(iv)
Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation
costs where appropriate, on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
(cid:31) buildings
(cid:31) plant and equipment
(cid:31) motor vehicles
(cid:31) computer equipment
(cid:31)
fixtures, fittings and equipment
5 to 10 years
2 to 5 years
3 years
3 years
3 years
The estimated useful lives and residual values of the assets are considered annually and restated as
required.
Page 36
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
Intangible assets
(f)
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation as well as the cost of mineral licences.
They are capitalised as intangible assets pending determination of the feasibility of the project. When the
existence of economically recoverable reserves and the availability of finance is established the related
intangible assets are transferred to property, plant and equipment and the exploration and evaluation costs
are amortised on a depletion percentage basis. Where a project is abandoned or is determined not to be
economically viable, the related costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors
common to the natural resource sector. These include the extent to which the Group can establish
economically recoverable reserves on its properties, the ability of the Group to obtain necessary financing to
complete the development of such reserves and future profitable production or proceeds from the
disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a project by project basis, with
each project representing a potential single cash generating unit. An impairment review is undertaken
when indicators of impairment arise but typically when one of the following circumstances apply:
•
•
•
•
unexpected geological occurrences that render the resource uneconomic;
title to the asset is compromised;
variations in metal prices that render the project uneconomic; and
variations in the exchange rate for the currency of operation.
Investments
(g)
Investments are stated at their cost less impairment losses (see accounting policy j).
Trade and other receivables
(h)
Trade and other receivables are stated at their cost less impairment losses (see accounting policy j).
Cash and cash equivalents
(i)
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable
on demand and form an integral part of the Group’s cash management are included as a component of cash
and cash equivalents for the purpose of the statement of cash flows.
Impairment
(j)
The carrying amounts of the Group’s assets (except deferred exploration and evaluation costs (see
accounting policy (f)(ii)) and deferred tax assets (see accounting policy 2(o)), are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated (see accounting policy 2(j)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. Impairment losses are recognised in the income statement.
Page 37
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the
carrying amount of the other assets in the unit (group of units) on a pro rata basis.
(i)
Calculation of recoverable amount
Receivables with a short duration are not discounted.
The recoverable amount of other assets is the greater of their net selling price and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount
is determined for the cash-generating unit to which the asset belongs.
Reversals of impairment
(ii)
An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
(k)
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities.
Financial liabilities include bank loans and the Gold Loan which are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption value being recognised in the statement of
comprehensive income over the period of the borrowings on an effective interest basis except where the
difference between cost and redemption value qualify to be capitalised as part of the cost of a qualifying
asset.
Provisions
(l)
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle
the obligation. If the effect is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
Page 38
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Trade and other payables
(m)
Trade and other payables are stated at amortised cost.
Expenses
Operating lease payments
(n)
(i)
Payments made under operating leases are recognised in the income statement on a straight-line basis
over the term of the lease. Lease incentives received are recognised in the income statement as an integral
part of the total lease expense.
Finance lease payments
(ii)
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding
liability. The finance charge is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
Borrowing costs
(iii)
Borrowing costs are recognised in the income statement where they do not meet the criteria for
capitalisation.
Equity settled share based payments
(o)
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based remuneration are measured at
their fair values. Fair values of employee services are determined indirectly by reference to the fair value of
the share options awarded. Their value is appraised at the grant dates and excludes the impact of non-
market vesting conditions.
All share-based remuneration is ultimately recognised as an expense in the income statement with a
corresponding credit to the accumulated losses in the balance sheet.
Equity settled share based payments (continued)
(o)
If vesting periods apply, the expense is allocated over the vesting period, based on the best available
estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense
recognised in prior periods if the number of share options ultimately exercised is different to that estimated on
vesting. Upon exercise of share options the proceeds received net of attributable transaction costs are
credited to share capital.
Page 39
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Income tax
(p)
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in
the income statement 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 balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes,
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet
date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3. Operating segments
The Group has adopted IFRS 8 Operating Segments with effect from 1 August 2009. IFRS 8 requires
operating segments to be identified on the basis of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and
to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required
an entity to identify two sets of segments (business and geographical), using a risks and returns approach,
with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the
starting point for the identification of such segments. Following the adoption of IFRS 8, the identification of
the Group’s reportable segments has not changed.
The Group’s operations relate to the exploration for, and development of mineral deposits with support
provided from the UK and as such the Group has only one segment.
Other geographical information
Segment revenue
UK
$
-
2010
2009
Canada
Consolidated
$
$
UK
$
Canada
Consolidated
$
$
-
-
-
-
-
Segment non-current assets
649 44,864,623 44,865,272
1,176 35,504,351 35,505,527
Page 40
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
4. Operating loss
The operating loss is after charging/(crediting):
Depreciation – owned assets
Directors’ emoluments (see note 22)
Auditors’ remuneration:
Audit of these financial statements
Fees payable to the auditor for other services:
Audit of accounts of associates of the Company pursuant to
legislation
Other services related to tax
Other services
Operating lease rentals
Foreign exchange differences
2010
$
2009
$
150,751
348,468
113,282
344,745
44,217
44,825
-
4,768
17,248
5,638
44,165
146,801
17,453
2,384
79,396
(2,953)
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is
maintained.
In addition to the depreciation charge shown above, depreciation of $1,746,252 (2009: $1,886,374) was
capitalised within exploration and evaluation assets.
5. Personnel expenses
Salary costs
Wages and salaries
Share based payments
Compulsory social security contributions
Group
2010
$
2,095,834
247,076
133,666
Group
2009
$
2,612,934
257,442
182,961
2,476,576
3,053,337
Salary costs of $1,345,965 (2009: $1,916,261) were capitalised as exploration and evaluation costs during the
year.
Number of employees
The average number of employees during the year was as follows:
Directors
Administration
Exploration and evaluation
Group
2010
Group
2009
9
6
19
34
8
6
26
40
During the year the Group granted share options to key personnel and consultants to purchase shares in the
entity. The options are exercisable at the market price of the shares at the date of grant.
Page 41
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses (continued)
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the period
Granted during the period
Cancelled during the period
Outstanding and exercisable at the end of the period
Weighted
average
Weighted
average
exercise
Number
exercise
Number
price
2010
$
0.416
0.500
0.890
0.467
of options
2010
price
2009
$
of options
2009
3,313,000
0.971
704,000
0.214
(65,000)
0.894
3,952,000
0.416
1,245,000
2,223,000
(155,000)
3,313,000
The options outstanding at 31 July 2010 have an exercise price in the range of $0.19 to $1.10 and a weighted
average remaining contractual life of 8 years (2009: 9 years).
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on the
Black-Scholes model. The contractual life of the option (10 years) is used as an input into this model.
Expectations of early exercise are incorporated into the Black-Scholes model.
Fair value of share options and assumptions
Fair value at measurement date
Share price (weighted average)
Exercise price (weighted average)
Expected volatility (expressed as weighted average volatility used
in the modelling under Black-Scholes model)
Expected option life
Expected dividends
Risk-free interest rate (based on national government bonds)
2010
2009
$
208,500
$
280,530
0.467
0.467
0.444
0.444
67.2%
5
0
3.98%
65.3%
5
0
4.30%
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life
of the share options), adjusted for any expected changes to future volatility due to publicly available information.
There are no performance or market conditions associated with the share option grants.
Share options granted in 2008
Share options granted in 2009
Share options granted in 2010
Total expense recognised as employee costs
Page 42
2010
2009
$
49,241
77,972
119,863
$
158,048
99,394
-
247,076
257,442
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Income tax credit
6.
Recognised in the income statement
Current tax expense
Current year
Deferred tax credit
Origination and reversal of temporary differences
Benefit of tax losses recognised
Tax losses surrendered for tax credit
Total income tax credit in income statement
Reconciliation of effective tax rate
Loss before tax
Income tax using the domestic corporation tax rate of 28% (2009: 28%)
Effect of tax rates in foreign jurisdictions (rates increased)
Non-deductible expenses
Capital allowances in excess of depreciation
Effect of tax losses carried forward
7. Loss of parent company
2010
$
2009
$
-
-
-
-
438,094
(438,094)
(30,509)
(30,509)
384,532
(384,532)
(11,623)
(11,623)
2010
$
2009
$
(2,456,394) (2,060,090)
(687,790)
(17,405)
90,651
(319,558)
903,593
(576,825)
(12,589)
75,342
(384,275)
886,725
(30,509)
(11,622)
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company is not
presented as part of these financial statements. The parent company’s loss for the financial year was $715,870
(2009: $801,211).
Page 43
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
8. Property, plant and equipment - group
Cost
Balance at 1 August 2008
Acquisitions
Disposals
Effect of movements in foreign
exchange
Balance at 31 July 2009
Balance at 1 August 2009
Acquisitions
Effect of movements in foreign
exchange
Balance at 31 July 2010
Depreciation and impairment losses
Balance at 1 August 2008
Depreciation charge for the
period
On disposals
Effect of movements in foreign
exchange
Balance at 31 July 2009
Balance at 1 August 2009
Depreciation charge for the year
Effect of movements in foreign
exchange
Balance at 31 July 2010
Carrying amounts
At 1 August 2008
At 31 July 2009
At 1 August 2009
At 31 July 2010
Land and
Assets under
Motor vehicles
Plant and
fittings and
Computer
buildings
construction
equipment
equipment
equipment
Total
$
$
$
$
$
$
$
Fixtures,
962,181
62,772
-
-
8,400
-
194,888
71,141
(147,787)
5,613,548
405,227
-
36,613 252,067
17,234 244,871
-
-
7,059,297
809,645
(147,787)
-
-
-
-
-
(849)
(849)
1,024,953
8,400
118,242
6,018,775
53,847 496,089
7,720,306
1,024,953
71,175
8,400
5,191,351
118,242
-
6,018,775
19,012
53,847 496,089
44,695
2,587
7,720,306
5,328,820
-
-
-
-
-
(662)
(662)
1,096,128
5,199,751
118,242
6,037,787
56,434 540,122
13,048,464
255,183
268,954
-
-
524,137
524,137
250,840
-
774,977
706,998
500,816
-
-
-
-
-
-
-
-
-
-
46,179
22,643
1,356,293
1,569,877
71,439
15,039
16,345 119,992
1,744,133
1,997,811
(50,448)
-
-
-
(50,448)
-
18,374
-
2,926,170
-
(601)
31,384 190,830
(601)
3,690,895
18,374
32,604
2,926,170
1,456,382
31,384 190,830
12,857 144,321
3,690,895
1,897,004
-
-
-
(572)
(572)
50,978
4,382,552
44,241 334,579
5,587,327
148,709
4,257,255
21,574 180,628
5,315,164
8,400
99,868
3,092,605
22,463 305,259
4,029,411
500,816
321,151
8,400
5,199,751
99,868
67,264
3,092,605
22,463 305,259
4,029,411
1,655,235
12,193 205,543
7,461,137
Leased plant and machinery
The Group leases surface and underground equipment under a number of finance lease agreements. At the end
of each lease the Group has the option to purchase the equipment at a beneficial price. At 31 July 2010, the net
carrying amount of leased plant and machinery was $126,715 (2009: $502,099). The leased equipment secures
lease obligations (see note 18).
Page 44
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
8. Property, plant and equipment - company
Cost
Balance at 1 August 2008
Acquisitions
Effect of movements in foreign exchange
Balance at 31 July 2009
Balance at 1 August 2009
Acquisitions
Effect of movements in foreign exchange
Balance at 31 July 2010
Depreciation and impairment losses
Balance at 1 August 2008
Depreciation charge for the period
Effect of movements in foreign exchange
Balance at 31 July 2009
Balance at 1 August 2009
Depreciation charge for the year
Effect of movements in foreign exchange
Balance at 31 July 2010
Carrying amounts
At 1 August 2008
At 31 July 2009
At 1 August 2009
At 31 July 2010
Computer
equipment
$
6,904
502
(849)
6,557
6,557
525
(662)
6,420
4,045
1,940
(604)
5,381
5,381
962
(572)
5,771
2,859
1,176
1,176
649
Page 45
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
9.
Intangible assets - group
Cost
Balance at 1 August 2008
Acquisitions
Balance at 31 July 2009
Balance at 1 August 2009
Acquisitions
Balance at 31 July 2010
Carrying amounts
At 1 August 2008
At 31 July 2009
At 1 August 2009
At 31 July 2010
Exploration
and
evaluation
Costs
$
24,586,176
6,889,940
31,476,116
31,476,116
5,574,794
37,050,910
24,586,176
31,476,116
31,476,116
37,050,910
Consideration of impairment for exploration and evaluation costs
The directors have assessed whether there are any indicators of impairment in respect of exploration and
evaluation costs. In making this assessment they have considered the Group’s recent Feasibility Study as well
as its opportunities economic model which includes resource estimates and conversion of its inferred resources,
movement of future processing capacity, the forward market and longer term price outlook for copper and gold.
The directors do not consider that there are any indicators that exploration and evaluation costs are impaired at
the year end.
10. Investments - company
Cost
Balance at 1 August 2008
Advances
Effect of movements in foreign exchange
Balance at 31 July 2009
Balance at 1 August 2009
Advances
Effect of movements in foreign exchange
Balance at 31 July 2010
Investment in
subsidiary
Loans
$
$
Total
$
486,631
-
(57,686)
33,789,783 34,276,414
1,730,277
(4,172,224)
1,730,277
(4,114,538)
428,945
31,405,522 31,834,467
428,945
-
(41,568)
31,405,522 31,834,467
11,567,136 11,567,136
(3,402,001)
(3,360,433)
387,377
39,612,225 39,999,602
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
10. Investments – company (continued)
The company has interests in the following material subsidiary undertakings, which are included in the
consolidated financial statements.
Name
Class
Holding
Activity
Country of
Incorporation
Rambler Mines Limited
Rambler Metals and Mining
Canada Limited
Ordinary
100%
Holding company England
Common
100% (indirectly) Exploration
Canada
The aggregate value of shares in subsidiary undertakings is stated at cost less any amounts provided for
impairment as deemed necessary by the directors.
The loans to the subsidiary undertakings are interest free.
11. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
2010
$
2009
$
2010
$
2009
$
2010
$
-
(272,838)
1,246,733 1,744,759
(1,471,921)
-
-
1,246,733
2009
$
(78,838)
1,246,733
(1,167,895)
-
Property, plant and equipment
Intangible assets
Tax value of loss carry-forwards recognised
Net tax (assets) / liabilities
(272,838)
-
(1,471,921)
(1,744,759)
(78,838)
-
(1,167,895)
(1,246,733)
-
1,744,759
-
1,744,759
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Deductible temporary differences
UK tax losses
Canadian tax losses
Other Canadian tax credits
2010
$
2009
$
334
740,443
707,580
(184)
623,069
299,902
2,527,844 2,129,063
3,976,201 3,052,034
The tax losses and deductible temporary differences do not expire under current tax legislation. Deferred tax
assets have not been recognised in respect of these items because it is not probable that future taxable profit
will be available against which the Group can utilise the benefits there from.
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
11. Deferred tax assets and liabilities (continued)
Movement in recognised deferred tax assets and liabilities
Recogn-
Effect of
Exchange
Balance
ised in
change in
difference
Balance
1 Aug 08
income
tax rate
$
$
$
$
31 Jul 09
$
Property, plant and equipment
Intangible assets
Tax value of loss carry-forwards
91,061 (162,285)
546,275
(383,990)
-
761,450
(852,511)
-
(7,375)
(61,678)
69,053
-
(239)
(78,838)
686 1,246,733
(1,167,895)
-
(447)
-
Property, plant and equipment
Intangible assets
Tax value of loss carry-forwards
12. Trade and other receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
13. Cash and cash equivalents
Short term deposits
Bank balances
Cash and cash equivalents in the statement of
cash flows
Recogn-
Effect of
Exchange
Balance
ised in
change in
difference
Balance
1 Aug 09
income
tax rate
$
(78,838)
1,246,733
(1,167,895)
$
(194,000)
498,026
(304,026)
-
-
$
$
-
-
-
-
31 Jul 10
$
(272,838)
-
- 1,744,759
(1,471,921)
-
-
-
Group
2010
$
22,004
56,963
205,906
Group
2009
$
2,531
42,135
92,321
Group Company Company Company
2008
2010
2009
2008
$
94,678
223,335
65,990
$
1,251
9,851
57,164
$
2,029
4,972
32,226
$
25,506
16,620
31,094
284,873
136,987
384,003
68,266
39,227
73,220
Group
2010
$
6,860,562
1,139,189
Group
2009
$
Group
Company Company Company
2008
$
2010
2009
2008
$
484,221
68,794
$
$
-
-
40,653 2,656,506
1,699,999 6,439,773
388,831 3,916,365
7,999,751
2,088,831 10,356,138
553,015
40,653 2,656,506
14. Restricted cash
Bearer deposit note
Group
2010
$
1,364,980
Group
2009
$
Group
Company Company Company
2008
$
2010
2009
2008
$
$
$
-
-
-
-
-
The group is required to hold a Letter of Credit in favour of the Government of Newfoundland and Labrador in
respect of the reclamation and closure liability at the Nugget Pond Mill. The bearer deposit note matures on 5
July 2011 and has a nominal value of $1,383,000 giving an effective yield of 1.32%.
Page 48
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
15. Capital and reserves
Share capital and share premium – group and company
In issue at 1 August 2008
Issued for cash
In issue at 31 July 2009
In issue at 1 August 2009
Issued for cash
In issue at 31 July 2010
Number
59,385,000
-
59,835,000
59,385,000
36,100,000
95,485,000
At 31 July 2010, the authorised share capital comprised 1,000,000,000 ordinary shares of 1p each.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to
one vote per share at meetings of the Company.
Details of shares issued during the year ended 31 July 2010 are as follows:
On 21 October 2009 the company received monies to subscribe for 27,500,000 shares for $0.346 each raising a
total of $8,866,724 net of expenses.
On 31 March 2010 the company received monies to subscribe for 8,600,000 shares for $0.491 each raising a
total of $3,976,305 net of expenses.
Merger reserve
The merger reserve arose from the acquisition of Rambler Mines Limited by Rambler Metals and Mining PLC.
This acquisition was accounted for in accordance with the merger accounting principles set out in UK Financial
Reporting Standard 6 and the Companies Act 1985, which continue under the Companies Act 2006, whereby
the consolidated financial statements were presented as if the business previously carried out through Rambler
Mines Limited had always been owned and controlled by the Company. The transition provisions of IFRS 1 allow
all business combinations prior to transition to IFRS to continue to be accounted for under the requirements of
UK GAAP at that time. Accordingly this acquisition has not been re-stated in accordance with that standard.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of the parent company which has a different functional currency from the presentation currency.
Exchange differences arising are classified as equity and transferred to the Group’s translation reserve. Such
translation differences are recognised in the income statement in the period of disposal of the operation.
Page 49
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
15. Capital and reserves (continued)
The Group’s objectives when managing capital are to safeguard the entity’s ability to continue as a going
concern so that it can continue to increase the value of the entity for the benefit of the shareholders. Given the
nature of the Group’s current activities the entity will remain dependent on a mixture of debt and equity funding
in the short to medium term until such a time as the Group becomes self-financing from the commercial
production of mineral resources.
Details of employee share options outstanding are set out in note 5.
16. Loss per share
Basic loss per share
The calculation of basic loss per share at 31 July 2010 was based on the loss attributable to ordinary
shareholders of $2,425,885 and a weighted average number of ordinary shares outstanding during the period
ended 31 July 2010 of 83,581,438 calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period
Loss attributable to ordinary shareholders
Weighted average number of ordinary shares
At 1 August 2008
Effect of shares issued during the year
At 31 July 2009
In issue at 1 August 2009
Effect of shares issued during year
Weighted average number of ordinary shares at 31 July 2010
2010
$
(2,425,885)
(2,425,885)
2009
$
(2,048,467)
(2,048,467)
Number
59,385,000
-
59,385,000
59,385,000
24,196,438
83,581,438
There is no difference between the basic and diluted loss per share. At 31 July 2010 there were 3,952,000
(2009: 3,313,000) share options and nil (2009: 478,200) compensation options in issue which may have a
dilutive effect on the basic earnings or loss per share in the future.
Page 50
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
17. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
Group
2010
$
437,836
232,123
130,417
Group
2009
$
2008
$
2010
$
51,475 1,046,592
136,861
23,819
276,838
394,036
12,491
4,922
130,417
2009
2008
$
8,225
680
166,515
$
47,278
55,592
90,486
Group Company
Company
Company
18. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.
For more information about the Group’s exposure to interest rate and foreign currency risk, see note 20.
800,376
469,330 1,460,291
147,830
175,420
193,356
2010
$
2009
2008
$
$
Non-current liabilities
Bank loan
Finance lease liabilities
Gold Loan
Current liabilities
Current portion of bank loan
Current portion of finance lease liabilities
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than one year
Between one and five years
29,408
32,793
412,258 789,208
-
5,149,566
-
921,296
-
5,591,232 822,001
921,296
3,250
3,250
384,627 259,545
-
277,110
387,877 262,795
277,110
Minimum
lease
Payments
2010
Interest
2010
Principal
2010
Minimum
lease
Payments
2009
Interest Principal
2009
2009
$
$
$
$
$
$
426,021
427,343
853,364
41,394
15,585
384,627
412,258
334,352
830,986
74,807
41,777
259,545
789,208
56,979
796,885 1,165,338 116,584 1,048,754
Under the terms of the lease agreements, no contingent rents are payable.
Gold Loan
During the year, the Group entered into an agreement (“Gold Loan”) with Sandstorm Resources Ltd to sell a
portion of the life-of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm Resources Ltd. will make staged upfront cash payments for the
gold to the Group totalling US$20 million. Payment milestones are as follows:
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
18. Interest-bearing loans and borrowings (continued)
• US$5 million available immediately and received on 10 March 2010;
• US$2 million on completion of a NI43-101 feasibility study and received on 8 September 2010;
• US$13 million when Rambler is awarded all permits required for the Ming mine to start production
(outstanding at the date of these financial statements).
For this, the Group has agreed to sell 25% of the first 175,000oz of payable gold and thereafter 12% of all
subsequent payable gold for the balance of the period ending 40 years after the date of the agreement. After the
expiry of the 40 year term, the agreement is renewable in 10 year blocks at the option of Sandstorm Resources
Ltd.
A 4.5% cash commission is payable with each payment received under the agreement.
There are certain circumstances in which the gold loan may be repaid earlier than by the delivery of payable gold
as follows:
(i)
If within 18 months of 4 March 2010 (the date of the agreement) the Ming mine has not started
producing gold any amounts advanced will become repayable on demand together with interest at a
rate of 8% per annum.
(ii) If within 24 months of the date that gold is first produced, the Ming mine has not produced and sold
a minimum of 24,000oz of payable gold then a portion of the US$20 million will be repayable based
on the shortfall of payable gold.
(iii) Within the first 36 months of Commercial production of gold any shortfall in payable gold below the
following amounts will be required to be paid in cash:
• within the first 12 months – US$3.6 million
• within the second 12 months – US $3.6 million
• within the third 12 months – US$3.1 million
The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective
interest rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end based
on management’s best estimates of the time of delivery of payable gold, the total amount of gold expected to be
produced over the mine life and the timing of that production.
Interest accrued of $218,595 during the year has been capitalised and included in exploration and evaluation
expenditure.
19. Provisions
Reclamation and closure provision
At 1 August 2009
Provision during the year
At 31 July 2010
2010
$
2009
$
-
558,739
558,739
-
-
-
The reclamation and closure provision has been made in respect of costs of land restoration and rehabilitation
expected to be incurred at the end of the Nugget Pond Mill’s useful life. The provision has been calculated based
on the present value of the expected future cash flows associated with reclamation and closure activities as
required by the Government of Newfoundland and Labrador. The provision relates to restoration of the mill site.
The liability is secured by a letter of credit for $1,364,980.
Page 52
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
20. Financial risk management
The Group’s principal financial assets comprise: cash and cash equivalents and other receivables. In addition
the Company’s financial assets include amounts due from subsidiaries. The Group and Company’s financial
liabilities comprise: trade payables; other payables; and accrued expenses. The Group’s financial liabilities also
include interest bearing loans and borrowings.
All of the Group’s and Company’s financial liabilities are measured at amortised cost and their financial assets
are classified as loans and receivables.
The board of directors determines, as required, the degree to which it is appropriate to use financial instruments
and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are
foreign exchange risk, interest rate risk, credit risk and liquidity risk each of which is discussed below. There
were no derivative instruments outstanding at 31 July 2010.
Foreign currency risk
The Group's cash resources are held in GB pounds and Canadian Dollars and the Gold Loan is repayable in US
dollars. The Group has a downside exposure to any strengthening of the GB pound as this would increase
expenses in Canadian dollar terms. This risk is mitigated by reviewing the holding of cash balances in GB
pounds. Any weakening of the GB pound would however result in the reduction of the expenses in Canadian
dollar terms and preserve the Group's cash resources. In addition, any such movements would affect the
Consolidated Balance Sheet when the net assets of the Parent Company are translated into Canadian dollars.
The Group has a downside exposure to any strengthening of the US dollar as this would increase the amount
repayable on the Gold Loan in Canadian dollar terms. This risk, however, is relevant only should the Gold Loan
be repaid in cash under terms set out in note 18. Repayment is envisaged in payable gold which is denominated
in US dollars. Once the Mine is in production, this will mitigate this foreign currency risk.
The policy in relation to the translation of foreign currency assets and liabilities is set out in note 2(d),
'Accounting Policies Foreign Currencies' to the consolidated financial statements.
Previously the Group’s results had been presented in GB pounds. Since the Group’s main assets are held in
Canada which has a Canadian dollar functional currency, Directors and management decided to change the
presentational currency to Canadian dollars for Fiscal 2010, This significantly reduces the effect on the Group’s
balance sheet of movements in the GB pound to the Canadian Dollar. The Group does not hedge its exposure
of foreign investments held in foreign currencies. There is no significant impact on profit or loss from foreign
currency movements associated with the Parent company’s assets and liabilities as the foreign currency gains
or losses are recorded in the translation reserve.
Exchange rate fluctuations may adversely affect the Group`s financial position and results. The following table
details the Group`s sensitivity to a 10% strengthening and weakening in the GB pound against the Canadian/US
Dollar. 10% represents management’s assessment of the reasonable possible exposure.
10% strengthening of GB pound
10% weakening of GB pound
10% strengthening of US dollar
10% weakening of US dollar
Page 53
Equity
2010
$
52,679
(47,408)
(514,956)
468,143
2009
$
33,458
(30,416)
-
-
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
20. Financial risk management (continued)
Liquidity risk
Prior to Q3 2010 the Group had relied on shareholder funding to finance its operations. During Q3, 2010 the
Group entered into a financing arrangement in US dollars (see note 18). With finite cash resources and no
material income, the liquidity risk is significant. This risk is managed by controls over expenditure and
concentrating on achieving the payment milestones under the financing arrangement. Success will depend
largely upon the outcome of ongoing and future exploration and development programmes. Given the nature of
the Group’s current activities the entity will remain dependent on a mixture of debt and equity funding in the short
to medium term until such time as the Group becomes self-financing from the commercial production of mineral
resources. The liabilities of the parent company are due within one year. The parent company has adequate
financial resources to meet the obligations existing at 31 July 2010.
The Group’s and Company’s trade payables, other payables and accrued expenses are generally due between
one and three months and the Group’s financial liabilities are due as follows:
Financial liabilities
At the year end the analysis of finance leases, hire purchase contracts and bank loans which were all due in
Canadian Dollars and are at fixed interest rates was as follows:
Fixed rate liabilities
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
Due after five years
2010
$
387,877
374,104
22,144
23,797
5,214
16,407
2009
$
262,795
399,995
359,504
20,634
22,066
19,802
829,543 1,084,796
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at 31 July 2010
was 5.50%.
Credit risk
With effect from July 2007, the Group has held the majority of its cash resources in Canadian Dollars given that
the majority of the Group’s outgoings are denominated in this currency. As at 31 July 2009, 85% of the Group’s
cash resources were invested in a short dated term deposits and bankers acceptances. Given the current
climate, the Group has taken a very risk averse approach to management of cash resources and management
and Directors monitor events and associated risks on a continuous basis. There is little perceived credit risk in
respect of trade and other receivables (see note 12). The Group’s maximum exposure to credit risk at 31 July
2010 was represented by receivables and cash resources.
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve
month's maximum duration. Details of the Group’s borrowings are described in note 18.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group’s reported
result.
Page 54
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
20. Financial risk management (continued)
Commodity price risk
Commodity price risk is the risk that the Group’s future earnings will be adversely impacted by changes in the
market prices of commodities. The Group is exposed to commodity price risk as its future revenues will be
derived based on contracts with customers at prices that will be determined by reference to market prices of
copper and gold at the delivery date.
As explained in note 24 the Group calculates the effective interest rate on the Gold Loan based on estimates of
future cash flows arising from the sale of payable gold. In estimating the cash flows the following table details
the Group’s sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent
management’s assessment of the reasonable possible exposure.
10% increase in the price of gold
25% decrease in the price of gold
Gross assets
2009
2010
$
(37,445)
105,693
$
-
-
Financial assets
The floating rate financial assets comprise interest earning bank deposits at rates set by reference to the
prevailing LIBOR or equivalent to the relevant country. Fixed rate financial assets are cash held on fixed term
deposit.
At the year end the cash and short term deposits were as follows:
At 31 July 2010
Sterling
Canadian $
At 31 July 2009
Sterling
Canadian $
Fixed rate
assets
Floating
rate
Assets
Average
Average
period for
interest
Total
which
rates for
rates are
fixed
fixed rate
assets
$
$
$
Months
484,221
550.939
6,351,140 1,097,672 7,448,812
66,718
1
2
6,835,361 1,164,390 7,999,751
$
$
$
Months
-
1,699,999
1,699,999
40,653
40,653
348,178 2,048,177
388,831 2,088,831
-
2
%
0.25
0.35
%
-
0.84
Fair values
In the directors’ opinion there is no material difference between the book value and fair value of any of the
group’s financial instruments.
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
21. Capital and operating lease commitments
The Group has commitments totalling CAD$1.24 million (2009: $46,000) with various vendors relating to the
purchase of equipment for the Nugget Pond Mill upgrade.
At 31 July 2010 the company had the following operating lease commitments:
In respect of land and buildings
Payable within one year
Other
Payable within one year
Payable within one to two years
Payable within two to three years
22. Related parties
2010
$
2009
$
-
-
15,892
3,976
-
19,868
15,892
15,892
3,976
35,760
Identity of related parties
The Group has a related party relationship with its subsidiaries (see note 10) and with its directors and executive
officers.
Transactions with key management personnel
Directors of the Company and their immediate relatives control 20% per cent of the voting shares of the
Company.
The directors’ compensations were as follows:
Salary – executive
G Ogilvie
J Thomson (became non-executive on 2 May 2010)
Fees – non-executive
D H W Dobson
S Neamonitis
J M Roberts
L D Goodman
B F Dalton
J A Baker
B D Hinchcliffe (includes additional fees of $nil (2009: $4,577)
J Thomson
2010
$
2009
$
200,000
76,530
200,000
89,049
-
13,605
13,605
13,605
2,381
2,381
13,605
12,755
348,467
-
15,260
15,260
15,260
2,670
2,670
19,837
-
360,006
D H W Dobson waived his entitlement to director’s fees for the current and preceding periods. The payment of
fees to non-executive directors was suspended during the year in order to preserve cash. At 31 July 2010 fees
of $38,738 (2009: $39,797) remained outstanding.
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
22. Related parties (continued)
Brian Dalton and John Baker, directors of the company are also directors of Altius Resources Inc (“Altius”), a
13% shareholder in the company.
Consultancy fees were payable to Altius Mineral Corporation for the year ended 31 July 2010 for the consultancy
services of J Baker & B Dalton amounting to $22,441 (31 July 2009: $25,178).At 31 July 2010, consultancy fees
of $21,306 (2009: $31,456) were outstanding.
Share options held by directors were as follows:
G Ogilvie1
J Thomson2
D H W Dobson3
S Neamonitis3
J M Roberts3
L D Goodman3
B F Dalton3
J A Baker3
B D Hinchcliffe3
At 31.07.10 At 31.07.09
No.
No.
1,100,000 1,100,000
400,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
400,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
1,815,000 1,815,000
1 200,000 options at an exercise price of $0.93 expiring on 7 December 2016, 150,000 options at an exercise price of $1.10 expiring on 12
November 2017 and 750,000 options at an exercise price of $0.19 expiring on 10 November 2018.
2 100,000 options at an exercise price of $0.93 expiring on 7 December 2016 and 300,000 options at an exercise price of $0.19 expiring on
10 November 2018.
3 options at an exercise price of $0.19 expiring on 10 November 2018.
Total key management personnel compensations were as follows:
Salaries
Share based payments
Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note 10.
2010
2009
$
$
382,212 410,580
121,757 103,304
503,969 513,884
23. Subsequent events
On 3 August 2010 the Group announced it had entered into a Toll Processing Agreement with Tenacity Gold
Mining Co. Ltd. (“Tenacity”). Tenacity will deliver ore for processing from its Deer Cove and Stog’er Tight Gold
Mines to the Group’s Nugget Pond Mill. This processing arrangement officially commenced on 1 September
2010.
On 10 August 2010 the Group received permission from the Government of Newfoundland and Labrador to
proceed with retrofit construction at the Nugget Pond Mill and the Mine Shaft Manway at the Ming mine.
Page 57
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
23. Subsequent events (continued)
On 26 August 2010 the Group released its final Feasibility Study for the Ming Mine indicating pre-tax operating
cash flow of US$71.0 million, Net Present Value of US$14.3 million discounted at 6%, payback of 1.5 years and
an Internal Rate of Return of 23.7% over a 6 year Life of Mine. Initial capital costs were projected at US$25.5
million with Sustaining Capital estimated at US$27.9 million.
On 31 August 2010, following Sandstorm’s review and acceptance of the Feasibility Study, the Group signed an
amended agreement which provides for a higher percentage gold payment to Sandstorm in the first year and
also adds protective measures for Sandstorm on the throughput rates at the Ming Mine. On 8 September 2010
the second payment of US$2.0 million (CAD$2.03 million after commission) was received by the Group.
24. Critical accounting estimates and judgements
The details of the Group’s accounting policies are presented in accordance with International Financial Reporting
Standards as set out in Note 2 to the financial statements. The preparation of financial statements in conformity
with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for investors to understand some
of the processes and reasoning that go into the preparation of the Company’s financial statements, providing
some insight also to uncertainties that could impact the Company’s financial results.
Going Concern
The risks associated with going concern are explained in note 1.
Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of exploration and
evaluation costs. In making this assessment they have considered the Group’s business plan which includes
resource estimates, future processing capacity, the forward market and longer term price outlook for copper and
gold. Resource estimates have been based on the most recently filed NI43-101 report. Management’s estimates
of these factors are subject to risk and uncertainties affecting the recoverability of the Group’s exploration and
evaluation costs. Any changes to these estimates may result in the recognition of an impairment charge with a
corresponding reduction in the carrying value of such assets. After consideration of the above factors, the
directors do not consider that there are any indicators that exploration and evaluation costs are impaired at the
year end.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option life and the volatility are subject to management estimate and any changes to
these estimates may have a significant effect on the cost. The assumptions used in calculating the cost of share
based payments are explained in note 5.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows arising
from the sale of payable gold (see note 18).The cash flows will be dependent on the production of gold and its
selling price at the time of delivery which have been estimated in line with the mine plan, future prices of gold
and reserve estimates. Management’s estimates of these factors are subject to risk and uncertainties affecting
the amount of the interest charge. Any changes to these estimates may result in a significantly different interest
charge which would affect the carrying value of the exploration and evaluation costs and the corresponding Gold
Loan liability.
Page 58