REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
REPORT OF THE DIRECTORS AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2011
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
Statement of Cash Flows
Notes to the Financial Statements
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39
RAMBLER METALS AND MINING PLC
COMPANY INFORMATION
FOR THE YEAR ENDED JULY 31, 2011
Directors:
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts
J S Thomson
Secretary:
P Mercer
Registered office:
Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number:
5101822 (England and Wales)
Auditor:
PKF (UK) LLP
20 Farringdon Road
London
EC1M 3AP
Page 1
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED JULY 31, 2011
We are pleased to report the results for the year ended July 31, 2011.
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine (“Ming
Mine”) 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
Ahead of bringing the Ming Mine back into production in calendar Q4 2011, key achievements during the year
include:
The Group generated its first revenue of $2.1 million in gold sales from its satellite deposits and
additional revenue of $1.4 million from various toll processing agreements demonstrating the Group’s
ability to source alternative revenue sources in the Baie Verte area.
The group released its final Feasibility Study moving the Ming Mine from pure Exploration and
Evaluation into the Mine Development Stage. Following the receipt of construction and final permits
from the Government of Newfoundland and Labrador (“GNL”) during the year the Group drew down the
remaining US$15 million available under the Gold Loan.
Significant progress was made on all construction works including the Group’s floatation circuit addition
at the Nugget Pond Mill and the site works at the Ming Mine enabling first commissioning plans for
calendar Q4 2011.
On May 3, 2011 the Group placed 27,777,778 Ordinary Shares raising $14.8 million after expenses to
provide additional working capital as the Group continued with the construction phase required to bring
the Mine into production.
FINANCIAL HIGHLIGHTS
The consolidated loss after taxation of the Group in respect of the year ended July 31, 2011 amounted to
$53,000 (a loss per share of $0.001) versus a loss of $2,426,000 for the year ended 31 July 2010 (a loss per
share of $0.029).
The Group generated revenue of $2.1 million from the sale of gold during the year in addition to revenue of $1.4
million from toll processing agreements.
The net assets of the Group amounted to $96.5 million as at the end of the year. This included mineral
properties of $38.5 million and intangible assets of $16.6 million which consisted of accumulated deferred
exploration and evaluation expenditures on the Lower Footwall Zone at the Ming Mine in Newfoundland and
Labrador.
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 back into production in calendar Q4 2011. A
special thank-you to Mr Brian Dalton and Mr John Baker, both Non-Executive Directors who recently resigned
from the Board, for their efforts over the past 5 years and we wish them every success in future endeavours.
DHW Dobson
Chairman
October 14, 2011
Page 2
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
This MD&A, including appendices, is intended to help the reader understand Rambler Metals and Mining plc (‘the parent company’) and its subsidiaries (the
‘Group’ or ‘Rambler’), our operations and our present business environment. It has been prepared as of October 14, 2011 and covers the results of operations
for the quarter and year ended July 31, 2011. This discussion should be read in conjunction with the audited Financial Statements for the year ended July 31,
2011 and notes thereto. These consolidated financial 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. The presentation currency is Canadian dollars. These statements together with the following MD&A are intended to
provide investors with a reasonable basis for assessing the potential future performance.
GROUP OVERVIEW
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine (‘Ming Mine’) located on Newfoundland and Labrador’s Baie Verte
Peninsula. See Appendix 1.
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”.
The Group has established the following three strategic goals:
1. Become a profitable copper and gold producer.
2.
3. Selectively pursue growth opportunities within Atlantic Canada including joint ventures and acquisitions.
Increase existing Ming Mine resources and reserves through further exploration.
The Group’s directors and management believe that focussing on these priorities will provide the Group with the best opportunity to build a successful and long term
mining operation.
Page 3
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2011
Ahead of bringing the mine back into production in calendar Q4 2011, the highlights of the 2011 fiscal year included:
Revenue
The Group received production approval from the Department of Natural Resources to begin the open pit development of its Nugget Pond Crown Pillar satellite
deposit. Processing, at an average throughput rate of 430 tonnes per day, produced 978 ounces of gold at a cash cost of $411 per ounce generating revenue of
$1.43 million.
The Group successfully negotiated Net Smelter Royalty (NSR) terms with Metals Creek Resources Corp. (‘MEK’) to process surface material remaining at the
MEK’s Tilt Cove East Mine Deposit, located 23 kilometres from the Nugget Pond Mill. A total of 421 ounces of gold were processed generating revenue of
$653,000.
The Group entered into a Toll Processing Agreement with Tenacity Gold Mining Co. Ltd. (“Tenacity”). Tenacity delivered ore for processing from its Stog’er Tight
Gold Mine to the Group’s Nugget Pond Mill generating revenue of $1.1 million. Further toll milling revenue of $300,000 was generated throughout the year
including processing a test sample from Crosshair Exploration and Mining Corp.
Financing
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 an initial 6 year Life of Mine. Initial capital costs were projected at US$25.5
million with Sustaining Capital estimated at US$27.9 million. Following its acceptance of the Feasibility Study, Sandstorm Gold Ltd (“Sandstorm”) made the second
instalment of US$2 million available under the terms of the Gold Loan agreement (“Gold Loan”).
The Group received further approval for the construction of its Office/Dry facility and fresh water source at the Ming Mine and final permits for the Ming Mine from
the Government of Newfoundland and Labrador (“GNL”). The receipt of these permits enabled the drawdown of the balance of US$13 million under the terms of the
Gold Loan.
The Group raised finance of $14.8 million after expenses from the placing of 27,777,778 ordinary shares at 36 pence each (approximately CDN$0.57) to support
bringing the Ming Mine into production.
Page 4
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2011 (Continued)
Capital development
The Ming Mine project moved from pure Exploration & Evaluation into the Mine Development stage following completion of the Feasibility Study. Subsequently, all
expenditures incurred in bringing the Ming Mine through the construction and development stage have been capitalised to Mineral Properties.
Nugget Pond Mill concentrator expansion continued on schedule with anticipated commission in calendar Q4 2011. The Mine Shaft Manway and the new office/dry
facility were completed and site construction of the concentrate storage facility at the Group’s port site in Goodyear’s Cove commenced and is anticipated to be
completed in calendar Q4 2011. Pre-production development to the ore bodies proceeded on pace and schedule with development into the main ore bodies being
the main focus for the underground crews. At year end a total of 111 full time employees were employed at the Ming Mine.
Exploration and evaluation
The Group’s NI43-101 Resource Estimate for the Lower and Upper Footwall Zones at the Ming Mine was updated and included an increase of 1.63 million tonnes
in the Lower Footwall Zone representing an additional 27,375 tonnes of contained copper, 403 ounces of gold and 53,827 ounces of silver representing an overall
indicated resource increase of 21%. The combined Footwall Resource at 1% copper cut-off now stands at 14.31 million tonnes.
Exploration of the Ming Mine continued as new drifts provided access to previously underexplored areas. The discovery of high grade visible gold on the 1700 level
during calendar Q3, 2011 was of particular significance and exploration will continue alongside pre-production development.
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
FINANCIAL RESULTS
During the year the group generated gross profit of $1,769,000 from its first sales of gold and toll processing agreements. During the quarter the Group generated a
gross profit of $1,319,000 from the sale of gold. Gold sales resulted from the Group’s Nugget Pond Crown Pillar and Tilt Cove East Mine satellite deposits. The
Nugget Pond Crown Pillar was completed and produced 978 ounces of gold at a cash cost of $411 per ounce resulting in a net profit of $1,031,897. An additional
74 ounces are anticipated following the further refining of slag materials. The Tilt Cove East Mine ore processing up to July 31 produced 421 ounces of gold at a
cash cost of $870 per ounce netting a profit of $282,602.
The net loss for the year was $53,000 compared with a loss of $2,426,000 for the year ended July 31, 2010. The net profit for the quarter ended July 31, 2011 was
$577,000 or $0.008 per share which compares to $193,000 for Q3/11 and a net loss of $676,000 for Q4/10.
Cash flows utilized for operating activities were $1,352,000 compare with $2,107,000 in the previous fiscal year. Cash flows generated from operating activities were
$573,000 in Q4/11 compared to cash utilized of $406,000 in Q3/11 and $1,328,000 in Q4/10. The increase in the cash generated is due to profits earned in Q4/11.
Cash resources (including short-term investments) as at July 31, 2011 were $10.2 million and as of October 14, 2011 had reduced to $4.0 million.
HEALTH AND SAFETY
The Group completed the quarter without any lost time accidents or medical aid injuries.
The Health and Safety of the Group’s employees continues to be a high priority.
There were no environmental incidents.
Page 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
OUTLOOK
Management continue to pursue the following objectives:
Completion of the construction and development at both the Nugget Pond Mill, Ming Mine and Port sites in order to generate revenue from the Ming Mine during
calendar Q4 2011.
Complete Off-take agreement for the sale of copper concentrates in calendar Q4 2011 and ship first concentrates in Calendar Q1 2012.
Finalize pre-production development in the Ming Mine to expose the 1806 and 1807 ore zones to permit both up-dip and down-dip exploration of these zones.
Continue to evaluate the development of the Footwall Zones.
Become a strategic long term producer on the Baie Verte Peninsula and throughout Atlantic Canada by selectively pursuing growth opportunities including joint
ventures and acquisitions.
See ‘Forward Looking Information’ for a description of the factors that may cause actual results to differ from forecast.
CAPITAL PROJECTS UPDATE
Effective September 1, 2010, following completion of the Ming Mine feasibility study by Sandstorm, the Ming Mine project moved from pure Exploration & Evaluation into
the Mine Development stage. Subsequently, all expenditures incurred in bringing the Ming Mine through the construction and development stage are now being
capitalised to Mineral Properties.
During the year the Group incurred expenditures of $17,566,000 on Mineral Property, $20,320,000 on property, plant and equipment and $478,000 on exploration and
evaluation of the Ming Mine.
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
CAPITAL PROJECTS UPDATE (continued)
Mineral Property (capital development of Ming Mine)
Total
$,000
Q4/11
$,000
Q3/11
$,000
Q2/11
$,000
Q1/11
$,000
Labour costs
Contractors’ and consultancy expenses
General materials and other costs
Surface development
Underground development
Sub-total
Finance costs
Depreciation
Reclamation and closure provision
Total
4,620
2,161
897
581
3,848
12,107
1,640
2,172
1,647
17,566
1,842
187
248
185
1,310
3,772
917
907
224
5,820
1,612
122
216
231
1,104
3,285
383
692
561
4,921
923
1,085
289
117
1,141
3,555
221
386
51
4,213
243
767
144
48
293
1,495
119
187
811
2,612
Mineral property costs increased in Q4/11 compared to Q3/11 in line with the aim of bringing the mine into production during the calendar Q4 2011. Q4 expenditure
included a full quarter with a further increased workforce, increased finance costs representing the first quarter with the full Gold Loan liability, increased depreciation
costs resulted from bringing on the office/mine dry building and other assets offset by a reduction in reclamation and closure provision expenses.
Mineral Property (capital development of Ming Mine by area,
before finance cost, depreciation and reclamation))
Surface
1806 ore zone
1807 ore zone
Ramp improvements
Shaft manway rehab
Administrative
Port site
Total
Q4/11
$,000
802
388
506
1597
76
390
12
3,772
Q3/11
$,000
705
642
108
1,361
191
278
-
3,285
Q2/11
$,000
265
8
827
667
1,400
388
-
3,555
Q1/11
$,000
127
-
-
210
946
212
-
1,495
Total
$,000
1,899
1,038
1,441
3,835
2,613
1,269
12
12,107
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
CAPITAL PROJECTS UPDATE (continued)
Surface related costs increased in Q4/11 compared to Q3/11 mainly due to the completion of the new office/dry facility and other site works at the Ming Mine. Increased
costs were also experienced on the 1807 ore zone and ramp improvements in Q4/11 compared to Q3/11. Underground operations continued to focus on ramp
improvements which subsequently allowed further development of the 1807 ore zone as a consequence 1806 ore zone expenditures decreased in Q4/11 compared to
Q3/11. The Shaft manway rehabilitation was substantially completed during Q3/11 with final completion in Q4/11.
Property, plant and equipment
Mill purchase and construction
Plant and equipment
Buildings
Other assets
Total
Total
$,000
10,110
8,127
1,845
238
20,320
Q4/11
$,000
2,139
521
617
104
3,381
Q3/11
$,000
2,996
3,650
552
48
7,246
Q2/11
$,000
4,536
3,790
674
17
9,017
Q1/11
$,000
439
166
2
69
676
Property, plant and equipment reduced during Q4/11 compared to Q3/11 reflecting the significant increase in underground equipment purchased during Q3/11. Mill
purchase and construction decreased during Q4/11 due to phasing of contractor payments.
Exploration and evaluation costs (Ming Mine)
Total
$,000
Q4/11
$,000
Q3/11
$,000
Q2/11
$,000
Q1/11
$,000
Labour costs
Consultancy expenses
Operating costs
Finance costs
Depreciation
Total
142
142
48
50
96
478
-
-
(31)
-
-
(31)
15
16
1
-
-
32
1
14
1
-
-
16
126
112
77
50
96
461
Effective September 1, 2010, following completion of the Ming Mine feasibility study, the Ming Mine project moved from pure Exploration & Evaluation into the Mine
Development stage. Exploration expenditures incurred related to updating and validating of the Footwall Zone resources.
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
FINANCIAL REVIEW
Fiscal
2011
Results
($000’s)
Commentary
3,523
Revenue of $2.1 million was generated from the sale of gold from the Group’s deposits and $1.4 million from toll
processing agreements during the year.
1,754
Operating Costs relate to mill processing expenditures incurred under the toll processing agreements and the
processing, mining and general and administrative costs associated with Groups satellite deposits.
Comparatives
Fiscal
2010
($000’s)
B/ (W)*
-
-
n/a%
n/a%
2,750
General and administrative expenses were higher than the previous year by $578,000. Employment costs
increased $367,000 as a result of key management promotions and the recruitment of additional administrative staff,
travel and investor relation costs increased $89,000 and general office expenses increased $122,000.
2,172
(27)%
897
Foreign exchange gains arising on the Gold Loan increased in the year as a result of the strengthening of the
Canadian dollar against the US dollar during the year.
(147)
710%
79
Exploration costs decreased compared to the previous year as the Group’s main focus was on the construction and
development of the Ming Mine.
91
13%
17,566
Mineral Properties. The group incurred costs of $17.6 million in the year including labour costs of $4.7 million,
contractor and material costs of $3.6 million, underground development costs of $3.9 million depreciation of $2.2
million, finance costs of $1.6 million and reclamation and closure costs of $1.6 million.
-
n/a%
20,320
Capital spending on property, plant and equipment increased during the year compared to the previous year
reflecting the increased spending on equipment for the refurbishment of the mill, acquisition of underground mining
equipment and office/dry building and other purchases related to production preparations at the Ming Mine.
Underground mining equipment additions include $6.7 million financed through capital lease financing.
5,329
(281)%
478
Capital spending on exploration and evaluation costs reduced during the year following the start of mine
development on September 1, 2010.
5,575
91%
*B / (W) = Better / (Worse)
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the Group for the last eight fiscal quarters are set out in the following table.
Quarterly Results
(All amounts in 000s of Canadian Dollars,
except Loss per share figures)
4th
Quarter
3rd
Quarter
2nd
Quarter
1st
Quarter
Fiscal 2011
Revenue
Net Income/ (loss)
Earnings/(loss) per Share (Basic & Diluted)
Fiscal 2010
Revenue
Net Income/ (loss)
2,089
577
0.008
-
(676)
183
193
266
(555)
985
(268)
0.002
(0.006)
(0.003)
-
(644)
-
(591)
-
(515)
Loss per Share (Basic & Diluted)
(0.008)
(0.008)
(0.007)
(0.006)
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. Losses in the first quarter of 2011 reduced as a result of revenue from
toll processing and rose again in the second quarter of 2011 following the completion of a toll processing agreement in November 2010. The profit arising in Q3 2011
included an exchange gain of $0.8 million arising on the retranslation of the Gold Loan following the weakening of the US Dollar against the Canadian Dollar during the
quarter. The profit arising in Q4 2011 arose from the profits realised on the sale of gold from the Group’s owned deposits.
Page 11
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
To date the Group has relied on private placement financings of equity securities, a Gold Loan facility and capital leases to finance its development requirements.
Subsequent to the year end, the Group has secured additional short term funding of CAD$10 million to provide additional working capital to assist in meeting the
objective of bringing the Ming Mine into production in calendar Q4, 2011. The last quarter of Fiscal 2011 was profitable and generated cash flows from operations of
$0.6 million. Positive cash flows are expected to continue after production at the Ming Mine commences; however, there is no guarantee that expenses will not exceed
income particularly during the start-up phase. If this is the case, the liquidity risk could be material, even with current cash resources.
Sales of gold and copper are likely to be made in US dollars and the majority of the Group’s expenses are incurred in Canadian dollars. The Group’s principal
exchange rate risk relates to movements between the Canadian and US dollar. The Gold Loan is repayable in US dollars from future sales of gold mitigating the
exchange risk. Management will closely monitor exchange fluctuation and consider the use of forward exchange contracts as required.
Interest rates on the capital leases and short term borrowings are fixed eliminating interest rate risk.
The Group’s holding of cash balances is kept under constant review. 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. Cash and short-term investment resources (cash, cash
equivalents and short-term investments) were as follows:
Resource
Cash $CDN
Cash GBP
Short-term Investments $CDN
Short-term Investments GBP
Total
July 31, 2011
$’000
July 31, 2010
$’000
9,431
47
25
667
10,170
1,098
67
6,351
484
8,000
Interest of 0.95% was received on Canadian dollar deposits during the year.
Net proceeds from financing activities during the year amounted to $28.6 million from the placing of 27,777,778 Ordinary Shares raising $14.8 million after expenses
and Gold loan receipts of $14.3 million net of financing fees offset by finance lease repayments of $0.5 million.
Cash flows used in investing activities amounted to $25.1 million for the year. Investments included $2.0 million in bearer deposit notes, $10.7 million in mine
development, $10.1 million on the Nugget Pond Mill and $1.8 million on property, plant and equipment. The group is required to hold a Letter of Credit in favour of the
Page 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION (continued)
Government of Newfoundland and Labrador in respect of the reclamation and closure liability at the existing Nugget Pond Mill and Ming Mine. At year end the Group
holds bearer deposit notes totalling $3.38 million.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on 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. In line with the extended terms of the Gold Loan,
if by October 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if
there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a
CAD$10 million credit facility (see note 25) and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks
associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise
to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may
require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital
be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the
Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. 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.
At October 14, 2011 the Group has $4.0 million in cash and cash equivalents.
Financial Instruments
The Group’s financial instruments as at July 31, 2011 comprised of financial assets of cash and cash equivalents and trade and other receivables and financial liabilities
comprised of trade payables; other payables; accrued expenses and interest bearing loans and borrowings.
All of the Group’s financial liabilities are measured at amortised cost.
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 currency risk, liquidity risk, credit risk, interest rate risk and commodity price risk each of which is discussed in
note 22 of the financial statements for the year ended July 31, 2011. There were no derivative instruments outstanding at July 31, 2011.
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
COMMITMENTS AND LOANS
At July 31, 2011, capital commitments made to third parties included:
Capital Commitments
Property, Plant and Equipment
TOTAL
$000
2,506
2,506
These commitments together with the ongoing evaluation and development of the mine will be partially financed from existing cash reserves and from funds drawn down
under the Group’s credit facility agreement disclosed below in Subsequent Events
At July 31, 2011, interest bearing loans and borrowings comprised a Gold Loan of $19,903,000, finance lease commitments of $6,956,000 and a bank loan of $29,000.
The Group entered into new finance leases of $6.7 million during the year to finance underground mining equipment. The finance leases are secured on the underlying
assets. The Gold Loan is secured by a fixed and floating charge over the Ming Mine.
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
SUBSEQUENT EVENTS
On September 29, 2011 the Group agreed a Credit Facility of up to CAD$10 million with Sprott Resource Lending Partnership (“Sprott”) for use as additional funding for
the development of the Ming Mine. The facility is available in two instalments; the first instalment of $5 million must and will be drawn on or before October 29, 2011 and
the final instalment for the balance up to $10 million is available until August 31, 2012 subject to a subsequent site visit and review of the Group’s off-take agreement
and then current financial forecasts . Interest will be payable at a fixed rate of 9.25% per annum, is repayable by March 29, 2013 and secured by a fixed and floating
charge over the assets of the Group. In connection with the Credit Facility, a Structuring Fee of CAD$100,000 and a 3% Commitment Fee of CAD$300,000 were paid to
Sprott in cash. Pursuant to the terms of the Credit Facility, the Company issued CAD$300,000 of ordinary shares of 1p each in the capital of the Company to Sprott in
exchange for the repayment of the previously paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts drawn under the Credit Facility is to
be satisfied by the issue of ordinary shares by the Company.
Page 15
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 1 – LOCATION MAP
Page 16
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 2 ‐ SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
Financial Highlights
(All amounts in 000s of Canadian Dollars, except
shares and per share figures)
Year ended July 31,
2011
2010
2009
Gold sales (Ounces)
Average price (per ounce)
Revenue
Operating Expenses
Exploration Expenditure
Administrative expenses
Net Income (loss)
Cash Flow used in operating activities
Cash Flow used in investing activities
Cash Flow from (used in) financing activities
Net increase (decrease) in cash
Cash and cash equivalents at end of period
Total Assets
Total Liabilities
Working Capital
Weighted average number of shares outstanding
Loss per share
1,399
1,492
3,523
(1,754)
(79)
(2,750)
(53)
(1,352)
(25,092)
28,623
2,179
10,170
96,473
(34,495)
7,804
102,282
(0.001)
-
-
-
-
(91)
(2,172)
(2,426)
(2,107)
(9,705)
17,725
5,913
8,000
54,162
(7,338)
8,462
83,581
(0.029)
-
-
-
-
-
(2,076)
(2,048)
(1,670)
(6,419)
(124)
(8,213)
2,089
37,731
(1,554)
1,494
59,385
(0.034)
Page 17
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2011
Q4/11
Results
($000’s)
Commentary
Comparatives
Q3/11
B/ (W)*
Q4/10
B/ (W)
2,088
Revenue was generated through gold sales from the Group’s deposits. The Group’s final toll processing agreement
concluded in Q3/11
183
1,040%
770
Operating Costs relate to the processing, mining and general and administrative costs associated with Groups
satellite deposits.
175
(340)%
-
-
N/a
N/a
General and administrative expenses were higher than the previous quarter by $137,000. Employment costs
increased by $62,000 as a result of key management promotions and the recruitment of additional administrative staff,
promotional and travel costs increased by $24,000, establishment costs increased by $33,000 and general office
expenses increased by $18,000.
755
In comparison to Q4/10 administrative expenses increased by $241,000. Employment costs increased by $107,000,
legal and professional fees by $16,000, promotional and travel costs by $29,000, and general office expenses by
$89,000. The increased costs were as a result of increased activity as a result of the mine development.
618
(22)%
514
(47)%
(84)
Foreign exchange differences arising on the Gold Loan resulted in a loss in Q4/11 as a result of the weakening of the
Canadian dollar against the US dollar during the quarter.
836
(110)%
(145)
42%
5
Exploration costs decreased compared to the previous quarters as the Group’s main focus was on the construction
and development of the Ming Mine.
16
69%
13
62%
5,820
Mineral Properties. The group incurred costs of $5.8 million in the quarter including labour costs of $1.8 million,
contractor and material costs of $0.4 million, underground development costs of $1.6 million depreciation of $0.9
million, finance costs of $0.9 million and reclamation and closure costs of $0.2 million.
4,920
18%
-
N/a
Capital spending on property, plant and equipment reduced during the quarter compared to the previous quarter
reflecting the slowing of expenditure on plant and equipment as production from the Ming Mine approaches.
3,342
7,246
54%
5,305
37%
Expenditure in Q4/10 includes expenditure of $3.5 million on the acquisition of the Nugget Pond Mill.
*B / (W) = Better / (Worse)
Page 18
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 Group’s financial statements, providing some insight also to uncertainties that could impact the Group’s financial results.
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.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on 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. In line with the extended terms of the Gold Loan,
if by October 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if
there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a
CAD$10 million credit facility (see note 25) and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks
associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise
to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may
require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital
be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the
Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. 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.
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 of the financial statements for the year ended July 31, 2011.
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 20 of the
financial statements for the year ended July 31, 2011).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 mineral properties costs and the corresponding Gold Loan liability.
Page 19
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
The financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that
would be necessary were the going concern assumption inappropriate, and these adjustments could be material.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property and 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 and its opportunities economic model which includes
resource estimates and conversion of its inferred resources. Management’s estimates of these factors are subject to risk and uncertainties affecting the recoverability of
the Group’s mineral property and 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
mineral property and exploration and evaluation costs are impaired at the year end.
Closure Costs
The Group has an obligation to reclaim its properties after the minerals have been mined from the site, and has estimated the costs necessary to comply with existing
reclamation standards. These estimates are recorded as a liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves to be
inaccurate, the Group could be required to increase the provision for site closure and reclamation costs, which would increase the amount of future reclamation
expense, resulting in a reduction in the Group’s earnings and net assets.
Page 20
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
CHANGES IN ACCOUNTING POLICIES
In the current quarter, new and revised standards which have been adopted have not affected the disclosures presented in these financial statements.
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 July 31, 2011:
IFRS
/Amendment
Various
Title
Nature of change to accounting
policy
Annual Improvements to IFRSs No change to accounting policy,
IAS 24 revised Related Party Disclosures
therefore, no impact
No change to accounting policy,
therefore, no impact
No change to accounting policy,
therefore, no impact
IFRS 9
IFRS 10
Financial instruments:
Classification and Measurement
Consolidated Financial Statements No change to accounting policy,
IFRS 11
Joint Arrangements
IFRS 12
IFRS 13
Disclosure of Interests in Other
Entities
Fair Value Measurement
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
Application date
of standard
Various
Application
date for Group
August 1, 2011
January1, 2011
August 1, 2011
January 1, 2013
August 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
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.
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the year ended July 31, 2011.
Page 21
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 5 – OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
Security
Shares issued or
Issuable
Common Shares
123,980,005
Options
4,287,000*
*if all options have fully vested
Weighted Average Exercise Price
--
$0.48
Mr. Peter Mercer assumed the role of Corporate Secretary on January 1, 2011. For future assistance Mr. Mercer can be reached directly at +1-709-800-1929 or
pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains “forward-looking information” which may include, but is not limited to, statements with respect to the Group’s objectives and strategy, future
financial or operating performance of the Group 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 and development, environmental risks, title disputes or claims and
limitations of insurance coverage. All statements, other than statements of historical fact, are forward-looking statements. 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 are necessarily based on a number of estimates and assumptions that, while considered reasonably by the
Company, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Group 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;
availability and cost of credit; fluctuations in Canadian dollar interest rates; fluctuations in the relative value of United States dollars, Canadian dollars and British
Pounds; changes in planned parameters as plans continue to be refined; fluctuations in the market and forward prices of copper, gold, silver or certain other
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 the Report of Directors. 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. Unless stated otherwise, forward-looking statements contained herein are made as of the date of this MD&A. Other than as
required by applicable securities law, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future
Page 22
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2011
APPENDIX 5 – OTHER MATTERS (continued)
Forward Looking Information(continued)
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. All of the forward-looking statements made in this MD&A are qualified by these cautionary 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 23
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2011
The Directors present their report with the audited financial statements of the Group for the year ended July 31,
2011.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine located in
Baie Verte, Newfoundland and Labrador, 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 becoming a copper and gold producer with the commissioning work on the
floatation circuit at the Nugget Pond Mill scheduled for calendar Q4 2011 and continue its growth through the
selective pursuit of opportunities within the region and Atlantic Canada as a whole including joint ventures and
acquisitions.
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2011.
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 July 31, 2011 was 39 days (2010: 20 days). The Company’s
average creditor payment period at July 31, 2011 was 33 days (2010: 9 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $2,988 (2010: $2,355) to various charities in the Baie
Verte area.
Page 24
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2011 (CONTINUED)
SUBSTANTIAL SHARE INTERESTS
At October 14, 2011 the parent Company was aware of the following substantial share interests:
Number of Ordinary Shares
% of Share Capital
CDS & Co.
Legal and General Investment Management
Whitmill Trust Co Limited
The Bank of New York (Nominees) Limited
Henderson Global Investors
Vestra Wealth LLP
SVM Asset Management
Hargreaves Lansdown
Waterhouse Securities
Barclays Stockbrokers Limited
Sector Investment Managers Limited
FINANCIAL INSTRUMENTS
14,584,853
10,500,000
8,838,000
8,340,542
6,474,000
5,827,698
4,360,000
4,136,169
4,134,690
4,117,923
4,100,000
11.76%
8.47%
7.13%
6.73%
5.22%
4.70%
3.52%
3.34%
3.33%
3.32%
3.31%
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, liquidity risk, credit risk, interest rate risk and commodity price risk, each of which is
discussed in note 22 to the Financial Statements. There were no derivative instruments outstanding at July 31,
2011.
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 25
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2011 (CONTINUED)
RISKS AND UNCERTAINTIES (CONTINUED)
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,
expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns,
speculative activities and increased global 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
Group’s economic evaluations and on the Group’s results of operations and financial condition.
Additional Requirement for Capital
The Group may 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 AUDITOR
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 Auditor for the purposes of their audit and to establish that the Auditor is
aware of that information. The Directors are not aware of any relevant audit information of which the Auditor is
unaware.
AUDITOR
The auditor, PKF (UK) LLP, will be proposed for re-appointment in accordance with Section 489 of the
Companies Act 2006.
ON BEHALF OF THE BOARD:
P Mercer
Company Secretary
October 14, 2011
Page 26
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 27
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2011
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 UK Corporate Governance Code issued by the Financial Reporting
Council in May 2010 (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 eight 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 which 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, J A Baker (resigned October 13, 2011) and J S Thomson. The committee receives reports
from management and from the Group's auditor. 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 which 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 (resigned October 13,
2011) 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 may
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 28
INDEPENDENT AUDITOR’S REPORT 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 July 31, 2011
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 auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the 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 and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
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. In addition, we read all the financial and non-financial information in the annual report to
identify material inconsistencies with the audited financial statements. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.
Opinion 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 July 31, 2011 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 issued by the IASB
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 29
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
RAMBLER METALS AND MINING PLC (CONTINUED)
Emphasis of matter —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. As detailed within
this note, management are working towards meeting the production deadline of October 31, 2011, as stipulated
within the Gold Loan agreement. As explained in the note, there is a risk that the Ming Mine may not
commence production within the timescales envisaged and this would necessitate an extension of the Gold
Loan and may require further funding beyond that already secured for working capital purposes. This would
indicate 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 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.
gir(wi)e-LP
Jason Homewood (Senior statutory auditor) (cid:9)
for and on behalf of PKF (UK) LLP, Statutory auditor (cid:9)
London, UK
October 14, 2011
Page 30
RAMBLER METALS AND MINING PLC
INDEPENDENT AUDITOR'S 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 July 31, 2011 in accordance with International Standards of Auditing
(UK and Ireland). There are no material differences in the form or content of our audit report, as compared to an
auditor's report prepared in accordance with Canadian GAAS and if this report were prepared in accordance
with Canadian GAAS it would contain an unmodified audit opinion.
/q(r(wOul
PKF (UK) LLP
London, UK
October 14,2011
Page 31
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Revenue
Cost of sales
Gross profit
Administrative expenses
Exploration expenses
Operating loss
Exchange gain/(loss)
Bank interest receivable
Finance costs
Net financing income/(expense)
Loss before tax
Income tax credit
Note
2011
$’000
2010
$’000
3
4
3,523
(1,754)
1,769
(2,750)
(79)
(1,060)
897
90
(9)
978
-
-
-
(2,172)
(91)
(2,263)
(147)
19
(65)
(193)
(82)
(2,456)
6
29
30
Loss for the year attributable to owners of the parent
(53)
(2,426)
Loss per share
Note
2011
$
2010
$
Basic and diluted loss per share
18
(0.001)
(0.029)
Page 32
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Loss for the year
Exchange differences on translation of foreign operations (net of tax)
Other comprehensive loss for the year
Total comprehensive income/(loss) for the year and attributable to the owners of the
parent
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2011
Loss for the year
Exchange differences on translation into presentation currency
Other comprehensive loss for the year
Total comprehensive loss for the year
2011
$’000
2010
$’000
(53)
(2,426)
110
110
(25)
(25)
57
(2,451)
2011
$’000
2010
$’000
(941)
(716)
(1,144)
(1,144)
(3,427)
(3,427)
(2,085)
(4,143)
Page 33
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED BALANCE SHEET
As at July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Assets
Intangible assets
Mineral properties
Property, plant and equipment
Total non-current assets
Inventory
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:
Director
Approved and authorised for issue by the Board on October 14, 2011
Page 34
Note
2011
$’000
2010
$’000
8
9
10
13
14
15
16
17
20
21
20
19
16,627
38,468
25,332
80,427
934
1,565
10,170
3,377
16,046
96,473
2,299
65,934
214
135
(6,604)
61,978
24,606
1,647
26,253
2,282
5,960
8,242
34,495
96,473
37,051
-
7,461
44,512
-
285
8,000
1,365
9,650
54,162
1,863
51,532
214
25
(6,811)
46,823
5,591
559
6,150
388
801
1,189
7,339
54,162
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
Note
11
14
15
17
19
2011
$’000
2010
$’000
-
52,624
52,624
47
714
761
53,385
2,299
65,934
(10,220)
(4,754)
53,259
126
126
126
53,385
1
40,000
40,001
68
553
621
40,622
1,863
51,532
(9,076)
(3,845)
40,474
148
148
148
40,622
RAMBLER METALS AND MINING PLC
COMPANY BALANCE SHEET
As at July 31, 2011
(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:
Director
Approved and authorised for issue by the Board on October 14, 2011
Page 35
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Group
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
Balance at 1 August 2010
Comprehensive loss
Loss for the year
Foreign exchange translation differences
Total other comprehensive loss
Total comprehensive income for the year
Transactions with owners
Issue of share capital
Share issue expenses
Share-based payments
Transactions with owners
Balance at July 31, 2011
Share
capital
$’000
Share
premium
$’000
Merger
Reserve
$’000
Translation
reserve
$’000
Accumulated
Losses
$’000
Total
$’000
1,256
39,296
214
50
(4,639)
36,177
-
-
-
-
-
-
-
-
214
214
-
-
-
-
-
-
-
-
214
-
(25)
(25)
(25)
-
-
-
-
25
25
-
110
110
110
-
-
-
-
135
(2,426)
-
-
(2,426)
-
-
254
254
(6,811)
(2,426)
(25)
(25)
(2,451)
13,735
(892)
254
13,908
46,823
(6,811)
46,823
(53)
-
-
(53)
-
-
260
260
(6,604)
(53)
110
110
57
15,688
(850)
260
15,098
61,978
-
-
-
-
607
-
-
607
1,863
-
-
-
-
13,128
(892)
-
12,236
51,532
1,863
51,532
-
-
-
-
436
-
-
436
2,299
-
-
-
-
15,252
(850)
-
14,402
65,934
Page 36
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
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
Balance at 1 August 2010
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 July 31, 2011
Share
capital
$’000
Share
premium
$’000
Translation
reserve
$’000
Accumulated
losses
$’000
Total
$’000
1,256
39,296
(5,649)
(3,162)
31,741
-
-
-
-
607
-
-
1,863
-
-
-
-
13,128
(892)
-
51,532
-
(3,427)
(3,427)
(3,427)
-
-
-
(9,076)
(716)
-
(716)
-
-
33
(3,845)
(716)
(3,427)
(3,427)
(4,143)
13,735
(892)
33
40,474
1,863
51,532
(9,076)
(3,845)
40,474
-
-
-
-
436
-
-
2,299
-
-
-
-
15,252
(850)
-
65,934
-
(1,144)
(1,144)
(1,144)
-
-
-
(10,220)
(941)
-
(941)
-
-
32
(4,754)
(941)
(1,144)
(1,144)
(2,085)
15,688
(850)
32
53,259
Page 37
RAMBLER METALS AND MINING PLC
STATEMENTS OF CASH FLOWS
For the Year Ended July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating loss
Depreciation
Share based payments
Increase in inventory
(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 mineral properties
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 exercise of share options
Proceeds from Gold Loan (note 20)
Capital element of finance lease payments
Net cash from financing activities
Net increase 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
Group
Company
2011
2011
$’000
$’000
(1,060)
141
248
(934)
(1,280)
1,513
(1,372)
(9)
29
(1,352)
90
-
(2,012)
(604)
(10,710)
(11,856)
(25,092)
15,688
(850)
12
14,268
(495)
28,623
2,179
8,000
(9)
10,170
(941)
-
21
-
20
(21)
(921)
-
-
(921)
1
(13,879)
-
-
-
(13,878)
15,688
(850)
12
-
-
14,850
51
553
109
713
Group
2010
$’000
(2,410)
151
247
-
(146)
85
(2,073)
(65)
31
(2,107)
19
-
(1,365)
(3,704)
Company
2010
$’000
(717)
1
26
-
(29)
(27)
(746)
-
-
(746)
1
(11,567)
-
-
(4,655)
(9,705)
(1)
(11,567)
13,735
(892)
7
5,139
(263)
17,725
5,913
2,089
(2)
8,000
13,735
(892)
7
-
-
12,850
537
41
(25)
553
Page 38
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 of the Ming Copper-Gold Mine (“Ming
Mine”) located in Baie Verte, Newfoundland and Labrador, Canada.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is
dependent on 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. In line with the extended terms of
the Gold Loan, if by October 31, 2011 the Ming Mine has not reached production, then amounts advanced
will become repayable on demand, however management consider that if there were delays in the
commencement of production an extension of the deadline could be secured. To ensure sufficient working
capital management has secured a CAD$10 million credit facility (see note 25) and is satisfied that the
Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated
with the commencement of a new mining and processing operation such that the plant may not be
commissioned within the timescales envisaged, giving rise to the possibility that additional working capital
may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged
which may require other sources of finance to be considered in order to satisfy short term working capital
requirements as production commences. Should additional working capital be required, the Directors
consider that further sources of finance could be secured in the required timescale. On this basis, the
Directors have concluded that the Group is a going concern. However there is no certainty that these funds
will be forthcoming or that the extension to the Gold Loan will be granted. 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.
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 July 31, 2011 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 July 31, 2011 the closing rate of exchange of Canadian
dollars to 1 GB pound was 1.57 (31 July 2010: 1.61) and the average rate of exchange of Canadian dollars
to 1 GB pound for the year was 1.59 (2010: 1.70).
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 issued 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.
New and revised standards which have been adopted during the year have not affected the disclosures
presented in these financial statements.
The Group has not adopted any standards or interpretations in advance of the required implementation
dates. It is not expected that adoption of standards or interpretations which have been issued by the
International Accounting Standards Board but have not been adopted will have a material impact on the
financial statements.
Page 39
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(b)
Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the nearest dollar.
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 26.
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.
(c)
Basis of consolidation
(i) Subsidiaries
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.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
(d)
Foreign currency
(i) Foreign currency transactions
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 40
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(d)
Foreign currency (continued)
(ii) Translation into presentation currency
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.
(iii) Net investment in foreign operations
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.
(e)
Property, plant and equipment
(i) Owned assets
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.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are
classified as finance leases.
(iii) Subsequent costs
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.
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation
costs or Mineral Properties 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 41
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(f)
Mineral Properties
Upon transfer of ‘Exploration and evaluation costs’ into ‘Mineral Properties’, all subsequent expenditure on
the construction, installation or completion of infrastructure facilities is capitalised within ‘Mineral
Properties’. Development expenditure is net of proceeds from all but the incidental sale of ore extracted
during the development phase.
Mineral properties are amortised on a depletion percentage basis.
(g)
Intangible assets
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation. 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 Mineral properties. 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
(h)
Investments are stated at their cost less impairment losses (see accounting policy l).
Inventory
(i)
Stockpiled ore is recorded at the lower of production cost and net realisable value. Production costs include
all direct costs plus an allocation of fixed costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value. Cost is determined on an
average cost basis.
Trade and other receivables
(j)
Trade and other receivables are stated at their cost less impairment losses (see accounting policy l).
Page 42
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
Cash and cash equivalents
(k)
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
(l)
The carrying amounts of the Group’s assets (except deferred exploration and evaluation costs (see
accounting policy (g)(ii)) and deferred tax assets (see accounting policy 2(r)), 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(l)(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.
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.
(ii) Reversals of impairment
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.
Page 43
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(m)
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.
Trade and other payables
(n)
Trade and other payables are stated at amortised cost.
Revenue recognition
(o)
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and
services in the ordinary course of the Group’s activities. Revenue is shown net of sales tax.
The group recognises revenue when the amount of the revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and when specific criteria have been met as described
below:
Sale of gold
Revenue associated with the sale of gold doré bars is recognised in accordance with contract terms
negotiated with the refiner and when significant risks and rewards of ownership of the asset sold are
transferred to the refiner, which is when the minimum determinable or agreed amount of gold has been
determined and title has passed to the refiner.
Toll processing
The Group processes ore at its milling facility. Sales of this service are recognised as the ore is processed.
The customer is invoiced based on tonnes processed each month at the price specified in the toll
processing agreement.
(p)
Expenses
(i) Operating lease payments
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.
Page 44
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
(p)
Expenses (continued)
(ii) Finance lease payments
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.
(iii) Borrowing costs
Borrowing costs are recognised in the income statement where they do not meet the criteria for
capitalisation. Borrowing costs directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised.
Equity settled share based payments
(q)
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.
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.
Income tax
(r)
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.
Page 45
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. Operating segments
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.
Information about geographical areas
2011
2010
UK
$’000
Canada
Consolidated
UK
Canada
Consolidated
$’000
$’000
$’000
$’000
$’000
Segment revenue
-
3,523
3,523
-
-
-
Segment non-current assets
-
80,427
80,427
1
44,511
44,512
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
Customer A
Customer B
Others
4. Operating loss
The operating loss is after charging/(crediting):
Depreciation – owned assets
Directors’ emoluments (see note 24)
Auditor’s remuneration:
Audit of these financial statements
Fees payable to the auditor for other services:
Other services related to tax
Other services
Operating lease rentals
2011
$’000
2010
$’000
2,087
1,063
373
3,523
-
-
-
2011
$’000
2010
$’000
141
332
57
-
6
-
151
348
44
17
6
44
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 $96,000 (2010: $1,746,000) was
capitalised within exploration and evaluation assets and $2,172,000 (2010: $nil) within mineral properties.
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses
Salary costs
Wages and salaries
Share based payments
Compulsory social security contributions
Group
2011
$’000
Group
2010
$,000
6,083
248
997
7,328
2,096
247
134
2,477
Salary costs of $127,000 (2010: $1,346,000) were capitalised as exploration and evaluation costs, $4,621,000
as mineral properties and $541,000 as assets under construction costs during the year.
Number of employees
The average number of employees during the year was as follows:
Directors
Administration
Development
Exploration and evaluation
Group
2011
Group
2010
9
9
68
-
86
9
6
-
19
34
During the year the Group granted share options to key personnel to purchase shares in the entity. The options
are exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cancelled during the year
Outstanding at the end of the year
Exercisable at end of year
Weighted
average
Weighted
average
exercise
Number
exercise
Number
price
2011
$
0.467
0.506
0.186
0.379
0.484
of options
2011
‘000
price
2010
$
of options
2010
‘000
3,952
0.416
647
(52)
0.500
-
(380)
0.890
4,167
0.467
3,077
3,313
704
-
(65)
3,952
2,170
The options outstanding at July 31, 2011 have an exercise price in the range of $0.18 to $1.10 and a weighted
average remaining contractual life of 7 years (2010: 8 years).
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses (continued)
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)
2011
$’000
2010
$’000
168
208
0.490
0.490
0.467
0.467
70.7%
5
0
2.35%
67.2%
5
0
3.98%
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 is no performance or market conditions associated with the share option grants.
The share-based payment expense relates to the following grants:
Share options granted in 2008
Share options granted in 2009
Share options granted in 2010
Share options granted in 2011
Total expense recognised as employee costs
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
Page 48
2011
$’000
2010
$’000
21
64
64
99
248
49
78
120
-
247
2011
$,000
2010
$,000
-
-
1,737
(1,737)
(29)
(29)
-
-
438
(438)
(30)
(30)
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
6.
Income tax credit (continued)
Reconciliation of effective tax rate
Loss before tax
Income tax using the UK corporation tax rate of 27.33% (2010: 28%)
Effect of tax rates in foreign jurisdictions (rates increased)
Non-deductible expenses
Other timing differences
Capital allowances in excess of depreciation
Effect of tax losses carried forward
7. Loss of parent company
2011
$’000
2010
$’000
(82)
(2,456)
(22)
14
(183)
(38)
(1,103)
1,303
(29)
(688)
(17)
91
-
(320)
904
(30)
As permitted by section 408 of the Companies Act 2006, the income statement of the parent company is not
presented as part of these financial statements. The parent company’s loss for the financial year was $941,000
(2010: $716,000).
8.
Intangible assets - group
Exploration
and
evaluation
Costs
$’000
31,476
5,575
37,051
37,051
478
(20,902)
16,627
31,476
37,051
37,051
16,627
Cost
Balance at 1 August 2009
Additions
Balance at 31 July 2010
Balance at 1 August 2010
Additions
Transfer to mineral properties
Balance at July 31, 2011
Carrying amounts
At 1 August 2009
At 31 July 2010
At 1 August 2010
At July 31, 2011
Page 49
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
8.
Intangible assets – group (continued)
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 business plan which includes
resource estimates, 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 ay the year end.
9. Mineral properties - group
Cost
Balance at 1 August 2010
Transfer from exploration and evaluation costs
Additions
Balance at July 31, 2011
Carrying amounts
At 1 August 2010
At July 31, 2011
Mineral
property
$’000
-
20,902
17,566
38,468
-
38,468
Effective September 1, 2010 following acceptance of the Ming Mine feasibility study by Sandstorm Gold Ltd.
(‘Sandstorm’) (see note 20), the Ming Mine project moved from pure Exploration & Evaluation into the Mine
Development stage. As a consequence, evaluation and exploration costs of $20.9 million relating to the Massive
Sulfide Ore Zones of the Ming Mine were transferred to Mineral Properties.
The directors have assessed whether there are any indicators of impairment in respect of mineral property 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 mineral property costs are impaired at the year end.
Page 50
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
10. Property, plant and equipment - group
Land and
Assets under
Motor vehicles
Plant and
fittings and
Computer
buildings
construction
equipment
equipment
equipment
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
Fixtures,
Cost
Balance at 1 August 2009
Additions
Effect of movements in foreign
exchange
Balance at 31 July 2010
Balance at 1 August 2010
Additions
Disposals
Balance at July 31, 2011
Depreciation and impairment losses
Balance at 1 August 2009
Depreciation charge for the year
Effect of movements in foreign
exchange
Balance at 31 July 2010
Balance at 1 August 2010
Depreciation charge for the year
Eliminated on disposals
Balance at July 31, 2011
Carrying amounts
At 1 August 2009
At 31 July 2010
At 1 August 2010
At July 31, 2011
Leased plant and machinery
1,025
71
-
1,096
1,096
1,845
-
2,941
524
251
-
775
775
151
-
926
501
321
321
2,015
8
5,192
-
5,200
5,200
10,110
-
15,310
-
-
-
-
-
-
-
-
8
5,200
5,200
15,310
118
-
-
118
118
74
(39)
153
18
33
-
51
51
40
(20)
71
100
67
67
82
6,019
19
-
6,038
6,038
8,127
-
14,165
2,926
1,456
-
4,382
4,382
2,070
-
6,452
3,093
1,656
1,656
7,713
54
2
-
56
56
34
-
90
31
13
-
44
44
13
-
57
22
12
12
33
496
45
(1)
540
540
130
-
670
192
144
(1)
335
335
156
-
491
305
205
205
179
7,720
5,329
(1)
13,048
13,048
20,320
(39)
33,329
3,691
1,897
(1)
5,587
5,587
2,430
(20)
7,997
4,029
7,461
7,461
25,332
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 July 31, 2011, the net
carrying amount of leased plant and machinery was $6,032,000 (2010: $127,000). The leased plant and
machinery secures lease obligations (see note 20).
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
11. Investments - company
Cost
Balance at 1 August 2009
Advances (net)
Effect of movements in foreign exchange
Balance at 31 July 2010
Balance at 1 August 2010
Advances (net)
Effect of movements in foreign exchange
Balance at July 31, 2011
Investment in
subsidiary
$’000
Loans
$’000
Total
$’000
429
-
(42)
387
387
-
(11)
376
31,406
11,567
(3,360)
39,613
39,613
13,879
(1,244)
52,248
31,835
11,567
(3,402)
40,000
40,000
13,879
(1,255)
52,624
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
and development
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.
12. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Mineral property
Intangible assets
Tax value of loss carry-forwards recognised
Net tax (assets) / liabilities
Assets
Liabilities
Net
Balance
Balance
Balance
Balance
Balance
Balance
July 31, 2011 July 31, 2010 July 31, 2011 July 31, 2010 July 31, 2011 July 31, 2010
$’000
$’000
$’000
$’000
$’000
$’000
-
-
-
(3,209)
(3,209)
(273)
-
-
(1,472)
(1,745)
97
1,556
1,556
-
3,209
-
-
1,745
-
1,745
97
1,556
1,556
(3.209)
-
(273)
-
1,745
(1,472)
-
Page 52
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
12. Deferred tax assets and liabilities (continued)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
UK tax losses
Canadian tax losses
Other Canadian tax credits
2011
$’000
2010
$’000
831
49
3,768
4,648
740
708
2,528
3,976
The Canadian tax losses and other Canadian tax credits expire if not realized within 20 years based on 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.
Movement in recognised deferred tax assets and liabilities
Property, plant and equipment
Intangible assets
Tax value of loss carry-forwards
Property, plant and equipment
Mineral properties
Intangible assets
Tax value of loss carry-forwards
13. Inventory
Metals in process
Operating supplies
Recogn-
Balance
ised in
Balance
Aug 1, 2009
$’000
income
July 31, 2010
$’000
$’000
(79)
1,247
(1,168)
-
(194)
498
(304)
-
(273)
1,745
(1,472)
-
Recogn-
Balance
ised in
Balance
Aug 1, 2010
$’000
income
Jul 31, 2011
$’000
$’000
(273)
-
1,745
(1,472)
370
1,556
(189)
(1,737)
-
-
97
1,556
1,556
(3,209)
-
Group
2011
Group Company Company
2010
2011
2010
$’000
$’000
$’000
$’000
540
394
934
-
-
-
-
-
-
-
-
-
Page 53
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
14. Trade and other receivables
Trade receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
15. Cash and cash equivalents
Short term deposits
Bank balances
Cash and cash equivalents in the statement of cash flows
16. Restricted cash
Bearer deposit notes
Group
2011
Group Company Company
2010
2011
2010
$’000
$’000
$’000
$’000
653
37
616
259
1,565
-
22
57
206
285
-
4
14
29
47
-
1
10
57
68
Group
2011
Group
Company Company
2010
2011
2010
$’000
$’000
$’000
$’000
692
9,478
10,170
6,861
1,139
8,000
667
47
714
484
69
553
Group
2011
Group
Company Company
2010
2011
2010
$’000
$’000
$’000
$’000
3,377
1,365
-
-
The Group is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in
respect of the reclamation and closure liability associated with the Ming Mine. Throughout the year additional
Letters of Credit, beyond the $1,365,000 placed in fiscal 2010, were secured with the Government of
Newfoundland and Labrador prior to the commencement of various stages of the project construction. Included
in the additions during the year is a $121,000 Letter of Credit for the reclamation and closure liability associated
with the Group’s Nugget Pond Crown Pillar satellite deposit. The bearer deposit notes mature on differing dates
throughout fiscal 2012 and have a nominal value of $3,424,000 giving an effective yield of 1.41%.
17. Capital and reserves
Share capital and share premium – group and company
In issue at 1 August 2009
Issued for cash
In issue at 31 July 2010
In issue at 1 August 2010
Issued for cash
Issued on exercise of options
In issue at July 31, 2011
Page 54
Number ‘000
59,385
36,100
95,485
95,485
27,778
52
123,315
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
17. Capital and reserves (continued)
At July 31, 2011, 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 July 31, 2011 are as follows:
On 29 November 2010 the company received monies to subscribe for 30,000 shares for $0.19 each raising a
total of $5,700 following the exercise of options.
On 3 May 2011 the company received monies to subscribe for 27,777,778 shares for $0.564 each raising a total
of $14,829,199 net of expenses.
On June 7, 2011 the company received monies to subscribe for 22,000 shares for $0.18 each raising a total of
$3,960 following the exercise of options.
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.
Capital management
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
until such a time as the Group becomes self-financing from the commercial production of mineral resources.
The Group’s capital was as follows:
Cash and cash equivalents
Finance leases
Bank loan
Gold loan
Net (debt)/cash
Equity
Total capital
Page 55
2011
$’000
10,170
(6,956)
(29)
(19,903)
(16,718)
(61,978)
2010
$’000
8,000
(797)
(32)
(5,150)
2,021
(46,823)
(78,696)
(44,802)
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
17. Capital and reserves (continued)
Details of employee share options outstanding are set out in note 5.
18. Loss per share
Basic loss per share
The calculation of basic loss per share at July 31, 2011 was based on the loss attributable to ordinary
shareholders of $53,000 and a weighted average number of ordinary shares outstanding during the period
ended July 31, 2011 of 102,282,000 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 2009
Effect of shares issued during the year
At 31 July 2010
In issue at 1 August 2010
Effect of shares issued during year
Weighted average number of ordinary shares at July 31, 2011
2011
$’000
(53)
(53)
2009
$
(2,426)
(2,426)
Number ‘000
59,385
24,196
83,581
95,485
6,797
102,282
There is no difference between the basic and diluted loss per share. At July 31, 2011 there were 4,167,000
(2010: 3,952,000) share options in issue which may have a dilutive effect on the basic earnings or loss per
share in the future.
19. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
Group
2011
$’000
4,710
187
1,063
5,960
Group Company
Company
2010
2011
2010
$’000
439
232
130
801
$’000
5
3
118
126
$’000
12
6
130
148
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
20. 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 22.
Non-current liabilities
Bank loan
Finance lease liabilities
Gold Loan
Current liabilities
Current portion of bank loan
Current portion of finance lease liabilities
Current portion of Gold Loan
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than one year
Between one and five years
2011
$’000
2010
$’000
26
5,326
19,254
24,606
3
1,630
649
2,282
29
412
5,150
5,591
3
385
-
388
Minimum
lease
Payments
2011
Interest
2011
Principal
2011
Minimum
lease
Payments
2010
Interest Principal
2010
2010
$’000
$’000
$’000
$’000
$’000
$’000
1,965
5,918
7,883
335
592
927
1,630
5,326
6,956
426
427
853
41
15
56
385
412
797
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are
secured on the underlying assets.
Gold Loan
During the previous year, the Group entered into an agreement (“Gold Loan”) with Sandstorm to sell a portion of
the life-of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm made staged upfront cash payments for the gold to the Group
totalling US$20 million.
For this, the Group has agreed to sell 32% of the payable gold in the first year of production. In each production
year following the first year of production, until 175,000oz of payable gold has been produced, the Group has
agreed to sell a percentage equal to 25% x (85% divided by the actual percentage of metallurgical recovery of
gold realized in the immediately preceding production year) provided that, if the payable gold production in any
production year after the third production year is less than 15,000 ounces, then in each such production year,
Sandstorm payable gold shall not be less than 25% of the payable gold. In each production year following the
first year of production, after 175,000oz of payable gold has been produced, the Group has agreed to sell a
percentage equal to 12% x (85% divided by the actual percentage of metallurgical recovery of gold realized in
the immediately preceding production year) provided that, if the payable gold production in any production year
after the third production year is less than 15,000 ounces, then in each such production year, Sandstorm
payable gold shall not be less than 12% of the payable gold for the remainder of the period ending 40 years after
Page 57
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
20. Interest-bearing loans and borrowings (continued)
the date of the agreement. After the expiry of the 40 year term, the agreement is renewable in 10 year terms at
the option of Sandstorm.
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. This date was extended to October 31, 2011 subsequent to the year end.
(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 the value of 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.
Total interest of $1,501,277 was accrued during the year. $49,906 (2010: $218,595) was included in exploration
and evaluation expenditure and $1,451,371 (2010: $nil) charged to mineral properties.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
21. Provisions
Reclamation and closure provision
At 1 August 2009
Provision during the year
Unwinding of discount
At July 31, 2011
2011
$’000
2010
$’000
559
1,007
81
1,647
-
559
559
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 Ming Mine’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 all three sites associated
with the Ming Mine project: mill, mine and port sites. The liability is secured by Letters of Credit for $3,376,555.
22. Financial risk management
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash 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.
Page 58
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
22. Financial risk management (continued)
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 and measured at amortised cost.
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, liquidity risk, credit risk, interest rate risk and commodity price risk each of which is
discussed below. There were no derivative instruments outstanding at July 31, 2011.
Foreign exchange 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 20. 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.
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
Equity
2011
$
64
(57)
(1,920)
1,746
2010
$
53
(47)
(515)
468
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 20). 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 July 31, 2011.
Page 59
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
22. Financial risk management (continued)
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
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
2011
$’000
2010
$’000
2,282
3,608
4,814
2,272
2,030
11,882
26,888
388
5,524
22
24
5
16
5,979
Fixed rate 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
2011
$’000
2010
$’000
1,633
1,465
1,508
1,478
888
13
6,985
388
374
22
24
5
16
829
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2011
was 6.01%.
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. 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 and Company’s maximum exposure to credit risk at July 31,
2011 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 20.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group’s and
Company’s reported results.
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
22. 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 26 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
2010
2011
$’000
$’000
(292)
783
(37)
106
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 July 31, 2011
Sterling
Canadian $
At 31 July 2010
Sterling
Canadian $
Fixed rate
assets
Floating
rate
Assets
Average
Average
period for
interest
Total
which
rates for
rates are
fixed
fixed rate
assets
$’000
$’000
$’000
Months
667
25
692
47
9,431
9,478
714
9,456
10,170
1
1.3
$’000
$’000
$’000
Months
484
6,351
6,835
67
1,098
1,165
551
7,449
8,000
1
2
%
0.25
0.95
%
0.25
0.35
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 61
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
23. Capital and operating lease commitments
The Group has commitments totalling $2.506 million (2010: $1.24 million) with various vendors relating to the
purchase of equipment for the Nugget Pond Mill copper floatation upgrade.
At July 31, 2011 the company had the following operating lease commitments:
Other
Payable within one year
Payable within one to two years
24. Related parties
2011
$’000
2010
$’000
4
-
4
16
4
20
Identity of related parties
The Group has a related party relationship with its subsidiaries (see note 11) and with its directors and executive
officers.
Transactions with key management personnel
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
J Thomson
2011
$’000
2010
$’000
229
-
-
13
13
13
2
2
13
47
332
200
76
-
14
14
14
2
2
14
13
349
D H W Dobson waived his entitlement to director’s fees for the current and preceding periods. At July 31, 2011
fees of $19,000 (2010: $38,000) remained outstanding.
Brian Dalton and John Baker, directors of the company are also directors of Altius Resources Inc (“Altius”).
Page 62
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
24. Related parties (continued)
Transactions with key management personnel (continued)
Consultancy fees were payable to Altius Mineral Corporation for the year ended July 31, 2011 for the
consultancy services of J Baker & B Dalton amounting to $21,000 (2010: $22,000). At July 31, 2011,
consultancy fees of $5,000 (2010: $21,000) 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 31.07.11 At 31.07.10
No.
No.
‘000
1,100
400
45
45
45
45
45
45
45
1,815
‘000
1,100
400
45
45
45
45
45
45
45
1,815
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 11.
25. Subsequent events
2011
$’000
2010
$’000
641
80
721
382
122
504
On September 29, 2011 the Group agreed a Credit Facility of up to CAD$10 million with Sprott Resource
Lending Partnership (“Sprott”) for use as additional funding for the development of the Ming Mine. The facility is
available in two instalments; the first instalment of $5 million must and will be drawn on or before October 29,
2011 and the final instalment for the balance up to $10 million is available until August 31, 2012 subject to a
subsequent site visit and review of the Group’s off-take agreement and then current financial forecasts . Interest
will be payable at a fixed rate of 9.25% per annum, is repayable by March 29, 2013 and secured by a fixed and
floating charge over the assets of the Group. In connection with the Credit Facility, a Structuring Fee of
CAD$100,000 and a 3% Commitment Fee of CAD$300,000 were paid to Sprott in cash. Pursuant to the terms
of the Credit Facility, the Company issued CAD$300,000 of ordinary shares of 1p each in the capital of the
Company to Sprott in exchange for the repayment of the previously paid cash Commitment Fee. In addition, a
further 4% Drawdown Fee on all amounts drawn under the Credit Facility is to be satisfied by the issue of
ordinary shares by the Company.
Page 63
RAMBLER METALS AND MINING PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
26. 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.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property and
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 mineral property and 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 mineral
property and exploration and evaluation costs are impaired at the year end.
Closure costs
The Group has an obligation to reclaim its properties after the minerals have been mined from the site, and has
estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a
liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves to be
inaccurate, the Group could be required to increase the provision for site closure and reclamation costs, which
would increase the amount of future reclamation expense, resulting in a reduction in the Group’s earnings and
net assets.
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 20).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 64