REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
REPORT OF THE DIRECTORS AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2012
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Company Information
Chairman’s Statement
Management’s Discussion and Analysis
Report of the Directors
Directors’ Responsibilities statement
Corporate Governance
Independent Auditor’s report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Comprehensive Income
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to the Company Financial Statements
Page
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73
RAMBLER METALS AND MINING PLC
COMPANY INFORMATION
FOR THE YEAR ENDED JULY 31, 2012
Directors:
T S Chan
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, 2012
We are pleased to report the results for the year ended July 31, 2012.
The principal activity of Rambler Metals and Mining plc (‘the parent Company’) and its subsidiaries (the ‘Group’ ,
or ‘Rambler’) is the development, mining 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
The Group reached considerable milestones and other key achievements during the fiscal year. Highlights
include:
Revenue generated from saleable material produced during commissioning through the sale of 14,918
ounces of gold and additional revenue from the sale of 1,271 tonnes of copper concentrate from its
newly completed copper concentrator.
Accepted an offer from Tinma International Ltd. (‘Tinma’) to become a strategic shareholder through
non-brokered private placements raising total proceeds of $8.71 million. Tinma now holds 16 per cent of
the issued share capital of the Group.
Finalized an off-take agreement for the copper concentrate production.
Announced the completion of a preliminary economic assessment (‘PEA’) to include the Lower Footwall
Zone mineralization evaluating the potential for an expansion of the Ming Mine into a 20+ year bulk
tonnage operation.
FINANCIAL HIGHLIGHTS
The consolidated loss after taxation of the Company in respect of the year ended July 31, 2012 amounted to
$3,367,000 (a loss per share of $0.026) versus a loss of $53,000 for the year ended 31 July 2011 (a loss per
share of $0.001).
The Group generated revenue from saleable material produced during commissioning of $25.2 million from the
sale of gold and $3.0 million from the sale of copper concentrate during the year and offset this revenue against
the Mineral Property asset as commercial production was not declared during the year.
The gross assets of the Company amounted to $107.2 million as at the end of the year. This included mineral
properties of $44.5 million and intangible assets of $17.3 million which consisted of accumulated deferred
exploration and evaluation expenditures on the Lower Footwall Zone at the Ming Mine.
Management is to be congratulated in commencing commissioning of the Ming Mine and generating early
production. We looking forward to announcing commercial production before the end of the calendar year. My
thanks to our employees, officers and directors for the progress which has been made during the year and I look
forward to continued success in fiscal 2013.
DHW Dobson
Chairman
October 19, 2012
Page 2
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
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 19, 2012 and covers the results of operations for the quarter and year ended July 31, 2012. This
discussion should be read in conjunction with the audited Financial Statements for the year ended July 31, 2012 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. See Forward Looking Statement disclosure in Appendix 5.
GROUP OVERVIEW
The principal activity of the Group is the development, mining and exploration of the Ming Copper-Gold Mine (‘Ming Mine’) located on Newfoundland and Labrador’s
Baie Verte Peninsula. See Appendix 1. On November 28, 2011 the Group reached a significant milestone in commencing the testing and commissioning of the gold mill
with 1806 gold ore, resulting in saleable material. A total of 14,918 ounces of gold was poured generating revenues of $25.2 million. In May 2012, following completion
of construction of the copper concentrator the Group began the live commissioning of its new facility generating first revenue from the sale of copper concentrate in July
2012.
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 by maximizing the use of the Nugget Pond processing facility.
2.
3. Selectively pursue growth opportunities within Atlantic Canada including joint ventures, acquisitions, strategic alliances and equity positions.
Increase existing Ming Mine resources and reserves through further exploration.
The Group’s directors and management believe that focussing on these priorities will instil a solid foundation for Rambler, while providing the best opportunity to build a
successful and long term mining company.
Page 3
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2012
This was a significant year for the Group as Management successfully commenced commissioning the Ming Mine, first by producing gold during the commissioning and
testing of the 1806 zone ores. Trucking of gold ore from the mine to the Group’s gold processing facility at Nugget Pond began on November 28, 2011 followed by the
Company’s first gold doré bar being poured on December 12, 2011 resulting in first revenue from the Ming Mine project. Subsequently the Group reached its second
significant milestone with the start-up of its newly constructed copper concentrator generating first revenue from copper concentrate sales before year end. Commercial
production for the project is anticipated to be announced during the second half of calendar 2012.
Highlights of the 2012 fiscal year included:
Capital Development and Production
Produced a total of 14,918 ounces of gold while testing the 1806 zone ore and commissioning the gold milling facility. During a five month period commencing in
November 2011 91,835 wet metric tonnes were processed with daily milling throughput ranging between 465 and 845 wet metric tonnes per day (‘wmtpd’), with an
overall average of 619 wmtpd. With an average grade of 4.94 grams per tonne gold the Group realized revenue of $25.2 million. For the period operating costs
ranged between $900 and $1,000 per ounce.
Completed the construction and dry commissioning of the copper concentrator concurrent with the processing of 1806 zone ore. Following the live ore
commissioning of the Group’s new copper flotation facility in May 2012 the first copper concentrate was trucked from the Nugget Pond to Goodyear’s Cove for
storage. Lower Footwall Zone material, with a head grade of 1.30% copper, was used during early stage commissioning followed by gradual blending of high grade
ore from the 1807 ore zone pushing the overall copper equivalent head grade to 2.76% at July year end. The quality of concentrate produced varied depending on
the ore blending strategy used and concentrate grades ranged between 22% and 32% copper.
Development into the high grade 1807 copper zone continued throughout the year with ore being stockpiled as development progressed. With the majority of tonnes
for the 2013 fiscal year coming from this zone, ore access on multiple levels was the main focus for underground development crews.
Finalized construction of the 9,500 wet metric tonne concentrate storage facility at the Goodyear’s Cove Port. Building services and electrical hook up was
concluded subsequent to year end. The installation of a ship loading 850 tonnes per hour conveyor system had begun during the year and is scheduled to be
completed before the Group’s first shipment of copper concentrate in the second half of calendar 2012. At year end approximately 2,500 wet metric tonnes of
copper concentrate was in storage at the facility.
Page 4
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2012 (Continued)
Financing, Royalty and Investment
Accepted an offer from Tinma International Ltd. (‘Tinma’), a wholly-owned subsidiary of a China-based investor, to become a strategic shareholder in Rambler
through a non-brokered private placement. On March 19, 2012 Rambler announced the closing of this private placement resulting in the issuance of 10,403,980
ordinary shares to Tinma at a placing price of $0.44 per ordinary share for total proceeds of $4.58 million. Subsequent to the completion of the initial placement the
Group entered into a second subscription agreement with Tinma to subscribe for 7,118,012 ordinary shares by way of a non-brokered private placement at a price
of CAD $0.58 per ordinary share for total proceeds of $4.13 million. Upon receipt of shareholder approval at the Company’s General meeting on June 28, 2012
Rambler announced the closing of the second private placement. Immediately following the closing of the second placement Tinma’s total shareholdings in
Rambler was 22,736,992 being the total of both private placements plus any shares bought on the open market. Tinma is now a strategic shareholder of Rambler
owning sixteen per cent of the issued share capital.
During the year repayments of US$7,855,441 were made from the delivery of 4,774 ounces of gold thereby satisfying requirements in the gold loan agreement to
repay a minimum of US$3.6 million in each of the first two 12 month periods of production.
Completed an acquisition of 4,500,000 shares of Maritime Resources Corp (TSXV: MAE) (‘Maritime’) through a non-brokered private transaction priced at $0.23
per share for a total consideration of $1,035,000. Subsequently Rambler acquired an additional 588,230 shares through a non-brokered private transaction priced
at $0.17 per share for a total consideration of $100,000 The acquisitions provided Rambler with a 17% equity stake and an invitation to appoint a representative to
join Maritime’s Board of Directors. Maritime continues to advance the Green Bay portfolio of properties, specifically the Hammerdown mine, and the Orion and
Lochinvar deposits.
Announced the purchase of Ming Mine’s 2% net smelter royalty held by Philippine Metals Inc., formerly Meridian Mining Corporation, for CAD$600,000. Before the
buyout the mine had a 4.5% combined net smelter royalty held by four separate groups.
Finalized an off-take agreement with Transamine Trading for the copper concentrate produced from the Ming Mine. The agreement includes the sale of 85,000
tonnes of concentrate over the initial 6 year mine life, at international spot rates and envisages a 90% provisional payment option for concentrate as it arrives at the
Goodyear’s Cove port facility. This is of particular significance as it will ensure steady cash flow to the Group during its early years of production.
The Group drew down its first installment of $5.0 million from the $10.0 million credit facility agreed to in September 2011. 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. Upon the completion of a second site
visit from Sprott Resource Lending Partnership and execution of the off-take agreement the final tranche of $5.0 million was made available. On January 30, 2012
the Group drew down a second installment of $2.5 million. A remaining $2.5 million was available until August 2012 and was not drawn.
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2012 (Continued)
Exploration and evaluation
Announced the completion of a preliminary economic assessment (‘PEA’) to include the Lower Footwall Zone mineralization in its mine plan. This assessment
evaluated the potential for an expansion of the Ming Mine to first optimize the current high grade operation and available infrastructure followed by a transition into
a 20+ year bulk tonnage operation through a four year ramp-up period. Production throughput will increase from the current 630 mtpd to 1,000 mtpd at Nugget
Pond, then 3,500 mtpd at a newly constructed milling facility at the Ming Mine site. Future optimization and engineering studies will focus on improving the
business case to ensure the project will benefit from additional upside of the existing operation. PEA results currently envisage: a pre-tax net present value of
US$251 million (discount 5%); an internal rate of return of 18%, an undiscounted pre-tax cash flow from operations of $861 million and initial capital requirements
of US$231 million.
Exploration diamond drilling in the 1806 gold zone, beyond current mining blocks, has reported visible gold and significant assayed intersections. Of particular
importance are drill holes MMUG12-34 and MMUG12-51 with uncut gold intersections of 5.10 metres grading 227.65 g/t (21.19 g/t cut) and 4.45 metres grading
49.69 g/t (7.57 g/t cut) respectively.
Page 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2012 (Continued)
Staffing
Continued to strengthen the operations team, including the appointment of a Mill Operations Foreman with 16 years of flotation experience and a Mill Metallurgist
as it prepared to run “live” feed through the copper concentrator.
Coinciding with the start of testing and commissioning, the Nugget Pond facility was staffed through the addition of 14 employees to the operating, electrical and
maintenance fields. The mine operation continued to fill underground staffing positions as dictated by production and development requirements.
At year end a total of 130 full time employees were employed at the Ming Mine compared to 111 full time employees at July 31, 2011.
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
FINANCIAL RESULTS
Revenue
A total of 14,918 ounces of gold were sold from the Ming Mine during the year at an average price of CAD$1,650 generating revenue of $25.2 million. Additional
revenue of $3.0 million was realized on the sale 1,271 tonnes of copper concentrate in July 2012. Revenue realized during the testing and commissioning of the
Ming Mine are credited to the Mineral Property asset until commercial production is achieved. During the year a total of $28.2 million was credited to Mineral
Property.
A total of 621 ounces of gold were processed from the Tilt Cove East Mine satellite deposit during the first quarter generating revenue of $1,095,000. The Group
suspended the ore processing in early August due to sodium cyanide supply issues and further postponed processing to make way for first production from Ming
Mine ores. Further revenue of $124,000 generated through further refining of slag materials from the Nugget Pond Crown Pillar satellite deposit recovering an
additional 74 ounces of gold. Revenue from satellite deposits totalling $1,219,000 was recorded in the Company’s consolidated statement of income and offset by
operating costs of $674,000 resulting in a gross profit of $545,000 for the fiscal year.
Loss
The net loss for the year was $3,367,000 compared with a loss of $53,000 for the year ended July 31, 2011. The net loss for the quarter ended July 31, 2012 was
$1,202,000 or $0.009 per share which compares to $281,000 for Q3/12 and a net profit of $577,000 for Q4/11.
Cash flow and cash resources
Cash flows utilized for operating activities were $1,209,000 compared with $1,352,000 in the previous fiscal year. Cash flows utilized in operating activities were
$1,211,000 in Q4/12 compared to $752,000 in Q3/12 and cash generated of $573,000 in Q4/11. The increase in the cash utilized relates to changes in working
capital and an increase in operating loss.
Cash resources (including short-term investments) as at July 31, 2012 were $7.8 million and as of October 19, 2012 had reduced to $6.5 million.
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
HEALTH AND SAFETY
The Group completed the year with 1 lost time accident and 9 medical aid injuries. The lost time accident was the first one ever recorded on the project’s 7 year life
and resulted when an employee drove an underground haulage truck over a large rock on the roadway causing the employee to jar their back.
The Health and Safety of the Group’s employees continues to be a high priority with prevention and hazard recognition being key components of the Group’s
strategy.
OUTLOOK
Management continue to pursue the following objectives:
Move the Ming Mine into commercial production before the end of calendar year 2012.
Continue mining and milling the exposed 1807 workplaces for the generation of copper concentrate revenue from the Ming Mine. Place additional development
focus into preparing this high grade zone for further exploration both up-dip and down-dip for inclusion in future resource and reserve estimates.
Optimize the mining and processing of ores from the Ming Mine in addition to continuing to evaluate opportunities for a possible future expansion into the Lower
Footwall Zone.
Become a strategic long term low-cost producer on the Baie Verte Peninsula, and throughout Atlantic Canada, by selectively pursuing growth opportunities including
joint ventures and acquisitions, including the Group’s investment in Maritime Resources Corp.
See ‘Forward Looking Information’ for a description of the factors that may cause actual results to differ from forecast.
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
CAPITAL PROJECTS UPDATE
During the year the Group incurred expenditures of $37,821,000 on Mineral Property which were offset by revenue of $28,225,000 from gold and copper concentrate
sales, $10,451,000 on property, plant and equipment and $633,000 on exploration and evaluation of the Ming Mine.
Prior to the mine being considered substantially complete and ready for its intended use, all direct operating costs, including costs associated with stockpile ores, are
capitalized within mineral property and offset by revenues generated from on-going production.
Mineral Property (capital development of Ming Mine)
Labour costs
Contractors’ and consultancy expenses
General materials and other costs
Surface development
Underground development
Processing and ore transportation
Concentrate transportation & other allowances
Sub-total
Other Charges
Finance costs
Depreciation
Royalties
Reclamation and closure provision
Total
Revenue recognized from gold and copper concentrate sales
Net
Total
$,000
8,449
336
972
591
7,324
5,546
241
23,459
9,320
4,092
784
166
37,821
(28,225)
9,596
Q4/12
$,000
Q3/12
$,000
Q2/12
$,000
Q1/12
$,000
2,332
27
217
228
2,405
2,340
241
7,790
4,945
1,099
59
218
14,111
(11,610)
2,501
2,297
78
234
128
2,132
1,983
-
6,852
2,337
1,023
668
23
10,903
(14,136)
(3,233)
2,031
88
250
171
1,666
1,223
-
5,429
1,408
1,056
57
23
7,973
(2,479)
5,494
1,789
143
271
64
1,121
-
-
3,388
630
914
(98)
4,834
-
4,834
Total mineral property costs before other charges increased in Q4/12 compared to Q3/12 in line with an increase in underground capital development, start-up of the
copper concentrator at the Nugget Pond processing facility and the trucking of copper concentrate to the Goodyear’s Cove storage facility. Labour and underground
development costs increased over the comparable quarters as the result of hiring additional full time operators for the copper concentrator and increased development
of the Ming Mine’s 1807 ore zone. Processing and ore transportation expenditures increased in Q4/12 due to more ore tonnes being trucked to Nugget Pond ahead of
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
CAPITAL PROJECTS UPDATE (continued)
starting the copper concentrator. Concentrate transportation and other allowances were incurred following the start of the copper concentrator and include trucking
expenditures, treatment, refining and freight charge allowances.
Finance costs increased in Q4/12 compared to Q3/12 due to adjustments in the timing of planned production affecting the effective interest charge on the Gold Loan
liability. Royalty expenditures decreased in Q4/12 directly related to the CAD$600,000 purchase of a 2% net smelter royalty held on the Ming Copper-Gold Mine project
in Q3/12. Revenue recognized in Q4/12 decreased compared to Q3/12 marking the completion of 1806 gold zone processing and switch over to the copper
concentrator commissioning.
Mineral Property (capital development of Ming Mine by area,
before other charges)
Surface
1806 ore zone
1807 ore zone
Lower Footwall ore zone
Ramp improvements & ongoing maintenance
Shaft manway rehab
Administrative
Port site
Nugget Pond Mill
Total
Total
$,000
4,037
4,126
3,561
965
3,840
188
1,786
592
4,364
23,459
Q4/12
$,000
1,166
878
2,128
253
530
26
460
433
1,916
7,790
Q3/12
$,000
1,251
1,113
1,206
441
619
134
447
107
1,534
6,852
Q2/12
$,000
997
1,440
212
103
1,288
8
427
40
914
5,429
Q1/12
$,000
623
695
15
168
1,403
20
452
12
-
3,388
Surface related costs fluctuated through fiscal 2012 quarters due to a timing of ore trucking to the Nugget Pond Mill. Decreased costs experienced on the 1806 ore
zone are in line with completion of production drilling and underground development towards the end of Q3/12. Current quarter expenditures are represented mainly by
final drilling and ore haulage activities. 1807 ore zone expenditures increased in Q4/12 compared to Q3/12 in line with a ramp up in development and production as the
Group began the commissioning of the copper concentrator. Lower Footwall ore zone expenditures decreased in Q4/12 compared to Q3/12 as fewer low grade tonnes
were mined during the quarter. Q3/12 and Q2/12 expenditures in this zone related to on-going development aimed at accessing ores for the commissioning of the
Group’s copper concentrator. Ramp improvements & maintenance decreased further in Q4/12 in line with the move towards increased development in the 1807 zone
and a reduction in required maintenance. Nugget Pond Mill expenditures increased in Q4/12 as operating expenditures were incurred during the clean out of 1806 zone
ore production at the gold mill and the start of commissioning at the newly construction copper concentrator in May 2012.
Page 11
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
CAPITAL PROJECTS UPDATE (continued)
Property, plant and equipment
Mill purchase and construction
Plant and equipment
Buildings
Other assets
Total
Total
$,000
6,189
3,378
733
151
10,451
Q4/12
$,000
Q3/12
$,000
(25)
164
71
(21)
189
383
1,053
-
1
1,437
Q2/12
$,000
1,671
2,089
152
80
3,992
Q1/12
$,000
4,160
72
510
91
4,833
Property, plant and equipment reduced during Q4/12 compared to Q3/12 reflecting the significant increase in underground equipment purchased during Q3/12. Mill
purchase and construction decreased during Q4/12 in line with bringing the Group’s copper concentrator on-line in May 2012.
Exploration and evaluation costs (Ming Mine)
Consultancy expenses
Total
Total
$,000
633
633
Q4/12
$,000
10
10
Q3/12
$,000
337
337
Q2/12
$,000
248
248
Q1/12
$,000
38
38
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 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
FINANCIAL REVIEW
Commentary
Fiscal
2012
($000’s)
Comparatives
Fiscal
2011
($000’s)
B/ (W)*
1,219
Revenue of $1.2 million was generated through gold sales from the Group’s Tilt Cove East Mine and the further
refining of slag materials from the Nugget Pond Crown Pillar satellite deposits. This compared with revenue of $3.5
million in the prior year on the sale of gold from the Group’s satellite deposits and toll processing agreements.
3,523
(65)%
674
Operating Costs of $674,000 relate to the processing, mining, royalty and general administrative costs associated
with the completion of the Group’s Tilt Cove satellite deposit during Q1/12. Fiscal 2011 expenditures represent similar
expenditures incurred on the Group’s Tilt Cove East Mine and Nugget Pond Crown Pillar satellite deposits and toll
processing agreements.
1,754
62%
3,022
General and administrative expenses were higher than the previous year by $272,000. Employment costs
increased $69,000 as a result of key management promotions and the recruitment of additional administrative staff,
travel and investor relation costs increased $42,000 and security and general office expenses increased $156,000 due
to the addition of security personnel at the mine site and the move to the new office and dry facility.
2,750
(10)%
(959)
Foreign exchange losses arising on the Gold Loan increased in the year as a result of the weakening of the
Canadian dollar against the US dollar during the year.
897
(207)%
24
Exploration costs decreased compared to the previous year as the Group’s main focus was on the construction and
development of the Ming Mine. As the Group moves towards and in through commercial production Management will
revisit various exploration opportunity in the area.
79
70%
Mineral Properties The group incurred costs of $37.8 million in the year offset by revenue on gold production of
$28.2 million (see further below). The costs include labour of $8.4 million, contractor and material costs of $0.3 million,
underground development costs of $7.3 million, depreciation of $4.1 million and finance costs of $9.3 million. Finance
costs include $7.9 million in effective interest charges arising on the gold loan due to higher than estimated gold prices
and actual gold ounces delivered during the year as well as changes to future gold pricing and volume estimates.
Finance costs include actual cash cost of $1.4 million relating to interest on the Group’s Credit Facility and equipment
capital leases.
9,596
Ming Mine Revenue of $28.2 million was realized in the year on the sale of 14,918 ounces of gold and 1,271 tonnes
of copper concentrate. Processing and ore transportation costs of $5.5 million and concentrated transportation & other
allowances of $241,000 were incurred to generate this revenue. Revenue realized during the testing and
commissioning of the Ming Mine has been credited against Mineral Properties and will continue until commercial
production is announced.
*B / (W) = Better / (Worse)
17,566
45%
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
FINANCIAL REVIEW (continued)
Fiscal
2012
Results
($000’s)
Commentary
Comparatives
Fiscal
2011
($000’s)
B/ (W)*
10,451
Capital spending on property, plant and equipment decreased during the year reflecting the substantial completion
of the copper concentrator at the Nugget Pond gold and base metal milling facility, a reduction in the amount of new
equipment being leased and substantial completion of the Goodyear’s Cove Storage Facility.
20,320
49%
633
Capital spending on exploration and evaluation costs increased in the year as a result of consultancy expenditure
incurred on the preliminary economic assessment of the Lower Footwall Zone at the Ming Mine.
478
(32)%
*B / (W) = Better / (Worse)
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
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 2012
Revenue
Net Income/ (loss)
Earnings/(loss) per Share (Basic & Diluted)
Fiscal 2011
Revenue
Net Income/ (loss)
Earnings/(loss) per Share (Basic & Diluted)
-*
(1,202)
(0.009)
2,089
577
0.008
-*
(281)
(0.002)
183
193
-*
(1,039)
(0.008)
266
(555)
1,219
(845)
(0.007)
985
(268)
0.002
(0.006)
(0.003)
*gold and copper sales resulting from the testing and commissioning of the Ming Mine are credited to
Mineral Properties until commercial production is achieved
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 satellite deposits. Losses increased in first quarter of 2012 and further increased in the second quarter of 2012 as a result of an exchange loss of $0.7 million
and $0.30 million respectively and reduced sales activity due to the processing of the Group’s satellite deposits completed in the first quarter of 2012. The reduction in
losses in the third quarter of 2012 reflects exchange gains on the retranslation of the Gold Loan with the increase in losses in the fourth quarter of 2012 reflecting a
reversal of such exchange gains.
Page 15
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
To date the Group has relied on private placement financings of equity securities, a Gold Loan facility, capital leases and a credit facility (see ’Commitments and Loans’
section) to finance its development requirements. Positive cash flows are expected to continue after commercial 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.
The Group’s holding of cash balances is kept under constant review. Given the current climate, the Group takes 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, 2012
$’000
July 31, 2011
$’000
7,394
77
-
355
7,826
9,431
47
25
667
10,170
Sales of copper concentrate are 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.
Cash flows utilised from investing activities amounted to $7.1 million for the year. Net cash of $4.5 million was incurred on the Group’s Mineral Property ($28.2 million
proceeds received from the sale of gold and copper concentrate less $32.7 million in mine development). $10.0 million was spent on property, plant and equipment, $0.7
million on Exploration and Evaluation of the Lower Footwall Zone and $1.1 million invested in Maritime Resources Corp.
Cash flows generated from financing activities during the year amounted to $5.9 million and included receipt of $8.7 million from the placing of 17,521,992 Ordinary
Shares to Tinma and net proceeds of $7.0 million from the Group’s credit facility both offset by gold loan repayments of $7.9 million and finance lease repayments of
$1.7 million.
Page 16
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION (continued)
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 at the
existing Nugget Pond Mill and Ming Mine. At year end the Group holds bearer deposit notes totalling $3.26 million.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on future trends in copper and gold prices, its ability to
fund its development and exploration programs, and to manage and generate positive cash flows from current operations. Through the use of current cash reserves and
continued production during the commissioning phase, management 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, which may give rise to the possibility that additional working capital may
be required to fund delays in commissioning the copper concentrator and continued mine development and the repayment of loans falling due for repayment in March
2013. 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. 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 19, 2012 the Group has $6.5 million in cash and cash equivalents.
Financial Instruments
The Group’s financial instruments as at July 31, 2012 comprised of financial assets of available for sale investments, 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 21 of the financial statements for the year ended July 31, 2012. There were no derivative instruments outstanding at July 31, 2012.
Page 17
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
COMMITMENTS AND LOANS
At July 31, 2012, there were no capital commitments made to third parties.
Gold Loan
In March 2010, 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 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.
The remaining circumstances in which the Gold Loan may be repaid earlier than by the delivery of payable gold are as follows:
(i)
If within 24 months of the date that gold is first produced (November 28, 2011), the Ming Mine has not produced and sold a minimum of 24,000oz of payable
gold (14,918 oz produced to July 31, 2012) then a portion of the US$20 million will be repayable based on the shortfall of payable gold, and/or;
(ii) Within the first 36 months of 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
During the first eight months of commissioning, repayments of US$7,855,441 were made from the delivery of 4,774 ounces of gold thereby satisfying the requirement to
repay a minimum of US$3.6 million cash during the first and second 12 month periods and partially meeting the requirements for the third 12 months.
Page 18
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
Credit Facility
On September 29, 2011 the Group agreed a Credit Facility of up to $10 million with Sprott Resource Lending Partnership (‘Sprott’) for use as additional funding for the
development of the Ming Mine. Subsequent to amending the agreement in December 2011 the facility is available in three instalments; the first instalment of $5 million
was drawn on October 29, 2011, the second instalment of $2.5 million was drawn on January 30, 2012 and the final instalment for the balance up to $10 million was
available until August 31, 2012. Interest will accrue at a fixed rate of 9.25% per annum. Principal 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 $100,000 and a 3% Commitment Fee of $300,000 were paid to Sprott in
cash. Pursuant to the terms of the Credit Facility, the Company issued $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 was satisfied by the
issuance of ordinary shares by the Company.
Loan and lease balances
At July 31, 2012, interest bearing loans and borrowings comprised a Gold Loan of $20,889,000, finance lease commitments of $7,689,000, a Credit Facility of
$7,500,000 and a bank loan of $26,000. The Group entered into finance lease commitments of $2,442,000 to finance the acquisition of a mine truck, scoop tram and
conveyor in the year.
SUBSEQUENT EVENTS
On October 9, 2012 the Company announced the purchase of a 1% net smelter royalty (‘NSR’) held over the Ming Mine by Ming Minerals Inc. for a total consideration of
$500,000. The mine was initially encumbered by a combined 4.5% NSR held by four separate groups. Of the four net smelter royalties, two included a buyout clause
allowing the Company to purchase 3% of the total NSR for a combined payment of $1,100,000. This is the second royalty Rambler purchased since starting
commissioning at the Ming Mine leaving a combined net smelter royalty of 1.5% on the Ming Mine.
Page 19
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
APPENDIX 1 – LOCATION MAP
Page 20
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
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,
2012
2011
2010
Gold sales (Ounces)1
Copper concentrate sales (dmt)1
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
15,6132
1,271
1,654
1,2192
(674)
(24)
(3,022)
(3,367)
(1,209)
(7,075)
5,903
(2,381)
7,826
110,718
(43,317)
(7,625)
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
-
-
-
-
-
(91)
(2,172)
(2,426)
(2,107)
(9,705)
17,725
5,913
8,000
54,162
(7,338)
8,462
Weighted average number of shares
outstanding
128,477
102,282
83,581
Loss per share
(0.026)
(0.001)
(0.029)
1gold and copper concentrate sales relating to the testing and commissioning of the Ming Mine are credited to
Mineral Properties until commercial production is achieved.
2 includes 621 ounces from the Group’s Tilt Cove East Mine satellite deposit and 74 ounces from further refining
of slag materials from the Nugget Pond Crown Pillar satellite deposit generating $1.219 million in revenue.
Page 21
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2012
Q4/12
Results
($000’s)
Commentary
-
-
785
Revenue in Q4/11 was generated through gold sales from the Group’s satellite deposits. Revenues realized in Q4/12
during the testing and commissioning of the Ming Mine have been credited against Mineral Property and will continue
until commercial production is achieved (see ‘Ming Mine Revenue’ below).
Operating Costs in Q4/11 relate to the processing, mining and general and administrative costs associated with
Groups satellite deposits.
General and administrative expenses were higher than the previous quarter by $24,000. Promotional and travel
costs reduced by $13,000 and security and general office expenses increased by $37,000.
In comparison to Q4/11 administrative expenses increased by $30,000. Promotional and travel costs increased by
$23,000, and security and general office expenses by $33,000 offset by reduced depreciation costs of $19,000.
Comparatives
Q3/12
B/ (W)*
Q4/11
B/ (W)
-
-
N/a
2,088
(100)%
N/a
770
100%
761
(3)%
755
(4)%
(447)
Foreign exchange differences arising on the Gold Loan resulted in a loss in Q4/12 as a result of the weakening of the
Canadian dollar against the US dollar during the quarter.
476
(110)%
(84)
432%
Mineral Properties The group incurred costs of $14.1million in the quarter offset by revenue on gold and copper
concentrate sales of $11.6 million (see further below). The cost includes labour costs of $2.3 million, underground
development costs of $2.4 million, processing and ore transportation of $2.3 million, depreciation of $1.1 million and
finance costs of $4.9 million. Finance costs include actual cash cost of $0.5 million relating to interest on the Group’s
Credit Facility and equipment capital leases and a non-cash cost of $4.4 million in effective interest charges arising on
the gold loan due to higher than estimated gold prices and actual ounces delivered as well as changes to future gold
pricing and volume estimates. Net mineral properties expenditures increased in Q4/12 resulting from a decrease in the
number of gold ounces sold during the quarter as compared to Q3/12 following the switch over and commissioning of
the Group’s copper concentrator.
2,501
Ming Mine Revenue in Q4/12 included $3.0 million from the sale of 1,271 tonnes of copper concentrate and $8.6
million from the sale and settlement of 5,263 ounces of gold compared with $14.1 million in Q3/12 on the sale and
settlement of 8,194 ounces of gold with the Group’s third party refinery. Revenues realized during the testing and
commissioning of the Ming Mine have been credited against Mineral Property and will continue until commercial
production is achieved.
189
Capital spending on property, plant and equipment decreased during the quarter compared to Q3/12 reflecting the
substantial completion of the copper concentrator at the Nugget Pond gold and base metal milling facility, fewer capital
lease acquisitions on plant and equipment and substantial completion of the Goodyear’s Cove Storage Facility. The
decrease from Q3/12 is due to the reasons outlined above and the overall movement from capital development into
production.
Page 22
(3,233)
(177)%
5,820
52%
1,437
87%
3,342
94%
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2012 (continued)
Q4/12
Results
($000’s)
Commentary
Comparatives
Q3/12
B/ (W)*
Q4/11
B/ (W)
10
Capital spending on exploration and evaluation costs reduced in Q4/12 compared to Q3/12 representing the final
expenditure on the preliminary economic assessment completed on the Lower Footwall Zone of the Ming Mine.
337
97%
(31)
*B / (W) = Better / (Worse)
Page 23
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
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 future trends in copper and gold prices, its ability to
fund its development and exploration programs, and to manage and generate positive cash flows from current operations. Through the use of current cash reserves and
continued production during the commissioning phase, management 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 which may give rise to the possibility that additional working capital may
be required to fund delays in commissioning the copper concentrator and continued mine development and the repayment of loans falling due for repayment in March
2013. 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. 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, 2012.
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 19 of the
financial statements for the year ended July 31, 2012). 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 resource 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 24
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
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.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and foreign exchange fluctuations. Management monitors these changes closely and at the
end of the period the directors will consider whether the effect of these variations are material on the whole and determine whether an adjustment is therefore
appropriate.
Available for sale investment
Management consider that they do not have significant influence over the financial and policy decisions of Maritime and therefore have included the investment as an
available for sale investment.
Commercial production
The Group monitors the on-going testing and commissioning of its copper concentrate milling facility to assess when commercial production has been achieved.
Commercial Production is the assessment that the mill is capable of operating in the manner intended was defined by management at the onset of development to be 60
days of continuous production from both the mill and mine, being 85% of target rates envisaged in the Group’s Feasibility Study. Prior to commercial production being
declared costs and revenues are offset to the Mineral Properties asset and post commercial production will be charged to the Group’s income statement. Commercial
production was not achieved at July 31, 2012.
Page 25
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
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, 2012:
IFRS
/Amendment
Various
IFRS 9
IFRS 10
Title
Nature of change to accounting
policy
Annual Improvements to IFRSs No change to accounting policy,
Financial instruments:
Classification and Measurement
Consolidated Financial Statements No change to accounting policy,
therefore, no impact
No change to accounting policy,
therefore, no impact
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, 2012
January 1, 2015
August 1, 2015
January 1, 2013
August 1, 2013
January 1, 2013
August 1, 2013
January 1, 2013
August 1, 2013
January 1, 2013
August 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, 2012.
Page 26
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
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
142,360,240
Options
3,966,000*
*if all options have fully vested
Weighted Average Exercise Price
--
$0.46
For further assistance Mr. Peter Mercer, Corporate Secretary can be reached directly at +1-709-800-1929 ext.500 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
Page 27
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2012
APPENDIX 5 – OTHER MATTERS (continued)
Forward Looking Information(continued)
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 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 28
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2012
The Directors present their report with the audited financial statements of the Group for the year ended July 31,
2012.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development, mining 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 profitable copper and gold producer with the continued
commissioning of its newly producing copper concentrator and underground mine throughout calendar Q4 2012
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, 2012.
DIRECTORS
The Directors during the period under review were:
T S Chan (appointed 26 March 2012)
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts
J Thomson
J A Baker (resigned 13 October 2011)
B F Dalton (resigned 13 October 2011)
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, 2012 was 74 days (2011: 39 days). The Company’s
average creditor payment period at July 31, 2012 was 62 days (2011: 33 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $2,950 (2011: $2,988) to various charities in the Baie
Verte area.
Page 29
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2012 (CONTINUED)
SUBSTANTIAL SHARE INTERESTS
At October 19, 2012 the parent Company was aware of the following substantial share interests:
Number of Ordinary Shares
% of Share Capital
Tinma International Ltd.
Legal and General Investment Management
HSBC Nominee (UK) Limited
The Bank of New York (Nominees) Limited
Whitmill Trust (Zila Corporation)
Vidacos Nominees Limited
Henderson Global Investors
Vestra Nominees Limited
TD Direct Investing Nominees Limited
Hargreaves Lansdown (Nominees) Limited
FINANCIAL INSTRUMENTS
22,807,322
17,575,000
13,825,530
11,665,487
8,838,000
8,744,962
6,889,605
5,632,651
4,883,552
4,591,761
16.02%
12.35%
9.71%
8.19%
6.21%
6.14%
4.84%
3.96%
3.43%
3.23%
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 21 to the financial statements. There were no derivative instruments outstanding at July 31,
2012.
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 inherently 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 30
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2012 (CONTINUED)
RISKS AND UNCERTAINTIES (CONTINUED)
Copper and Gold Price Volatility
The Group’s revenues 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 on-
going 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 assumed 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 19, 2012
(cid:19)(cid:131)(cid:137)(cid:135)(cid:3)(cid:885)(cid:883)(cid:3)
RAMBLER METALS AND MINING PLC
DIRECTORS’ RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the report of the directors 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 accounting 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, to disclose with reasonable accuracy at any time the financial position of the
company and to 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 32
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2012
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 September 2012 (as appended to the Listing Rules of the Financial Services Authority) and the size
and development of the Group. The Group also has regard to the Quoted Companies Alliance (QCA) Guidelines
on Corporate Governance for AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director and seven non-executive
Directors. D H W Dobson is the senior non-executive director and G Ogilvie is the Group's President and Chief
Executive. It is the Board's policy to maintain independence by having at least half of the Board comprising non-
executive directors. The structure of the Board ensures that no one individual or group dominates the decision
making process.
The Board ordinarily meets no less than quarterly providing effective leadership and overall control of the
Group's affairs through the schedule of matters reserved for its decision. This includes the approval of budgets
and business plans, items of major capital expenditure, risk management policies and the approval of the
financial statements. Formal agendas, papers and reports are sent to the directors in a timely manner, prior to
Board meetings. The Board also receives a summary financial report before each Board meeting. The Board
delegates certain of its responsibilities to Board committees which have clearly defined terms of reference.
Between the Board meetings, the executive Director, the Chief Financial Officer and some of the non-executive
directors meet on a regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary, who is responsible for ensuring
that all Board procedures are followed. Any Director may take independent professional advice at the Group's
expense in the furtherance of his duties.
The Audit Committee, 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 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 S Thomson 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 33
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 31 July 31 2012
which comprise the consolidated income statement, the consolidated and parent company statements of
comprehensive income, the consolidated and parent company statements of financial position, the consolidated
and parent company statements of changes in equity, the consolidated and parent company 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 directors’ responsibilities statement, 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 group’s
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 31 July 31 2012 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.
Page 34
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2012
(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
Loss for the year attributable to owners of the parent
Loss per share
Note
2012
$’000
2011
$’000
3
4
1,219
(674)
545
(3,022)
(24)
(2,501)
(959)
102
(9)
(866)
(3,367)
6
-
(3,367)
3,523
(1,754)
1,769
(2,750)
(79)
(1,060)
897
90
(9)
978
(82)
29
(53)
Note
2012
$
2011
$
Basic and diluted loss per share
17
(0.026)
(0.001)
Page 36
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2012
(EXPRESSED IN CANADIAN DOLLARS)
Loss for the year
Exchange differences on translation of foreign operations (net of tax)
Loss on available for sale investment
Other comprehensive income for the year
Total comprehensive income for the year and attributable to the owners of the parent
2012
$’000
2011
$’000
(3,367)
8
(422)
(414)
(3,781)
(53)
110
-
110
57
Page 37
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2012
(EXPRESSED IN CANADIAN DOLLARS)
Note
2012
$’000
2011
$’000
7
8
9
10
12
13
14
15
16
19
20
19
18
17,260
48,064
31,494
712
97,530
1,100
999
7,826
3,263
13,188
110,718
2,599
74,756
214
143
(422)
(9,888)
67,402
20,691
1,812
22,503
14,827
5,986
20,813
43,317
110,718
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
Assets
Intangible assets
Mineral properties
Property, plant and equipment
Available for sale investments
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
Fair value 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:
J S Thomson
Director
Approved and authorised for issue by the Board on October 19, 2012
Page 38
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Group
Balance at 1 August 2010
Comprehensive income
Loss for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners
Issue of share capital
Share issue expenses
Share-based payments
Transactions with owners
Balance at 31 July 2011
Balance at 1 August 2011
Comprehensive income
Loss for the year
Foreign exchange translation differences
Loss on available for sale investments
Total other comprehensive income
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, 2012
Share
capital
$’000
Share
Premium
$’000
Merger
Reserve
$’000
Translation
reserve
$’000
Fair value
reserve
$’000
Accumulated
Losses
$’000
Total
$’000
1,863
51,532
214
-
-
-
-
-
-
-
-
214
214
-
-
-
-
-
-
-
-
-
214
-
-
-
-
15,252
(850)
-
14,402
65,934
65,934
-
-
-
-
-
9,047
(225)
-
8,822
74,756
-
-
-
-
436
-
-
436
2,299
2,299
-
-
-
-
-
300
-
-
300
2,599
Page 39
25
-
110
110
110
-
-
-
-
135
135
-
8
-
8
8
-
-
-
-
143
-
-
-
-
-
-
-
-
-
-
-
-
-
(422)
(422)
(422)
-
-
-
-
(422)
(6,811)
46,823
(53)
-
-
(53)
-
-
260
260
(6,604)
(6,604)
(3,367)
-
-
-
(3,367)
-
-
83
83
(9,888)
(53)
110
110
57
15,688
(850)
260
15,098
61,978
61,978
(3,367)
8
(422)
(414)
(3,781)
9,347
(225)
83
9,205
67,402
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2012
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating loss
Depreciation
Share based payments
Increase in inventory
Decrease/(increase) in debtors
Increase in creditors
Cash utilised in operations
Interest paid
Tax received
Net cash utilised in operating activities
Cash flows from investing activities
Interest received
Redemption/(purchase) of bearer deposit note
Acquisition of listed investment
Acquisition of evaluation and exploration assets
Acquisition of mineral properties - net
Acquisition of property, plant and equipment
Net cash utilised in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Payment of transaction costs
Proceeds from exercise of share options
(Repayment)/proceeds from Gold Loan (note 19)
Proceeds of Credit Facility
Capital element of finance lease payments
Net cash from financing activities
Net (decrease)/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
Page 40
2012
$’000
(2,501)
131
80
(167)
847
410
(1,200)
(9)
-
(1,209)
102
114
(1,135)
(658)
4,508
(10,006)
(7,075)
8,714
(225)
38
(7,888)
6,976
(1,712)
5,903
(2,381)
10,170
37
7,826
2011
$’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
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED 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 future trends in copper and gold prices, its ability to fund its development and exploration
programs, and to manage and generate positive cash flows from current operations. Through the use of
current cash reserves and continued production during the commissioning phase, management 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 which may give rise to the
possibility that additional working capital may be required to fund delays in commissioning the copper
concentrator and continued mine development and the repayment of loans falling due for repayment in
March 2013. 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. 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, 2012 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, 2012 the closing rate of exchange of Canadian
dollars to 1 GB pound was 1.58 (31 July 2011: 1.57) and the average rate of exchange of Canadian dollars
to 1 GB pound for the year was 1.60 (2011: 1.59).
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 41
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(b)
Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the nearest thousand dollars.
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 25.
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 42
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED 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. All other leases are classified as operating 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 43
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED 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 sale of gold and copper concentrate
extracted during the development phase and until commercial production is declared.
Mineral properties are amortised on a unit of production 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.
Available for sale investments
(h)
Available for sale investments are recognised at fair value with changes in value recorded in other
comprehensive income. Subsequent to initial recognition available-for-sale financial assets are stated at fair
value. Movements in fair values are recognised in other comprehensive income, with the exception of
impairment losses which are recognised in profit or loss. Fair values are based on prices quoted in an
active market if such a market is available. If an active market is not available, the group establishes the fair
value of financial instruments by using a valuation technique, usually discounted cash flow analysis. When
an investment is disposed, any cumulative gains and losses previously recognised in equity are recognised
in profit or loss.
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.
Page 44
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
Trade and other receivables
(j)
Trade and other receivables are stated at their cost less impairment losses (see accounting policy l).
Receivables in respect of sale of copper concentrate are revalued using metal prices ruling at the balance
sheet date.
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 45
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED 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. Any revenues generated during commissioning are treated as a contribution towards previously
incurred costs and are therefore credited against mining and development assets accordingly.
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.
Sale of concentrate
Revenue associated with the sale of copper concentrate is recognised when significant risks and rewards
of ownership of the asset sold are transferred to the Group’s off-taker, which is when the group receives
provisional payment for each lot of concentrate invoiced. Where a provisional invoice is not raised, risks
and rewards of ownership transfers when the concentrate pass over the rail of the shipping vessel.
Adjustments arising due to differences in commodity prices and assays, from the time of provisional
invoicing to the time of final settlement, are adjusted to revenue at each balance sheet date.
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.
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(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.
(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.
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(r)
Income tax (continued)
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes,
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet
date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3. Operating segments
The Group’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 operating segment.
Information about geographical areas
2012
2011
UK
$’000
Canada
Consolidated
UK
Canada
Consolidated
$’000
$’000
$’000
$’000
$’000
Segment revenue
Segment non-current assets
Information about major customers
-
-
1,219
1,219
97,530
97,530
-
-
3,523
3,523
80,427
80,427
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
Customer A
Customer B
Others
2012
$’000
2011
$’000
1,219
-
-
1,219
2,087
1,063
373
3,523
Page 48
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Operating loss
The operating loss is after charging/(crediting):
Depreciation – owned assets
Directors’ emoluments (see note 23)
Auditor’s remuneration:
Audit of these financial statements
Fees payable to the auditor for other services:
Other services
2012
$’000
2011
$’000
131
338
64
10
141
332
57
6
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 $nil (2011: $96,000) was capitalised
within exploration and evaluation assets and $4,092,000 (2011: $2,172,000) within mineral properties.
5. Personnel expenses
Salary costs
Wages and salaries
Compulsory social security contributions
Share based payments
Group
2012
$’000
9,543
1,367
79
10,989
Group
2011
$,000
6,083
997
248
7,328
Salary costs of $nil (2011: $127,000) were capitalised as exploration and evaluation costs, $8,449,000 as
mineral properties and $948,000 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
Group
2012
Group
2011
7
10
126
143
9
9
68
86
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.
Page 49
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses (continued)
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the 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
2012
$
0.484
0.503
0.175
0.541
0.461
0.446
of options
2012
‘000
price
2011
$
of options
2011
‘000
4,167
0.467
646
0.506
(202)
0.186
(674)
0.379
3,937
0.484
3,313
0.495
3,952
647
(52)
(380)
4,167
3,077
The options outstanding at July 31, 2012 have an exercise price in the range of $0.16 to $1.10 and a weighted
average remaining contractual life of 6 years (2011: 7 years).
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on the
Black-Scholes model. The contractual life of the option (10 years) is used as an input into this model.
Expectations of early exercise are incorporated into the Black-Scholes model.
Fair value of share options and assumptions
Fair value at measurement date
Share price (weighted average)
Exercise price (weighted average)
Expected volatility (expressed as weighted average volatility used
in the modelling under Black-Scholes model)
Expected option life
Expected dividends
Risk-free interest rate (based on national government bonds)
2012
$’000
2011
$’000
186
168
0.503
0.503
0.490
0.490
68.0%
5
0
1.67%
70.7%
5
0
2.35%
The expected volatility is based on the historical 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.
Page 50
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses (continued)
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
Share options granted in 2012
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
Reconciliation of effective tax rate
Loss before tax
Income tax using the UK corporation tax rate of 25.33% (2011: 27.33%)
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
2012
$’000
2011
$’000
-
17
4
36
22
79
21
64
64
99
-
248
2012
$,000
2011
$,000
-
-
-
-
-
-
-
-
1,737
(1,737)
(29)
(29)
2012
$’000
2011
$’000
(3,367)
(82)
(853)
(105)
(25)
(7,161)
(6,458)
230
-
(22)
14
(183)
(38)
(1,103)
1,303
(29)
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.
Intangible assets
Cost
Balance at 1 August 2010
Additions
Transfer to mineral properties
Balance at 31 July 2011
Balance at 1 August 2011
Additions
Balance at July 31, 2012
Carrying amounts
At 1 August 2010
At 31 July 2011
At 1 August 2011
At July 31, 2012
Exploration and
evaluation
costs
$’000
37,051
478
(20,902)
16,627
16,627
633
17,260
37,051
16,627
16,627
17,260
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 preliminary economic
assessment 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.
Page 52
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Mineral properties
Cost
Balance at 1 August 2010
Transfer from exploration and evaluation costs
Additions
Balance at July 31, 2011
Balance at 1 August 2011
Additions
Balance at 31 July 2012
Carrying amounts
At 1 August 2010
At 31 July 2011
At 1 August 2011
At July 31, 2012
Mineral
property
$’000
-
20,902
17,566
38,468
38,468
9,596
48,064
-
38,468
38,468
48,064
Consideration of impairment for mineral property costs
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.
The Group generated revenue from saleable material produced during commissioning of $25.2 million from the
sale of gold doré bar and $3.0 million from the sale of copper concentrate during the year and offset this revenue
against the mineral property asset as commercial production was not declared during the year.
Page 53
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Property, plant and equipment
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 2010
Additions
Disposals
Balance at 31 July 2011
Balance at 1 August 2011
Additions
Disposals
Balance at July 31, 2012
Depreciation and impairment losses
Balance at 1 August 2010
Depreciation charge for the year
Eliminated on disposals
Balance at 31 July 2011
Balance at 1 August 2011
Depreciation charge for the year
Eliminated on disposals
Balance at July 31, 2012
Carrying amounts
At 1 August 2010
At 31 July 2011
At 1 August 2011
At July 31, 2012
Leased plant and machinery
1,096
1,845
-
2,941
2,941
733
-
3,674
775
151
-
926
926
333
-
1,259
321
2,015
2,015
2,415
5,200
10,110
-
15,310
15,310
6,189
-
21,499
-
-
-
-
-
-
-
-
5,200
15,310
15,310
21,499
118
74
(39)
153
153
59
-
212
51
40
(20)
71
71
58
-
129
67
82
82
83
6,038
8,127
-
14,165
14,165
3,378
(189)
17,354
4,382
2,070
-
6,452
6,452
3,755
(189)
10,018
1,656
7,713
7,713
7,336
56
34
-
90
90
3
-
93
44
13
-
57
57
15
-
72
12
33
33
21
540
130
-
670
670
89
(6)
753
335
156
-
491
491
128
(6)
613
205
179
179
140
13,048
20,320
(39)
33,329
33,329
10,451
(195)
43,585
5,587
2,430
(20)
7,997
7,997
4,289
(195)
12,091
7,461
25,332
25,332
31,494
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, 2012, the net
carrying amount of leased plant and machinery was $5,542,000 (2011: $6,032,000). The leased plant and
machinery secures lease obligations (see note 19). During the year plant and equipment additions of $2,422,000
(2011: $7,019,000) were acquired through finance lease arrangements.
Page 54
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Available for sale investments
Cost
Balance at 1 August 2011
Acquisitions
Revaluation
Balance at 31 July 2012
Carrying amounts
At 31 July 2011
At 31 July 2012
Available for sale
investments
$’000
-
1,134
(422)
712
-
712
On February 15, 2012 the Group completed an acquisition of 4,500,000 shares of Maritime Resources Corp (TSXV:
MAE) (‘Maritime’) through a non-brokered private transaction priced at $0.23 per share for a total consideration of
$1,035,000. The acquisition gives Rambler a 17% equity stake and an invitation to appoint a representative to join
Maritime’s Board of Directors. On May 23, 2012 the Group acquired a further 588,230 shares at $0.17 per share. The
market price at July 31, 2012 was $0.14 per share.
11. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
Balance
Balance
Balance
Balance
Balance
Balance
July 31, 2012 July 31, 2012 July 31, 2012 July 31, 2011 July 31, 2012 July 31, 2011
$’000
$’000
$’000
$’000
$’000
$’000
-
-
-
(61)
(4,391)
(4,452)
-
-
-
-
(3,209)
(3,209)
21
3,104
1,327
-
-
4,452
97
1,556
1,556
-
-
3,209
21
3,104
1327
(61)
(4,391)
-
97
1,556
1,556
(3,209)
-
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Tax value of loss carry-forwards recognised
Net tax (assets) / liabilities
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
2012
$’000
2011
$’000
1,126
-
5,442
6,568
831
49
3,768
4,648
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Deferred tax assets and liabilities (continued)
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
Mineral properties
Intangible assets
Tax value of loss carry-forwards
Property, plant and equipment
Mineral properties
Intangible assets
Available for sale investment
Tax value of loss carry-forwards
12. Inventory
Metals in process
Operating supplies
13. Trade and other receivables
Trade receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
14. Cash and cash equivalents
Short term deposits
Bank balances
Cash and cash equivalents in the statement of cash flows
Page 56
Recogn-
Balance
ised in
Balance
Aug 1, 2010
$’000
income
July 31, 2011
$’000
$’000
(273)
-
1,745
(1,472)
-
370
1,556
(189)
(1,737)
-
97
1,556
1,556
(3,209)
-
Recogn-
Balance
ised in
Balance
Aug 1, 2011
$’000
income
Jul 31, 2012
$’000
$’000
97
1,556
1,556
-
(3,209)
(76)
1,548
(229)
(61)
(1,182)
-
-
21
3,104
1,327
(61)
(4,391)
-
2012
2011
$’000
$’000
-
1,100
1,100
540
394
934
2012
2011
$’000
$’000
281
72
478
168
999
653
37
616
259
1,565
2012
2011
$’000
$’000
355
7,471
7,826
692
9,478
10,170
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. Restricted cash
Bearer deposit notes
2012
2011
$’000
$’000
3,263
3,377
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 The bearer deposit notes mature
on differing dates throughout fiscal 2013 and have a nominal value of $3,302,000 (2011 - $3,424,000) giving an
effective yield of 1.1% (2011 – 1.4%).
16. Capital and reserves
Share capital and share premium – group and company
In issue at 1 August 2010
Issued for cash
Issued on exercise of options
In issue at 31 July 2011
In issue at 1 August 2011
Issued for cash
Issued in consideration for finance fees
Issued on exercise of options
In issue at July 31, 2012
Number ‘000
95,485
27,778
52
123,315
123,315
17,522
1,321
202
142,360
At July 31, 2012, 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, 2012 are as follows:
On August 22, 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.
On October 7, 2011 the company issued 643,227 shares for $0.4664 to satisfy $300,000 of finance expenses.
On October 31, 2011 the company issued 481,001 shares for $0.4158 to satisfy $200,000 of finance expenses.
On February 3, 2012 the company issued 197,242 shares for $0.5070 to satisfy $100,000 of finance expenses.
On February 9, 2012 the company received monies to subscribe for 180,000 shares for an average of $0.1754
each raising a total of $31,573 following the exercise of options.
Page 57
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. Capital and reserves (continued)
On March 19, 2012 the company received monies to subscribe for 10,403,980 shares for $0.44 each raising a
total of $4,408,323 net of expenses.
On July 18, 2012 the company received monies to subscribe for 7,118,012 shares for $0.58 each raising a total
of $4,073,014 net of expenses.
Merger reserve
The merger reserve arose from the acquisition of Rambler Mines Limited by Rambler Metals and Mining PLC.
This acquisition was accounted for in accordance with the merger accounting principles set out in UK Financial
Reporting Standard 6 and the Companies Act 1985, which continue under the Companies Act 2006, whereby
the consolidated financial statements were presented as if the business previously carried out through Rambler
Mines Limited had always been owned and controlled by the Company. The transition provisions of IFRS 1 allow
all business combinations prior to transition to IFRS to continue to be accounted for under the requirements of
UK GAAP at that time. Accordingly this acquisition has not been re-stated in accordance with that standard.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of the parent company which has a different functional currency from the presentation currency.
Exchange differences arising are classified as equity and transferred to the Group’s translation reserve. Such
translation differences are recognised in the income statement in the period of disposal of the operation.
Fair value reserve
The fair value reserve comprises cumulative adjustments made to the fair value of available for sale
investments.
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
Credit facility
Net debt
Equity
Total capital
Details of employee share options outstanding are set out in note 5.
Page 58
2012
$’000
7,826
(7,689)
(26)
(20,889)
(6,914)
(27,692)
(67,402)
2011
$’000
10,170
(6,956)
(29)
(19,903)
-
(16,718)
(61,978)
(95,094)
(78,696)
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. Loss per share
Basic loss per share
The calculation of basic loss per share at July 31, 2012 was based on the loss attributable to ordinary
shareholders of $3,367,000 and a weighted average number of ordinary shares outstanding during the period
ended July 31, 2012 of 128,477,000 calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period
Loss attributable to ordinary shareholders
Weighted average number of ordinary shares
At August 1, 2010
Effect of shares issued during the year
At July 31, 2011
In issue at August 1, 2011
Effect of shares issued during year
Weighted average number of ordinary shares at July 31, 2012
2012
$’000
(3,367)
(3,367)
2011
$
(53)
(53)
Number ‘000
95,485
6,797
102,282
123,315
5,162
128,477
There is no difference between the basic and diluted loss per share. At July 31, 2012 there were 3,937,000
(2011: 4,167,000) share options in issue which may have a dilutive effect on the basic earnings or loss per
share in the future.
18. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
2012
2011
$’000
4,918
65
1,003
5,986
$’000
4,710
187
1,063
5,960
Page 59
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. 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 21.
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
Credit Facility
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than one year
Between one and five years
2012
$’000
2011
$’000
23
5,727
14,941
20,691
26
5,326
19,254
24,606
3
1,962
5,948
6,914
14,827
3
1,630
649
-
2,282
Minimum
lease
Payments
2012
Interest Principal
2012
2012
Minimum
lease
Payments
2011
Interest Principal
2011
2011
$’000
$’000
$’000
$’000
$’000
$’000
2,189
6,361
8,550
227
634
861
1,962
5,727
7,689
1,965
5,918
7,883
335
592
927
1,630
5,326
6,956
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are
secured on the underlying assets. Total interest of $428,000 (2011: $188,000) was charged to mineral properties
during the year.
Gold Loan
In March 2010, 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
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Interest-bearing loans and borrowings (continued)
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
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 was payable with each payment received under the agreement.
The remaining circumstances in which the Gold Loan may be repaid earlier than by the delivery of payable gold
are as follows:
(iii) If within 24 months of the date that gold is first produced (November 28, 2011), 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.
(iv) Within the first 36 months of 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
During the first eight months of commissioning, repayments of US$7,855,441 were made from the delivery of
4,774 ounces of gold thereby satisfying the requirement to repay a minimum of US$3.6 million cash during the
first and second 12 months and partially meeting the requirements for the third 12 months.
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 $7,886,000 was accrued during the period. $nil (2011: $49,906) was included in exploration and
evaluation expenditure and $4,340,000 (2011: $3,446,000) charged to mineral properties.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
Credit Facility
On September 29, 2011 the Group agreed a credit facility of up to $10 million with Sprott Resource Lending
Partnership (“Sprott”) for use as additional funding for the development of the Ming Mine. Subsequent to
amending the agreement in December 2011 the facility is available in three instalments; the first instalment of $5
million was drawn on October 29, 2011, the second instalment of $2.5 million was drawn on January 30, 2012
and the final instalment for the balance up to $10 million is available until August 31, 2012. Interest accrues at a
fixed rate of 9.25% per annum. The principle is repayable by March 29, 2013 and is secured by a fixed and
floating charge over the assets of the Group. In connection with the credit facility, a structuring fee of $100,000
and a 3% commitment fee of $300,000 were paid to Sprott in cash. Pursuant to the terms of the credit facility,
the Company issued $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 was satisfied by the issuance of ordinary shares by the Company.
Total financing and interest charges of $1,004,000 (2011: $nil) were charged to mineral properties during the
year.
Page 61
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
20. Provision
Reclamation and closure provision
Opening balance
Provision (utilised)/made during the year
Unwinding of discount
Ending balance
2012
$’000
2011
$’000
1,647
(121)
286
1,812
559
1,007
81
1,647
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. Following the completion and restoration of the Group’s
Nugget Pond Crown Pillar satellite deposit government released a Letter of Credit valued at $121,000. The
remaining liability is secured by Letters of Credit for $3,255,155.
21. Financial risk management
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale
investments and other receivables. In addition the Company’s financial assets include amounts due from
subsidiaries. The Group and Company’s financial liabilities comprise: trade payables; other payables; and
accrued expenses. The Group’s financial liabilities also include interest bearing loans and borrowings.
All of the Group’s and Company’s financial liabilities are measured at amortised cost and their financial assets
are classified as loans and receivables 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, 2012.
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 19. 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.
Page 62
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Financial risk management (continued)
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
2012
$
24
(22)
(1,734)
1,576
2011
$
64
(57)
(1,920)
1,746
Liquidity risk
With finite cash resources 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, 2012.
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 other 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
2012
$’000
2011
$’000
16,174
5,667
4,795
4,778
3,168
16,240
50,822
5,056
6,118
6,915
4,021
3,614
18,238
43,962
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
2012
$’000
2011
$’000
8,879
2,021
2,015
1,461
243
10
14,629
1,633
1,465
1,508
1,478
888
13
6,985
Page 63
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Financial risk management (continued)
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2012
was 6.46%.
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 13). The Group maximum exposure to credit risk at July 31, 2012 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 19.
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.
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 25 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
2011
2012
$’000
$’000
(2,089)
5,222
(292)
783
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.
Page 64
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Financial risk management (continued)
At the year end the cash and short term deposits were as follows:
At July 31, 2012
Sterling
Canadian $
At 31 July 2011
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
355
-
355
77
7,394
7,471
432
7,394
7,826
1
-
$’000
$’000
$’000
Months
667
25
692
47
9,431
9,478
714
9,456
10,170
1
1.3
%
0.25
-
%
0.25
0.95
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.
22. Capital and operating lease commitments
The Group has commitments totalling $nil (2011: $2.506 million) with various vendors relating to the purchase of
equipment for the Nugget Pond Mill copper concentrator upgrade.
Page 65
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its directors and executive officers.
Transactions with key management personnel
The directors’ compensations were as follows:
Salary – executive
G Ogilvie
Fees – non-executive
D H W Dobson
S Neamonitis
J M Roberts
L D Goodman
B F Dalton
J A Baker
B D Hinchcliffe
T S Chan
J Thomson
2012
$’000
2011
$’000
270
229
-
13
13
13
-
-
13
3
13
338
-
13
13
13
2
2
13
-
47
332
D H W Dobson waived his entitlement to director’s fees for the current and preceding periods. At July 31, 2012
fees of $21,000 (2011: $19,000) remained outstanding.
Brian Dalton and John Baker, directors of the company until October 13, 2011 are also directors of Altius
Resources Inc. (“Altius”).
Consultancy fees were payable to Altius Mineral Corporation for the year ended July 31, 2012 for the
consultancy services of J Baker & B Dalton amounting to $2,700 (2011: $21,000). At July 31, 2012, consultancy
fees of $nil (2011: $5,000) were outstanding.
Share options held by directors were as follows:
G Ogilvie1
J Thomson2
D H W Dobson3
S Neamonitis4
J M Roberts3
L D Goodman3
B D Hinchcliffe3
At 31.07.12 At 31.07.11
No.
No.
‘000
1,100
400
45
100
45
45
45
1,780
‘000
1,100
400
45
45
45
45
45
1,725
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.
4 options at an exercise price of $0.53 expiring on 22 March 2022.
Page 66
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Related parties (continued)
Total key management personnel compensations were as follows:
Short term employee benefits
Social security costs
Share based payments
24. Subsequent events
2012
$’000
2011
$’000
659
33
17
709
641
30
80
751
On October 9, 2012 the Company announced the purchase of a 1% net smelter royalty (‘NSR’) held over the
Ming Mine by Ming Minerals Inc. for a total consideration of $500,000. The mine was initially encumbered by a
combined 4.5% NSR held by four separate groups. Of the four net smelter royalties, two included a buyout
clause allowing the Company to purchase 3% of the total NSR for a combined payment of $1,100,000. This is
the second royalty Rambler purchased since starting commissioning at the Ming Mine leaving a combined net
smelter royalty of 1.5% on the Ming Mine.
25. 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.
Page 67
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
25. Critical accounting estimates and judgements (continued)
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 19).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.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and foreign exchange fluctuations.
Management monitors these changes closely and at the end of the period the directors will consider whether the
effect of these variations are material on the whole and determine whether an adjustment is therefore
appropriate.
Available for sale investment
Management consider that they do not have significant influence over the financial and policy decisions of
Maritime and therefore have included the investment as an available for sale investment.
Commercial production
The Group monitors the on-going testing and commissioning of its copper concentrate milling facility to assess
when commercial production has been achieved. Commercial Production is the assessment that the mill is
capable of operating in the manner intended was defined by management at the onset of development to be 60
days of continuous production from both the mill and mine, being 85% of target rates envisaged in the Group’s
Feasibility Study. Prior to commercial production being declared costs and revenues are offset to the Mineral
Properties asset and post commercial production will be charged to the Group’s income statement. Commercial
production was not achieved at July 31, 2012.
Page 68
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2012
(Loss)/profit for the year
Exchange differences on translation into presentation currency
Other comprehensive income/(loss) for the year
Total comprehensive loss for the year
Note
2012
$’000
Restated
2011
$’000
(1,232)
309
361
361
(1,352)
(1,352)
(871)
(1,043)
Page 69
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at July 31, 2012
(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
Retained profit
Total equity
Liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
ON BEHALF OF THE BOARD:
Note
2012
$’000
Restated
2011
$’000
Restated
2010
$’000
C4
C5
C6
16
C7
-
68,848
68,848
50
437
487
69,335
2,599
74,756
(10,067)
1,893
69,181
154
154
154
69,335
-
60,285
60,285
47
714
761
61,046
2,299
65,934
(10,428)
3,115
60,920
126
126
126
61,046
1
46,619
46,620
68
553
621
47,241
1,863
51,532
(9,076)
2,774
47,093
148
148
148
47,241
J S Thomson
Director
Approved and authorised for issue by the Board on October 19, 2012
Page 70
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Balance at 1 August 2010 (as previously stated)
Prior period adjustment (see note C3)
Balance at 1 August 2010 (restated)
Comprehensive income
Profit for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive income for the year
Issue of share capital
Share issue expenses
Share-based payments
Balance at 31 July 2011 (restated)
Comprehensive income
Loss for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive income for the year
Issue of share capital
Share issue expenses
Share-based payments
Balance at July 31, 2012
Share
capital
$’000
Share
premium
$’000
Translation
reserve
$’000
Accumulated
losses
$’000
Total
$’000
1,863
-
1,863
-
-
-
-
436
-
-
2,299
-
-
-
-
300
-
-
2,599
51,532
-
51,532
-
-
-
-
15,252
(850)
-
65,934
-
-
-
-
9,047
(225)
-
74,756
(9,076)
-
(9,076)
-
(1,352)
(1,352)
(1,352)
-
-
-
(10,428)
-
361
361
361
-
-
-
(10,067)
(3,845)
6,619
2,774
309
-
309
-
-
32
3,115
(1,232)
-
(1,232)
-
-
10
1,893
40,474
6,619
47,093
307
(1,352)
(1,352)
(2,085)
15,688
(850)
32
60,920
(1,232)
361
361
(871)
9,347
(225)
10
69,181
Page 71
RAMBLER METALS AND MINING PLC
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2012
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating (loss)/profit
Share based payments
Foreign exchange losses
(Increase)/decrease in debtors
Increase/(decrease) in creditors
Net cash utilized in operating activities
Cash flows from investing activities
Interest received
Loans to subsidiaries
Net cash utilised in investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Payment of transaction costs
Proceeds from exercise of share options
Net cash from financing activities
Net (decrease)/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
2012
$’000
(1,232)
6
313
(3)
28
(888)
2011
$’000
309
21
(1,250)
20
(21)
(921)
1
(7,923)
(7,922)
1
(13,879)
(13,878)
8,714
(225)
38
8,527
(283)
713
7
437
15,688
(850)
12
14,850
51
553
109
713
Page 72
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1. Accounting policies
The accounting policies of the company are consistent with those adopted by the Group with the addition of the
following:
Investments
Investments are stated at their cost less impairment losses.
C2. Loss of parent company
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 $1,232,000
(2011: Profit $309,000).
C3. Prior period adjustment
The parent company has provided finance in the form of loans to its Canadian subsidiary over a number of
years. The loans have previously been recorded in the books of the parent company in British pounds.
However, the directors have determined that the intercompany loan is, and always has been, denominated in
Canadian dollars and have restated the comparative information in accordance with IAS8, “Accounting policies,
changes in accounting estimates and errors” to reflect this. Accordingly, the foreign exchange translation
differences have been determined for each period presented, resulting in a decrease of $1,250,000 in losses, a
decrease in other comprehensive income of $208,000 presented for the year ended 31 July 2011 and a
increase of $7,661,000 in total equity as at 31 July 2011. The correction to total equity as at 1 August 2010,
being the start of the earliest period presented, was an increase of $6,619,000.
C4. Investments
Cost
Balance at 1 August 2010 (restated)
Advances (net)
Effect of movements in foreign exchange
Balance at 31 July 2011 (restated)
Balance at 1 August 2011 (restated)
Advances (net)
Effect of movements in foreign exchange
Balance at July 31, 2012
Investment in
subsidiary
$’000
Loans
$’000
Total
$’000
387
-
(11)
376
376
-
2
378
46,232
13,879
(202)
59,909
59,909
8,523
38
68,470
46,619
13,879
(213)
60,285
60,285
8,523
40
68,848
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
Page 73
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C4. Investments (continued)
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.
C5. Trade and other receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
C6. Cash and cash equivalents
Short term deposits
Bank balances
Cash and cash equivalents in the statement of cash flows
C7. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
C8. Related party transactions
2012
2011
$’000
$’000
1
23
26
50
4
14
29
47
2012
2011
$’000
$’000
355
82
437
667
47
714
2012
2011
$’000
35
1
118
154
$’000
5
3
118
126
The Company has a related party relationship with its subsidiaries (see note C4) and with its directors and
executive officers (see note 23).
Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note C4.
Other related parties
Transactions with other related parties are detailed in note 23.
Page 74