REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
REPORT OF THE DIRECTORS AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013
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
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
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RAMBLER METALS AND MINING PLC
COMPANY INFORMATION
FOR THE YEAR ENDED JULY 31, 2013
Directors:
T S Chan
E C Chen
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J S Thomson
Secretary:
P Mercer
Registered office:
Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number:
5101822 (England and Wales)
Auditor:
BDO LLP
55 Baker Street
London
W1U 7EU
Page 1
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED JULY 31, 2013
We are pleased to report the results for the year ended July 31, 2013.
The principal activity of Rambler Metals and Mining plc (‘the parent Company’ or ‘the Company’) and its
subsidiaries (the ‘Group’ , or ‘Rambler’) is the development, mining and exploration of the Ming Copper-Gold
Mine (“Ming Mine”) in Newfoundland and Labrador and the exploration and development of other properties
located in Atlantic Canada.
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:
Declared commercial production on November 1, 2012 resulting in profits before tax of $3.7 million for
the last three quarters of the year.
Generated cash of $12.6 million from operations since declaring commercial production.
Continued its exploration activity at the Ming Mine and acquired exploration and development rights to
other local copper/gold properties.
FINANCIAL HIGHLIGHTS
The consolidated profit after taxation of the Group in respect of the year ended July 31, 2013 amounted to
$9,053,000 (earnings per share of $0.063) versus a loss of $3,367,000 for the year ended July 31, 2012 (a loss
per share of $0.026).
Following the declaration of commercial production on November 1, 2012 the Group generated revenue of $34.7
million mainly from the sale of copper concentrate. Prior to commercial production the Group generated revenue
from saleable material produced during commissioning of $9.5 million and offset this revenue against the Mineral
Property asset.
The gross assets of the Group amounted to $116.9 million as at the end of the year. This included Mineral
Properties of $49.3 million and Intangible assets of $17.4 million which consisted of accumulated deferred
exploration and evaluation expenditures on the Lower Footwall Zone at the Ming Mine.
Reaching commercial production is a significant milestone for any exploration or development project. My thanks
to our employees, officers and directors for the progress made during the year and I look forward to continued
success in fiscal 2014.
DHW Dobson
Chairman
October 28, 2013
Page 2
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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 28, 2013 and covers the results of operations for the quarter and year ended July 31, 2013. This
discussion should be read in conjunction with the audited Financial Statements for the year ended July 31, 2013 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 strategic vision of the Group is to become Atlantic Canada’s leading mine operator and resource developer. Its principal activity is the development, mining and
exploration of the Ming Copper-Gold Mine (‘Ming Mine’) in Newfoundland and Labrador (see map referenced in Appendix 1) and the exploration and development of
other properties located in Atlantic Canada. The Company declared commercial production on November 1, 2012 and the Group subsequently reported revenue of
$34.7 million from the sale of 14,634 dry metric tonnes (‘dmt’) of copper concentrate containing 3,947 tonnes of accountable copper metal, 2,664 and 10,895 ounces of
accountable gold and silver respectively and further revenue from the sale of gold doré bars containing 270 ounces of gold, generating an overall profit before tax of
$2,985,000.
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 four strategic goals:
1. Continue as a profitable copper and gold producer by continuing to produce a high grade concentrate at the Nugget Pond concentrating facility then improving
revenue through the integration of the gold hydromet plant into the production stream.
2.
Increase available resources and reserves through further exploration both within the Ming mine and current land holdings.
3. Continue to investigate, through various optimization studies, development of the Lower Footwall Zone creating organic growth.
4. Selectively pursue growth opportunities within Atlantic Canada including joint ventures, acquisitions, strategic alliances and equity positions.
The Group’s directors and management believe that focussing on these priorities will instil a solid foundation for Rambler and its shareholders, 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, 2013
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2013
This was a significant year following the declaration of commercial production on November 1, 2012.
Highlights of the 2013 fiscal year included:
Production
For the first 9 months in commercial production the Group produced 13,802 tonnes of copper concentrate containing 3,953 tonnes of copper metal, 3,137 ounces of
gold and 23,958 ounces of silver. The average feed grade during the period was 3.60% Cu, 1.31 g/t Au and 8.95 g/t Ag followed by a mill recovery of 91%, 62% and
71% for copper, gold and silver respectively.
During the fourth quarter produced a total of 5,244 dmt (Q3’13 – 4,575 dmt) of copper concentrate for a total of 18,299 dmt for fiscal year ended July 31, 2013 and
20,524 dmt since the start of copper production in May 2012. Concentrate produced during the fourth quarter averaged 30% copper with 8 g/t gold and 59 g/t silver
(Q3’13: 28% copper with 7 g/t gold and 51 g/t silver) with milling recoveries for copper and gold averaging 94% and 65% respectively (Q3’13: 91% and 62%
respectively).
During the fourth quarter daily tonnage through the mill increased from 571 dmt during May, improved to 585 dmt in June and 610 dmt in July. The continued
increase in throughput was evident in the increased concentrate produced during the fourth quarter, despite a 12 day maintenance period in the copper concentrator
between June and July allowing the gold hydromet to be operated.
Delivered three shipments of concentrate during the year totalling approximately 17,956 wet metric tonnes (‘wmt’) via the Group’s port facility at Goodyear’s Cove,
Newfoundland and Labrador.
Capital Development
Development into the high grade 1807 copper zone continued during 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.
A significant development milestone was reached during the year, being the breakthrough of the independent 1807 ramp system. Ore from all developed levels of
this high copper grade zone can now be accessed with larger 42 tonne haul trucks. Additional drill sites are also now available for continued exploration and
extension drilling of the known mineralized areas.
Page 4
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2013 (Continued)
Financing, Royalty and Investment
During the year repayments of US$1,454,129 (project to date US$9,309,570) were made from the delivery of 949 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 and partially meeting the requirements for the
third 12 months.
Agreed terms for the extension of its $10 million secured credit facility to March 31, 2014. Under the amendment agreement the Group paid Sprott Resource
Lending Partnership (‘Sprott’), in shares, a 4% extension fee. Interest will continue to accrue at 9.25% and any drawdown on the facility will be subject to the 4%
drawdown fee as per the original agreement. Of the initial $10 million credit facility made available, only $7.5 million was drawn with $500,000 repaid in November
2012. $3.0 million was made available under the amended credit facility and was available until September 30, 2013. On April 30, 2013 and May 31, 2013
payments of $500,000 and $600,000 respectively reduced the outstanding balance at year end to $5,900,000. As of the date of this release the outstanding
balance on the facility is $4,750,000.
Exercised an option for the acquisition of 588,230 shares of Maritime Resources Corp (TSXV: MAE) (‘Maritime’) priced at $0.25 per share for a total consideration
of $147,000 bringing Rambler’s equity stake to 18%. Maritime continues to advance the Green Bay portfolio of properties, specifically the Hammerdown mine.
Maritime filed a Technical Report to accompany its NI43-101 compliant resource estimate released on May 28, 2013 which showed 79,000 ounces in the measured
category, 349,600 ounces in the indicated category (428,600 ounces of gold combined) and 661,100 ounces in the Inferred category, at a 3g/t cut-off grade. The
reported grades for each of the measured, indicated and inferred resource categories were 12.12 g/t, 8.27 g/t and 6.92 g/t gold respectively.
Announced the purchase of a 1% net smelter royalty (‘NSR’) held over the Ming Mine 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 leaving a combined net smelter
royalty of 1.5% on the Ming Mine.
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2013 (Continued)
Exploration and evaluation
Capital development continued with the 1807 zone ramp being driven down gradient to the 481 and 485 levels. In the first half of fiscal 2014 the Company intends
to complete a program of in-fill drilling moving inferred 1807 zone material into the measure and indicated categories with the medium term intention of testing for
new mineralization down and up-plunge. All zones within the mine, including the 1807 Zone, remain open both up and down plunge.
The Group finalized a purchase and sale agreement with a local exploration company for the exclusive rights to explore and develop the Krissy Buckle gold/copper
property located within 40 kilometres of the Group’s Nugget Pond precious and base metal processing facility. The Group has exclusive rights to explore and
develop the property while providing the vendors with a 2% net smelter royalty (‘NSR’) on any ore extracted. 1% of the NSR can be bought out at any point in the
future for a fee of $1,000,000. In addition to the NSR, advance royalty payments totalling $90,000 will be paid to the vendors over the first 4 years.
The Company received funding from the Research Development Corporation, Newfoundland and Labrador (‘RDC’) to complete in depth research on two separate
projects associated with the advancement of Ming Mine. The first is a gold liberation of historic tailings study for which RDC will contribute $178,439, total project
investment $239,169. The second project involves an examination of various pre-concentration methods with the goal of further improving the economic viability of
the Lower Footwall Zone. RDC is supporting this research by contributing $250,000 through its R&D Proof of Concept program to a total project cost of $372,668.
Staffing
Announced the appointment of Mr. Robert McGuire, P.Eng., as the Group’s new General Manager at the Ming Copper-Gold Mine. Mr. McGuire has over 35 years’
experience in underground mining with a diverse background in supervisory and managerial positions. Mr. Tim Sanford, P.Eng., the Group’s previous General
Manager was promoted to Vice President Technical Services, a new executive position that will oversee the preparation of Rambler’s expansion plans of the Ming
Mine and external growth opportunities.
At the end of the year a total of 139 full time employees were employed at the Ming Mine compared to 130 full time employees at July 31, 2012.
The Group continues to evaluate current employment levels and look for opportunities to streamline its operations with the goal of improving overall efficiency.
Page 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
FINANCIAL RESULTS
Revenue
A total of 14,746 dmt of concentrate was provisionally invoiced during the year at an average price of $3.38 per pound copper, $1,530 per ounce gold and $27 per
ounce silver, generating $35.6 million in combined revenue before final assay and weights were agreed on the three delivered shipments. An additional $479,000
in revenue was realized on the sale of 324 ounces of gold produced mainly from the testing of floatation tails from the copper concentrator being reprocessed
through the Group’s gold processing facility.
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 transfer when the concentrate passes over the rail of the shipping vessel. Adjustments arising due to differences in assays, from the time of
provisional invoicing to the time of final settlement, are adjusted to revenue. Adjustments arising due to differences in commodity prices, from the time of provisional
invoicing to the time of final settlement, are adjusted to Gain or Loss on Derivative Financial Instruments.
During the year the Group agreed final weights and assays on three concentrate shipments with its off-take partner resulting in a $941,776 reduction in revenue
(112 dmt) bringing net revenue for the period to $34.7 million. Throughout the year the Group fixed a portion of its copper, gold and silver production with its off-
take partner to mitigate the risk of any significant commodity price movements resulting in a net realized loss on derivative financial assets of $73,703 being the
difference in the commodity prices at time of provisional invoicing, and actual commodity prices realized on the fixed portion of the shipment. A further unrealized
loss of $250,755 resulted at year end being the difference in the commodity prices at time of provisional invoicing and anticipated commodity prices upon final
settlement following the future shipment of concentrates in the Group’s warehouse at year end.
Revenue of $9.5 million realized in Q1/13 during the testing and commissioning of the Ming Mine along with operating expenditures were offset against the mineral
property asset.
Profit
The net profit before tax for the year was $2,985,000 compared with a loss of $3,367,000 for the year ended July 31, 2012. The net profit for the quarter ended July
31, 2013 was $7,620,000 ($1,579,000 before tax) or $0.053 per share which compares to $193,000 for Q3/13 and a loss of $1,202,000 for Q4/12.
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
FINANCIAL RESULTS (continued)
Production costs
Average production costs (before depreciation and amortisation) incurred since the declaration of commercial production were $145 per tonne of ore milled and
$2.03 per equivalent pound of copper.
Cash flow and cash resources
Cash flows generated from operating activities were $11,468,000 compared with cash utilized of $1,209,000 in the previous fiscal year. Cash flows generated from
operating activities were $5,892,000 in Q4/13 compared to cash utilized of $380,000 in Q3/13 and cash utilized of $1,211,000 in Q4/12. The increase in the cash
generated relates to the operating profit and changes in working capital.
Cash resources as at July 31, 2013 were $5.6 million and as of October 28, 2013 had increased to $6.5 million.
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
OPERATIONAL SUMMARY
For the first 9 months in commercial production the Company produced 13,802 tonnes of copper concentrate containing 3,953 tonnes of copper metal, 3,137 ounces
of gold and 23,958 ounces of silver. The average feed grade during the period was 3.60% Cu, 1.31 g/t Au and 8.95 g/t Ag followed by a mill recovery of 91%, 62%
and 71% for copper, gold and silver respectively.
Total
137,397
Q4/13
47,027**
Q3/13
43,907*
Q2/13
46,463
PRODUCTION
Dry Tonnes Milled
Copper Recovery
Gold Recovery
Silver Recovery
Copper Head Grade (%)
Gold Head Grade (g/t)
Silver Head Grade (g/t)
94%
65%
73%
4.05
1.52
10.95
91%
62%
71%
3.59
1.29
8.68
Q3/13
27.9
6.7
51.4
4,575
1,278
987
7,557
89%
58%
68%
3.14
1.13
7.19
Q2/13
27.6
6.7
51.0
3,983
1,101
853
6,528
CONCENTRATE (Produced and Stored in Warehouse)
Copper (%)
Gold (g/t)
Silver (g/t)
Dry Tonnes produced
Copper Metal (tonnes)
Gold (ounces)
Silver (ounces)
Total
13,802
3,953
3,137
23,958
Q4/13
30.0
7.7
58.6
5,244
1,574
1,297
9,873
Note:
(1) Tables show first three quarters in commercial production
(2) * Continual freezing of the course ore bin in February
(3) ** 12 day period where gold hydromet was operated instead of copper circuit allowing annual maintenance in the copper concentrator. The hydromet milled 7,247 dry
tonnes giving a combined total tonnage for Q4 of 54,274
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
HEALTH AND SAFETY
The Group completed the year with no lost time accidents and 7 medical aid injuries. The lost time accident frequency rate and medical aid frequency rate for the
period and fiscal year to date was 0 and 4.3 respectively.
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:
Continue to utilize cash flow from operations to pay down credit facility debt by the end of March 2014 maximizing shareholder value by reducing the Group’s
expensive finance costs
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.
Open up mining horizons in the Ming South up and down plunge ore bodies.
Optimize the mining and processing of ores from the Ming Mine that would allow an expansion to 1,000 mtpd; which in turn could allow the gold hydromet to be
operated independently and/or simultaneously with the copper concentrator.
Continuing to evaluate Optimization Opportunities for a possible future expansion into the Lower Footwall Zone.
Become a strategic long term low-cost producer in Atlantic Canada, by selectively pursuing growth opportunities with joint ventures and acquisitions, including the
Group’s investment in “The Little Deer Project” and Maritime Resources Corp.
Increase exposure and liquidity both on London’s AIM and on Toronto’s Venture Exchange through marketing and investor relations campaigns.
See ‘Forward Looking Information’ in Appendix 5 for a description of the factors that may cause actual results to differ from forecast.
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
CAPITAL PROJECTS REVIEW
During the year the Group incurred expenditures of $15,142,000 on Mineral Property which were offset by pre-commercial production revenue of $9,478,000 from gold
and copper concentrate sales, $2,620,000 on property, plant and equipment and $190,000 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, were
capitalized within mineral property and offset by revenues generated from on-going production.
Mineral Property
Property, plant and equipment
Exploration and evaluation costs
TOTAL CAPITAL
Total
$,000
5,664
2,620
190
8,474
Q4/13
$,000
1,267
826
131
2,224
Q3/13
$,000
1,766
389
1
2,156
Q2/13
$,000
2,147
586
-
2,733
Q1/13
$,000
484
819
58
1,361
Following the start of commercial production at the beginning of Q2/13 the majority of expenditure on the mineral property relates to capital development in the 1807
zone including the independent 1807 ramp system which will provide access to 1807 stoping and access to lower levels of the Ming Mine ore body.
Property, plant and equipment includes $1.9 million on underground mobile equipment and $0.6 million on storage and office buildings during the year.
Exploration and evaluation costs relate to exploration drilling on the 1806 and 1807 ore zones and the on-going Lower Footwall zone projects as outlined above in the
Highlights of the Year Ended July 31, 2013 section.
Page 11
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
FINANCIAL REVIEW
Fiscal
2013
($000’s)
34,669
Commentary
Revenue of $34.7 million was generated through the sale of 14,634 dmt of copper concentrate containing 3,947
tonnes of accountable copper metal and 2,664 ounces of accountable gold. This compared with revenue of $1.2
million in the prior year from 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.
27,644
Production costs relate to the processing and mining costs associated with Group’s Ming Mine and include
processing costs of $5.4 million, mining costs $15.5 million and depreciation and amortisation of $6.7 million.
Operating costs associated with mining and processing of Ming Mine ores were capitalized to Mineral Property prior to
commercial production being achieved. In 2012, 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.
3,557
(323)
General and administrative expenses were higher than the previous year by $535,000. Employment costs
increased $256,000 as a result of key management promotions and compensation changes and the recruitment of
additional administrative staff, legal and professional costs increased $79,000 which includes the costs of a strategic
review carried out during the year , travel and investor relation costs increased $113,000 and security and general
office expenses increased $112,000 due to the addition of security personnel at the mine site and the move to the new
office and dry facility.
Loss on derivative financial instruments. Throughout the year the Group fixed a portion of its copper, gold and
silver production with its off-take partner to mitigate the risk of any significant commodity price movements resulting in
a net realized loss on derivative financial assets of $73,703 being the difference in the commodity prices at time of
provisional invoicing, and actual commodity prices realized on the fixed portion of the shipment. A further unrealized
loss of $250,755 resulted at year end being the difference in the commodity prices at time of provisional invoicing and
anticipated commodity prices upon final settlement following the future shipment of concentrates in the Group’s
warehouse at year end.
Comparatives
Fiscal
2012
($000’s)
B/ (W)*
1,219
2,744%
674
(4,001)%
3,022
(18)%
-
-
(513)
Foreign exchange losses arising on the Gold Loan reduced in the year as a result of the strengthening of the
Canadian dollar against the US dollar during the year.
(959)
47%
6,068
Income tax credit. Following the declaration of commercial production during the year it has been concluded that the
Group has sufficient evidence of future taxable profits to justify the recognition of a deferred tax credit of $6.1 million.
-
-
Page 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
FINANCIAL REVIEW (continued)
Fiscal
2013
Results
($000’s)
Commentary
Mineral Properties The group incurred costs of $15.1 million in the year offset by revenue on gold production of $9.5
million (see further below). The costs include labour of $4.6 million, contractor and material costs of $0.3 million,
underground development costs of $4.5 million, depreciation of $1 million and finance costs of $1.1 million. Finance
costs include $0.6 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 $0.6 million relating to interest on the Group’s Credit Facility and equipment
capital leases.
5,664
Ming Mine Revenue of $9.5 million was realized in Q1/13 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 testing and commissioning
was credited against Mineral Properties prior the declaration of commercial production.
Comparatives
Fiscal
2012
($000’s)
B/ (W)*
9,596
41%
2,620
Capital spending on property, plant and equipment decreased significantly during the year following the move to
commercial production with $1.9 million spent on underground mobile equipment and $0.4 million on a storage facility.
10,451
75%
190
Capital spending on exploration and evaluation relate to exploration drilling on the 1806 and 1807 ore zones and
the on-going Optimization Studies on the Group’s Lower Footwall Zone ore body.
633
70%
*B / (W) = Better / (Worse)
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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 2013
Revenue
Net Income/ (loss)
Earnings/(loss) per Share (Basic & Diluted)
Fiscal 2012
Revenue
Net Income/ (loss)
Earnings/(loss) per Share (Basic & Diluted)
13,175
10,087
11,407
7,620
0.053
-*
(1,202)
(0.009)
193
0.001
-*
(281)
(0.002)
1,958
0.014
-*
(1,039)
(0.008)
-*
(718)
(0.005)
1,219
(845)
(0.007)
*gold and copper sales resulting from the testing and commissioning of the Ming Mine were credited to Mineral Properties
until commercial production was achieved
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 fluctuation in losses in the third
and fourth quarters of 2012 and the first quarter of 2013 reflects exchange gains and losses on the retranslation of the Gold Loan. The profit in the second quarter of
2013 reflects the successful move into commercial production on November 1, 2012. The reduced profit in the third quarter of 2013 was due to a decline in copper and
gold prices and invoicing of less copper concentrate when compared to the second quarter of 2013 and the subsequent increase in profits in fourth quarter of 2013 was
due to an increase in production and the recognition of a deferred tax credit of $6,040,000.
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
Since announcing commercial production, the Group has generated cash flows to finance its operational and development requirements and repay loans. Prior to Q2/13
the Group 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. The Group generated operating cash flows of $12.6 million since declaring commercial production on November 1, 2012 with
$5.9 million generated in Q4/13 and positive cash flows are expected to continue. However, there is no guarantee that expenses will not exceed income again during
this mining 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 $CDN
Cash US$
Cash GBP
Short-term Investments GBP
Total
July 31, 2013
$’000
July 31, 2012
$’000
2,212
3,293
61
-
5,566
7,394
-
77
355
7,826
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 in investing activities amounted to $8.6 million for the year. Net cash of $6.7 million was spent on the Group’s Mineral Property ($9.5 million proceeds
received from the sale of gold and copper concentrate less $16.2 million in mine development). $1.6 million was spent on property, plant and equipment, $0.2 million on
Exploration and Evaluation of the Lower Footwall Zone and $0.1 million invested in Maritime Resources Corp.
Cash flows utilized in financing activities during the year amounted to $5.1 million and included repayment of $1.6 million of the Group’s credit facility and repayments of
the gold loan of $1.4 million and finance lease repayments of $2.1 million.
Page 15
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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.
Since the commencement of commercial production the Group has generated operating cash flows of $12.6 million and reduced the working capital deficit from $8.8
million at November 1, 2012 to $2.7 million at July 31, 2013. The Group expects to remain cash flow positive based on current projections and production forecasts
generating a working capital surplus during the next 12 months including the repayment of the Sprott credit facility by the due date of March 31, 2014. The current
economic conditions do, however, create uncertainty particularly over:
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the consequence for the cash generated from US dollar revenues;
(c) the production targets being met; and
(d) the terms of the Gold Loan being complied with.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should continue to be cash flow
positive and meet its repayment obligations under both the credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to
adopt the going concern basis of accounting in preparing the annual financial statements.
At October 28, 2013 the Group has $6.5 million in cash and cash equivalents.
Financial Instruments
The Group’s financial instruments as at July 31, 2013 comprised of financial assets, comprising 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 23 of the financial statements for the year ended July 31, 2013.
Page 16
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
COMMITMENTS AND LOANS
At July 31, 2013, 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, 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 (28 November 2011), the Ming Mine has not produced and sold a minimum of 24,000oz (6,000
ounces of Sandstorm payable gold) of payable gold (18,555 oz produced to July 31, 2013; 5,723 ounces of Sandstorm payable gold) 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
Subsequent to the year end the Group has satisfied the requirement to deliver 6,000 ounces of Sandstorm payable gold.
During the first twenty months of production, repayments of US$9,309,570 were made from the delivery of 5,723 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 17
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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. The Company did not draw on this $2.5 million final available instalment. Interest will accrue at a fixed rate of 9.25% per annum. 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. On November 30, 2012 the Group repaid $500,000. On March 26, 2013 this agreement was amended such that the principal is repayable by March 31, 2014
and secured by a fixed and floating charge over the assets of the Group. Upon amending the credit facility an amendment fee of $400,000 was paid to Sprott in ordinary
shares of 1p each. On April 30, 2013 and subsequently on May 31, 2013 the Group made repayments of $500,000 and $600,000 respectively reducing the outstanding
balance to $5,900,000 at July 31, 2013.
Loan and lease balances
At July 31, 2013, interest bearing loans and borrowings comprised a Gold Loan of $18,791,000, finance lease commitments of $7,040,000, a Credit Facility of
$5,900,000 and a bank loan of $22,000. The Group entered into finance lease commitments of $1,432,000 to finance the acquisition of a mine truck, scoop trams and a
loader in the year.
SUBSEQUENT EVENTS
On August 30, 2013 the Company announced an additional payment of $500,000 to Sprott reducing the outstanding balance to $5.4 million.
On September 17, 2013 the Group announced that a conditional offer had been accepted by Cornerstone Capital Resources Inc. for the Group to acquire their 50%
interest in The Little Deer Copper Deposit and Whalesback Mine in Newfoundland for $550,000 consisting of $200,000 in cash and $350,000 in shares. The 50%
interest is subject to a Joint Venture agreement with Thundermin Resources Inc. On October 15, 2013 the Group announced that the conditions of the offer had been
satisfied.
On September 30, 2013 the Company made an additional payment of $650,000 to Sprott reducing the outstanding balance to $4.75 million.
Page 18
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 1 – LOCATION MAP
Page 19
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 2 ‐ SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
Financial Highlights
(All amounts in 000s of Canadian Dollars, unless
otherwise stated)
Gold sales – gold doré (Ounces)
Average price (per ounce)
Concentrate sales pre commercial production (dmt)
Concentrate sales post commercial production (dmt)
Average provisional price ($ per tonne Cu, Ag & Au
concentrate)
Revenue
Production Expenses
Exploration Expenditure
Administrative expenses
Net Income (loss)
Cash Flow generated from (used in) operating activities
Cash Flow used in investing activities
Cash Flow (used in) from financing activities
Net (decrease) increase in cash
Cash and cash equivalents at end of period
Total Assets
Total Liabilities
Working Capital
Weighted average number of shares outstanding (000s)
Earnings (loss) per share ($)
Year ended July 31,
2013
2012
2011
3241
1,4911
14,6341
4,3312
2,3821
34,669
(27,644)
(26)
(3,557)
9,053
11,468
(8,595)
(5,154)
(2,281)
5,566
116,859
(39,167)
(2,753)
142,690
0.063
15,6132
1,6542
1,2712
-
-
1,219
(674)
(24)
(3,022)
(3,367)
(1,209)
(7,075)
5,903
(2,381)
7,826
110,718
(43,317)
(7,625)
128,477
(0.026)
1,399
1,492
-
-
-
3,523
(1,754)
(79)
(2,750)
(53)
(1,352)
(25,092)
28,623
2,179
10,170
96,473
(34,495)
7,804
102,282
(0.001)
1 represents post commercial production, November 1, 2012 to July 31, 2013.
2 gold and copper concentrate sales relating to the testing and commissioning of the Ming Mine are credited to
Mineral Properties until commercial production is achieved.
Page 20
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2013
Q4/13
Results
($000’s)
Commentary
Comparatives
Q3/13
B/ (W)*
Q4/12
B/ (W)
13,175
Revenue in Q4/13 was generated through the sale of 5,573 dmt of copper concentrate containing 1,610 tonnes of
accountable copper metal and 1,130 ounces of accountable gold compared with $10.1 million from the sale of 4,274
dmt of copper concentrate in Q3/13. The increase in revenue can be attributed to increased concentrate production
offset by declining commodity prices during Q4/13. Revenue realized in Q4/12 during the testing and commissioning of
the Ming Mine was credited against the Mineral Property asset.
10,087
31%
7,173
Production costs relate to the processing and mining costs associated with Group’s Ming Mine production and include
processing and mining costs of $1.8 million (Q3/13: $1.7 million) and $5.4 million (Q3/13: $4.7 million) respectively and
in line with the increased production noted above. Operating costs associated with mining and processing of Ming Mine
ores were capitalized to Mineral Property prior to commercial production being achieved.
6,435
(11)%
-
-
N/A
N/A
843
General and administrative expenses were lower than the previous quarter by $155,000. Promotional and travel
costs reduced by $79,000 and legal and professional costs by $59,000. In comparison to Q4/12 administrative
expenses increased by $58,000. Staff costs increased by $62,000, security and general office expenses by $30,000
offset by a reduction of $25,000 in promotional and travel costs and $14,000 in legal and professional costs.
998
16%
785
(7)%
(47)
Loss on derivative financial instruments. During Q4/13 the net unrealized fair value gain adjustment recognized was
$145,000 being the difference in the commodity prices at time of provisional invoicing and anticipated commodity prices
upon final settlement offset by a realized loss of $192,000 on the final settlement of the Group’s third concentrate
shipment. In Q3/13 as commodity prices began to fall the Group fixed a portion of its copper, gold and silver
concentrate to reduce further losses ahead of final settlement on its second concentrate shipment. A loss of $385,000
was realized being the difference in commodity prices at the time of provisional invoicing and actual commodity prices
realized on the fixed portion of the shipment. A further unrealized loss of $473,000 was booked during the third
quarter being the difference in commodity prices at the time of provisional invoicing concentrates in shipment three
(shipment subsequently on 28 May 2013) and the anticipated future commodity price at time of final settlement.
(858)
95%
-
N/A
(295)
Foreign exchange differences arising on the Gold Loan resulted in a loss in Q4/13 as a result of the weakening of the
Canadian dollar against the US dollar during the quarter.
(243)
(21)%
(447)
34%
1,266
Mineral Properties The group incurred costs of $1.3 million in the quarter. The cost includes labour costs of $0.7
million and underground development costs of $0.6 million. Mineral properties expenditure reduced in Q4/13 in line
with the completion of the 1807 independent ramp breakthrough in Q3/13.
1,768
28%
2,501
49%
828
Capital spending on property, plant and equipment increased during the quarter compared to Q3/13 reflecting the
acquisition of two additional underground scooptrams The increase from Q4/12 is due to the reasons outlined above
and the overall movement from capital development into production.
389
(112)%
189
(338)%
Page 21
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2013 (continued)
Q4/13
Results
($000’s)
Commentary
Comparatives
Q3/13
B/ (W)*
Q4/12
B/ (W)
131
Capital spending on exploration and evaluation costs in Q4/13 relates to exploration drilling on the Group’s 1807
and 1806 ore bodies as well as on-going Optimization Studies on the Group’s Lower Footwall Zone ore body
-
N/A
10
(1,210)%
*B / (W) = Better / (Worse)
Page 22
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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
Since the commencement of commercial production the Group has generated operating cash flows of $12.6 million and reduced the working capital deficit from $8.8
million at November 1, 2012 to $2.7 million at July 31, 2013. The Group expects to remain cash flow positive based on current projections and production forecasts
generating a working capital surplus during the next 12 months including the repayment of the Sprott credit facility by the due date of March 31, 2014. The current
economic conditions do, however, create uncertainty particularly over:
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the consequence for the cash generated from US dollar revenues;
(c) the production targets being met; and
(d) the terms of the Gold Loan being complied with.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should continue to be cash flow
positive and meet its repayment obligations under both the credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to
adopt the going concern basis of accounting in preparing the annual financial statements.
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, 2013.
Page 23
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
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 21 of the
financial statements for the year ended July 31, 2013). 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
income statement and the corresponding Gold Loan liability.
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.
Page 24
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
Commercial production
The Group monitored the on-going testing and commissioning of its copper concentrate milling facility to assess when commercial production had been achieved.
Commercial Production is the assessment that the mill is capable of operating in the manner intended and 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 achieved at November 1, 2012.
Deferred tax
The Group has incurred losses which will be available for offset against future taxable profits and one of the subsidiaries has tax credits available to offset against future
tax liabilities. Following the declaration of commercial production during the year it has been concluded that the Group has sufficient evidence of future taxable profits to
justify the recognition of a deferred tax asset. If future taxable profits prove to be insufficient the Group could be required to reduce the deferred tax asset which would
result in a reduction in the Group’s earnings and net assets.
Page 25
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
In the current year, new and revised standards which have been adopted have not affected the disclosures presented in these financial statements with the exception of
the disclosure of the breakdown of other comprehensive income between items that may be reclassified into profit or loss or not in accordance with IAS 1 – Presentation
of 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, 2013:
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, 2013
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, 2013.
Page 26
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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
143,280,614
Options
4,087,334*
*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” (“FLI”) 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, statements containing
FLI 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 be achieved or continue to be achieved. Statements containing FLI 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 FLI. 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
“Risks and Uncertainties” in the Report of Directors for the year ended July 31, 2013. Although the Group has attempted to identify important factors that could cause
actual actions, events or results to differ materially from those described in the FLI contained in this MD&A, there may be other factors that cause actions, events or
results to differ from those anticipated, estimated or intended. Unless stated otherwise, statements containing FLI herein are made as of the date of this MD&A.
Page 27
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
APPENDIX 5 – OTHER MATTERS (continued)
Forward Looking Information(continued)
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. The following table outlines certain significant forward-looking
statements contained in this MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause
actual results to differ materially from the forward looking statements.
FLI statements
Continued positive cash flow
Assumptions
Risk Factors
Actual expenditures
exceed revenues.
from operations will not
Expenditures exceeding revenues resulting from fluctuations in the market
and forward prices of copper, gold, silver or certain other commodities, or
increased costs of production
Significant reductions in price of copper and/or gold. Production shortfalls.
Increased costs of production
Development delays reducing access to production ore
Repayment of credit facility by March 31, 2014 Generation of sufficient cash flow from the sale of
concentrate
Continued mining and milling the exposed 1807
workplaces and further up-dip and down-dip
exploration of 1807 zone
Achieving
the planned capital and operating
development and production targets; and, timely
completion of drill bays to allow commencement of
exploration drilling
Optimisation of the mining and processing of
ores from the Ming Mine to allow expansion to
1,000 mtpd
Successful completion of a detailed engineering
review of existing infrastructure and availability of
finance from cash flow from operations or external
Economic viability
Open up mining horizons in the Ming South up
and down plunge ore bodies.
Achieving
development and production targets
the planned capital and operating
Development delays reducing access to production ore
Become a strategic
low cost
producer by selective pursuit of growth
opportunities
term
long
Identification and acquisition of suitable mineral
properties, investment opportunities and suitable
partners for joint ventures.
Availability of suitable mineral properties at an appropriate price and
adequate available finance. Availability of suitable acquisition and joint
venture opportunities on acceptable terms
Increasing stock market exposure and liquidity Market reacts positively to Group’s results and
promotional activity
Failure to reach market expectations. Deterioration in market conditions
generally or in the mining sector
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, 2013
The Directors present their report with the audited financial statements of the Group for the year ended July 31,
2013.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development, mining and exploration of the Ming Copper-Gold Mine
located in Newfoundland and Labrador and the exploration and development of other properties located in
Atlantic 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:
1. Continuing as a profitable copper and gold producer by continued optimization of concentrate production
at the Nugget Pond concentrating facility, improving revenue through the integration of the gold
hydromet plant into the production stream and focusing on the Group’s operations with the goal of
reducing its overall operating costs.
Increasing available resources and reserves through further exploration both within the Ming mine and
current land holdings.
2.
3. Continuing to investigate, through on-going optimization studies, development of the Lower Footwall
Zone creating organic growth.
4. Selectively pursuing growth opportunities within Atlantic Canada including joint ventures, acquisitions,
strategic alliances and equity positions.
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2013.
DIRECTORS
The Directors during the period under review were:
T S Chan
E C Chen (appointed September 24, 2012)
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts (resigned February 20, 2013)
J S Thomson
POLICY ON PAYMENT OF CREDITORS
It is the Group's and Company’s policy to settle all amounts due to creditors in accordance with agreed terms of
supply and market practice in the relevant country.
The Group's average creditor payment period at July 31, 2013 was 53 days (2012: 74 days). The Company’s
average creditor payment period at July 31, 2013 was 51 days (2012: 62 days).
Page 29
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2013 (CONTINUED)
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $12,800 (2012: $2,950) to various charities in the Baie
Verte area, Newfoundland and Labrador.
SUBSTANTIAL SHARE INTERESTS
At October 28, 2013 the parent Company was aware of the following substantial share interests:
Number of Ordinary Shares
% of Share Capital
Henderson Global Investors
Tinma International Ltd.
Legal and General Investment Management
Majedie Asset Management
Whitmill Trust (Zila Corporation)
Hargreaves Lansdown
24,427,575
22,736,992
17,575,000
9,043,597
8,838,000
4,564,543
17.05%
15.87%
12.27%
6.31%
6.17%
3.19%
FINANCIAL INSTRUMENTS
The Board of Directors determines, as required, the degree to which it is appropriate to use financial instruments
and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are
foreign exchange risk, liquidity risk, credit risk, interest rate risk and commodity price risk, each of which is
discussed in note 23 to the financial statements.
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 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.
Page 30
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2013 (CONTINUED)
RISKS AND UNCERTAINTIES (CONTINUED)
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.
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, BDO 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 28, 2013
Page 31
RAMBLER METALS AND MINING PLC
DIRECTORS’ RESPONSIBILITIES
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 elected to prepare the group and company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 group and company and of the profit or loss of the group for that period. The directors are also
required to prepare financial statements in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company and the group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of
the directors. The directors' responsibility also extends to the on-going integrity of the financial statements
contained therein.
Page 32
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2013
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 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 S Thomson, the other members
being L Goodman and E C Chen. 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. T S Chan 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 2013
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 auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit 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
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate.
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 2013 and of the group’s profit 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 and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in Note 2 to the group financial statements the group, in addition to applying IFRSs as adopted by
the European Union, has also applied IFRSs as issued by the International Accounting Standards Board
(IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Page 34
Note
2013
$’000
2012
$’000
3
4
6
7
8
34,669
(20,936)
(6,708)
7,025
(3,557)
(26)
3,442
(513)
84
(323)
295
(457)
1,219
(674)
-
545
(3,022)
(24)
(2,501)
(959)
102
-
(9)
(866)
2,985
(3,367)
6,068
-
9,053
(3,367)
Note
2013
$
2012
$
19
19
0.063
(0.026)
0.063
(0.026)
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Revenue
Production costs
Depreciation and amortisation
Gross profit
Administrative expenses
Exploration expenses
Operating profit/(loss)
Exchange loss
Bank interest receivable
Loss on derivative financial instruments
Finance costs
Net financing income/(expense)
Profit/(loss) before tax
Income tax credit
Profit/(loss) for the year attributable to owners of the parent
Earnings/(loss) per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Page 36
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Profit/(loss) for the year
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign operations (net of tax)
Gain/(loss) on available for sale investment (net of tax)
Other comprehensive income/(loss) for the year
Total comprehensive income/(loss) for the year and attributable to the owners of the
parent
2013
$’000
2012
$’000
9,053
(3,367)
(3)
721
718
8
(422)
(414)
9,771
(3,781)
Page 37
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013
$’000
2012
$’000
9
10
11
12
8
13
14
15
16
17
18
21
22
21
20
17,450
49,395
28,460
1,703
5,916
102,924
3,373
1,096
639
5,566
3,261
17,260
48,064
31,494
712
-
97,530
1,100
718
281
7,826
3,263
13,935
116,859
13,188
110,718
2,613
75,164
214
140
299
(738)
77,692
20,576
1,903
22,479
10,898
5,790
16,688
39,167
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
116,859
110,718
Assets
Intangible assets
Mineral properties
Property, plant and equipment
Available for sale investments
Deferred tax
Total non-current assets
Inventory
Trade and other receivables
Derivative financial asset
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:
L D Goodman
Director
Approved and authorised for issue by the Board on October 28, 2013
Page 38
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Group
Balance at August 1, 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
Balance at August 1, 2012
Comprehensive income
Profit for the year
Foreign exchange translation differences
Profit on available for sale investments (net of tax)
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners
Issue of share capital
Share-based payments
Transactions with owners
Balance at July 31, 2013
Share
capital
$’000
Share
Premium
$’000
Merger
Reserve
$’000
Translation
reserve
$’000
Fair value
reserve
$’000
Accumulated
Losses
$’000
Total
$’000
2,299
65,934
214
135
-
(6,604)
61,978
-
-
-
-
-
-
-
-
-
-
8
-
8
8
-
-
-
-
-
-
(422)
(422)
(422)
-
-
-
-
(3,367)
-
-
-
(3,367)
-
-
83
83
214
214
143
143
(422)
(422)
(9,888)
(9,888)
-
-
-
-
-
-
-
-
-
(3)
-
(3)
(3)
-
-
-
-
-
721
721
721
-
-
-
9,053
-
-
-
9,053
-
97
97
(3,367)
8
(422)
(414)
(3,781)
9,347
(225)
83
9,205
67,402
67,402
9,053
(3)
721
718
9,771
422
97
519
214
140
299
(738)
77,692
-
-
-
-
-
9,047
(225)
-
8,822
74,756
74,756
-
-
-
-
-
408
-
408
75,164
-
-
-
-
-
300
-
-
300
2,599
2,599
-
-
-
-
-
14
-
14
2,613
Page 39
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating profit/(loss)
Depreciation
Share based payments
Increase in inventory
(Increase)/decrease in debtors
Increase in derivative financial instruments
Increase in creditors
Cash generated from/(utilised in) operations
Interest paid
Tax received
Net cash generated from/(utilised in) operating
activities
Cash flows from investing activities
Interest received
Redemption 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 of Gold Loan (note 21)
(Repayment)/proceeds of Credit Facility
Capital element of finance lease payments
Net cash (utilised)/from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
Page 40
2013
$’000
3,442
6,813
97
(145)
(379)
(962)
3,431
12,297
(857)
28
2012
$’000
(2,501)
131
80
(167)
847
-
410
(1,200)
(9)
-
11,468
(1,209)
84
2
(148)
(160)
(6,735)
(1,638)
(8,595)
-
-
22
(1,466)
(1,625)
(2,085)
(5,154)
(2,281)
7,826
21
5,566
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
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 business activities, together with the factors likely to affect its future development,
performance and position, its financial position, cash flows, liquidity position and borrowing facilities are set
out in the Management Discussion and Analysis on pages 3 to 28. In addition, note 23 to the financial
statements includes the Group’s objectives, policies and processes for managing its capital; its financial
risk management objectives; details of its financial instruments and hedging activities; and its exposures to
credit risk and liquidity risk.
Since the commencement of commercial production the Group has generated operating cash flows of
$12.6 million and reduced the working capital deficit from $8.8 million at November 1, 2012 to $2.7 million
at July 31, 2013. The Group expects to remain cash flow positive based on current projections and
production forecasts generating a significant working capital surplus during the next 12 months including
the repayment of the Sprott credit facility by the due date of March 31, 2014. The current economic
conditions do, however, create uncertainty particularly over
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the consequence for the cash generated
from US dollar revenues ;
(c) the production targets being met; and
(d) the terms of the Gold loan being complied with.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading
performance, show that the Group should continue to be cash flow positive and meet its repayment
obligations under both the credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
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, 2013 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, 2013 the closing rate of exchange of Canadian
dollars to 1 GB pound was 1.57 (July 31, 2012: 1.58) and the average rate of exchange of Canadian dollars
to 1 GB pound for the year was 1.58 (2012: 1.60).
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.
Page 41
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
New and revised standards which have been adopted during the year have not affected the disclosures
presented in these financial statements with the exception of the disclosure of the breakdown of other
comprehensive income between items that may be reclassified into profit or loss or not in accordance with
IAS 1 – Presentation of 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.
(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 on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in
note 26.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
(c)
Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power,
directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from
its activities. In assessing control, potential voting rights that presently are exercisable or convertible are
taken into account. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
Page 42
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(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.
(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 of the costs of dismantling and removing the items
and restoring the site on which they are located, where an obligation to incur such costs exists.
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.
Page 43
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(e)
Property, plant and equipment (continued)
(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 10 years
3 years
3 years
3 years
The estimated useful lives and residual values of the assets are considered annually and restated as
required.
(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.
Page 44
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
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.
Trade and other receivables
(j)
Trade and other receivables are generally stated at their cost less impairment losses. Receivables in
respect of the sale of copper concentrate which contain an embedded derivative linking them to future
commodity prices are measured at fair value through profit and loss and are treated as derivative financial
assets or liabilities. Receivables with a short duration are not discounted.
Financial instruments measured at fair value through profit and loss
(k)
Financial instruments measured at fair value through profit and loss, which includes all derivative financial
instruments and receivables containing embedded derivatives arising from sales of concentrate, are
measured at fair value at each balance sheet date with changes in value reflected directly within the
income statement.
Cash and cash equivalents
(l)
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
(m)
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(s)), 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(m)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. Impairment losses are recognised in the income statement.
Page 45
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Impairment (continued)
(m)
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
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.
(n)
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
(o)
Trade and other payables are stated at amortised cost.
Revenue recognition
(p)
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.
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(p)
Revenue recognition (continued)
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 transfer when the concentrate passes over the rail of the shipping vessel.
Adjustments arising due to differences in assays and weights, from the time of provisional invoicing to the
time of final settlement, are adjusted to revenue.
(q)
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
(r)
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.
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
Equity settled share based payments (continued)
(r)
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
(s)
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in
the income statement except to the extent that it relates to items recognised directly in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes,
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet
date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Page 48
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Operating segments
The Group’s operations relate to the exploration for and development of mineral deposits with support
provided from the UK and as such the Group has only one operating segment.
Information about geographical areas
2013
2012
UK
$’000
Canada
Consolidated
UK
Canada
Consolidated
$’000
$’000
$’000
$’000
$’000
Segment revenue
-
34,669
34,669
Segment non-current assets
1,357
101,567
102,924
Information about major customers
-
-
1,219
1,219
97,530
97,530
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
Customer A
Customer B
Others
4. Operating profit/(loss)
The operating profit/(loss) is after charging/(crediting):
Depreciation – owned assets
Amortisation
Directors’ emoluments (see note 24)
Auditor’s remuneration:
Audit of these financial statements
Fees payable to the auditor for other services:
Other assurance services
2013
$’000
2012
$’000
-
34,190
479
34,669
1,219
-
-
1,219
2013
$’000
2012
$’000
4,609
2,204
413
66
10
131
-
338
64
10
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is
maintained.
In addition to the depreciation charge shown above, depreciation of $1,045,000 (2012: $4,092,000) was
capitalised within mineral properties.
Page 49
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses
Salary costs
Wages and salaries
Compulsory social security contributions
Share based payments
Group
2013
$’000
11,343
1,644
325
13,312
Group
2012
$,000
9,543
1,367
79
10,989
Salary costs of $4,638,000 (2012: $8,449,000) were capitalised as mineral properties and $10,000 (2012:
$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
Production and development
Group
2013
Group
2012
8
13
139
160
7
10
126
143
During the year the Group granted share options to key personnel to purchase shares in the entity. The options
are exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cancelled during the year
Outstanding at the end of the year
Exercisable at end of year
Weighted
average
Weighted
average
exercise
Number
exercise
Number
price
2013
$
of options
2013
‘000
0.46
0.47
0.24
0.63
0.45
0.45
3,937
622
(117)
(329)
4,113
3,339
price
2012
$
0.48
0.50
0.18
0.54
0.46
0.45
of options
2012
‘000
4,167
646
(202)
(674)
3,937
3,313
The options outstanding at July 31, 2013 have an exercise price in the range of $0.16 to $1.10 and a weighted
average remaining contractual life of 7 years (2012: 6 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.
Page 50
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses (continued)
Fair value of share options and assumptions issued during the year
2013
2012
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 (years)
Expected dividends
Risk-free interest rate (based on national government bonds)
$0.214
$0.288
$0.473
$0.473
$0.503
$0.503
50.8%
5
0
1.55%
68.0%
5
0
1.67%
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.
The share-based payment expense relates to the following grants:
Share options granted in 2009
Share options granted in 2010
Share options granted in 2011
Share options granted in 2012
Share options granted in 2013
Total expense recognised as employee costs
6. Loss on derivative financial instruments
Loss on concentrate receivables from off-taker
7. Finance costs
Finance lease interest
Gold loan interest
Credit facility interest and charges
Off-take provisional payment interest
Mortgage interest
Unwinding of discount on reclamation provision
2013
$’000
2012
$’000
-
-
17
26
54
97
17
4
36
22
-
79
2013
$’000
323
2012
$’000
2013
$’000
2012
$’000
319
(1,750)
975
88
5
68
(295)
-
-
-
-
-
9
-
9
Finance costs incurred prior to the declaration of commercial production were generally capitalised in Mineral
Properties.
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income tax credit
8.
Recognised in the income statement
Current tax expense
Current year
Deferred tax credit
In respect of previously unrecognised tax losses
Tax losses surrendered for tax credit
Total income tax credit in income statement
Reconciliation of effective tax rate
Profit/(loss) before tax
Income tax using the UK corporation tax rate of 23.67% (2012: 25.33%)
Effect of tax rates in foreign jurisdictions (rates increased)
Non-deductible expenses
Foreign exchange differences
Effect of tax losses previously not recognised
Recognised in other comprehensive income
Current tax expense
Current year
Deferred tax expense
Fair value re-measurement of available for sale investments
Total income tax expense in statement of other comprehensive income
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2013
$,000
2012
$,000
-
-
(6,040)
(28)
(6,068)
-
-
-
-
-
2013
$’000
2012
$’000
2,985
(3,367)
706
228
30
(2)
(7,030)
(6,068)
(853)
(105)
25
-
933
-
2013
$,000
2012
$,000
-
-
122
122
-
-
-
-
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan
Tax value of loss carry-forwards and credits
recognised
Net tax assets / (liabilities)
Assets
Liabilities
Net
Balance
Balance
Balance
Balance
Balance
Balance
July 31, 2013 July 31, 2012 July 31, 2013 July 31, 2012 July 31, 2013 July 31, 2012
$’000
$’000
$’000
$’000
$’000
$’000
-
-
-
-
-
-
-
-
61
-
(1,413)
(1,228)
(1,352)
(61)
(533)
(21)
(3,104)
(1,327)
-
-
(1,413)
(1,228)
(1,352)
(61)
(533)
10,503
10,503
4,391
4,452
-
-
(4,587)
(4,452)
10,503
5,916
Page 52
(21)
(3,104)
(1,327)
61
-
4,391
-
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Income tax credit (continued)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
UK tax losses
Canadian losses and tax credits
2013
$’000
2012
$’000
-
-
-
1,126
5,442
6,568
The Group has incurred losses which will be available for offset against future taxable profits and one of the
subsidiaries has tax credits available to offset against future tax liabilities. Following the declaration of commercial
production during the year it has been concluded that the Group has sufficient evidence of future taxable profits to
justify the recognition of a deferred tax asset of $5.9 million.
Movement in recognised deferred tax assets and liabilities
Property, plant and equipment
Mineral properties
Intangible assets
Available for sale investment
Tax value of loss carry-forwards and credits
Property, plant and equipment
Mineral properties
Intangible assets
Available for sale investment
Gold loan
Tax value of loss carry-forwards and credits
Recognised in
Recognised in
Balance
income
other
Balance
Aug 1, 2011
comprehensive
July 31, 2012
$’000
$’000
income
$’000
$’000
97
1,556
1,556
-
(3,209)
-
(76)
1,548
(229)
(61)
(1,182)
-
-
-
-
-
-
-
21
3,104
1,327
(61)
(4,391)
-
Recognised in
Balance
Recognised in
other
Balance
Aug 1, 2012
income
comprehensive
Jul 31, 2013
$’000
$’000
income
$’000
21
3,104
1,327
(61)
-
(4,391)
-
1,392
(1,876)
25
-
533
(6,114)
(6,040)
-
-
-
122
-
2
124
$’000
1,413
1,228
1,352
61
533
(10,503)
(5,916)
Page 53
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Intangible assets
Cost
Balance at 1 August 2011
Additions
Balance at 31 July 2012
Balance at 1 August 2012
Additions
Balance at July 31, 2013
Carrying amounts
At 1 August 2011
At 31 July 2012
At 1 August 2012
At July 31, 2013
Exploration and
evaluation
costs
$’000
16,627
633
17,260
17,260
190
17,450
16,627
17,260
17,260
17,450
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 54
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Mineral properties
Cost
Balance at August 1, 2011
Additions
Balance at July 31, 2012
Balance at August 1, 2012
Additions
Transfer to inventory on commercial production
Balance at July 31, 2013
Amortisation
Balance at August 1, 2011
Amortisation charge
Balance at July 31, 2012
Balance at August 1, 2012
Amortisation charge
Balance at July 31, 2013
Carrying amounts
At August 1, 2011
At July 31, 2012
At August 1, 2012
At July 31, 2013
Mineral
property
$’000
38,468
9,596
48,064
48,064
5,664
(2,129)
51,599
-
-
-
-
2,204
2,204
38,468
48,064
48,064
49,395
The Group generated revenue from saleable material produced during commissioning of $9.5 million (2012:
$28.2 million) and offset this revenue against the mineral property asset prior to commercial production being
declared during the year.
The Group capitalised borrowing costs of $1.1 million (2012: $4.6 million).
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. 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 August 1, 2011
Additions
Disposals
Balance at July 31, 2012
Balance at August 1, 2012
Additions
Reclassification
Balance at July 31, 2013
Depreciation and impairment losses
Balance at August 1, 2011
Depreciation charge for the year
Eliminated on disposals
Balance at July 31, 2012
Balance at August 1, 2012
Depreciation charge for the year
Balance at July 31, 2013
Carrying amounts
At August 1, 2011
At July 31, 2012
At August 1, 2012
At July 31, 2013
Leased plant and machinery
2,941
733
-
3,674
3,674
30
613
4,317
926
333
-
1,259
1,259
399
1,658
2,015
2,415
2,415
2,659
15,310
6,189
-
21,499
21,499
131
(21,604)
26
-
-
-
-
-
-
-
15,310
21,499
21,499
26
153
59
-
212
212
47
-
259
71
58
-
129
129
54
183
82
83
83
76
14,165
3,378
(189)
17,354
17,354
2,349
20,991
40,694
6,452
3,755
(189)
10,018
10,018
5,087
15,105
7,713
7,336
7,336
25,589
90
3
-
93
93
17
-
110
57
15
-
72
72
16
88
33
21
21
22
670
89
(6)
753
753
46
-
799
491
128
(6)
613
613
98
711
179
140
140
88
33,329
10,451
(195)
43,585
43,585
2,620
-
46,205
7,997
4,289
(195)
12,091
12,091
5,654
17,745
25,332
31,494
31,494
28,460
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, 2013, the net
carrying amount of leased plant and machinery was $4,090,000 (2012: $5,542,000). The leased plant and
machinery secures lease obligations (see note 21). During the year plant and equipment additions of $1,432,000
(2012: $2,422,000) were acquired through finance lease arrangements.
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Available for sale investments
Cost or valuation
Balance at August 1, 2011
Acquisitions
Revaluation
Balance at July 31, 2012
Balance at August 1, 2012
Acquisitions
Revaluation
Balance at July 31, 2013
Carrying amounts
At July 31, 2012
At July 31, 2013
Available for sale
investments
$’000
-
1,134
(433)
712
712
148
843
1,703
712
1,703
Rambler holds an 18% equity stake in Maritime Resources Corp and a representative on the Board of Directors. The
market price at July 31, 2013 was $0.30 (2012: $0.14 per share). The cost of the available for sale investments is
$1,282,000 (2012: $1,134,000).
13. Inventory
Metals in process
Operating supplies
14. Trade and other receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
15. Derivative financial asset
Concentrate receivables from off-taker
The cost of the concentrate receivables is $865,000 (2012: $281,000).
Page 57
2013
2012
$’000
$’000
1,977
1,396
3,373
-
1,100
1,100
2013
2012
$’000
$’000
372
288
436
1,096
72
478
168
718
2013
2012
$’000
$’000
639
281
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. Cash and cash equivalents
Short term deposits
Bank balances
Cash and cash equivalents in the statement of cash flows
17. Restricted cash
Bearer deposit notes
2013
2012
$’000
$’000
-
5,566
5,566
355
7,471
7,826
2013
2012
$’000
$’000
3,261
3,263
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 2014 and have a nominal value of $3,300,000 (2012 - $3,302,000) giving an
effective yield of 1.2% (2012 – 1.1%).
18. Capital and reserves
Share capital and share premium – group and company
In issue at 1 August 2011
Issued for cash
Issued in consideration for finance fees
Issued on exercise of options
In issue at 31 July 2012
In issue at 1 August 2012
Issued in consideration for finance fees
Issued on exercise of options
In issue at July 31, 2013
Number ‘000
123,315
17,522
1,321
202
142,360
142,360
804
72
143,236
At July 31, 2013, 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, 2013 are as follows:
On October 24, 2012 the company received monies to subscribe for 39,000 shares for $0.38 each raising a total
of $14,820 following the exercise of options.
On November 23, 2012 the company issued 33,000 shares for $0.18 each raising a total of $5,940 following the
exercise of options.
On March 27, 2013 the company issued 803,374 shares for $0.4979 to satisfy $400,000 of finance expenses.
Page 58
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Capital and reserves (continued)
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.
2013
$’000
5,566
(7,040)
(22)
(18,791)
(5,621)
(25,908)
(77,692)
2012
$’000
7,826
(7,689)
(26)
(20,889)
(6,914)
(27,692)
(67,402)
(103,600)
(95,094)
Page 59
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Earnings/(loss) per share
Basic earnings per share
The calculation of basic earnings per share at July 31, 2013 was based on the profit attributable to ordinary
shareholders of $9,053,000 and a weighted average number of ordinary shares outstanding during the period
ended July 31, 2013 of 142,690,000 calculated as follows:
Profit/(loss) attributable to ordinary shareholders
Profit/(loss) for the period
Profit/(loss) attributable to ordinary shareholders
Weighted average number of ordinary shares
At August 1, 2011
Effect of shares issued during the year
At July 31, 2012
In issue at August 1, 2012
Effect of shares issued during year
Weighted average number of ordinary shares at July 31, 2013
2013
$’000
2012
$’000
9,053
9,053
(3,367)
(3,367)
Number ‘000
123,315
5,162
128,477
142,360
330
142,690
There is no material difference between the basic and diluted loss per share. At July 31, 2013 there were
4,113,000 (2012: 3,937,000) share options in issue of which 1,079,397 (2012: N/A) were considered to be
dilutive and may have a dilutive effect on the basic earnings or loss per share in the future.
20. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
2013
2012
$’000
4,177
287
1,326
5,790
$’000
4,918
65
1,003
5,986
21. 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 23.
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Interest-bearing loans and borrowings (continued)
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
2013
$’000
2012
$’000
19
4,613
15,944
20,576
23
5,727
14,941
20,691
3
2,427
2,847
5,621
10,898
3
1,962
5,948
6,914
14,827
Minimum
lease
Payments
2013
Interest Principal
2013
2013
Minimum
lease
Payments
2012
Interest Principal
2012
2012
$’000
$’000
$’000
$’000
$’000
$’000
2,759
4,867
7,626
332
254
586
2,427
4,613
7,040
2,189
6,361
8,550
227
634
861
1,962
5,727
7,689
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 $101,000 (2012: $428,000) 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, 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
Page 61
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Interest-bearing loans and borrowings (continued)
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:
(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 (6,000 ounces of Sandstorm payable gold) of
payable gold (18,555 oz produced to July 31, 2013; 5,723 oz of Sandstorm payable gold) 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
Subsequent to the year end the Group has satisfied the requirement to deliver 6,000 ounces of Sandstorm
payable gold.
During the first twenty months of commissioning, repayments of US$9,309,570 were made from the delivery of
5,723 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 $1,169,000 was accrued during the period of which $581,000 (2012: $4,340,000) was 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 was available in three instalments; the first instalment of
$5 million was drawn on January 29, 2012, 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 but was not drawn.
Interest accrues at a fixed rate of 9.25% per annum. 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. On November 30, 2012 the Group repaid $500,000. On March 26, 2013 this agreement was
amended such that the principal is repayable by March 31, 2014 and is secured by a fixed and floating charge
over the assets of the Group. Upon amending the credit facility an amendment fee of $400,000 was paid to
Sprott in ordinary shares of 1p each. On April 30, 2013 and subsequently on May 31, 2013 the Group made
repayments of $500,000 and $600,000 respectively to Sprott thereby reducing the outstanding balance to
$5,900,000.
Page 62
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Interest-bearing loans and borrowings (continued)
Total financing and interest charges of $392,000 (2012: $1,004,000) were charged to mineral properties during
the year.
22. Provision
Reclamation and closure provision
Opening balance
Provision utilised during the year
Unwinding of discount
Ending balance
2013
$’000
2012
$’000
1,812
-
91
1,903
1,647
(121)
286
1,812
The reclamation and closure provision has been made in respect of costs of land restoration and rehabilitation
expected to be incurred at the end of the Ming Mine’s useful life. The provision has been calculated based on the
present value of the expected future cash flows associated with reclamation and closure activities as required by
the Government of Newfoundland and Labrador. The provision relates to restoration of all three sites associated
with the Ming Mine project: mill, mine and port sites. The liability is secured by Letters of Credit for $3,255,155.
23. Financial instruments
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale
investments, derivative financial instruments 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 with the exception of available for sale
investments and derivative financial instruments as described in notes 12 and 15 respectively.
The Group held the following categories of financial instruments at July 31, 2013:
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments
Available for sale investments:
Investment in quoted equity securities
Loans and receivables:
Other receivables
Sales taxes recoverable
Prepayments and accrued income
Cash at bank
Restricted cash
Total financial assets
Page 63
2013
$’000
2012
$’000
639
281
1,703
712
372
288
436
5,566
3,261
72
478
168
7,826
3,263
9,923
12,265
11,807
12,800
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
Liabilities at amortised cost or equivalent:
Trade payables
Non trade payables
Accrued expenses
Loans and borrowings
Total financial liabilities
2013
2012
$’000
(4,177)
(287)
(1,326)
(31,474)
$’000
(4,918)
(65)
(1,003)
(35,518)
(37,264)
(41,504)
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.
Foreign exchange risk
The Group's cash resources are held in Canadian dollars, GB pounds and US Dollars and certain receivables
and the Gold Loan are denominated 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 21. Repayment is envisaged in
payable gold which is denominated in US dollars. Exposure to this foreign currency risk has been mitigated
since the commencement of production. Any weakening of the US dollar would however result in a reduction in
revenue and receivables in Canadian dollar terms. The Group has not hedged its exposure to currency
fluctuations.
The policy in relation to the translation of foreign currency assets and liabilities is set out in note 2(d),
'Accounting Policies Foreign Currencies' to the consolidated financial statements.
The Group does not hedge its exposure of foreign investments held in foreign currencies. There is no significant
impact on profit or loss from foreign currency movements associated with the Parent company’s assets and
liabilities as the foreign currency gains or losses are recorded in the translation reserve.
Exchange rate fluctuations may adversely affect the Group’s financial position and results. The following table
details the Group’s sensitivity to a 10% strengthening and weakening in the GB pound against the Canadian/US
Dollar. 10% represents management’s assessment of the reasonable possible exposure.
10% strengthening of GB pound
10% weakening of GB pound
10% strengthening of US dollar
10% weakening of US dollar
Equity
2013
$’000
2012
$’000
(12)
11
(1,879)
1,708
24
(22)
(1,734)
1,576
Page 64
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial risk management (continued)
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 on-going 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, 2013.
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
2013
$’000
2012
$’000
11,621
5,865
4,732
3,764
3,404
16,576
45,962
16,174
5,667
4,795
4,778
3,168
16,240
50,822
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
2013
$’000
2012
$’000
8,663
2,640
1,916
306
23
-
13,548
8,879
2,021
2,015
1,461
243
10
14,629
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2013
was 6.30%.
Credit risk
The Group generally holds 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 14). The Group maximum exposure to credit risk at July 31, 2013 was represented by
receivables and cash resources.
Page 65
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
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 21.
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 26 the Group calculates the effective interest rate on the Gold Loan based on estimates of
future cash flows arising from the sale of payable gold. In estimating the cash flows the following table details
the Group’s sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent
management’s assessment of the reasonable possible exposure.
10% increase in the price of gold
25% decrease in the price of gold
Gross assets
2012
2013
$’000
$’000
(1,843)
4,609
(2,089)
5,222
Receivables in respect of the sale of copper concentrate which contain an embedded derivative linking them to
future commodity prices are measured at fair value through profit and loss and are treated as derivative financial
assets or liabilities. In estimating the value of the derivative the following table details the Group’s sensitivity to a
5% increase and a 5% decrease in the price of copper, gold and silver. These percentages represent
management’s assessment of the reasonable possible exposure.
5% increase in the price of copper, gold and silver
5% decrease in the price of copper, gold and silver
Gross assets
2012
2013
$’000
$’000
441
(441)
157
(157)
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 66
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
At the year end the cash and short term deposits were as follows:
At July 31, 2013
Sterling
US $
Canadian $
At July 31, 2012
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
%
-
-
-
-
61
3,293
2,212
5,566
61
3,293
2,212
5,566
-
-
-
$’000
$’000
$’000
Months
355
-
355
77
7,394
7,471
432
7,394
7,826
1
-
-
-
-
%
0.25
-
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.
24. 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 D Hinchcliffe
T S Chan
J Thomson
E C Chen
2013
$’000
2012
$’000
330
270
-
13
7
13
13
13
13
11
-
13
13
13
13
3
13
-
413
338
D H W Dobson waived his entitlement to director’s fees for the current and preceding periods. At July 31, 2013
fees of $12,000 (2012: $21,000) remained outstanding.
Page 67
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Related parties (continued)
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 31.07.13 At 31.07.12
No.
No.
‘000
1,100
400
45
100
45
45
45
1,780
‘000
1,100
400
45
100
45
45
45
1,780
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.
Total key management personnel compensations were as follows:
Short term employee benefits
Social security costs
Share based payments
25. Subsequent events
2013
2012
$’000
$’000
784
39
-
823
659
33
17
709
On August 30, 2013 the Company announced an additional payment of $500,000 to Sprott reducing the
outstanding balance to $5.4 million.
On September 17, 2013 the Group announced that a conditional offer had been accepted by Cornerstone
Capital Resources Inc. for the Group to acquire their 50% interest in The Little Deer Copper Deposit and
Whalesback Mine in Newfoundland for $550,000 consisting of $200,000 in cash and $350,000 in shares. The
50% interest is subject to a Joint Venture agreement with Thundermin Resources Inc. On October 15, 2013 the
Group announced that the conditions of the offer had been satisfied.
On September 30, 2013 the Company made an additional payment of $650,000 to Sprott reducing the
outstanding balance to $4.75 million.
26. Critical accounting estimates and judgements
The details of the Group’s accounting policies are presented in accordance with International Financial Reporting
Standards as set out in Note 2 to the financial statements. The preparation of financial statements in conformity
with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the year.
Page 68
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Critical accounting estimates and judgements (continued)
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 restore its properties after the minerals have been mined from the site, and has
estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a
liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves to be
inaccurate, the Group could be required to increase the provision for site closure and reclamation costs, which
would increase the amount of future reclamation expense, resulting in a reduction in the Group’s earnings and
net assets.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option life and the volatility are subject to management estimate and any changes to
these estimates may have a significant effect on the cost. The assumptions used in calculating the cost of share
based payments are explained in note 5.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows arising
from the sale of payable gold (see note 21).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.
Page 69
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Critical accounting estimates and judgements (continued)
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 achieved at November 1, 2012.
Deferred tax assets
The Group has incurred losses which will be available for offset against future taxable profits and one of the
subsidiaries has tax credits available to offset against future tax liabilities. Following the declaration of
commercial production during the year it has been concluded that the Group has sufficient evidence of future
taxable profits to justify the recognition of a deferred tax asset. If future taxable profits prove to be insufficient the
Group could be required to reduce the deferred tax asset which would result in a reduction in the Group’s
earnings and net assets.
Page 70
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
Profit/(loss) for the year
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into presentation currency
Other comprehensive (loss)/income for the year
Total comprehensive income/(loss) for the year
2013
$’000
2012
$’000
211
(1,232)
(154)
(154)
361
361
57
(871)
Page 71
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Assets
Investments
Deferred tax
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
C3
C4
C5
C6
18
C7
2013
$’000
2012
$’000
68,323
1,375
69,698
53
66
119
69,817
2,613
75,164
(10,221)
2,104
69,660
157
157
157
69,817
68,848
-
68,848
50
437
487
69,335
2,599
74,756
(10,067)
1,893
69,181
154
154
154
69,335
L D Goodman
Director
Approved and authorised for issue by the Board on October 28, 2013
Page 72
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Balance at August 1, 2011
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
Balance at August 1, 2012
Comprehensive income
Profit for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive income for the year
Issue of share capital
Balance at July 31, 2013
Share
capital
$’000
Share
premium
$’000
Translation
reserve
$’000
Accumulated
losses
$’000
Total
$’000
2,299
65,934
(10,428)
3,115
60,920
-
-
-
-
300
-
-
-
-
-
-
9,047
(225)
-
-
361
361
361
-
-
-
(1,232)
(1,232)
-
(1,232)
-
-
10
361
361
(871)
9,347
(225)
10
2,599
74,756
(10,067)
1,893
69,181
2,599
74,756
(10,067)
1,893
69,181
-
-
-
-
-
-
-
-
14
2,613
408
75,164
-
(154)
(154)
(154)
-
211
-
-
211
-
211
(154)
(154)
57
422
(10,221)
2,104
69,660
Page 73
RAMBLER METALS AND MINING PLC
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating loss
Share based payments
Foreign exchange losses
Increase in debtors
(Decrease)/increase in creditors
Net cash utilised in operating activities
Cash flows from investing activities
Interest received
Loans repaid by/(advanced to) subsidiaries
Net cash generated from/( 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
2013
$’000
(1,166)
-
(135)
(3)
4
(1,300)
-
907
907
-
-
22
22
(371)
437
-
66
2012
$’000
(1,232)
6
313
(3)
28
(888)
1
(7,923)
(7,922)
8,714
(225)
38
8,527
(283)
713
7
437
Page 74
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. Profit/(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 profit for the financial year was $211,000
(2012: Loss $1,232,000).
C3. Investments
Cost
Balance at August 1, 2011
Advances (net)
Effect of movements in foreign exchange
Balance at July 31, 2012
Balance at August 1, 2012
Repayments (net)
Effect of movements in foreign exchange
Balance at July 31, 2013
Investment in
subsidiary
$’000
Loans
$’000
Total
$’000
376
-
2
378
378
-
-
378
59,909
8,523
38
68,470
68,470
(508)
(17)
67,945
60,285
8,523
40
68,848
68,848
(508)
(17)
68,323
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
development and
mining
The aggregate value of shares in subsidiary undertakings is stated at cost.
The loans to the subsidiary undertakings are interest free.
Page 75
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C4. Deferred tax
The Company has incurred losses which will be available for offset against future taxable profits. Following the
declaration of commercial production during the year by one of the Company’s subsidiaries it has been concluded
that the Company has sufficient evidence of future taxable profits to justify the recognition of a deferred tax asset
of $1.4 million.
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
2013
2012
$’000
$’000
1
13
39
53
1
23
26
50
2013
2012
$’000
$’000
-
66
66
355
82
437
2013
$’000
17
9
131
157
2012
$’000
35
1
118
154
The Company has a related party relationship with its subsidiaries (see note C3) and with its directors and
executive officers (see note 24).
Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note C3.
Other related parties
Transactions with other related parties are detailed in note 24.
Page 76