REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
REPORT OF THE DIRECTORS AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2014
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Company Information
Chairman’s Statement
Strategic report
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, 2014
Directors:
T S Chan
E C Chen
D H W Dobson
L D Goodman
G Ogilvie
J S Thomson
N P Williams (appointed February 19, 2014)
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, 2014
We are very pleased to report the results for the year ended July 31, 2014 While the volatility of our markets
has added new challenges to operating a successful mining business, the Board of Directors feels that the
Company has developed a strong base from its assets and is well positioned for its continued growth and the
generation of shareholder value.
This has been a year of significant change and progress for Rambler Metals and Mining. We have seen changes
to our management and our operations, all of which, in my opinion have been very positive.
At the financial level, and following the declaration of commercial production in 2012, this was our first full fiscal
year of commercial production. As a result, we generated cash of nearly $25 million, earned a profit of $13.5
million and reduced our debt to zero.
Operationally, we achieved many of our goals in addition to creating new opportunities to further grow the
business in the years to come and to hopefully extend the mine life of our assets.
We also made a significant change to the management structure of the business with the promotion of the CFO,
Norman Williams, to the CEO position on January 15, 2014. Mr. Williams, with his management team, has
been an integral part of making Rambler into a profit making mining company and will be a key component of its
continued success as we move into optimizing the business.
As a result of our financial position, we are now able to examine the various strategic opportunities available to
us and decide which offer the best ways to create value for our shareholders. Your Board has decided that the
focus for 2015 will be towards optimizing the existing infrastructure at the Nugget Pond milling facility and
moving the Ming Mine’s Lower Footwall Zone towards production. The Board is also seeking approval at this
year’s Annual General Meeting for the authorization for a Share Buy-Back program.
The presentational currency of the Group’s financial statements is Canadian dollars ($).
OPERATIONAL HIGHLIGHTS
The Group reached considerable milestones and other key achievements during the fiscal year. Highlights
include:
Earned a profit before tax of $13.5 million (2013: $3 million) after completing the first full year of
commercial production.
Generated cash of $24.8 million (2013 $11.5 million) from operations during the year.
Repaid its credit facility and became debt free in February 2014.
Continued its exploration activity at the Ming Mine and acquired exploration and development rights to
other local copper/gold properties.
Continued to advance its review of pre-concentrating the Lower Footwall Zone material with the goal of
converting the known resources into mineable reserves.
FINANCIAL HIGHLIGHTS
The consolidated profit after taxation of the Group in respect of the year ended July 31, 2014 amounted to
$9,015,000 (earnings per share of $0.063) versus a profit of $9,053,000 for the year ended July 31, 2013
(earnings per share of $0.063). Earnings before interest, taxes, depreciation, amortisation (“EBITDA”) for the
year were $27,270,000 (2013 : $9,419,000).
The Group generated revenue of $62.1 million from the sale of copper concentrate containing gold and silver by-
products.
Page 2
The gross assets of the Group amounted to $119.4 million as at the end of the year. This included Mineral
properties of $51.6 million and Intangible assets of $18.5 million which mainly consisted of accumulated deferred
exploration and evaluation expenditures on the Lower Footwall Zone at the Ming Mine.
Following declaration of commercial production in the previous year the Group has had a successful year
generating sufficient cash flow to become debt free.
My thanks go to our employees, officers and directors for the progress made during the year and to our
shareholders for their continuing support. I look forward to continued success in fiscal 2015.
G Ogilvie
Chairman
October 25, 2014
Page 3
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED JULY 31, 2014
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
A review of the Group’s business and future developments is set out in the Management’s Discussion and
Analysis.
PRINCIPAL RISKS AND UNCERTAINTIES
An investment in Rambler should be considered speculative due to the nature of its operations and certain other
factors. 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, development and production of mineralization in an underground setting. These include but are not
limited to formation pressures, seismic activity, rock bursts, fires, power outages, cave-ins, flooding, explosions
and other conditions involved in the drilling and removal of material. Any of these events could result in serious
damage to the mine and other infrastructure, damage to life or property, environmental damage and possible
legal liability.
The Company’s profitability will depend, in part, on the economic returns and actual costs of developing its
mining projects, which may differ from the estimates made by the Company.
Copper and Gold Price Volatility
The Group’s revenues will continue to be derived from the extraction and sale of copper concentrate containing
gold and silver by-products. The prices of copper, gold and silver 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
to new extraction
consumption patterns, speculative activities and
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.
increased global production due
Page 4
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED JULY 31, 2014
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
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 reserve 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.
ON BEHALF OF THE BOARD:
N P Williams
Director
October 25, 2014
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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 25, 2014 and covers the results of operations for the quarter and year ended July 31, 2014. This
discussion should be read in conjunction with the audited Financial Statements for the year ended July 31, 2014 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. Since the declaration of commercial production in November 2012 the Group has generated sufficient free cash flows to
repay its credit facility and is now a debt free and profitable operation.
The Group is looking forward to:
1. Continuing as a profitable copper and gold producer with a focus on further optimization of the existing infrastructure at the Nugget Pond milling facility.
2.
Improving revenue through the integration of the existing 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.
3.
4. Creating organic growth through the integration of the Ming mine’s Lower Footwall Zone, extending the life of mine and increasing the annual concentrate
production .
5. Selectively pursuing strategic growth opportunities including joint ventures, acquisitions, strategic alliances and equity positions.
The Group’s directors and management believe that these priorities have created a solid foundation for Rambler and its shareholders, and will continue to provide the
best opportunity to build a successful and long term mining company.
The parent Company’s Ordinary Shares trade on the London AIM market under the symbol “RMM” and the TMX Venture Exchange under the symbol “RAB”.
Page 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2014
Highlights of the 2014 fiscal year included:
Production
Produced a total of 25,647 dmt (2013 – 13,802 dmt – nine months of commercial production) of copper concentrate during the year. Concentrate produced
averaged 29.13% copper with 8.39 g/t gold and 66.97 g/t silver (2013: 29.02% copper with 7.07 g/t gold and 49.11 g/t silver) with milling recoveries for copper and
gold averaging 96.4% and 67.1% respectively (2013: 91% and 62% respectively). The Group met or exceeded all production guidance for the fiscal year. Of
particular significance are the increases in copper metal, gold ounce and silver ounce production at 9, 26 and 35 per cent respectively over the high end range of the
fiscal guidance.
During the fourth quarter daily tonnage through the copper concentrator averaged 647 dmt a 16% increase over the average of 555 dmt in Q3/14. Tonnage milled:
Q4/14 – 59,526 dmt versus Q3/14 – 49,355 dmt an increase of 10,171 dmt. Concentrate produced decreased as a result of lower copper head grades however still
remained within the fiscal production guidance.
Shipped copper concentrate, totalling approximately 28,837 wmt via the Group’s port storage facility at Goodyear’s Cove, Newfoundland and Labrador. In addition,
at year end 3,258 dmt of invoiced copper concentrate remained in storage together with non-invoiced concentrate of 260 dmt.
At year end approximately 30,000 – 35,000 dmt of ore was either developed, drilled, blasted or in stockpiled inventory. Underground resources were also made
available to begin preparing and developing other massive sulphide zones, specifically the Ming up and down plunge areas. The fiscal 2015 production scheduled
will include the mining and blending of these zones with the 1807 Zone.
Average production costs (before depreciation and amortisation) for the year were $138 (2013 $145) per tonne of ore milled and $1.51 (2013: $2.03) per equivalent
pound of copper. The reduction in costs per tonne and equivalent pound of copper are mainly attributable to more tonnes milled compared with the previous year.
Revenue
A total of 25,806 dmt (2013 – 14,746 dmt) of concentrate was provisionally invoiced during the year containing 6,968 (2013 5,124) tonnes of accountable copper
metal, 6,043 (2013 3,439) and 28,887 (2013 12,850) ounces of accountable gold and silver respectively at an average price of $3.42 (2013 - $3.38) per pound
copper, $1,395 (2013 - $1,530) per ounce gold and $22.06 (2013 - $27) per ounce silver, generating revenue of $62.0 million (2013 - $34.7 million).
During the year the Group agreed to final weights and assays on three concentrate shipments with its off-take partner resulting in a $0.3 million decrease in
revenue. Additional revenue of $0.4 million was realized on the final settlement of 293 ounces of gold produced from 1806 zone ore through the Group’s gold
processing facility bringing net revenue for the year to $62.1 million.
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2014 (continued)
The Group realized a gain of $250,000 being the difference in the commodity prices at time of provisional invoicing and commodity prices realised on final
settlement of the three shipments during the year. In addition a gain of $197,000 arose on the movement in the differences between anticipated commodity prices
upon final settlement of concentrate in the Group’s warehouse at period end and shipments delivered pending final settlements.
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.
Profit
The net profit before tax for the year was $13,503,000 compared with $2,985,000 for the year ended July 31, 2013. The net profit for the quarter ended July 31,
2014 was $1,974,000 ($3,407,000 before tax) or $0.014 per share which compares to $2,306,000 for Q3/14 and a profit of $7,620,000 ($1,579,000 before tax) for
Q4/13.
Earnings before interest, taxes, depreciation, amortisation (“EBITDA”) for the year were $27,270,000 (2013 : $9,419,000).
Cash flow and cash resources
Cash flows generated from operating activities were $24,755,000 compared with $11,468,000 in the previous fiscal year. Cash flows generated from operating
activities were $5,889,000 in Q4/14 compared to $5,966,000 in Q3/14 and cash utilized of $5,892,000 in Q4/13. The increase in the cash generated relates to the
operating profit and changes in working capital.
Cash resources as at July 31, 2014 were $9.5 million and as of October 25, 2014 were$8.9 million.
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2014 (Continued)
Financing and Investment
During the year a repayment of US$2.2 million (project to date US$11.6 million) was made on the Group’s Gold Loan from the delivery of 1,722 payable ounces of
gold (project to date 7,446 ounces have been delivered).
Cleared the outstanding balance of $5.7 million on its secured credit facility by February 28, 2014.
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. (‘Thundermin’). The purchase price consists of a 0.75 per cent net smelter
return (‘NSR’) on Rambler’s proportionate share of all products derived from the Little Deer Project subject to a buyback of 0.5 per cent of the NSR for $500,000 at
any time; and the remaining 0.25 per cent of the NSR for fair market value as determined by the economics of the Little Deer Project’s feasibility study at any time
following the completion of the feasibility study. On October 11, 2013 the Group satisfied the conditions of the offer and 887,614 ordinary shares were subsequently
issued on December 2, 2013.
Consistent with the strategic goals outlined above, in December 2013 the Group entered into a subscription agreement with Marathon Gold Corporation (TSX:
MOZ) (‘Marathon’) for common shares of Marathon by way of a non-brokered private placement of a guaranteed subscription of $0.5 million with an option by
Rambler to invest an additional $1.5 million. Marathon’s principal asset is the Valentine Lake property, located in central Newfoundland, which hosts two well
defined gold deposits with NI 43-101 compliant resources: the Leprechaun Gold Deposit and the Victory Gold Deposit. The first tranche of $250,000 closed on
December 4, 2014 with the acquisition of 1,176,470 of MOZ shares at a subscription price of $0.2125. The second tranche of $250,000 closed on April 2, 2014 with
the acquisition of 797,448 common shares of MOZ at a subscription price of $0.3135.
Subscribed $129,000 for shares in Maritime Resources Corp. (TSX: MAE). Of the $129,000, $79,000 will be used to allow for the conversion of a $75,000 loan,
plus interest, into shares of Maritime, totaling 316,000 shares. The remaining $50,000 was invested for 200,000 non-flow though (‘NFT’) units consisting of one
common share and one non-transferable share purchase warrant. Each share purchase warrant attached to NFT units entitles the holder to purchase one non flow-
through common share at a price of $0.35 until May 21, 2015. Following the placement Rambler holds 6,267,460 shares of Maritime representing 17.7% of the
issued outstanding shares of the Company. Funds from the placement will be used to further advance the Green Bay Property and the former producing
Hammerdown Gold Mine in particular.
Staffing
At the end of the year a total of 157 full time employees were employed at the Ming Mine compared to 139 full time employees at July 31, 2013.
The Group continues to evaluate current employment levels and look for opportunities to streamline its operations with the goal of improving overall efficiency.
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2014 (Continued)
Exploration and evaluation
Ming Mine diamond drilling has been mainly focused on extending the 1807 Copper Zone to replenish the reserves that have been mined since declaring
Commercial Production. The deepest drill hole completed to date has extended the resource model 210 meters (plunge length) below the deepest reserve level,
516L, while drilling up plunge has extended the zone an additional 161 meters (plunge length) above the shallowest reserve level, 329L. Additional drilling is also
being planned to test the mineralized contact to the west and east of the mine which remains largely unexplored.
On January 27, 2014 the Group updated its NI 43-101 Reserve and Resource estimates at the Ming Copper-Gold Mine. The reserve itself shows the replacement
of all tonnes mined from the 1807 zone to date, extending the mine life by one year. All zones remain open to further exploration.
Consistent with the Company’s strategic goal of growing and extending the life of the Ming Mine in June 2013 the Group 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 the
Ming Copper-Gold 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
(‘LFZ’). 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. During Q4/14 work
continued on both projects with the Group’s third party consultant.
The Lower Footwall Zone pre-concentration project has identified Dense Media Separation (DMS) technology as a potentially viable method of upgrading the in situ
grade of the large (18.2M tonnes at 1.43% Cu) Lower Footwall Zone at the Ming Mine. Through the completion of bench scale testing and a mini-pilot plant
program, DMS technology was successful by removing thirty to forty per cent of the lighter host rock with copper recoveries up to ninety five per cent. In terms of
copper grade improvement, the mini-pilot using run of mine ore from the LFZ grading 1.39% returned a pre-concentrate grade of 2.27% (an upgrade ratio of 1.63).
The Company is planning the next stage in testing of this technology through the rental and operation of an on-site demonstration plant. This plant would be fed
from a bulk sample of Lower Footwall Zone material (~ 20,000 to 30,000 metric tonnes) sourced from readily available access points already established in the
Ming Mine. This demonstration plant would serve to scale up the results seen in the laboratory with the resultant pre-concentrate being delivered to the copper
concentrator as additional feed. Results of this demonstration would be used in subsequent optimization studies aimed at commercialization of the Lower Footwall
Zone with the expectation of lowering initial capital requirements compared to the Company’s Preliminary Economic Assessment published in April 2012.
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
OPERATIONAL SUMMARY
For the quarter ended July 31, 2014 the Group produced 6,000 tonnes of copper concentrate containing 1,708 tonnes of copper metal, 2,107 ounces of gold and
16,708 ounces of silver. The average feed grade during the period was 3.24% Cu, 1.65 g/t Au and 12.60 g/t Ag followed by a mill recovery of 96.7 per cent, 71.0
per cent and 75.9 per cent for copper, gold and silver respectively.
During the year the Company milled 215,496 dry metric tonnes of ore and produced 25,647 tonnes of copper concentrate containing 7,472 tonnes of copper metal,
6,921 ounces of gold and 52,539 ounces of silver. The average feed grade during the year was 3.68 per cent copper, 1.59 grammes per tonne gold and 10.65
grammes per tonne silver followed by a mill recovery of 96.4 per cent, 67.1 per cent and 78.1 per cent for copper, gold and silver respectively.
The Company first declared commercial production in November 2012 and has since milled 352,893 dry metric tonnes and produced 39,449 tonnes of copper
concentrate containing 11,425 tonnes of copper metal, 10,058 ounces of gold and 76,497 ounces of silver.
Feed grades can be subject to fluctuations throughout the year due to a combination of factors including the inconsistent nature of the ore bodies being mined,
production sequencing, unplanned mining dilution and blending strategies. Fluctuations in recoveries can be attributed to variations in feed grade, variations in
production rate, grindability of the mill feed and planned processing plant shutdowns. The ranged values in the fiscal guidance is intended to cover these variations
seen throughout the fiscal year.
Ore and Concentrate Production Summary for Fiscal 2014
PRODUCTION
Dry Tonnes Milled
215,496
59,526
49,355
50,957
55,659
200,000 – 220,000
YTD
Q4/14
Q3/14
Q2/14
Q1/14
F2014 Guidance
Copper Recovery
Gold Recovery
Silver Recovery
Copper Head Grade (%)
Gold Head Grade (g/t)
96.4%
67.1%
78.1%
3.68
1.59
96.7%
71.0%
75.9%
3.24
1.65
96.4%
66.2%
79.2%
3.84
1.62
Silver Head Grade (g/t)
10.65
12.60
11.70
95.9%
61.7%
76.1%
3.71
1.64
9.22
96.8%
69.1%
81.9%
4.01
1.43
8.91
Page 11
92 – 94 %
63 – 67 %
55 – 65 %
3.0 – 4.0
1.0 – 2.0
6.0 – 8.0
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
OPERATIONAL SUMMARY (continued)
CONCENTRATE (Produced and Stored in Warehouse)
Copper (%)
Gold (g/t)
Silver (g/t)
Dry Tonnes produced
Copper Metal (tonnes)
Gold (ounces)
Silver (ounces)
Total
Q4/14
Q3/14
Q2/14
Q1/14
F2014 Guidance
29.13
8.39
66.97
25,647
7,472
6,921
52,539
28.47
10.93
86.62
6,000
1,708
2,107
29.32
8.02
79.15
6,238
1,829
1,608
29.02
7.07
49.11
6,818
1,978
1,551
29.68
7.81
56.01
6,591
1,956
1,655
27 – 30
6 – 8
45 – 55
20,000 – 24,000
5,700 – 6,840
4,500 – 5,500
16,708
13,196
10,764
11,870
32,000 – 39,000
Ore and Concentrate Production Quarterly results comparison
PRODUCTION
Q4/14
Q3/14
Q4/14
Q4/13
Dry Tonnes Milled
59,526
49,355
21%
59,526
47,027
27%
Copper Recovery
Gold Recovery
Silver Recovery
Copper Head Grade (%)
Gold Head Grade (g/t)
96.7%
71.0%
75.9%
3.24
1.65
96.4%
66.2%
79.2%
3.84
1.62
Silver Head Grade (g/t)
12.60
11.70
0%
7%
-4%
-16%
2%
8%
96.7%
71.0%
75.9%
3.24
1.65
94.0%
65.0%
73.0%
4.05
1.52
12.60
10.95
3%
9%
4%
-20%
9%
15%
Page 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
OPERATIONAL SUMMARY (continued)
CONCENTRATE (Produced and Stored in Warehouse)
Q4/14
Q3/14
Q4/14
Q4/13
Copper (%)
Gold (g/t)
Silver (g/t)
Dry Tonnes produced
Copper Metal (tonnes)
Gold (ounces)
Silver (ounces)
28.47
10.93
86.62
6,000
1,708
2,107
29.32
8.02
79.15
6,238
1,829
1,608
16,708
13,196
-3%
36%
9%
-4%
-7%
31%
27%
28.47
10.93
86.62
6,000
1,708
2,107
16,708
30.00
7.70
58.60
5,244
1,574
1,297
9,873
-5%
42%
48%
14%
9%
62%
69%
Production of 6,000 tonnes of copper concentrate representing a 14 per cent increase over Q4 2013 and a 4 per cent decrease from Q3 2014
Dry tonnes milled of 59,526 tonnes representing a 27 per cent increase over Q4 2013 and a 21 per cent increase from Q3 2014. This resulted in the production
of:
1,708 tonnes of Copper (7,472 tonnes for the year)
2,107 ounces of Gold (6,921 ounces for the year)
16,708 ounces of Silver (52,539 ounces for the year)
Head grades of Copper 3.24 per cent, Gold 1.65 grammes per tonne and Silver 12.60 grammes per tonne with recoveries to concentrate for Copper 96.7 per
cent, Gold 71.0 per cent and Silver 75.9 per cent. Copper head grade decreased by 20 per cent over Q4 2013 and 16 per cent in Q3 2014 while copper
recoveries remained in line with full year results.
Concentrate grade for Copper 28.47 per cent, Gold 10.93 grammes per tonne and Silver 86.62 grammes per tonne representing a 5 and 3 per cent decrease in
copper concentrate grade over Q4/2013 and Q3/2014 respectively. Gold and Silver in concentrate both showed increases over Q4 2013 and Q3 2014.
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
HEALTH AND SAFETY
The Group completed the year with no lost time accidents and 3 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 1.9 respectively.
The Health and Safety of the Group’s employees continues to be a high priority with prevention and early hazard recognition being key components of the Group’s
strategy.
OUTLOOK
Management continues to pursue the following objectives:
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.
Continue to open up other mining horizons in the Ming North and South ore bodies, both up and down plunge.
Increase production from the Ming Mine to allow the optimization of the Nugget Pond copper concentrator to its design capacity of 1,000 mtpd and potentially allow
the gold hydromet to be operated independently and/or simultaneously with the copper concentrator.
Continuing to evaluate opportunities for the possible integration of the Lower Footwall Zone into the mine’s reserve. As a part of this work, completing the onsite
demonstration program to determine if pre-concentrating the Lower Footwall Zone material using dense media separation (‘DMS’) is a viable option to help improve
the run of mine head grade from this zone.
Become a strategic long term low-cost producer, by selectively pursuing growth opportunities through joint ventures and acquisitions, as demonstrated by the
Group’s investment in the former producing Hammerdown gold mine, Little Deer and Whales Back copper mines and the advanced Valentine Lake Gold Project.
Increase exposure and liquidity both on London’s AIM and on Toronto’s Venture Exchange through marketing and investor relations campaigns.
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
FISCAL 2015 GUIDANCE
Similar to 2014, copper production for the 2015 fiscal year is forecast between 5,400 and 6,700 tonnes of metal with increases forecasted for gold and silver; 5,600 to
6,600 ounces of gold and 39,000 to 46,000 ounces of silver.
PRODUCTION
Fiscal 2015
CONCENTRATE
Fiscal 2015
Dry Tonnes Milled
215,000 – 230,000
Copper Recovery
Gold Recovery
Silver Recovery
94 - 96%
65 - 70%
60 - 75%
Copper Head Grade (%)
2.5 – 3.5
Gold Head Grade (g/t)
Silver Head Grade (g/t)
1 - 2
6 - 8
(Produced)
Copper %
Gold (g/t)
Silver (g/t)
27 – 30
6 – 8
45 -55
Dry tonnes produced
20,000 – 24,000
Copper Metal (tonnes) 5,400 -6,700
Gold (ounces)
5,600 – 6,600
Silver (ounces)
39,000 – 46,000
See ‘Forward Looking Information’ in Appendix 5 for a description of the factors that may cause actual results to differ from forecast.
Page 15
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
CAPITAL PROJECTS REVIEW
During the year the Group incurred expenditures of $6,683,000 on Mineral Property; $2,925,000 on property, plant and equipment; and $1,064,000 on exploration and
evaluation at the Ming Mine net of $264,000 in RDC claims.
Mineral Property
Property, plant and equipment
Exploration and evaluation costs
TOTAL CAPITAL
Total
$,000
6,683
2,925
1,064
10,672
Q4/14
$,000
1,550
420
137
2,107
Q3/14
$,000
1,778
533
(19)
2,292
Q2/14
$,000
2,074
1,563
314
3,951
Q1/14
$,000
1,281
409
632
2,322
Mineral Property expenditures in the year remained consistent quarter on quarter and are in line with the continued capital development within the Group’s producing
1807 ore zone and the Ming up and down plunge areas.
Property, plant and equipment includes $1.5 million on underground mobile equipment and $0.6 million on storage and office buildings during the year.
Exploration and evaluation costs at the Ming Mine relate to exploration drilling on the 1807 and undefined ore zones and the on-going Lower Footwall zone projects and
include $550,000 on the acquisition of the Little Deer Project as outlined above.
Page 16
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
FINANCIAL REVIEW
Fiscal
2014
($000’s)
62,110
Commentary
Revenue of $62.1 million was generated through the sale of 25,806 dmt of copper concentrate containing 6.968
tonnes of accountable copper metal and 6,043 ounces of accountable gold. This compared with revenue of $34.7
million in the prior year 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.
Comparatives
Fiscal
2013
($000’s)
B/ (W)*
34,669
79%
39,732
Production costs relate to the processing and mining costs associated with Group’s Ming Mine and include
processing costs of $7.2 million, mining costs $22.5 million and depreciation and amortisation of $10.0 million.
Operating costs associated with mining and processing of Ming Mine ores were capitalized to Mineral Property prior to
commercial production being achieved for the first quarter of 2013.
27,644
(44)%
4,432
447
General and administrative expenses were higher than the previous year by $875,000. Employment costs
increased $442,000 as a result of , compensation changes and addition of administrative/management staff, Legal
and professional costs increased $281,000 which includes the costs of merger and acquisition activity carried out
during the year , travel and investor relation costs increased $6,000 and security and general expenses increased
$153,000 mainly due to increased municipal taxes of $101,000 and increased security costs of $41,000 .
Gain/(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 gain on derivative financial assets of $250,000 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 $197,000 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.
3,557
(25)%
(323)
238%
(1,173)
Foreign exchange losses arising on the Gold Loan increased in the year as a result of the weakening of the
Canadian dollar against the US dollar during the year.
(513)
(129%)
(4,488)
Income tax(charge)/credit. The income tax charge is the deferred tax charge arising from the utilisation of losses
brought forward compared to a recognition of a deferred tax asset in 2013.
6,068
(174)%
Page 17
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
FINANCIAL REVIEW (continued)
Fiscal
2014
Results
($000’s)
Commentary
Mineral properties The group incurred costs of $6.7 million in the year which included labour costs of $3.4 million
and underground development costs of $3.3 million. In 2013 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 for 2013 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.
6,683
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
2013
($000’s)
B/ (W)*
5,664
(18)%
2,925
Capital spending on property, plant and equipment slightly increased during the year including $1.9 million spent
on underground equipment and $0.4 million on updates at the mill.
2,620
(11)%
1,064
Capital spending on exploration and evaluation relate to exploration drilling on the 1807 and undefined ore zones
and the on-going Optimization Studies on the Group’s Lower Footwall Zone ore body. It also includes $550,000 for the
purchase of the Little Deer Coper Deposit.
190
(454)%
*B / (W) = Better / (Worse)
Page 18
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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 2014
Revenue
Profit before tax
Net Income
Earnings per Share (Basic & Diluted)
Fiscal 2013
Revenue
Profit/(loss) before tax
Net Income/ (loss)
Earnings/(loss) per Share (Basic & Diluted)
15,050
15,078
15,237
16,745
3,407
1,974
0.014
3,312
2,306
0.016
1,520
1,027
0.007
13,175
10,087
11,407
1,580
7,620
0.053
193
193
0.001
1,930
1,958
0.014
5,264
3,708
0.026
-*
(718)
(718)
(0.005)
* gold and copper sales resulting from the testing and commissioning of the Ming Mine
were credited to Mineral properties until commercial production was achieved
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. Profits before tax in the first quarter of
2014 increased by $3,684,000 due to increased sales and production efficiencies and fell by $2,681,000 in the second quarter as a result of lower revenue, increased
production costs and exchange losses on the Gold Loan. In the third quarter of 2014 profit before tax increased by $1,792,000 mainly as a result of a reversal of foreign
exchange losses on the Gold Loan and a reduction in administrative expenses with a further increase of $95,000 in the fourth quarter of 2014 mainly due to reduced
production costs.
Page 19
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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 $39 million since declaring commercial production on November 1, 2012 with $7
million generated in Q4/14 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
Total
July 31, 2014
$’000
July 31, 2013
$’000
7,398
1,992
145
9.535
2,212
3,293
61
5,566
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 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 $9.9 million for the year. Cash of $6.7 million was spent on the Group’s Mineral Property $2.0 million on property,
plant and equipment, $0.7 million on evaluation and exploration costs, $0.1 million on equity interest in Marathon Gold Corp. and $0.5 million on equity interest in
Maritime Resources Corp.
Cash flows utilized in financing activities during the year amounted to $10.9 million and included repayment of $5.9 million of the Group’s credit facility and repayments
of the gold loan of $2.4 million and finance lease repayments of $2.6 million.
Page 20
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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 period end the Group holds bearer deposit notes totalling $3.25 million.
Since the commencement of commercial production the Group has generated operating cash flows of $39 million and reduced the working capital deficit from $2.7
million at July 31, 2013 to positive working capital of $9.8 million at July 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.
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.
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 25, 2014 the Group has $8.9 million in cash and cash equivalents.
Financial Instruments
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale investments, derivative financial instruments and trade
and other receivables. The Group’s financial liabilities comprise trade payables; other payables; 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, 2014.
Page 21
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
COMMITMENTS AND LOANS
At July 31, 2014, the Group has a commitment of approximately $250,000 in connection with the Little Deer Project.
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 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 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.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
Page 22
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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. 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. During the first nine months of fiscal 2014 the Group made total repayments of $5.9 million repaying the facility in full.
Loan and lease balances
At July 31, 2014, interest bearing loans and borrowings comprised of finance lease commitments of $5,434,000. The Group entered into finance lease commitments of
$953,000 to finance the acquisition of a mine truck in the year.
SUBSEQUENT EVENTS
The Company subscribed to purchase 760,340 common shares in Marathon Gold Corporation for $375,000 bringing its total holding to 2,734,258 representing 3.98% of
the issued and outstanding shares.
As a continuation of previously successful dense media (‘DMS’) or pre-concentration test work the Group is planning to implement an on-site demonstration DMS plant
to scale-up the process and prove the technology for its application. Once the technology demonstration is complete and operating parameters are optimized, this
project will serve as the basis of a pre-feasibility study with the goal of moving the LFZ resources into the mine reserve. The Research & Development Corporation of
Newfoundland and Labrador (‘RDC’) initial contribution of $250,000 in 2013 helped provide the groundwork for the on-site demonstration plant program. On September
9, 2014 the Group announced that RDC has again provided support with an additional $750,000 investment.
Page 23
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
APPENDIX 1 – LOCATION MAP
Page 24
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
APPENDIX 2 ‐ SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
Financial Highlights
(All amounts in 000s of Canadian Dollars, unless
otherwise stated)
Gold sales – gold doré (Ounces)
Average price (per ounce)
Concentrate sales pre commercial production (dmt)
Concentrate sales post commercial production (dmt)
Average provisional price ($ 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 increase (decrease) 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,
2014
2013
2012
293
1,447
N/A
25,806
2,423
62,110
(39,732)
(93)
(4,432)
9,015
24,755
(9,926)
(10,877)
3,952
9,535
119,387
(31,979)
9,814
143,863
0.063
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 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 25
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2014
Q4/14
Results
($000’s)
Commentary
Comparatives
Q3/14
B/ (W)*
Q4/13
B/ (W)
15,050
Revenue of $15.0 million in Q4/14 was generated through the sale of 5,909 dmt of copper concentrate containing
1,572 tonnes of accountable copper metal, 1,927 ounces of accountable gold and 11,445 ounces of accountable silver
compared with $15.1 million from the sale of 6,320 dmt of copper concentrate in Q3/14. The small reduction in revenue
reflects lower average copper prices during the quarter on lower accountable copper metal sold offset by increased
accountable gold and silver. 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.
6,357
Production costs relate to the processing and mining costs associated with Group’s Ming Mine production and include
processing and mining costs of $1.7 million (Q3/14: $1.8 million) and $4.7million (Q3/14: $6.2 million) respectively.
Processing and mining costs in Q4/13 were of $1.8 million and $5.4 million respectively.
1,104
General and administrative expenses were higher than the previous quarter by $16,000. Promotional and travel
costs reduced by $79,000 and legal and professional costs by $59,000. In comparison to Q4/13 administrative
expenses increased by $261,000. Staff costs increased by $34,000 , legal and professional costs by $207,000 mainly
as a result of costs of merger and acquisition activity expensed in Q4/14, promotional and travel costs by $30,000
offset by a reduction of $10,000 in general expenses.
Gain/(loss) on derivative financial instruments. During the quarter the net unrealized fair value gain adjustment
recognized was $314,000 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 $198,000 on the final settlement of the Group’s
sixth concentrate shipment. During Q3/14 the fair value loss adjustment was $64,000 being the difference in the
commodity prices at time of provisional invoicing and anticipated commodity prices upon final settlement of
concentrates in the Group’s warehouse at period end and shipment delivered pending final settlement.
116
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.
15,078
0%
13,175
14%
7,964
20%
7,173
11%
1,088
(1)%
843
(7)%
(64)
281%
(47)
347%
36
Foreign exchange differences arising on the Gold Loan resulted in a gain in Q4/14 as a result of the weakening of
the Canadian dollar against the US dollar during the quarter.
296
(88)%
112
34%
1,550
Mineral properties The group incurred costs of $1.5 million in the quarter. The cost includes labour costs of $0.8
million and underground development costs of $0.7 million. Mineral properties expenditure reduced in Q4/13 in line
with the completion of the 1807 independent ramp breakthrough in Q3/13.
1,778
13&
1,266
(22)%
420
Capital spending on property, plant and equipment reduced slightly during the quarter compared to Q3/14. Q4/13
includes the purchase of two additional scooptrams.
533
21%
828
49%
Page 26
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
APPENDIX 3 ‐ FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2014 (continued)
Q4/14
Results
($000’s)
Commentary
137
Capital spending on exploration and evaluation costs in Q3/14 was $191,000 and this was offset by RDC claims of
$54,000 and relates to exploration drilling on the Group’s 1807 and undefined ore bodies. Expenditure in Q3/14 was
$190,000 offset by RDC claims of $209,000. Expenditure 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.
*B / (W) = Better / (Worse)
Comparatives
Q3/14
B/ (W)*
Q4/13
B/ (W)
(19)
(821)%
131
(5)%
Page 27
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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 $39 million and reduced the working capital deficit from $2.7
million at July 31, 2013 to positive working capital of $9.8 million at July 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.
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.
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, 2014.
Page 28
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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, 2014). 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.
Amortisation of Mineral Property
Amortisation of the Mineral Property is calculated on a unit of production method expected to amortise the cost including future forecast capital expenditure over the
expected life of the mine based on the tonnes of ore expected to be extracted. Any changes to these estimates may result in an increase in the amortisation charge with
a corresponding reduction in the carrying value of the Mineral Property.
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.
Page 29
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
Available for sale investments
Management considers that they do not have significant influence over the financial and policy decisions of the entities in which investment has been made and
therefore have included the investments as available for sale investments.
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 in the previous 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 30
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
APPENDIX 4 ‐ CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
The Group has adopted all of the new and revised Standards and Interpretations that are relevant to its operations and effective for accounting periods beginning on or
after 1 January 2013. The adoption of these new and revised Standards and Interpretations had no material effect on the profit or loss or financial position of the Group.
In order to comply with International Financial Reporting Standards as issued by the International Accounting Standards Board, the Group has chosen early adoption of
IFRS 10, 11, and 12 for EU purposes, however these do not have a material impact on the 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, 2014:
IFRS
/Amendment
Various
IFRS 9
IFRS 14
IFRS 15
IFRIC 21
Title
Nature of change to accounting
policy
Annual Improvements to IFRSs No change to accounting policy,
Application date of
standard
Various
Application date
for Group
August 1, 2014
Financial instruments:
Classification and Measurement
Regulatory Deferral Accounts
Revenue from contracts with
customers
Levies
therefore, no impact
No change to accounting policy,
therefore, no impact
No change to accounting policy,
therefore, no impact
No change to accounting policy,
therefore, no impact
No change to accounting policy,
therefore, no impact
January 1, 2015
August 1, 2015
January 1, 2014
August 1, 2014
January 1, 2017
August 1, 2017
January 1, 2014
August 1, 2014
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, 2014.
Page 31
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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
144,168,228
Options
5,506,000*
*if all options have fully vested
Weighted Average Exercise Price
--
$0.47
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. Forward-looking statements are based on opinions, estimates and assumptions of management considered reasonably at
the date the statements are made. Key assumptions include without limitation, the price of and anticipated costs of recovery of, copper concentrate, gold and silver, the
presence of and continuity of such minerals at modeled grades and values, the capacities of various machinery and equipment, the availability of personnel, machinery
and equipment at estimated prices, mineral recovery rates, and others. Investors are cautioned however that forward-looking statements necessarily involve both 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, 2014. 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 and the Group disclaims any intention or
obligation and assumes no responsibility to update or revise any FLI contained herein, whether as a result of new information, future events or otherwise, except as
required by applicable law.
Page 32
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2014
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, or production stoppages or shortfalls.
Continued mining and milling the exposed 1807
workplaces and further up-dip and down-dip
exploration of 1807 zone
Increase production from the Ming Mine to
allow the optimization of the Nugget Pond
copper concentrator at 1,000 mtpd and
potentially allow the gold hydromet to be
operated independently and/or simultaneously
with the copper concentrator.
Achieving
the planned capital and operating
development and production targets; and, timely
completion of drill bays to allow commencement of
exploration drilling
Successful completion of a detailed engineering
review of existing infrastructure and availability of
finance from cash flow from operations or external
Development delays reducing access to production ore
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 33
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2014
The Directors present their report with the audited financial statements of the Group for the year ended July 31,
2014.
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 strategic properties within
the immediate area. The principal activity of the parent company is that of a holding company.
DIRECTORS
The Directors during the period under review were:
T S Chan
E C Chen
D H W Dobson
L D Goodman
B Hinchcliffe (resigned January 2, 2014)
S Neamonitis (resigned December 5, 2013)
G Ogilvie
J S Thomson
N P Williams (appointed February 19, 2014)
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2014.
SUBSTANTIAL SHARE INTERESTS
At October 25, 2014 the parent Company was aware of the following substantial share interests:
Number of Ordinary Shares
% of Share Capital
Henderson Global Investors
Tinma International Ltd.
BlackRock Investment Management
Majedie Asset Management
Legal and General Investment Management
Whitmill Trust (Zila Corporation)
Hargreaves Lansdown
FINANCIAL INSTRUMENTS
28,878,626
22,736,992
13,053,180
10,988,197
9,691,887
8,838,000
5,274,339
20.03
15.77
9.05
7.62
6.72
6.13
3.66
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.
Page 34
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2014 (CONTINUED)
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Management’s Discussion and Analysis.
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 25, 2014
Page 35
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 36
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2014
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 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. G Ogilvie is the senior non-executive director and N Williams 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 37
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 2014
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
Financial Reporting Council’s (FRC’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 FRC’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 2014 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).
Page 38
Note
2014
$’000
2013
$’000
3
4
6
7
8
62,110
(29,684)
(10,048)
22,378
(4,432)
(93)
17,853
(1,173)
99
447
(3,723)
(4,350)
34,669
(20,936)
(6,708)
7,025
(3,557)
(26)
3,442
(513)
84
(323)
295
(457)
13,503
2,985
(4,488)
6,068
9,015
9,053
Note
2014
$
2013
$
19
19
0.063
0.063
0.062
0.063
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2014
(EXPRESSED IN CANADIAN DOLLARS)
Revenue
Production costs
Depreciation and amortisation
Gross profit
Administrative expenses
Exploration expenses
Operating profit
Exchange loss
Bank interest receivable
Gain/(loss) on derivative financial instruments
Finance costs
Net financing expense
Profit before tax
Income tax (charge)/credit
Profit for the year attributable to owners of the parent
Earnings/(loss) per share
Basic earnings per share
Diluted earnings per share
Page 40
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2014
(EXPRESSED IN CANADIAN DOLLARS)
Profit 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 for the year
Total comprehensive income for the year and attributable to the owners of the parent
2014
$’000
2013
$’000
9,015
9,053
176
(93)
83
(3)
721
718
9,098
9,771
Page 41
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2014
(EXPRESSED IN CANADIAN DOLLARS)
Note
2014
$’000
2013
$’000
9
10
11
12
8
13
14
15
16
17
18
21
22
21
20
18,514
51,644
25,676
2,151
1,754
99,739
3,950
2,120
788
9,535
3,255
17,450
49,395
28,460
1,703
5,916
102,924
3,373
1,096
639
5,566
3,261
19,648
119,387
13,935
116,859
2,628
75,505
214
316
206
8,539
87,408
20,242
1,903
22,145
5,300
4,534
9,834
31,979
2,613
75,164
214
140
299
(738)
77,692
20,576
1,903
22,479
10,898
5,790
16,688
39,167
119,387
116,859
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
Retained profits/(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:
N P Williams
Director
Approved and authorised for issue by the Board on October 25, 2014
Page 42
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
Group
Balance at August 1, 2012
Comprehensive income
Profit for the year
Foreign exchange translation differences
Gain 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
Balance at August 1, 2013
Comprehensive income
Profit for the year
Foreign exchange translation differences
Gain 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, 2014
Share
capital
$’000
Share
Premium
$’000
Merger
Reserve
$’000
Translation
reserve
$’000
Fair value
reserve
$’000
Accumulated
Losses
$’000
Total
$’000
2,599
74,756
214
143
(422)
(9,888)
67,402
-
-
-
-
-
-
-
-
214
214
-
-
-
-
-
-
-
-
-
(3)
-
(3)
(3)
-
-
-
140
140
-
176
-
176
176
-
-
-
-
-
721
721
721
-
-
-
299
299
-
-
(93)
(93)
(93)
-
-
-
9,053
-
-
-
9,053
-
97
97
(738)
9,053
(3)
721
718
9,771
422
97
519
77,692
(738)
77,692
9,015
-
-
-
9,015
-
262
262
9,015
176
(93)
83
9,098
356
262
618
214
316
206
8,539
87,408
-
-
-
-
-
14
-
14
2,613
-
-
-
-
-
408
-
408
75,164
2,613
75,164
-
-
-
-
-
15
-
15
2,628
-
-
-
-
-
341
-
341
75,505
Page 43
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2014
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating profit
Depreciation
Share based payments
Foreign exchange difference
Increase in inventory
Increase in debtors
Decrease/(increase) in derivative financial instruments
(Decrease)/increase in creditors
Cash generated from operations
Interest paid
Tax received
Net cash generated from 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 exercise of share options
Repayment of Gold Loan (note 21)
Repayment of Credit Facility
Capital element of finance lease payments
Net cash utilised in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
Page 44
2014
$’000
2013
$’000
17,853
10,143
262
(172)
(577)
(1,024)
298
(1,206)
25,577
(822)
-
24,755
98
6
(629)
(746)
(6,683)
(1,972)
(9,926)
7
(2,402)
(5,900)
(2,582)
(10,877)
3,952
5,566
17
9,535
3,442
6,813
97
-
(145)
(379)
(962)
3,431
12,297
(857)
28
11,468
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
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 $39
million and reduced the working capital deficit from $2.7 million at July 31, 2013 to positive working capital
of $9.8 million at July 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.
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.
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, 2014 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, 2014 the closing rate of exchange of Canadian
dollars to 1 GB pound was 1.84 (July 31, 2013: 1.57) and the average rate of exchange of Canadian dollars
to 1 GB pound for the year was 1.71 (2013: 1.58).
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 45
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
The Group has adopted all of the new and revised Standards and Interpretations that are relevant to its
operations and effective for accounting periods beginning 1 January 2013. The adoption of these new and
revised Standards and Interpretations had no material effect on the profit or loss or financial position of the
Group.
In order to comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board, the Group has chosen early adoption of IFRS 10, 11, and 12 for EU purposes,
however these do not have a material impact on the 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
An investor controls an investee when the investor is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
The financial statements of subsidiaries are included in the consolidated financial statements from the date
that control is obtained.
(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 46
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.
(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:
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(e)
Property, plant and equipment (continued)
Mineral properties
(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. Future forecast capital expenditure is
included in the unit of production amortisation calculation.
(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 48
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 49
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 finance leases and hire purchase contracts 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 50
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 51
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 52
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
2014
2013
UK
$’000
Canada
Consolidated
UK
Canada
Consolidated
$’000
$’000
$’000
$’000
$’000
Segment revenue
-
62,110
62,110
-
34,669
34,669
Segment non-current assets
1,663
98,076
99,739
1,357
101,567
102,924
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
Customer A
Others
4. Operating profit
The operating profit is after charging:
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
2014
$’000
61,687
423
62,110
2013
$’000
34,190
479
34,669
2014
$’000
2013
$’000
5,709
4,434
482
91
4
4,609
2,204
413
66
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 $nil (2013: $1,045,000) was capitalised
within Mineral properties.
Page 53
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Personnel expenses
Salary costs
Wages and salaries
Other short term benefits
Compulsory social security contributions
Share based payments
Group
2014
$’000
11,848
433
1,836
262
14,379
Group
2013
$,000
11,343
325
1,644
97
13,409
Salary costs of $3,386,000 (2013: $4,638,000) were capitalised as Mineral properties and $21,000 (2013:
$10,000) 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
2014
Group
2013
7
14
136
157
8
13
139
160
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
2014
$
of options
2014
‘000
0.45
0.49
-
0.42
0.47
0.47
4,113
1,526
-
(133)
5,506
4,202
price
2013
$
0.46
0.47
0.24
0.63
0.45
0.45
of options
2013
‘000
3,937
622
(117)
(329)
4,113
3,339
The options outstanding at July 31, 2014 have an exercise price in the range of $0.17 to $1.10 and a weighted
average remaining contractual life of 6.5 years (2013: 7 years).
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on the
Black-Scholes model.
Page 54
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
2014
2013
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)
$0.225
$0.214
$0.492
$0.492
$0.473
$0.473
50.7%
5
0
1.63%
50.8%
5
0
1.55%
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 2011
Share options granted in 2012
Share options granted in 2013
Share options granted in 2014
Total expense recognised as employee costs
6. Loss on derivative financial instruments
Gain/(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
2014
$’000
2013
$’000
7
23
44
188
262
17
26
54
-
97
2014
$’000
2013
$’000
447
(323)
2014
$’000
2013
$’000
349
2,639
477
256
2
-
3,723
319
(1,750)
975
88
5
68
(295)
Finance costs incurred prior to the declaration of commercial production were generally capitalised in Mineral
properties.
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Income tax
8.
Recognised in the income statement
Current tax expense
Current year
Deferred tax charge/(credit)
Origination and reversal of temporary timing differences
In respect of previously unrecognised tax losses
Tax losses surrendered for tax credit
Total income tax charge/(credit) in income statement
Reconciliation of effective tax rate
Profit before tax
Income tax using the UK corporation tax rate of 22.33% (2013: 23.67%)
Effect of tax rates in foreign jurisdictions (rates increased)
Non-deductible expenses
Foreign exchange differences
Effect of reduction in tax rates
Effect of tax losses and credits
Under provision in previous year
Recognised in other comprehensive income
Current tax expense
Current year
Deferred tax (credit)/expense
Fair value re-measurement of available for sale investments
Exchange difference on retranslation of UK deferred tax asset
Over provision in previous period
Total income tax (credit)/expense in statement of other comprehensive
income
2014
$,000
2013
$,000
-
-
4,488
-
-
4,488
-
-
-
(6,040)
(28)
(6,068)
2014
$’000
2013
$’000
13,502
2,985
3,015
1,017
65
-
231
93
67
4,488
706
228
30
(2)
-
(7,030)
-
(6,068)
2014
$,000
2013
$,000
-
-
(26)
(238)
(61)
(325)
-
-
122
-
-
122
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Income tax credit (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
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, 2014 July 31, 2013 July 31, 2014 July 31, 2013 July 31, 2014 July 31, 2013
$’000
$’000
$’000
$’000
$’000
$’000
-
-
-
-
-
10,503
10,503
(1,832)
(2,166)
(1,658)
(35)
(151)
-
(5,842)
(1,413)
(1,228)
(1,352)
(61)
(533)
-
(4,587)
(1,832)
(2,166)
(1,658)
(35)
(151)
7,596
1,754
(1,413)
(1,228)
(1,352)
(61)
(533)
10,503
5,916
-
7,596
7,596
Movement in recognised deferred tax assets and liabilities
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, 2012
comprehensive
July 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 57
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Movement in recognised deferred tax assets and liabilities (continued)
Property, plant and equipment
Mineral properties
Intangible assets
Available for sale investment
Gold loan
Other timing differences
Tax value of loss carry-forwards and credits
Recognised in
Balance
Recognised in
other
Balance
Aug 1, 2013
income
comprehensive
Jul 31, 2014
$’000
$’000
income
$’000
$’000
1,413
1,228
1,352
61
533
-
(10,503)
(5,916)
419
938
306
-
(382)
(29)
3,235
4,487
-
-
-
(26)
-
-
(299)
(325)
1,832
2,166
1,658
35
151
(29)
(7,567)
(1,754)
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. The Group considers that it has
sufficient evidence of future taxable profits to justify the recognition of a deferred tax asset of $1.8 million (2013:
$5.9 million).
9.
Intangible assets
Cost
Balance at 1 August 2012
Additions
Balance at 31 July 2013
Balance at 1 August 2013
Additions
Balance at July 31, 2014
Carrying amounts
At 1 August 2012
At 31 July 2013
At 1 August 2013
At July 31, 2014
Exploration and evaluation costs
Ming Mine
Little Deer Project
Total
$’000
$’000
$’000
17,260
190
17,450
17,450
514
17,964
17,260
17,450
17,450
17,964
-
-
-
-
550
550
-
-
-
550
17,260
190
17,450
17,450
1,064
18,514
17,260
17,450
17,450
18,514
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 at the year end.
Page 58
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Mineral properties
Cost
Balance at August 1, 2012
Additions
Transfer to inventory on commercial production
Balance at July 31, 2013
Balance at August 1, 2013
Additions
Balance at July 31, 2014
Amortisation
Balance at August 1, 2012
Amortisation charge
Balance at July 31, 2013
Balance at August 1, 2013
Amortisation charge
Balance at July 31, 2014
Carrying amounts
At August 1, 2012
At July 31, 2013
At August 1, 2013
At July 31, 2014
Mineral
property
$’000
48,064
5,664
(2,129)
51,599
51,599
6,683
58,282
-
2,204
2,204
2,204
4,434
6,638
48,064
49,395
49,395
51,644
The Group generated revenue from saleable material produced during commissioning of $nil million (2013: $9.5
million) and offset this revenue against the mineral property asset prior to commercial production being declared.
The Group capitalised borrowing costs of $nil million (2013: $1.1 million).
Page 59
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, 2012
Additions
Reclassification
Balance at July 31, 2013
Balance at August 1, 2013
Additions
Balance at July 31, 2014
Depreciation and impairment losses
Balance at August 1, 2012
Depreciation charge for the year
Balance at July 31, 2013
Balance at August 1, 2013
Depreciation charge for the year
Balance at July 31, 2014
Carrying amounts
At August 1, 2012
At July 31, 2013
At August 1, 2013
At July 31, 2014
Leased plant and machinery
3,674
30
613
4,317
4,317
126
4,443
1,259
399
1,658
1,658
407
2,065
2,415
2,659
2,659
2,378
21,499
131
(21,604)
26
26
20
46
-
-
-
-
-
-
21,499
26
26
46
212
47
-
259
259
-
259
129
54
183
183
46
229
83
76
76
30
17,354
2,349
20,991
40,694
40,694
2,610
43,304
10,018
5,087
15,105
15,105
5,155
20,260
7,336
25,589
25,589
23,044
93
17
-
110
110
-
110
72
16
88
88
14
102
21
22
22
8
753
46
-
799
799
169
968
613
98
711
711
87
798
140
88
88
170
43,585
2,620
-
46,205
46,205
2,925
49,130
12,091
5,654
17,745
17,745
5,709
23,454
31,494
28,460
28,460
25,676
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, 2014, the net
carrying amount of leased plant and machinery was $2,426,000 (2013: $4,090,000). The leased plant and
machinery secures lease obligations (see note 21). During the year plant and equipment additions of $953,000
(2013: $1,432,000) were acquired through finance lease arrangements.
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Available for sale investments
Cost or valuation
Balance at August 1, 2012
Acquisitions
Revaluation
Balance at July 31, 2013
Balance at August 1, 2013
Acquisitions
Revaluation
Balance at July 31, 2014
Carrying amounts
At July 31, 2013
At July 31, 2014
Available for sale
investments
$’000
712
148
843
1,703
1,703
629
(181)
2,151
1,703
2,151
Rambler holds an 17.7% equity stake in Maritime Resources Corp and a representative on the Board of Directors.
The market price at July 31, 2014 was $0.17 (2013: $0.30 per share).
Rambler also acquired a 3.7% equity stake in Marathon Gold Corporation for $500,000 during the year. The market
price at July 31, 2014 was $0.55
The carrying amount of the available for sale investments is the level 1 fair value determined using the closing market
price of the shares on the TSX exchange. The cost of the available for sale investments is $1,911,000 (2013:
$1,282,000).
13. Inventory
Metals in process
Operating supplies
14. Trade and other receivables
Trade receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
2014
2013
$’000
$’000
2,351
1,599
3,950
1,977
1,396
3,373
2014
2013
$’000
$’000
1,295
113
311
401
2,120
-
372
288
436
1,096
Page 61
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. Derivative financial asset
Concentrate receivables from off-taker
2014
2013
$’000
$’000
788
639
The carrying amount of the derivative financial asset is the level 2 fair value determined using forward prices of
copper, gold and silver. The cost of the concentrate receivables is $713,000 (2013: $865,000).
16. Cash and cash equivalents
Bank balances
Cash and cash equivalents in the statement of cash flows
17. Restricted cash
Bearer deposit notes
2014
2013
$’000
$’000
9,535
9,535
5,566
5,566
2014
2013
$’000
$’000
3,255
3,261
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 (2013 - $3,300,000) giving an
effective yield of 1.2% (2013 – 1.2%).
18. Capital and reserves
Share capital and share premium – group and company
In issue at 1 August 2012
Issued in consideration for finance fees
Issued on exercise of options
In issue at 31 July 2013
In issue at 1 August 2013
Issued in consideration for acquisition of Little Deer project
Issued on exercise of options
In issue at July 31, 2014
Number ‘000
142,360
804
72
143,236
143,236
887
45
144,168
At July 31, 2014, 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, 2014 are as follows:
On August 31, 2013 the company received monies to subscribe for 45,000 shares for $0.16 each raising a total
of $7,345 following the exercise of options.
Page 62
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Capital and reserves (continued)
On December 2, 2013 the company issued 887,614 shares for $0.39 each raising a total of $350,000 as part
consideration for the acquisition of the Little Deer Project.
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.
2014
$’000
9,535
(5,434)
-
(20,108)
-
(16,007)
(87,408)
(103,415)
2013
$’000
5,566
(7,040)
(22)
(18,791)
(5,621)
(25,908)
(77,692)
(103,600)
Page 63
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at July 31, 2014 was based on the profit attributable to ordinary
shareholders of $9,015,000 and a weighted average number of ordinary shares outstanding during the period
ended July 31, 2014 of 143,863,000 calculated as follows:
Profit/(loss) attributable to ordinary shareholders
Profit for the period
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares
At August 1, 2012
Effect of shares issued during the year
At July 31, 2013
In issue at August 1, 2013
Effect of shares issued during year
Weighted average number of ordinary shares at July 31, 2014
2014
$’000
2013
$’000
9,015
9,015
9,053
9,053
Number ‘000
142,360
330
142,690
143,236
627
143,863
There is no material difference between the basic and diluted loss per share. At July 31, 2014 there were
5,506,000 (2013: 4,113,000) share options in issue of which 978,265 (2013: 1,079,397) 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
2014
2013
$’000
2,811
304
1,419
4,534
$’000
4,177
287
1,326
5,790
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 64
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
2014
$’000
2013
$’000
-
2,750
17,492
20,242
19
4,613
15,944
20,576
-
2,684
2,616
-
5,300
3
2,427
2,847
5,621
10,898
Minimum
lease
Payments
2014
Interest Principal
2014
2014
Minimum
lease
Payments
2013
Interest Principal
2013
2013
$’000
$’000
$’000
$’000
$’000
$’000
2,894
2,863
5,757
210
113
323
2,684
2,750
5,434
2,759
4,867
7,626
332
254
586
2,427
4,613
7,040
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 $nil (2013: $101,000) 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 65
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.
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 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 $546,000 (2013: $1,169,000) was accrued during the period of which $nil (2013: $581,000) 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. 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. During the first nine months of fiscal 2014 the Group made total
repayments of $5.9 million repaying the facility in full.
Total financing and interest charges of $nil (2013: $392,000) were charged to Mineral properties during the year.
22. Provision
Reclamation and closure provision
Opening balance
Unwinding of discount
Ending balance
2014
$’000
2013
$’000
1,903
-
1,903
1,812
91
1,903
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 Ming Mine’s useful life was extended by one year
resulting in no unwinding of the discount in 2014. 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.
Page 66
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
The Group held the following categories of financial instruments at July 31, 2014:
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments – level 2 fair value
Available for sale investments:
Investment in quoted equity securities – level 1 fair value
Loans and receivables:
Trade receivables
Other receivables
Sales taxes recoverable
Cash at bank
Restricted cash
Total financial assets
Liabilities at amortised cost or equivalent:
Trade payables
Non trade payables
Accrued expenses
Loans and borrowings
Total financial liabilities
2014
$’000
2013
$’000
788
639
2,151
1,703
1,295
113
311
9,535
3,255
-
372
288
5,566
3,261
14,509
17,448
9,487
11,829
2014
2013
$’000
(2,811)
(304)
(1,419)
(25,542)
$’000
(4,177)
(287)
(1,326)
(31,474)
(30,076)
(37,264)
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.
Page 67
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
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
2014
$’000
2013
$’000
(19)
17
(2,010)
1,828
(12)
11
(1,879)
1,708
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, 2014.
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:
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
2014
$’000
2013
$’000
5,683
5,898
4,471
3,643
3,219
17,807
40,721
11,621
5,865
4,732
3,764
3,404
16,576
45,962
Page 68
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
Fixed rate financial liabilities
At the year end the analysis of finance leases and hire purchase contracts 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
2014
$’000
2013
$’000
2,894
2,170
562
131
-
5,757
8,663
2,640
1,916
306
23
13,548
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2014
was 5.81%.
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, 2014 was represented by
receivables and cash resources.
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve
month's maximum duration. Details of the Group’s borrowings are described in note 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
Page 69
Gross assets
2013
2014
$’000
$’000
(2,011)
5,027
(1,843)
4,609
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
23. Financial instruments (continued)
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
2013
2014
$’000
$’000
1,006
(1,006)
441
(441)
Financial assets
The floating rate financial assets comprise interest earning bank deposits at rates set by reference to the
prevailing LIBOR or equivalent to the relevant country. Fixed rate financial assets are cash held on fixed term
deposit.
At the year end the cash and short term deposits were as follows:
At July 31, 2014
Sterling
US $
Canadian $
At July 31, 2013
Sterling
US $
Canadian $
Floating
rate
Assets
Total
$’000
$’000
145
1,992
7,398
9,535
145
1,992
7,398
9,535
$’000
$’000
61
3,293
2,212
5,566
61
3,293
2,212
5,566
Fair values
In the directors’ opinion there is no material difference between the book value and fair value of any of the
group’s financial instruments.
Page 70
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
N Williams
Fees – non-executive
G Ogilvie
D H W Dobson
S Neamonitis
J M Roberts
L D Goodman
B D Hinchcliffe
T S Chan
J Thomson
E C Chen
2014
$’000
2013
$’000
192
138
87
-
6
-
13
7
13
13
13
482
330
-
-
13
7
13
13
13
13
11
413
D H W Dobson waived his entitlement to director’s fees for the current and preceding periods. At July 31, 2014
fees of $29,448 (2013: $18,874) remained outstanding.
Page 71
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
N Williams2
J Thomson3
D H W Dobson4
S Neamonitis
L D Goodman4
B D Hinchcliffe
At 31.07.14 At 31.07.13
No.
No.
‘000
1,100
1,175
400
45
N/A
45
N/A
2,765
‘000
1,100
N/A
400
45
100
45
45
1,735
1 200,000 options at an exercise price of $0.71 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 $0.96 expiring on 7 July 2018, 75,000 options at an exercise price of $0.18 expiring on 10
November 2018, 250,000 options at an exercise price of $0.50 expiring on 7 May 2020 and 750,000 options at an exercise price of $0.50
expiring on 19 February 2024.
3 100,000 options at an exercise price of $0.71 expiring on 7 December 2016 and 300,000 options at an exercise price of $0.17 expiring on
10 November 2018.
4 options at an exercise price of $0.17 expiring on 10 November 2018.
Total key management personnel compensations were as follows:
Short term employee benefits
Social security costs
Share based payments
25. Subsequent events
2014
2013
$’000
$’000
863
62
191
1,116
784
39
-
823
The Company subscribed to purchase 760,340 common shares in Marathon Gold Corporation for $375,000
bringing its total holding to 2,734,258 representing 3.98% of the issued and outstanding shares.
As a continuation of previously successful dense media (‘DMS’) or pre-concentration test work the Group is
planning to implement an on-site demonstration DMS plant to scale-up the process and prove the technology for
its application. Once the technology demonstration is complete and operating parameters are optimized, this
project will serve as the basis of a pre-feasibility study with the goal of moving the LFZ resources into the mine
reserve. The Research & Development Corporation of Newfoundland and Labrador (‘RDC’) initial contribution of
$250,000 in 2013 helped provide the groundwork for the on-site demonstration plant program. On September 9,
2014 the Group announced that RDC has again provided support with an additional $750,000 investment.
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 72
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.
Amortisation of Mineral Property
Amortisation of the Mineral Property is calculated on a unit of production method expected to amortise the cost
including future forecast capital expenditure over the expected life of the mine based on the tonnes of ore
expected to be extracted. Any changes to these estimates may result in an increase in the amortisation charge
with a corresponding reduction in the carrying value of the Mineral Property.
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.
Page 73
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Critical accounting estimates and judgements (continued)
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.
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 previous 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 74
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2014
(Loss)/profit for the year
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into presentation currency
Other comprehensive income/(loss) for the year
Total comprehensive (loss)/income for the year
2014
$’000
2013
$’000
(11,291)
211
11,014
11,014
(154)
(154)
(277)
57
Page 75
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at July 31, 2014
(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
2014
$’000
2013
$’000
68,245
1,663
69,908
94
145
239
70,147
2,628
75,505
793
(9,011)
69,915
232
232
232
70,147
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
N P Williams
Director
Approved and authorised for issue by the Board on October 25, 2014
Page 76
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN CANADIAN DOLLARS)
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, 20123
Balance at August 1, 2013
Comprehensive income
Loss for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive loss for the year
Issue of share capital
Share based payments
Transactions with owners
Balance at July 31, 2014
Share
capital
$’000
Share
premium
$’000
Translation
reserve
$’000
Accumulated
losses
$’000
Total
$’000
2,599
74,756
(10,067)
1,893
69,181
-
-
-
-
-
-
-
-
-
(154)
(154)
(154)
14
2,613
408
75,164
-
(10,221)
211
-
-
211
-
2,104
211
(154)
(154)
57
422
69,660
2,613
75,164
(10,221)
2,104
69,660
-
-
-
-
15
-
15
2,628
-
-
-
-
341
-
341
75,505
-
(11,291)
(11,291)
11,014
11,014
11,014
-
-
-
793
-
-
(11,291)
-
176
176
(9,011)
11,014
11,014
(277)
356
176
532
69,915
Page 77
RAMBLER METALS AND MINING PLC
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2014
(EXPRESSED IN CANADIAN DOLLARS)
Cash flows from operating activities
Operating loss
Share based payments
Foreign exchange losses
Increase in debtors
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
Proceeds from exercise of share options
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
2014
$’000
(11,341)
176
9,526
(41)
75
(1,605)
-
1,661
1,661
7
7
7
63
66
16
145
2013
$’000
(1,166)
-
(135)
(3)
4
(1,300)
-
907
907
-
22
22
(371)
437
-
66
Page 78
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1. Accounting policies
The accounting policies of the company are consistent with those adopted by the Group with the addition of the
following:
Investments
Investments are stated at their cost less impairment losses.
C2. (Loss)/profit of parent company
As permitted by section 408 of the Companies Act 2006, the income statement of the parent company is not
presented as part of these financial statements. The parent company’s loss for the financial year was
$11,291,000 (2013: profit $211,000).
C3. Investments
Cost
Balance at August 1, 2012
Repayments (net)
Effect of movements in foreign exchange
Balance at July 31, 2013
Balance at August 1, 2013
Repayments (net)
Effect of movements in foreign exchange
Balance at July 31, 2014
Investment in
subsidiary
$’000
Loans
$’000
Total
$’000
378
-
-
378
378
-
64
442
68,470
(508)
(17)
67,945
67,945
(1,311)
1,169
67,803
68,848
(508)
(17)
68,323
68,323
(1,311)
1,233
68,245
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 79
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. Given the
continuing profitability of 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 $1.7 million.
C5. Trade and other receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
C6. Cash and cash equivalents
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
2014
2013
$’000
$’000
-
22
72
94
1
13
39
53
2014
2013
$’000
$’000
145
145
66
66
2014
$’000
47
1
184
232
2013
$’000
17
9
131
157
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 80