REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2016
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 Report
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, 2016
Directors:
T I Ackerman (appointed June 2, 2016)
E C Chen
B Labatte (appointed June 2, 2016)
B A Mills (appointed June 2, 2016)
G R Poulter
M V Sander (appointed June 2, 2016)
N P Williams
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, 2016
2016 was a challenging year for the global mining industry as it struggled to rebalance supply in the face of
reduced Chinese demand. Copper was no exception, as prices fell to below US$2.00/lb in January and has
since stabilized at around US$2.15/lb. The industry has taken significant steps to cut high cost supply to match
current demand but more may be needed to underpin a future price rally. In the meantime virtually all new
projects have been shelved which puts Rambler in a unique position to execute a low capital cost, low operating
cost expansion over the next 18 months in anticipation of this price recovery.
In this regard, Rambler (‘the Company’) achieved some important corporate milestones in 2016.
•
The Company successfully raised approximately US$15 million equity with the potential for an additional
US$ 13 million if certain objectives are achieved.
• On the back of this capital raise the Company immediately started expansion of its Ming mine targeting
1,250 metric tonnes per day (‘mtpd’) of production by the end of 2017. This expansion will position the
Company as a low cost producer with a 20 year mine life.
• During the initial construction phase of this expansion, further engineering and assessment work will be
carried out on re-establishing the shaft for hoisting with the integration of ore pre-concentration through
dense media separation. Successful conclusion of this work could lead to further expansion of the mine,
Phase III.
The composition of the Board was adjusted after the financing to enhance its technical ability to manage the
growth phase of the Company.
The Company announced it will change its financial year end to December 31 commencing with the five
months ended December 31, 2016 and will provide guidance on its planned targets for the calendar year
ended December 31, 2017 early in the New Year.
•
•
At the operational level, the Company delivered its planned targets for tonnes milled, recoveries, head grades
and copper and gold production for the fiscal year. The Company has also identified exciting exploration targets
within the Ming mine footprint that could allow for further growth if realized. The Company will start the
exploration on these near mine targets in 2017.
The Company continues to advance and develop other opportunities within Canada, as demonstrated by the
acquisition of the remaining 50% interest in the Little Deer and Whalesback Copper Deposit from Thundermin
Resources Inc. during the year.
The presentation currency of the Company’s financial statements has been changed this year to US dollars
(‘US$’). This change reflects the fact that all of our revenues are in US$. With the Company’s operational costs
in Canadian dollars the Company is naturally hedged with a weak Canadian$/US$ exchange rate being
consistent with weak commodity prices and vice versa.
FINANCIAL RESULTS
In spite of the challenging market condition the Company achieved reasonable financial results. These include:
•
•
The Company generated revenue of US$30.4 million from the sale of copper concentrate containing gold
and silver by-products.
An operating loss of US$1.1 million (2015: US$0.9 million profit) before impairment.
• Generation of cash of US$4.8 million (2015 US$7.3 million) from operations during the year.
•
•
The consolidated loss after taxation in respect of the year ended July 31, 2016 amounted to US$12.8 million
(loss per share of US$0.067) after a provision for impairment of US$11.3 million before tax, versus a loss of
US$8.4 million for the year ended July 31, 2015 (loss per share of US$0.058) after a provision for
impairment of US$12.1 million before tax.
Earnings before interest, taxes, depreciation, amortisation (“EBITDA”) for the year were US$6.1 million
(2015 : US$1.8 million).
Page 2
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED JULY 31, 2016 (CONTINUED)
•
•
The gross assets of the Company amounted to US$87.3 million as at the end of the year. This included
Mineral property of US$35.2 million and intangible assets of US$2.2 million which consists of accumulated
deferred exploration and evaluation expenditures on the Little Deer Project.
The Company’s cash balance at year end was US$8.9 million and cash net of debt, excluding Gold Loan,
was US$3.7 million.
A provision for impairment of US$11.3 million before tax was recorded against the carrying value of the Ming
Copper Gold Mine during fiscal 2016. The provision for impairment was a non-cash revaluation of assets
reflecting the current market outlook regarding commodity prices, foreign exchange rates and the current market
cost of capital. The provision was calculated using the 2015 Prefeasibility Study model updated for depletion in
2016 and does not consider management’s latest internal modelling for the Phase III expansion program
currently being evaluated.
Today the future of the Company looks bright with a healthy balance sheet and a funded expansion that will take
us toward being a lowest quartile cost copper producer with a 20 year mine life. Significant future organic growth
opportunities are embedded in our near mine exploration programs and through our low cost acquisition of good
quality undeveloped nearby mineral resources.
My thanks go to our employees, officers and directors for their strong support in successfully securing finance
during the year to fund the expansion of the operation. I look forward to the continued implementation of this
expansion plan in fiscal 2017.
B Mills
Chairman
October 21, 2016
Page 3
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED JULY 31, 2016
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
A review of the Company’s business and future developments is set out in the Management’s Discussion and
Analysis including key performance indicators.
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 has all necessary permits in place to continue with the current operation. As expansion plans
progress, the Company will be required to submit revised Development Plans for approval by the ministry. There
can be no guarantee that these revised plans will be agreed to or approved in a timely manner.
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 Company’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 Company’s control including international,
economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or
regional consumption patterns, speculative activities and increased global production due to new extraction
developments and improved extraction and production methods.
In recent years the price of copper has been affected by changes in the worldwide balance of copper supply and
demand, largely resulting from economic growth and political conditions in China and other major developing
economies. While this demand has resulted in higher prices for copper in past years, the current economic
slowdown in China has placed downward pressure on the demand for copper. The effect of these factors on the
price of copper and gold cannot be accurately predicted. Current predictions for the price of copper have had an
adverse and material impact on the Company’s economic evaluations and on the Company’s results of
operations resulting in the Company recording a provision for impairment during the year. This provision for
impairment does not consider management’s latest internal modelling which factors in increased production
through re-establishing the shaft for hoisting and the integration of ore pre-concentration, Phase III.
Foreign currency risk
The Company has a small amount of cash resources and certain liabilities including the Gold loan and the
advance purchase agreement denominated in US dollars. All other assets and liabilities are denominated in
Canadian dollars and GB pounds. Revenue is generated in US dollars while the majority of the expenditure is
incurred in Canadian dollars and, to a lesser extent, GB pounds. The Company has a downside exposure to
any strengthening of the Canadian Dollar or GB pound as this would increase expenses in US dollar terms.
This risk is mitigated by reviewing the holding of cash balances in Canadian Dollars and GB pounds. Any
weakening of the Canadian Dollar or GB pound would however result in the reduction of the expenses in US
dollar terms. In addition movements in the Canadian dollar and GB pound/US Dollar exchange rates would
affect the Consolidated Balance Sheet.
Page 4
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED JULY 31, 2016
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Additional Requirement for Capital
As mentioned above, management is evaluating further increases in production through re-establishing the
shaft for hoisting and the integration of ore pre-concentration. With further engineering and assessment,
management will work to finalize internal modelling and economics for this Phase III expansion. Rambler has
issued 200,000,000 warrants at an exercise price of US$0.07 (GBP 0.05) which, if exercised will, along with
cash flows from increased production, provide the necessary capital for this Phase III expansion. However, the
warrants and any additional equity financing may be further 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 Company.
Uncertainty in the estimation of mineral resources and mineral reserves
The estimation of mineral reserves, mineral resources and related grades 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 or reviewed by an independent consultant and is 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
President and CEO
Director
October 21, 2016
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
This MD&A, including appendices, is intended to help the reader understand Rambler Metals and Mining
plc (‘the parent company’) and its subsidiaries (the ‘Company’ or ‘Rambler’), our operations and our
present business environment. It has been prepared as of October 21, 2016 and covers the results of
operations for the quarter and year ended July 31, 2016. This discussion should be read in conjunction
with the audited Financial Statements for the year ended July 31, 2016 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 Company’s presentation currency has been changed to US dollars (US$) and the financial information
is in US$ unless otherwise stated. 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 6.
OVERVIEW
The Company is transforming the Ming Copper-Gold Mine (‘Ming mine’) with a fully funded expansion. Its
principal activity is the development, mining and exploration of the Ming mine in Newfoundland and Labrador
(see map referenced in Appendix 1) with a longer term view of continued exploration and development of
other properties in its portfolio which are all located in Canada.
The Company is looking forward to:
1. Continuing the Phase II optimisation strategy, as described below, with funding now secured.
2. Kick starting further engineering studies aimed at boosting production beyond the Phase II - 1,250
metric tonnes per day (‘mtpd’) strategy. Detailed engineering and review to include ore pre-
concentration (Dense Media Separation – “DMS”), shaft rehabilitation and improving gold recovery.
3. Maintaining its focus on reducing overall unit costs at its operation through a stepped increase in
production.
4.
Increasing available resources and reserves through further exploration both within the Ming mine
and current land holdings.
The Company’s new directors and management believe that these priorities provide a solid foundation for
Rambler, and its shareholders, as it continues working towards building a successful mid-tier mining
company.
The parent Company’s Ordinary Shares trade on the London AIM market under the symbol “RMM” and the
TSX Venture Exchange under the symbol “RAB”.
Phase II optimisation strategy
The results for the 2016 fiscal year incorporates the first year of the Phase II optimisation strategy
incorporating the Lower Footwall Zone (“LFZ”) into the production stream.
This strategy is based on the transformation of the current Phase I, high grade 650 mtpd operation, into a
fully optimised Phase II at 1,250 mtpd with a mine life of more than 20 years. Coupled with the financing
completed during the year, production is expected to continue to increase with the blending of LFZ ore with
high grade massive sulphide (‘MMS’) ore. Fiscal 2016 was the first step towards fully optimising all available
infrastructure at the mine and mill sites. With funding secured and in hand the LFZ mine development will be
accelerated where possible with a goal of reaching full production by mid calendar 2017.
The first production milestone was achieved during the fiscal year with daily mill throughput now in excess of
850 mtpd. The Company is reviewing opportunities to minimize the additional capital required to maintain
1,250 mtpd through the existing grinding circuit at the mill. The 21 year projected mine life did not consider
shaft rehabilitation, ore pre-concentration or any further success with the ongoing exploration program.
Page 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
HIGHLIGHTS FOR THE FOURTH QUARTER AND THE YEAR ENDED JULY 31, 2016
Production of 69,874 dmt (Q3/16: 56,695 dmt, Q4/15: 59,373 dmt) for the quarter with a total of
241,080 dmt for the year (2015: 215,535 dmt) in line with fiscal guidance with copper concentrate
grade of 27% (Q3/16: 27%, Q4/15: 27%).
Phase II optimisation strategy continued with LFZ ore blended with ongoing production from the high
grade MMS.
Revenue for the year was US$30.4 million for the year (2015: US$34.6 million) and for the quarter,
$7.9 million (Q3/16: US$8 million, Q4/15 US$7.1 million).
Average prices for the year were US$2.20 per pound of copper, US$1,179 per ounce gold and
US$15.66 per ounce silver.
Operating loss for the year was US$1.1 million before non-cash impairment of US11.3 million (2015:
US$11.2 million) and for the quarter US$0.6 million before impairment (Q3/16: profit US$0.1 million,
Q4/15: loss US$11.8 million). Earnings before interest, taxes, depreciation, amortisation (‘EBITDA’)
for the year were US$6.1 million (2015: US$1.8 million) and for the quarter of US$0.055 million
(Q3/16: US$3.3 million, Q4/15 US$(0.7 million)).
Net direct cash costs net of by-product credits (‘C1 costs’) for the year were US$1.72 per pound of
saleable copper (2015: US$2.11) and for the quarter US$1.71 (Q3/16: US$1.70, Q4/15: US$2.10).
Cash flows generated from operating activities for the year were US$4.7 million (2015: US$7.3
million) and for the quarter were US$2.3 million (Q3/16: US$2.6 million, Q4/15: US$1.0 million).
SUBSEQUENT EVENTS
On August 22, 2016 the Company issued 9,405,000 options to employees at an exercise price of US$0.06
(CAD 0.0781). The options were issued to advance the interests of the Company by providing the senior
officers and employees a performance incentive for continued and improved service enhancing their
contribution to increased shareholder return by encouraging share ownership.
On August 29, 2016 and September 8, 2016 the Company sold 1,176,500 and 190,000 common shares
respectively of Marathon Gold Corporation thereby divesting approximately 50% of its equity stake for gross
proceeds of US$0.8 million.
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
FINANCIAL RESULTS FOR THE YEAR ENDED JULY 31, 2016
Revenue
A total of 17,412 dmt (2015 – 17,662 dmt) of concentrate was provisionally invoiced during the year
containing 4,508 (2015 - 4,622) tonnes of saleable copper metal, 7,129 (2015 - 4,926) and 37,701 (2015
- 23,744) ounces of saleable gold and silver respectively at an average price of US$2.20 (2015 –
US$2.87) per pound copper, US$1,179 (2015 - US$1,207) per ounce gold and US$15.66 (2015 -
US$16.81) per ounce silver, generating revenue of US$30.4 million (2015 – US$34.6 million). The
reduction in revenue mainly reflects lower saleable metal sold as a result of lower head grades and lower
average prices than the previous year.
Costs
Net cash direct costs per pound of copper net of by-product credits (‘C1’) for the year were US$1.72
(2015 - US$2.10) and for the fourth quarter US$1.71 (Q3/16: US$1.70, Q4/15: US$2.10). Saleable
copper in the year was 9.9 million pounds (2015 – 10.2 million pounds) and in the fourth quarter was 2.4
million pounds (Q3/16: 2.6 million, Q4/15 2.0 million). The cost reduced from Q4/15 due to the increased
copper production and a weakening of the Canadian dollar against the US dollar.
A summary of the Company’s net cash direct costs (C1) and fully allocated costs (C3) net of by-product
credits per pound of saleable copper together with the average sales price of copper for the past four
quarters are shown below. The decrease in costs between Q2/16 and Q3/16 was as a result of higher
copper production and increased gold price.
C1 and C3 costs per pound of
saleable copper
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$-
C1 cost
C3 cost
Avg Cu price
per pound
6
1
/
1
Q
6
1
/
2
Q
6
1
/
3
Q
6
1
/
4
Q
5
1
0
2
l
a
c
s
i
F
6
1
0
2
l
a
c
s
i
F
The Company has included non-GAAP performance measures: net cash direct costs per
pound of saleable copper net of by-product credits (C1 costs) and fully allocated costs (net
of by-product credits)(C3 costs) per pound of saleable copper, throughout this document.
C3 costs include interest charges which are shown below the operating profit line in the
income statement. This is a common performance measure in the mining industry but
does not have any standardized meaning. Refer to Appendix 4 for a reconciliation of these
measures to reported production expenses.
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
FINANCIAL RESULTS FOR THE YEAR ENDED JULY 31, 2016 (CONTINUED)
Loss
The net loss before tax for the year was US$15.2 million (US$3.9 million before impairment) compared
with a loss of US$13.6 million (US$1.5 million before impairment) for the year ended July 31, 2015. The
net loss for the quarter ended July 31, 2016 was US$12.8 million (US$15.4 million before tax) or
US$0.067 per share which compares to a profit of US$0.9 million for Q3/16 and a loss of US$5.9 million
(US$10.4 million before tax) for Q4/15.
Earnings before interest, taxes, depreciation, amortisation (“EBITDA”) for the year were US$6.1 million
(2015 : US$1.8 million).
Impairment
As part of the annual impairment review of asset carrying values a provision of US$11.3 million was
recorded in relation to the Ming Mine. Following the publication of the Company’s Prefeasibility Study
(‘PFS’), extraction of ore from the Ming mine’s Lower Footwall Zone has been included in the Mine plan
adopted by management for fiscal 2016. During the year, the Company carried out an impairment
review of the related cash generating unit (“CGU”). The review determined that the mine remains
commercially viable however as a result of the current market outlook regarding commodity prices,
foreign exchange rates and assuming the current pre-tax real discount rate of 10.71% the recoverability
of the entire carrying value of the mineral property is questionable. As a result a provision for
impairment was recognised in the consolidated income statement reflecting the non-cash revaluation of
assets.
The impairment review was based on the original PFS model adjusted for 2016 depletion and does not
reflect management’s latest internal modelling which factors in increased production through re-
establishing the shaft for hoisting and the integration of ore pre-concentration, Phase III. Management
is confident that the new model will deliver significant value.
The provision for impairment is sensitive in particular to production volumes, commodity prices, discount
rate and foreign exchange rates. Production volumes used in the mine plan are based on proven and
probable mineral reserves only and do not consider any value for the potential conversion of any
remaining measured or indicated resources. The impairment loss incurred in the year would be
reversed on an assumption that long term copper prices of US$2.71 per pound included in the mine
plan increased by approximately 4% whereas a 4% reduction would result in an additional provision for
impairment of US$21.9 million. The provision for impairment would be reversed on an assumption that
the US dollar included in the model at an exchange rate of USD/CAD of 0.81 strengthened against the
Canadian dollar by approximately 3.5% whereas a 3.5% reduction would result in an additional
provision for impairment of US$21.9 million. A fall in the discount rate of approximately 2.15% to 8.56%
would reverse the impairment charge whereas an increase of approximately 2.15% to 12.86% would
result in an additional provision of US$20.1 million. The conditions used to calculate the provision for
impairment are reflective of the state of current market conditions.
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
FINANCIAL RESULTS FOR THE YEAR ENDED JULY 31, 2016 (Continued)
Cash flow and cash resources
Cash flows generated from operating activities were US$4.8 million compared with US$7.3 million in the
previous fiscal year. Cash flows generated from operating activities were US$2.4 million in Q4/16
compared to US$2.6 million in Q3/16 and US$1.0 million in Q4/15. The decrease in the cash generated
relates to the operating loss and changes in working capital. The cash balance at July 31, 2016 was
US$8.9 million.
Financing and Investment
During the year a repayment of US$2.3 million (project to date $15.8 million) was made on the
Company’s Gold Loan from the delivery of 1,935 payable ounces of gold (project to date 10,996 ounces
have been delivered).
Net debt excluding the Gold loan was as follows:
Cash
Finance leases
Advance purchase agreement
Net cash (debt)
Q4/16
US$’000
8,929
(3,195)
(1,980)
3,756
Q3/16
US$’000
473
(3,202)
(3,118)
(5,847)
Q4/15
US$’000
3,389
(3,566)
(1,879)
(2,056)
OPERATIONAL SUMMARY
Ore and Concentrate Production Summary for Fiscal 2016
PRODUCTION
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Year
end
F2016
Dry Tonnes Milled
Copper Recovery (%)
Gold Recovery (%)
Silver Recovery (%)
Copper Head Grade (%)
Gold Head Grade (g/t)
Silver Head Grade (g/t)
58,053
56,458
56,695
69,874
241,080
95.3
70.6
76.4
2.42
1.45
11.77
96.4
75.3
75.4
2.07
1.40
10.20
96.3
67.9
70.7
2.22
1.62
10.34
94.7
62.6
65.8
1.83
1.16
7.97
95.6
68.7
71.8
2.12
1.40
9.97
F2016
Guidance
235,000 -
250,000
94 – 96
65 – 70
65 – 75
2.0 - 2.5
1.0 – 2.0
6.0 – 10.0
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
OPERATIONAL SUMMARY (continued)
CONCENTRATE
(Delivered to Warehouse)
Copper (%)
Gold (g/t)
Silver (g/t)
Dry Tonnes Produced
Copper Metal (tonnes)
Gold (ounces)
Silver (ounces)
Q1
2016
26.57
12.90
101.75
4,788
1,272
1,986
15,664
Q2
2016
26.49
16.35
110.28
3,621
960
1,889
12,860
Q3
2016
26.98
13.98
92.05
4,530
1,222
2,037
13,407
Q4
2016
Yearend
F2016
F2016
Guidance
27.41
12.39
90.10
4,108
1,126
1,637
11,899
26.89
13.82
98.09
17,047
4,580
7,549
53,830
27 - 29
6.0 – 8.0
55 - 75
17,000 - 21,000
4,500 - 6,000
5,500 - 6,500
42,000 - 57,000
Rambler met or exceeded its 2016 fiscal year production guidance. Targets were achieved for tonnes milled,
metal recovery, grades and copper and gold production. Gold ounces exceeded guidance by 16%, a record for
gold in concentrate production, resulting from adjustments made to the floatation circuit in the first half of the year.
During the fourth quarter of the year more focus was place on increasing mill throughput. Once throughput is fully
optimized the team will work towards re-establishing the high gold recoveries.
Copper grades of 2.12% and gold grades of 1.40 g/t were in line with guidance and decreased in the fourth
quarter with increased production from the LFZ. Total mill throughput for the year was 241,080 dry metric tonnes,
a 12% increase over the 216,000 tonnes milled in fiscal 2015.
Ore and Concentrate Production Quarterly results comparison
PRODUCTION
Q4/15
(May, Jun, Jul)
Q4/16
(May, Jun, Jul)
Q3/16
(Feb, Mar, Apr)
Q4/16
(May, Jun, Jul)
Dry Tonnes Milled
59,373
69,874 18%
56,695
69,874 23%
Copper Recovery (%)
Gold Recovery (%)
Silver Recovery (%)
Copper Head Grade (%)
Gold Head Grade (g/t)
Silver Head Grade (g/t)
96.6
68.7
72.8
1.93
1.22
8.75
94.7%
62.6%
65.8%
-2%
-9%
-10%
1.83
1.16
7.97
-5%
-5%
-9%
96.3%
67.9%
70.7%
2.22
1.62
10.34
94.7%
62.6%
65.8%
-2%
-8%
-7%
1.83
1.16
7.97
-17%
-28%
-23%
Page 11
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
OPERATIONAL SUMMARY (continued)
• Production of 4,108 tonnes of copper concentrate representing a 14% increase over Q4 2015 and a
9% decrease from Q3 2016.
• Dry tonnes milled of 69,874 tonnes remaining, an increase of 18% on Q4 2015 and representing a
23% increase from Q3 2016 driven by an increase in Lower Footwall Zone ore availability. This
resulted in the production of:
• 1,126 tonnes of Copper (4,580 tonnes for the year)
• 1,637 ounces of Gold (7,549 ounces for the year)
• 11,899 ounces of Silver (53,830 ounces for the year)
• Head grades of copper averaged 1.83% for the quarter and 2.12% for the year; gold at 1.16 g/t
(‘grammes per tonne’) for the quarter and 1.4 g/t for the year; silver at 7.97 g/t for the quarter and
9.97 g/t for the year.
• Concentrate grade for Copper 27.41%, Gold 12.39 g/t and Silver 90.10 g/t representing a 3 and a 2
percent increase in copper concentrate grade over Q4/2015 and Q3/2016 respectively. Gold and
Silver in concentrate both showed decreases over Q4 2015 and Q3 2016.
OUTLOOK
Management continues to pursue the following objectives:
With funding secured and in hand, continue transitioning from the Phase I to Phase II by blending
increasing amounts of LFZ ore with plans to reach 1,250 mtpd by mid Fiscal 2017.
Further evaluate ore pre-concentration (DMS); engineer a potential shaft rehabilitation; and improve gold
recovery at the Nugget Pond Mill. All potentially providing further upside opportunities with the goal to
further reduce unit costs, Phase III.
Continuing to advance development headings into new high grade zones to allow for further exploration
both up-dip and down-dip to increase mine resource and reserves.
Further define the mineral potential of untested areas of the LFZ through an aggressive infill diamond
drilling program currently underway.
Continue assessing regional gold projects, like the former producing Hammerdown Gold mine, with the goal
of adding a second source of revenue outside of the Ming Mine. Nugget Pond’s gold processing circuit is
currently idle but could potentially be operated in conjunction with the copper concentrator.
Page 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
FINANCIAL REVIEW
Fiscal
2016
(US$000’s)
30,378
Commentary
Revenue of US$30.3 million was generated through the sale of 17,413 dmt of copper concentrate
containing 4,508 tonnes of accountable copper metal and 7,129 ounces of accountable gold. This
compared with revenue of US$34.6 million in the prior year generated through the sale of 17,052 dmt
of copper concentrate containing 4,493 tonnes of saleable copper metal and 4,653 ounces of
saleable gold. The reduction in revenue mainly reflects lower average prices.
Comparatives
Fiscal
2015
(US$000’s)
B/ (W)*
34,583
(12)%
28,508
Production costs relate to the processing and mining costs associated with the Company’s Ming
Mine and include processing costs of US$5.0 million (2015: US$5.4 million), mining costs US$16.6
million (2015: US$18.4 million) and depreciation and amortisation of US$6.9 million (2015: US$6.2
million). The cost of production of pounds of copper increased during the year due to lower head
grades compared to the previous year.
30,111
5%
2,899
General and administrative expenses were lower than the previous year by US$603,000.
Employment costs reduced by US$313,000. Legal and professional costs reduced by US$70,000
reflecting savings in corporate legal costs, travel and investor relation costs reduced by $132,000 and
security and general expenses reduced by $59,000.
3,502
17%
11,268
Provision for impairment represents the provision for impairment on the Ming Mine of US$11.3
million (2015: US$11.5 million) and a provision for impairment of US$ nil (2015: US$0.6 million) on
available for sale investments. The provision for impairment on the Ming Mine is mainly as a result of
the current market outlook regarding commodity prices, foreign exchange rates and the current
market cost of capital.
539
Gain/(loss on derivative financial instruments. The Company realised a gain on derivative
financial assets of $591,000, being the difference in the commodity prices at time of provisional
invoicing, and actual commodity prices realised on the fixed portion of the shipment. An unrealised
loss of $52,000 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 Company’s warehouse at year end.
12,100
7%
(1,812)
130%
(237)
Foreign exchange losses arising on the Gold Loan reduced in the year as a result of the Canadian
dollar against the US dollar during the year.
(3,604)
93%
2,422
Income tax credit/(charge) The income tax charge is the deferred tax charge arising from the
recognition of losses offset by an overprovision made in 2015.
5,207
(53)%
Mineral property The Company incurred costs of US$4.1 million in the year which included labour
costs of US$1.5 million and underground development costs of US$2.1 million and an adjustment of
US$0.5 to the reclamation and closure provision. In 2015 the Company incurred costs of US$4.5
million in the year including labour of US$2.5 million and underground development costs of US$2.2
million offset by an adjustment of $0.2 million to the reclamation and closure provision.
4,050
4,493
10%
5,122
Capital spending on property, plant and equipment increased during the year including US$3.1
million spent on underground equipment and US$0.5 million on surface and general plant and
equipment. In addition US$1.5 million was spent on assets under construction including the
construction of a building to house the crusher, ventilation upgrades and mine rescue equipment.
4,494
(14)%
1,903
Capital spending on exploration and evaluation relates mainly to the acquisition of 50% of the Little
Deer Copper Deposit in the Thundermin amalgamation.
3,460
45%
*B / (W) = Better / (Worse)
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the Company for the last eight fiscal quarters are set out in the following table.
Quarterly Results
(All amounts in 000s of US Dollars, except
Loss per share figures)
4th
Quarter
3rd
Quarter
2nd
Quarter
1st
Quarter
Fiscal 2016
Revenue
(Loss)/profit before impairment and tax
Net (loss) income
(Loss)/earnings per Share (Basic & Diluted)
Fully allocated cost net of by-products (C3) per
pound of saleable copper
Fiscal 2015
Revenue
(Loss)/profit before impairment and tax
Net Income
(Loss)/earnings per Share (Basic & Diluted)
Fully allocated cost net of by-products (C3) per
pound of saleable copper
7,890
(4,120)
(12,827)
(0.067)
7,976
1,241
859
0.002
6,009
(1,501)
(1,115)
(0.003)
8,503
420
277
0.001
2.71
2.55
2.78
2.28
7,103
1,708
(5,927)
(0.041)
7,339
1,532
1,056
0.007
9,040
(5,119)
(3,730)
(0.026)
11,101
420
249
0.002
2.76
2.85
3.36
2.60
Since 2012 when commercial production commenced at the Ming Mine the Company’s results have been,
and are expected to continue to be, influenced by the operational results of the Mine. Financial results are
impacted by the levels of copper concentrate production, the costs associated with that production and the
selling prices of the concentrate. The prices for the copper, gold and silver contained in the concentrate are
determined using prevailing international prices in US Dollars whereas the majority of the mine costs are in
Canadian Dollars.
Volatility of revenue and earnings over the past two years is due to the combined effect of changes in
volumes and fluctuations in metal prices and the fluctuation of the US Dollar exchange rate.
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
Historically the Company has been successful in accessing the equity and debt markets to finance the initial
acquisition of the Ming Mine site, a US$20 million gold loan and a US$8 million credit facility to finance the
construction of the mine and milling facilities and drawing US$3 million of an advance purchase facility. In June 2016
the Company accessed approximately US$15 million in equity finance to improve working capital and to provide
funds for the planned increase in production from the mine and improved capacity at the mill.
In future, the Company plans to fund operational requirements through internally generated cash flow, proceeds from
the exercise of warrants, debt offerings and, if necessary, additional equity financing.
The Company continually reviews operational results, expenditures and additional financial opportunities in order to
ensure adequate liquidity to support its growth strategy while maintaining or increasing production levels at the Ming
Mine. However, there is no guarantee that the Company will have access to future capital or the ability to generate
positive cash flows.
Cash flows utilised in investing activities amounted to US$7.6 million for the year (2015: US$9.9 million). Cash of
US$3.6 million (2015: US$4.7 million) was spent on the Company’s Mineral Property, US$2.9 million (2015: US$2.4
million) was spent on property, plant and equipment, US$0.5 million (2015: US$3.1 million) on exploration at the Ming
mine. The Company acquired Thundermin Resources Inc. by way of an amalgamation with 1948565 Ontario Inc. for
the issue of 8,757,838 ordinary shares and net cash of US$0.07 million.
Cash flows generated from financing activities during the period amounted to US$9.1 million (2015: utilised US$2.7
million) and included repayments of the gold loan of US$2.3 million (2015: US$1.9 million) and finance lease
repayments of US$2.6 million (2015: US$2.7 million) offset by a receipt of US$1 million (2015: US$1.9 million) from
an advanced purchase facility and funds received, net of expenses, on issue of share capital of US$14.3 million.
The Company 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
Company holds bearer deposit notes totalling US$3.3 million (2015: US$2.5million)
Sales of copper concentrate are in US dollars and the majority of the Company’s expenses are incurred in Canadian
dollars. The Company’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.
Financial Instruments
The Company’s principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale
investments, derivative financial instruments and trade and other receivables. The Company’s financial liabilities
comprise trade payables; other payables; and interest bearing loans and borrowings.
All of the Company’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
26 of the financial statements for the year ended July 31, 2016.
Page 15
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION (continued)
COMMITMENTS AND LOANS
Gold Loan
In March 2010, the Company 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 Company totalling US$20 million.
For this, in each production year following the first year of production, until 175,000 ounces of payable gold has been
produced, the Company has agreed to sell a percentage equal to 25% x (85% divided by the actual percentage of
metallurgical recovery of gold realised 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 175,000 ounces of payable gold has been produced, the Company has
agreed to sell a percentage equal to 12% x (85% divided by the actual percentage of metallurgical recovery of gold
realised 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.
Total interest of US$2.6 million (2015: US$3.2 million reversed) was charged during the period.
The Gold Loan is secured by a fixed and floating charge over the assets of the Company.
Advance Purchase Agreement
In July 2015 the Company entered into a purchase agreement with Transamine Trading S.A. (“Transamine”) wherein
Rambler has extended its off-take agreement with Transamine with respect to concentrate from the Ming Copper-
Gold Mine until December 31, 2021.
Pursuant to the terms of the Purchase Agreement, Transamine has agreed to purchase in advance, at Rambler’s
option, up to US$5 million of concentrate (the “Advance Purchase Payments”). The Advance Purchase Payments
accrue interest at a rate of three month LIBOR plus 3.5% per annum and will be secured by a second charge against
the assets of Rambler’s operating subsidiary and guaranteed by the Company. The Advance Purchase Payments
were used for working capital requirements along with the development and construction of Rambler’s Lower
Footwall Zone optimisation plan (Phase II) at the Ming Mine.
The Company drew down US$3 million of Advance Purchase Payments and further advances are no longer available
under the agreement.
At July 31, 2016 the balance was US$1.98 ,million which, following an addendum to the Purchase Agreement which
saw a lump sum of US$1 million repaid on June 17,2016. The remainder is repayable by twelve monthly instalments
of US$176,005 plus interest at 3 month LIBOR plus 7.5%. The repayment by instalments commenced July 15, 2016.
The advance purchase payments of US$3 million have been accounted for as a financial liability carried at amortised
cost.
Page 16
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
COMMITMENTS AND LOANS (CONTINUED)
Loan and lease balances
At July 31, 2016, interest bearing loans and borrowings comprised of finance lease commitments of US$3,195,000.
The Company entered into finance lease commitments of US$2,256,000 to finance the acquisition of underground
mobile equipment during the year.
Page 17
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 1 – LOCATION MAP
Page 18
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL
PERFORMANCE
Financial Highlights
(All amounts in 000s of US Dollars, unless otherwise
stated)
Year ended July 31,
2016
2015
2014
Gold sales – gold doré (Ounces)
Average price (per ounce)
-
N/A
-
N/A
Concentrate sales post commercial production (dmt)
17,048
17,662
Average provisional price ($ per tonne Cu, Ag & Au
concentrate)
Average revenue per pound of Cu ($)
Revenue
Production Expenses
Exploration Expenditure
Administrative expenses
Impairment charge
Net (loss) income
Cash Flow generated from operating activities
Cash Flow used in investing activities
Cash Flow from (used in) financing activities
Net increase (decrease) in cash
Cash and cash equivalents at end of period
Total Assets
Total Liabilities
Working Capital
Weighted average number of shares outstanding (000s)
Earnings (loss) per share ($US)
1,772
2.20
30,378
(28,508)
(26)
(2,899)
(11,268)
(12,806)
4,808
(7,702)
9,138
6,244
8,929
87,255
(25,569)
2,412
191,132
(0.067)
2,013
2.87
34,583
(30,111)
(32)
(3,502)
(12,100)
(8,352)
7,325
(9,939)
(2,725)
(5,339)
3,389
84,553
(25,370)
(4,288)
144,168
(0.058)
293
1,447
25,806
2,254
3.19
57,863
(37,015)
(87)
(4,129)
-
8,398
23,062
(9,247)
(10,133)
3,682
8,755
109,631
(29,367)
6,022
143,863
0.058
Page 19
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 3 - FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2016
Q4/16
Results
(US$000’s)
Commentary
7,890
5,643
804
Revenue of US$7.9 million in Q4/16 was generated through the sale of 4,169 dmt of copper concentrate containing
1,103 tonnes of saleable copper metal, 1,513 ounces of saleable gold and 7,862 ounces of saleable silver
compared with US$8.0 million from the sale of 4,595 dmt of copper concentrate in Q3/16. The small reduction in
revenue reflects lower average copper prices during the quarter on lower saleable copper metal. Revenue in Q4/15
was generated through the sale of 3,598 dmt of copper concentrate containing 931 tonnes of saleable copper metal
and 1,392 ounces of saleable gold.
Production costs relate to the processing and mining costs associated with the Company’s Ming Mine production
and include processing and mining costs of US$1.3 million (Q3/16: US$1.4 million) and US$4.3million (Q3/16:
US$4.1 million) respectively. Processing and mining costs in Q4/15 were of $1.4 million and $3.6 million
respectively.
General and administrative expenses were higher than the previous quarter by US$131,000 mainly due to an
increase in staff costs of US$115,000 relating to the payment of executive bonuses, an increase of US$55,000 in
promotional and travel offset by a fall in legal and professional costs of US$92,000 and the receipt of a royalty
payment of US$27,000. In comparison to Q4/15 administrative expenses increased by US$41,000. Staff costs
increased by $77,000, promotional and travel costs increased by US$26,000 and legal and professional costs
decreased by $92,000.
11,268
Provision for impairment represents the provision for impairment on the Ming Mine of US$11.3 million. The
provision for impairment on the Ming Mine is mainly as a result of the current market outlook regarding commodity
prices, foreign exchange rates and the current market cost of capital. The provision does not reflect management’s
current modelling.
Gain/(loss) on derivative financial instruments. During the quarter the net unrealised fair value gain adjustment
recognized was US$52,000 being the difference in the commodity prices at time of provisional invoicing and
anticipated commodity prices upon final settlement offset by a realised loss of US$740,000 on the final settlement
of the Company’s thirteenth concentrate shipment. During Q3/16 the net unrealised fair value gain adjustment
recognized was $116,000 being the difference in the commodity prices at time of provisional invoicing and
anticipated commodity prices upon final settlement.
(792)
During Q4/15 the net unrealised fair value gain adjustment recognized was $4,000 being the difference in the
commodity prices at time of provisional invoicing and anticipated commodity prices upon final settlement offset by a
realised loss of US$370,000 on the final settlement of the Company’s tenth concentrate shipment.
Comparatives
Q3/16
B/ (W)*
Q4/15
B/ (W)
7,976
(1)%
7,103
11%
5,476
(3)%
5,086
(11)%
673
(19)%
763
(5)%
-
N/A
12,100
7%
116
(783)%
(366)
(116)%
(598)
Foreign exchange differences arising on the Gold Loan resulted in a loss in Q4/16 as a result of the weakening of
the Canadian dollar against the US dollar during the quarter.
1,364
(144)%
(1,595)
63%
2,561
Income tax credit/(expense). A deferred tax credit of US$2,561,000 was recognised on the loss for the quarter.
This compares with a charge of US$381,000 in Q3/16 and a credit of US$4,465,000 for Q4/15.
(381)
772%
4,465
(43)%
Page 20
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 3 - FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2016 (continued)
Q4/16
Results
(US$000’s)
Commentary
Comparatives
Q3/16
B/ (W)*
Q4/15
B/ (W)
921
Mineral property The Company incurred costs of US$1.0 million in the quarter offset by US$0.6 million of cost
reallocated to operating expenditure in the quarter. The cost includes labour costs of $0.5 million and underground
development costs of $0.5 million and an increase in the reclamation and closure provision of $0.5 million.
1,192
23%
824
(12)%
1,329
Capital spending on property, plant and equipment reduced by US$1.0 million during the quarter compared to
Q3/16 and included the purchase of an additional haul truck.
2,327
43%
1,043
(27)%
54
Capital spending on exploration and evaluation costs in Q4/16 mainly relates to the Pre-Feasibility Study on the
Ming mine’s Lower Footwall Zone and further exploration drilling the 1806 and 1807 zones.
103
48%
539
90%
*B / (W) = Better / (Worse)
Page 21
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 4 – NON-GAAP FINANCIAL MEASURES
The Company has included non-GAAP performance measures throughout this document. These include: net direct cash cost (C1) per pound of saleable copper, fully
allocated costs (C3) per pound of saleable copper and earnings before interest, taxes, depreciation, amortisation (‘EBITDA’).
C1 and C3 costs per pound of saleable copper are common performance measures in the mining industry but do not have any standardized meaning. The guidance
provided by the World Gold Council for calculating all-in costs was followed; however, the Company adjusts for non-cash items and includes financing fees within the
total cash costs. Total cash operating costs include mine site operating costs (mining, processing and refining, in-mine drilling expenditures, administration, and
production taxes), but are exclusive of other costs (non-cash inventory valuation adjustments, reclamation, capital, long-term development and exploration). These
measures, along with sales, are considered to be key indicators of the Company’s ability to generate operating earnings and free cash flows from its mining operations.
The Company believes that certain investors use this information to evaluate the Company’s performance and ability to generate cash flows. These should not be
considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and are not necessarily indicative of production costs presented
under IFRS. The following tables provide reconciliation of said costs to the Company’s financial statements for the year ended July 31, 2016:
Cash Operating Cost
All amounts in 000s of US Dollars except pounds of saleable copper
Three months ended
Year to Jul 31,
Jul 31, 2016
Apr 30, 2016
Jul 31, 2015
2016
2015
Production Costs per Financial Statements
Cash Production Costs
On-site general administration costs
By-product credits
Net direct cash costs (C1)
Pounds of saleable copper
C1 cost per pound of saleable copper
$
$
$
$
$
$
5,195 $
5,195 $
528 $
5,665 $
5,665 $
428 $
5,086 $
21,701 $
23,928
5,086 $
21,701 $
23,928
479 $
1,811 $
2,049
(1,577) $
(1,603) $
(1,260) $
(6,450) $
(4,424)
4,146 $
4,490 $
4,305 $
17,062 $
21,553
2,431
2,638
2,051
9,939
10,190
1.71
$
1.70
$
2.10
$
1.72
$
2.11
Page 22
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 4 - NON-GAAP FINANCIAL MEASURES (continued)
C3 per Pound of Saleable Copper
All amounts in 000s of US Dollars except pounds of saleable copper
Three months ended
Year to Jul 31,
Jul 31, 2016
Apr 30, 2016
Jul 31, 2015
2016
2015
Net direct cash costs (see above)
$
4,146 $
4,490 $
4,305 $
17,062 $
21,553
Depreciation and amortisation
2,071
1,733
Profit on sale of property, plant and equipment
Corporate Cash Expense
Cash Interest Expense
Fully allocated costs (C3 cost)
Pounds of saleable copper
C3 cost per pound of saleable copper
-
273
103
-
226
282
1,418
(419)
271
76
6,972
(105)
1,015
544
6,680
(419)
1,302
383
$
$
6,593 $
6,731 $
5,651 $
25,488 $
29,499
2,431
2,638
2,051
9,939
10,190
2.71 $
2.55 $
2.76 $
2.56 $
2.89
Page 23
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 4 - NON-GAAP FINANCIAL MEASURES (continued)
Earnings before interest, tax and depreciation
All amounts in 000s of US Dollars
Three months ended
Year to Jul 31,
Jul 31, 2016
Apr 30, 2016
Jul 31, 2015
2016
2015
(Loss)/profit after tax per Financial statements
$
(12,827) $
859 $
(5,927) $
(12,806) $
(8,352)
Taxation
Net interest
Depreciation and amortisation
Gain on disposal of property, plant and equipment
Provision for impairment
EBITDA
(2,561)
2,104
2,071
-
11,268
381
346
1,733
-
-
(4,465)
(3,418)
1,419
(419)
12,100
(2,422)
3,207
6,972
(105)
(5,207)
(3,019)
6,680
(419)
11,268
12,100
$
55 $
3,319 $
(710) $
6,114 $
1,783
Page 24
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 5 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The details of the Company’s accounting policies are presented in accordance with International Financial Reporting
Standards as set out in Note 2 to the financial statements. The preparation of financial statements in conformity with
IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for investors to understand some of
the processes and reasoning that go into the preparation of the Company’s financial statements, providing some
insight also to uncertainties that could impact the Company’s financial results.
Going Concern
Historically the Company has been successful in accessing the equity and debt markets to finance the initial
acquisition of the Ming Mine site, a US$20 million gold loan and a US$8 million credit facility to finance the
construction of the mine and milling facilities and drawing US$3 million of an advance purchase facility. In June 2016
the Company accessed approximately US$15 million in equity finance to improve working capital and to provide
funds for the planned increase in production from the mine and improved capacity at the mill.
In future, the Company plans to fund operational requirements through internally generated cash flow, proceeds from
the exercise of warrants, debt offerings and, if necessary, additional equity financing.
The Company continually reviews operational results, expenditures and additional financial opportunities in order to
ensure adequate liquidity to support its growth strategy while maintaining or increasing production levels at the Ming
Mine. However, there is no guarantee that the Company will have access to future capital or the ability to generate
positive cash flows.
Based on the above management concludes the Compay has adequate resources to continue in operational
existence for the foreseeable future. Thus it continues to adopt the going concern basis of accounting in preparing
the financial statements.
Share-based payments
The Company calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option/warrant life and the volatility are subject to management estimates 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 notes 6 and 21 of the financial statements for the year ended July 31, 2016.
Page 25
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 5 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
Gold Loan
The Company 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 24 of the financial statements for the year ended July 31, 2016). 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 Company’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 without conversion of its inferred resources.
Management’s estimates of these factors are subject to risk and uncertainties affecting the recoverability of the
Company’s mineral property and exploration and evaluation costs. The assessment determined that the mine
remains commercially viable however as a result of the current market outlook regarding commodity prices, foreign
exchange rates and the current pre-tax real discount rate of 10.71% the recoverability of the entire carrying values of
the mineral property and exploration and evaluation costs is questionable. As a result, a provision for impairment was
recognised in the consolidated income statement. The impairment review was based on the original PFS model
adjusted for 2016 depletion and does not reflect management’s latest internal modelling which factors in increased
production through re-establishing the shaft for hoisting and the integration of ore pre-concentration. Management
are confident that the new model will deliver significant value.
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 Company 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 Company 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 Company’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 26
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 5 - 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 Company 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 Company 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 Company
could be required to reduce the deferred tax asset which would result in a reduction in the Company’s earnings and
net assets.
The Company 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 2015. The adoption of these new
and revised Standards and Interpretations had no material effect on the profit or loss or financial position of the
Company.
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, 2016:
Title
IFRS
/Amend
ment
IFRS 9 Financial instruments:
Classification and
Measurement
IFRS 15 Revenue from contracts with
customers
IFRS 16 Leases
Nature of change to accounting
policy
Application date
of standard
Application date
for Company
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, 2018 January 1, 2018
January 1, 2018 January 1, 2018
January 1, 2019 January 1, 2019
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 Company are included in note 2 of the financial statements for the year
ended July 31, 2016.
Page 27
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 6 – 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
414,289,702
Warrants
Options
200,000,000
12,939,000*
*if all options have fully vested
Weighted Average Exercise Price
--
US$0.066
US$0.15
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 Company’s objectives and strategy, future financial or operating performance of the Company 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 Company 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, 2016. Although the Company 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.
Page 28
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2016
APPENDIX 6 – OTHER MATTERS (continued)
Forward Looking Information(continued)
Unless stated otherwise, statements containing FLI herein are made as of the date of this MD&A and the Company
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.
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 from operations will
not exceed revenues
Expenditures exceeding revenues
resulting from fluctuations in the
forward prices of
market and
copper, gold, silver or certain
other commodities, or increased
costs of production, or production
stoppages or shortfalls
Development delays
access to production ore
reducing
Economic viability
Continued mining and milling the exposed
massive sulphide and LFZ workplaces with
further exploration up-dip and down-dip
Increase production from the Ming Mine to
allow the optimization of the Nugget Pond
copper concentrator at 1,250 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
existing
review
infrastructure and availability of finance
from cash flow from operations
of
Further information
Additional information relating to the Company is on SEDAR at www.sedar.com and on the Company’s web site at
www.ramblermines.com.
Page 29
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2016
The Directors present their report with the audited financial statements of the Company for the year ended July 31,
2016.
PRINCIPAL ACTIVITY
The principal activity of the Company 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 I Ackerman (appointed June 2, 2016)
T S Chan (resigned June 2, 2016)
E C Chen
D H W Dobson (resigned December 4, 2015)
L D Goodman (resigned June 2, 2016)
B Labatte (appointed June 2, 2016)
B A Mills ( appointed June 2, 2016)
G Ogilvie (resigned June 2, 2016)
G R Poulter
M V Sander (appointed June 2, 2016)
J S Thomson (resigned June 2, 2016)
N P Williams
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2016.
SUBSTANTIAL SHARE INTERESTS
At September 30, 2016 the parent company was aware of the following substantial share interests:
CE Mining II Rambler
Henderson Global Investors
Tinma International Ltd.
FINANCIAL INSTRUMENTS
Number of Ordinary Shares
% of Share Capital
261,363,636
46,248,223
22,736,992
63.09
11.16
5.49
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
26 to the financial statements.
Page 30
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2016 (CONTINUED)
LIKELY FUTURE DEVELOPMENTS
Details of likely future developments are set out in the Management’s Discussion and Analysis.
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 Company’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 21, 2016
Page 31
RAMBLER METALS AND MINING PLC
DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the strategic report, 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 and with IFRS and their interpretations
adopted by the IASB. Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of
the group for that period. The directors are also required to prepare financial statements in accordance with the rules
of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to
any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company and the group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company's website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the directors. The
directors' responsibility also extends to the on-going integrity of the financial statements contained therein.
Page 32
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2016
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 six non-executive Directors.
G Poulter is the lead independent 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 are
in contact 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 E C Chen, the other members being B Mills and G
Poulter. 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. The Audit Committee has
reviewed the systems in place and considers these to be appropriate.
The Compensation, Corporate Governance and Nominating Committee, which meets at least once a year and is
responsible for making decisions on directors' remuneration packages and the development of the Board, is chaired
by M Sander, E C Chen, G Poulter and B Labatte are the other committee members.
The Safety, Health and Environment Committee was created to assist the Board in the effective discharge of its
responsibilities in relation to safety, health and environmental issues and is chaired by B Labatte with T Ackerman
and N Williams as its other members.
The Technical Committee is responsible for assurance to the Board in relation to the oversight of technical and
operational matters and is chaired by T Ackerman, M Sander and N Williams are the other committee members.
Remuneration of executive Directors is established by reference to the remuneration of executives of equivalent
status both in terms of time commitment, level of responsibility of the position and by reference to their job
qualifications and skills. The Remuneration Committee will also have regard to the terms which may be required to
attract an executive of equivalent experience to join the Board from another company. Such packages may include
performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all price
sensitive information is released to all shareholders at the same time in accordance with AIM and Toronto Stock
Exchange-Venture market rules. The Group's principal communication is through the Annual General Meeting and
through the annual report and accounts, quarterly and interim statements.
Page 33
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
RAMBLER METALS AND MINING PLC
We have audited the financial statements of Rambler Metals and Mining PLC for the year ended 31 July 2016 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 2016 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union 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 34
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2016
(EXPRESSED IN US DOLLARS)
Revenue
Production costs
Depreciation and amortisation
Gross profit
Administrative expenses
Exploration expenses
Operating (loss)/profit before impairment
Provision for impairment
Operating loss after impairment
Exchange loss
Bank interest receivable
Gain/(loss) on derivative financial instruments
Finance costs
Net financing expense
Loss before tax
Income tax credit
Loss for the year attributable to owners of the parent
Loss per share
Basic loss per share
Diluted loss per share
Note
2016
US$’000
2015
US$’000
4
12
5
7
8
9
30,378
(21,701)
(6,807)
1,870
(2,899)
(26)
(1,055)
(11,268)
(12,323)
(237)
25
539
(3,232)
(2,905)
34,583
(23,928)
(6,183)
4,472
(3,502)
(32)
938
(12,100)
(11,162)
(3,604)
64
(1,812)
2,955
(2,397)
(15,228)
(13,559)
2,422
5,207
(12,806)
(8,352)
Note
2016
US$
2015
US$
22
22
(0.067)
(0.058)
(0.067)
(0.058)
Page 36
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2016
(EXPRESSED IN US DOLLARS)
Loss for the year
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign operations (net of tax)
Gain/(loss) on available for sale investment (net of tax)
Other comprehensive loss for the year
2016
US$’000
2015
US$’000
(12,806)
(8,352)
(1,222)
1,178
(44)
(12,520)
(313)
(12,833)
Total comprehensive loss for the year and attributable to the owners of the parent
(12,850)
(21,185)
Page 37
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2016
(EXPRESSED IN US DOLLARS)
Assets
Intangible assets
Mineral property
Property, plant and equipment
Available for sale investments
Deferred tax
Restricted cash
Total non-current assets
Inventory
Trade and other receivables
Derivative financial asset
Cash and cash equivalents
Total current assets
Total assets
Equity
Issued capital
Share premium
Share warrants reserve
Merger reserve
Translation reserve
Fair value reserve
Retained profits
Total equity
Liabilities
Interest-bearing loans and borrowings
Provision
Total non-current liabilities
Interest-bearing loans and borrowings
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
ON BEHALF OF THE BOARD:
Note
31 July
2016
US$’000
31 July
2015
US$’000
1 August
2014
US$’000
10
11
13
14
9
19
15
16
17
18
21
24
25
24
23
2,233
35,238
23,125
2,402
8,420
3,339
74,757
2,383
599
587
8,929
12,498
87,255
6,374
81,455
2,089
180
(16,756)
1,075
(12,731)
61,686
13,650
1,833
15,483
5,226
4,860
10,086
25,569
87,255
14,084
32,561
20,919
994
6,447
2,495
77,500
1,831
1,593
240
3,389
7,053
17,001
47,424
23,577
1,975
1,611
2,989
94,577
3,628
1,947
724
8,755
15,054
84,553
109,631
2,471
72,128
-
180
(15,534)
(103)
41
59,183
12,732
1,297
14,029
6,064
5,277
11,341
25,370
84,553
2,471
72,128
-
180
(3,014)
210
8,289
80,264
18,588
1,747
20,335
4,866
4,166
9,032
29,367
109,631
N P Williams
Director
Approved and authorised for issue by the Board on October 21, 2016
Page 38
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
(EXPRESSED IN US DOLLARS)
Group
Balance at August 1, 2014
Comprehensive income
Profit for the year
Foreign exchange translation differences
Gain on available for sale investments (net of tax)
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners
Issue of share capital
Share-based payments
Transactions with owners
Balance at July 31, 2015
Balance at August 1, 2015
Comprehensive income
Loss for the year
Foreign exchange translation differences
Gain on available for sale investments (net of tax)
Total other comprehensive income
Total comprehensive income/(loss) for the year
Transactions with owners
Issue of share capital
Share issue expenses
Share-based payments
Transactions with owners
Balance at July 31, 2016
Share
Capital
US$’000
Share
Premium
US$’000
Warrants
Reserve
US$’000
Merger
Reserve
US$’000
Translation
Reserve
US$’000
Fair Value
Reserve
US$’000
Accumulated
Losses
US$’000
Total
US$’000
180
(3,014)
210
8,289
80,264
-
(12,520)
-
(12,520)
(12,520)
-
-
-
(15,534)
-
-
(313)
(313)
(313)
-
-
-
(103)
(8,352)
-
-
-
(8,352)
-
104
104
41
(8,352)
(12,520)
(313)
(12,833)
(21,185)
-
104
104
59,183
(15,534)
(103)
41
59,183
-
(1,222)
-
(1,222)
(1,222)
-
-
-
-
-
1,178
1,178
1,178
-
-
-
(12,806)
-
-
-
(12,806)
(1,222)
1178
(44)
(12,806)
(12,850)
-
-
34
16,215
(896)
34
15,353
61,686
-
180
-
(16,756)
-
1,075
34
(12,731)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180
180
-
-
-
-
-
-
-
-
2,471
72,128
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,471
-
72,128
2,471
72,128
-
-
-
-
-
3,903
-
-
3,903
6,374
-
-
-
-
-
10,223
(896)
-
9,327
81,455
2,089
-
2,089
2,089
Page 39
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2016
(EXPRESSED IN US DOLLARS)
Cash flows from operating activities
Operating loss
Depreciation and amortisation
Gain on disposal of property, plant and equipment
Provision for impairment
Share based payments
Foreign exchange difference
Decrease/(increase) in inventory
Decrease/(increase) in debtors
(Increase)/decrease in derivative financial instruments
(Decrease)/increase in creditors
Cash generated from operations
Interest paid
Net cash generated from operating activities
Cash flows from investing activities
Interest received
Acquisition of bearer deposit note
Acquisition of listed investment
Acquisition of subsidiary net of cash (note 20)
Acquisition of evaluation and exploration assets
Acquisition of Mineral property – net
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Net cash utilised in investing activities
Cash flows from financing activities
Issue of share capital
Share issue expenses
Loans received
Repayment of Gold Loan (note 24)
Repayment of Loans
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 40
2016
$’000
2015
$’000
(12,323)
6,972
(105)
11,268
34
(703)
(551)
1,014
191
(723)
5,074
(266)
4,808
25
(844)
-
(49)
(480)
(3,551)
(2,939)
136
(7,702)
15,105
(896)
1,000
(2,297)
(1,179)
(2,595)
9,138
6,244
3,389
(704)
8,929
(11,162)
6,680
(419)
12,100
104
(1,678)
1,797
354
(1,328)
1,112
7,560
(235)
7,325
64
-
(308)
-
(3,107)
(4,693)
(2,404)
509
(9,939)
-
-
1,880
(1,932)
-
(2,673)
(2,725)
(5,339)
8,755
(27)
3,389
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 operation, 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 6 to 29. In addition, notes 21 and 26 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.
Historically the Company has been successful in accessing the equity and debt markets to finance the initial
acquisition of the Ming Mine site, a US$20 million gold loan and a US$8 million credit facility to finance the
construction of the mine and milling facilities and drawing US$3 million of an advance purchase facility. In June
2016 the Company accessed approximately US$15 million in equity finance to improve working capital and to
provide funds for the planned increase in production from the mine and improved capacity at the mill.
In future, the Company plans to fund operational requirements through internally generated cash flow, proceeds
from the exercise of warrants, debt offerings and, if necessary, additional equity financing.
The Company continually reviews operational results, expenditures and additional financial opportunities in
order to ensure adequate liquidity to support its growth strategy while maintaining or increasing production levels
at the Ming Mine. However, there is no guarantee that the Company will have access to future capital or the
ability to generate positive cash flows.
Based on the above management concludes the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus it continues to adopt the going concern basis of accounting in
preparing the 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, 2016 comprise the Company and
its subsidiaries (together referred to as the “Group”).
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.
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 2015.
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.
Refer to Appendix 5 of Management’s Discussion and Analysis on page 34 for standards not yet effective.
Page 41
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(b)
Basis of preparation
The financial statements are presented in United States dollars (“US dollars”), rounded to the nearest thousand
dollars. US Dollars is used as the presentation currency in line with industry peers. The parent company has a
functional currency of GB pounds and 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, 2016 the closing rate of exchange of US dollars to 1 GB pound
was 1.32 (July 31, 2015: 1.55) and the average rate of exchange of US dollars to 1 GB pound for the year was
1.42 (2015: 1.48).
Change of presentation currency
The Group’s principal operations are based in Canada with revenue generated in US dollars. The Directors
consider that using US dollars as the Group’s presentation currency allows greater comparability with industry
peers and have therefore changed the Group’s presentation currency from Canadian dollars to US dollars.
The change of the Group’s presentation currency has been accounted for in accordance with IAS 21 ‘The
Effects of Changes in Foreign Exchange Rates’.
On the change of the Group’s presentational currency, comparative figures previously reported in Canadian
dollars were translated into US dollars as follows:
•
income and expenses were translated at the average exchange rate for the relevant period;
• assets and liabilities were translated at the closing exchange rate on the relevant balance sheet date;
and
• equity items were translated at historical exchange rates.
The exchange rates used were as follows:
Average rate
Closing rate
2015
2014
2013
2012
CAD$=US$
CAD$=US$
CAD$=US$ CAD$=US$
1.22
1.31
1.07
1.09
1.01
1.03
1.01
1.00
As a result of the change of the Group’s presentation currency, a currency translation difference of $2,012,000
was recognised in equity as at 31 July 2015 which represented the difference between the Group’s assets and
liabilities translated from Canadian dollars into US dollars at the closing exchange rate on that date of CAD$1 =
US$1.31 and the equity items recognised in the consolidated financial statements that were translated from
Canadian dollars to US dollars at historical exchange rates.
Page 42
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
The currency translation difference arose as follows:
Ordinary share capital
Share premium account
Retranslation of net assets from Canadian dollars to US dollars
US$’000
457
14,256
(12,701)
2,012
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.
(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 US dollars at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of the parent company are translated to US 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.
Page 43
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(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 property 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. Depreciation on assets under construction does
not commence until they are complete and available for use. The estimated useful lives are as follows:
• buildings
• plant and equipment
• motor vehicles
•
•
computer equipment
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 property
Upon transfer of ‘Exploration and evaluation costs’ into ‘Mineral property’, all subsequent expenditure on the
construction, installation or completion of infrastructure facilities is capitalised within ‘Mineral property’.
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 property is amortised on a unit of production basis. Future forecast capital expenditure is included in the
unit of production amortisation calculation.
Page 44
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(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 are established, the related intangible assets are transferred to Mineral property.
Where a project is abandoned or is determined not to be economically viable, the related costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common
to the natural resource sector. These include the extent to which the Group can establish economically
recoverable reserves on its properties, the ability of the Group to obtain necessary financing to complete the
development of such reserves and future profitable production or proceeds from the disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a project by project basis, with each
project representing a potential single cash generating unit. An impairment review is undertaken when
indicators of impairment arise but typically when one of the following circumstances apply:
• unexpected geological occurrences that render the resource uneconomic;
•
•
•
title to the asset is compromised;
variations in metal prices that render the project uneconomic; and
variations in the exchange rate for the currency of operation.
Available for sale investments
(h)
Available for sale investments are recognised at fair value with changes in value recorded in other
comprehensive income. Subsequent to initial recognition available-for-sale financial assets are stated at fair
value. Movements in fair values are recognised in other comprehensive income, with the exception of
impairment losses which are recognised in profit or loss. Fair values are based on prices quoted in an active
market if such a market is available. If an active market is not available, the Company 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.
Page 45
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
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.
Restricted cash is not available for use by the
Group and therefore is not considered highly liquid.
Impairment of non-financial assets
(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.
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.
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(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.
The Company accounts for its share warrants as equity at fair value as of the date of issuance on the
Company’s consolidated balance sheets and no further adjustments to their valuation are made. Management
estimates the fair value of these liabilities using option pricing models and assumptions that are based on the
individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for future
financings, expected volatility, expected life, yield, and risk-free interest rate.
Trade and other payables
(o)
Trade and other payables are stated at amortised cost.
Provisions
(p)
The Group records the present value of estimated costs of legal and constructive obligations required to restore
mining and other operations in the period in which the obligation is incurred. The nature of these restoration
activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling
operating facilities, closure of plant and waste sites, and restoration, reclamation and revegetation of affected
areas.
Revenue recognition
(q)
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 Company recognises revenue when the amount of the revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and when specific criteria have been met as described
below. Any revenues generated during commissioning are treated as a contribution towards previously incurred
costs and are therefore credited against mining and development assets accordingly.
Sale of 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 Company 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.
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(r)
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
(s)
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based remuneration are measured at their
fair values. Fair values of employee services are determined indirectly by reference to the fair value of the share
options awarded. Their value is appraised at the grant dates and excludes the impact of non-market vesting
conditions.
All share-based remuneration is ultimately recognised as an expense in the income statement with a
corresponding credit to the accumulated losses in the balance sheet.
If vesting periods apply, the expense is allocated over the vesting period, based on the best available estimate of
the number of share options expected to vest. Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to
vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if
the number of share options ultimately exercised is different to that estimated on vesting. Upon exercise of share
options the proceeds received net of attributable transaction costs are credited to share capital.
Page 48
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
Income tax
(t)
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.
Fair value measurement
(u)
A number of assets and liabilities included in the Group’s financial statements require measurement at, and/or
disclosure of, fair value.
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market
observable inputs and data as far as possible. Inputs used in determining fair value measurements
are categorised into different levels based on how observable the inputs used in the valuation technique
utilised are (the ‘fair value hierarchy’):
- Level 1: Quoted prices in active markets for identical items (unadjusted)
- Level 2: Observable direct or indirect inputs other than Level 1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that has a
significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in
the period they occur. The Group measures a number of items at fair value:
- Derivative financial asset (note 17)
- Available for sale investments (note 14)
For more detailed information in relation to the fair value measurement of the items above, please refer to the
applicable notes.
Page 49
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. 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 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.
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 and its
opportunities economic model which includes resource estimates without 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. The assessment determined that the mine
remains commercially viable however as a result of the current market outlook regarding commodity prices,
foreign exchange rates and the current market based pre-tax real discount rate of 10.71% the recoverability of
the entire carrying values of the mineral property and exploration and evaluation costs is questionable. As a
result, a provision for impairment was recognised in the consolidated income statement.
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.
Page 50
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Critical accounting estimates and judgements (continued)
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option/warrant 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 notes 6 and 20.
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 24).The cash flows will be dependent on the production of gold and its
selling price at the time of delivery which have been estimated in line with the mine plan, future prices of gold
and reserve estimates. Management’s estimates of these factors are subject to risk and uncertainties affecting
the amount of the interest charge. Any changes to these estimates may result in a significantly different interest
charge which would affect the carrying value of the exploration and evaluation costs and the corresponding Gold
Loan liability.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and foreign exchange fluctuations.
Management monitors these changes closely and at the end of the period the directors will consider whether the
effect of these variations are material on the whole and determine whether an adjustment is therefore
appropriate.
Available for sale investment
Management consider that they do not have significant influence over the financial and policy decisions of
Maritime and therefore have included the investment as an available for sale investment.
4. 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
2016
2015
UK
Canada
Consolidated
UK
Canada
Consolidated
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Revenue
-
30,378
30,378
-
34,583
34,583
Non-current assets
1,567
73,190
74,757
1,569
75,931
77,500
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
Customer A
2016
2015
US$’000
US$’000
30,378
30,378
34,583
34,583
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Operating profit
The operating profit is after charging:
Depreciation – owned assets
Gain on disposal of property, plant and equipment
Amortisation
Impairment charges (see note 12)
Directors’ emoluments (see note 27)
Auditor’s remuneration:
Audit of these financial statements
Fees payable to the auditor for other services:
Other assurance services
2016
2015
US$’000
US$’000
2,906
(105)
4,066
11,268
416
81
4
3,011
(419)
3,669
12,100
464
81
7
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is maintained.
6. Personnel expenses
Salary costs
Wages and salaries
Other short term benefits
Compulsory social security contributions
Share based payments
Group
2016
Group
2015
US$’000
US$,000
8,308
504
1,412
34
9,302
506
1,680
104
10,258
11,592
Salary costs of US$259,000 (2015: US$13,000) were capitalised as part of the cost of assets under construction
costs during the year.
Number of employees
The average number of employees during the year was as follows:
Directors
Administration
Production and development
Group
2016
Group
2015
7
11
122
140
7
14
117
138
During the year the Group granted share options to key personnel to purchase shares in the entity. The options are
exercisable at the market price of the shares at the date of grant.
Page 52
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Personnel expenses (continued)
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Cancelled during the year
Outstanding at the end of the year
Exercisable at end of year
Weighted
average
exercise
price
2016
US$
Number
of options
2016
‘000
Weighted
average
exercise
price
2015
US$
Number
of options
2015
‘000
0.37
0.62
0.49
0.36
0.36
5,190
0.37
264
-
(375)
0.39
5,079
4,999
0.37
0.37
5,506
-
(316)
5,190
4,795
The options outstanding at July 31, 2016 have an exercise price in the range of US$0.13 to US$0.84 (2015: US$0.14
to US$0.84) and a weighted average remaining contractual life of 4.3 years (2015: 5.3 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.
Fair value of share options and assumptions issued during the year
2016
2015
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)
US$0.03
US$0.62
US0.07
94%
4
-
0.55%
-
-
-
-
-
-
-
The expected volatility is based on the historical volatility (calculated based on the weighted average remaining life of
the share options), adjusted for any expected changes to future volatility due to publicly available information.
There is no performance or market conditions associated with the share option grants.
The share-based payment expense relates to the following grants:
Share options granted in 2012
Share options granted in 2013
Share options granted in 2014
Total expense recognised as employee costs
2016
2015
US$’000
-
18
16
34
US$’000
13
23
68
104
Page 53
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Loss on derivative financial instruments
Gain/(loss) on concentrate receivables from off-taker
8. Finance costs
Finance lease interest
Gold loan interest
Advance purchase facility interest and charges
Off-take provisional payment interest
Unwinding of discount on reclamation provision
9.
Income tax
Recognised in the income statement
Current tax expense
Current year
Deferred tax credit
Origination and reversal of temporary timing differences
Over provision in previous year
Total income tax credit in income statement
Reconciliation of effective tax rate
Loss before tax
Income tax using the UK corporation tax rate of 20% (2015: 20.67%)
Effect of tax rates in foreign jurisdictions (rates increased)
Non-deductible expenses
Effect of change in tax rates
Effect of tax losses and credits
Over provision in previous year
Exchange difference
2016
2015
US$’000
US$’000
539
(1,812)
2016
2015
US$’000
US$’000
123
2,648
279
144
38
3,232
214
(3,347)
-
139
39
(2,955)
2016
2015
US$,000
US$,000
-
-
-
-
(4,186)
1,764
(2,422)
(5,207)
-
(5,207)
2016
2015
US$’000
US$’000
(15,228)
(13,559)
(3,046)
(1,416)
371
(52)
155
1,764
(198)
(2,422)
(2,803)
(1,019)
122
8
(1,556)
-
41
(5,207)
Page 54
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax (continued)
Recognised in other comprehensive income
Current tax expense
Current year
Deferred tax (credit)/expense
Fair value re-measurement of available for sale investments
Exchange difference on retranslation of UK deferred tax asset
Over provision in previous period
Total income tax expense/(credit) in statement of other comprehensive
income
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2016
2015
US$,000
US$,000
-
201
256
--
457
-
-
(21)
(196)
(50)
(267)
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan
Tax value of loss carry-forwards and credits
recognised
Net tax assets / (liabilities)
Assets
Liabilities
Net
Balance
Balance
Balance
Balance
Balance
Balance
July 31, 2016 July 31, 2015 July 31, 2016 July 31, 2015 July 31, 2016 July 31, 2015
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
-
3,328
107
-
-
8,974
12,409
-
1,795
110
713
6,294
8,912
(3,264)
-
-
(91)
(634)
(2,103)
-
(361)
-
-
(3,264)
3,328
107
(91)
(634)
-
-
(3,989)
(2,464)
8,974
8,420
(2,103)
1,795
(361)
110
713
6,294
6,448
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax credit (continued)
Movement in recognised deferred tax assets and liabilities
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan
Other timing differences
Tax value of loss carry-forwards and credits
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan
Other timing differences
Tax value of loss carry-forwards and credits
Recognised in
income
Balance
Aug 1, 2014
Recognised in
other
comprehensive
income
Exchange
difference
Balance
July 31, 2015
US$’000
US$’000
US$’000
US$’000
US$’000
1,682
1,989
1,523
32
138
(26)
(6,949)
(1,611)
741
(3,689)
(964)
(92)
(878)
(8)
(317)
(5,207)
-
-
-
(53)
-
-
(148)
(201)
(320)
(95)
(198)
3
27
4
1,150
571
2,103
(1,795)
361
(110)
(713)
(30)
(6,264)
(6,448)
Balance
Aug 1, 2015
Recognised in
income
Recognised in
other
comprehensive
income
Exchange
difference
Balance
Jul 31, 2016
US$’000
US$’000
US$’000
US$’000
US$’000
2,103
(1,795)
361
(110)
(713)
(30)
(6,264)
(6,448)
1,157
(1,528)
(467)
-
1,348
1
(2,933)
(2,422)
-
-
-
201
-
-
256
457
4
(5)
-
-
(1)
-
(5)
(7)
3,264
(3,328)
(106)
91
634
(29)
(8,946)
(8,420)
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 US$8.4 million (2015: US$6.4
million).
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Intangible assets
Cost
Balance at 1 August 2014
Additions
Effect of movements in foreign exchange
Balance at 31 July 2015
Balance at 1 August 2015
Additions
Transfer to mineral property
Effect of movements in foreign exchange
Balance at July 31, 2016
Impairment
Balance at 1 August 2014
Provision for impairment
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at 1 August 2015
Transfer to mineral property
Effect of movements in foreign exchange
Balance at July 31, 2016
Carrying amounts
At 1 August 2014
At 31 July 2015
At 1 August 2015
At July 31, 2016
Ming Mine
US$’000
Exploration and evaluation costs
Little Deer Project
Total
US$’000
US$’000
16,496
3,225
(3,056)
16,665
16,665
440
(17,125)
20
-
-
3,354
(142)
3,212
3,212
(3,214)
2
-
16,496
13,453
13,453
-
505
235
(109)
631
631
1,463
-
139
2,233
-
-
-
-
-
-
-
-
505
631
631
2,233
17,001
3,460
(3,165)
17,296
17,296
1,903
(17,125)
159
2,233
-
3,354
(142)
3,212
3,212
(3,214)
2
-
17,001
14,084
14,084
2,233
Following the integration of the Lower Footwall Zone into the Company’s mine plan, costs of US$ 17.1 million were
transferred to mineral properties.
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.
Page 57
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Mineral property
Cost
Balance at August 1, 2014
Additions
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at August 1, 2015
Additions
Transfer from exploration and evaluation costs
Effect of movements in foreign exchange
Balance at July 31, 2016
Amortisation and impairment
Balance at August 1, 2014
Amortisation charge
Provision for impairment
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at August 1, 2015
Amortisation charge
Provision for impairment
Transfer from exploration and evaluation costs
Effect of movements in foreign exchange
Balance at July 31, 2016
Carrying amounts
At August 1, 2014
At July 31, 2015
At August 1, 2015
At July 31, 2016
Mineral
property
US$’000
53,519
4,493
(9,237)
48,775
48,775
4,050
17,125
108
70,058
6,095
3,669
8,119
(1,669)
16,214
16,214
4,066
11,268
3,214
58
34,820
47,424
32,561
32,561
35,238
Consideration of impairment for mineral property costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property
costs. See note 12 for an explanation of the factors considered in respect of the Ming Mine.
Page 58
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Provision for impairment
Summary of impairments
The following impairment charges were recognised in the income statement for the year ended July 31, 2016:
Mineral property
Exploration and evaluation costs
Available for sale investments
2016
2015
US$’000
US$’000
11,268
-
-
11,268
8,119
3,354
627
12,100
Consideration of impairment for mineral property costs
As part of the annual impairment review of asset carrying values a charge of $11.3 million (2015: $11.5 million)
was recorded in relation to the Ming Mine. Following the publication of the Group’s PFS, extraction of ore from
the Ming Mine’s Lower Footwall Zone has been included in the Mine plan adopted by management for fiscal
2016. During the year, the Group carried out an impairment review of the related cash generating unit (“CGU”).
The review determined that the mine remains commercially viable however as a result of the current market
outlook regarding commodity prices, foreign exchange rates and the current market cost of capital of 10.71% the
recoverability of the entire carrying values of the mineral property is questionable. As a result, an impairment was
recognised in the consolidated income statement.
In accordance with its accounting policies and processes, each asset or CGU is evaluated annually at July 31, to
determine whether there are any indications of impairment. If any such indications of impairment exist, a formal
estimate of the recoverable amount is performed.
In assessing whether an impairment is required, the carrying value of the asset or CGU is compared with its
recoverable amount. The recoverable amount is the higher of the CGU’s fair value less costs of disposal
(“FVLCD”) and value in use (“VIU”). Given the nature of the Group’s activities, information on the fair value of an
asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking
place. Consequently, the VIU for each CGU is determined based on the net present value of the future estimated
cash flows (expressed in real terms) expected to be generated from the continued use of the CGUs based on the
most recent life of mine plan, and its eventual disposal, using assumptions a market participant may take into
account. These cash flows were discounted using a real pre-tax discount rate that reflected current market
assessments of the time value of money and the risks specific to the CGU.
Key assumptions
The determination of value in use is most sensitive to the following key assumptions:
• Production volumes
• Commodity prices
• Discount rates
• Exchange rates
Page 59
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Provision for impairment (continued)
Production volumes: In calculating the value in use, the production volumes incorporated into the cash flow models
were based on the PFS released in July 2015. After milling and recovery, approximately 158,000 tonnes of copper is
estimated to be produced with 90,000 ounces of gold and 528,000 ounces of silver. Estimated production volumes
are based on a 21 year life of mine plan and take into account development plans for the mine agreed by
management as part of the long-term planning process. Production volumes used in the model are based on
probable and proven mineral reserves and do not take account the potential conversion of any measured or indicated
resource. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the
production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production
costs; the contractual duration of mining rights; and the selling price of the commodities extracted. The production
profile used is consistent with the reserves volumes approved as part of the Group’s process for the estimation of
proved and probable reserves. The production profile excludes potential conversion of resource into reserve.
Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward
price curves and long-term views of global supply and demand, building on past experience of the industry and
consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for
the different qualities and type of commodities, or, where appropriate, contracted prices were applied. Estimated
long–term copper, gold and silver prices of US$2.71 per pound, US$1,300 per ounce and US$22 per ounce
respectively, have been used to estimate future revenues.
Discount rate: In calculating the VIU, a pre-tax discount rate of 10.71% was applied to the pre-tax cash flows
expressed in real terms. This discount rate is derived from the Group’s pre-tax weighted average cost of capital
(WACC), with appropriate adjustments made to reflect the risks specific to the CGU. The WACC takes into account
both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors.
The cost of debt is based on its interest bearing borrowings the Group is obliged to service. Segment-specific risk is
incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available
market data.
Exchange rates: Foreign exchange rates are estimated with reference to external market forecasts and updated at
least annually. The rates applied for the first five years of the valuation are based on observable market data
including spot and forward values, thereafter the estimate is interpolated to the long term assumption, which involves
market analysis including equity analyst estimates. The assumed long-term US dollar/CAD dollar exchange rate is
estimated to be US$0.81.
Sensitivity analysis: Any variation in the key assumptions above would either result in further impairment or lead to a
reversal of impairment. The total provision for impairment that would arise for the Ming Mine due to the effect of an
increase or decrease in the key assumptions is summarised below:
Total provision for impairment
Copper price (4% increase/decrease)
Discount rate (at 8.56%/12.86%)
Increase
Decrease
US$’000
US$’000
-
-
21,911
20,058
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Property, plant and equipment
Land and
buildings
Assets under
construction
Motor
vehicles
Plant and
equipment
Fixtures,
fittings and
equipment
Computer
equipment
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000 US$’000
4,080
16
(161)
-
(668)
3,267
3,267
138
-
641
17
4,063
1,897
318
(145)
(336)
1,734
1,734
304
-
7
2,045
2,183
1,533
1,533
2,018
42
808
-
(236)
(82)
532
532
1,159
-
(963)
-
728
-
-
-
-
-
-
-
-
-
-
42
532
532
728
238
35
-
-
(45)
228
228
-
-
-
-
228
210
30
-
(38)
202
202
14
-
1
217
28
26
26
11
39,765
3,602
(261)
236
(6,952)
36,390
36,390
3,822
(707)
322
58
39,885
18,604
2,585
(209)
(3,324)
17,656
17,656
2,522
(675)
46
19,549
21,161
18,734
18,734
20,336
101
9
-
-
(17)
93
93
2
-
-
1
96
94
7
-
(17)
84
84
6
-
-
90
7
9
9
6
889
24
-
-
(150)
45,115
4,494
(422)
-
(7,914)
763
41,273
763
1
-
-
-
764
41,273
5,122
(707)
-
76
45,764
733 21,538
3,011
(354)
(3,841)
71
-
(126)
678 20,354
678 20,354
2,906
(675)
54
60
-
-
738 22,639
156 23,577
85 20,919
85 20,919
26 23,125
Cost
Balance at August 1, 2014
Additions
Disposals
Reclassification
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at August 1, 2015
Additions
Disposals
Reclassification
Effect of movements in foreign exchange
Balance at July 31, 2016
Depreciation and impairment losses
Balance at August 1, 2014
Depreciation charge for the year
Eliminated on disposals
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at August 1, 2015
Depreciation charge for the year
Eliminated on disposals
Effect of movements in foreign exchange
Balance at July 31, 2016
Carrying amounts
At August 1, 2014
At July 31, 2015
At August 1, 2015
At July 31, 2016
Leased plant and machinery
The Group leases surface and underground equipment under a number of finance lease agreements. At the end of
each lease the Group has the option to purchase the equipment at a beneficial price. At July 31, 2016, the net
carrying amount of leased plant and machinery was US$4,211,000 (2015: US$2,984,000). The leased plant and
machinery secures lease obligations (see note 24). During the year plant and equipment additions of US$2,256,000
(2015: US$2,090,000) were acquired through finance lease arrangements.
Page 61
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Available for sale investments
Cost or valuation
Balance at August 1, 2014
Acquisitions
Revaluation
Provision for impairment
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at August 1, 2015
Acquisitions
Revaluation
Effect of movements in foreign exchange
Balance at July 31, 2016
Carrying amounts
At July 31, 2015
At July 31, 2016
Available for sale
investments
US$’000
1,975
288
(342)
(627)
(300)
994
994
21
1,371
16
2,402
994
2,402
Rambler holds a 10.86% equity stake in Maritime Resources Corp and a representative on the Board of Directors.
This representation does not result in the Group having significant influence over the investment. The market price at
July 31, 2016 was US$0.21 (2015: US$0.08 per share).
Rambler holds 2.58% equity stake in Marathon Gold Corporation. The market price at July 31, 2016 was US$0.37
(2015: US$0.19 per share).
The Company acquired a number of listed investments on the acquisition of Thundermin Resources Inc. at a fair
value of US$21,000.
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 US$1,776,000
(2015: US$1,752,000).
15. Inventory
Metals in process
Operating supplies
2016
2015
US$’000 US$’000
580
1,251
891
1,492
2,383
1,831
Page 62
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. Trade and other receivables
Trade receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
There are no trade receivables past due or considered impaired (2015: $nil).
17. Derivative financial asset
Concentrate receivables from off-taker
2016
2015
US$’000 US$’000
207
-
232
206
402
250
752
143
599
1,593
2016
2015
US$’000 US$’000
240
587
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 US$638,000 (2015: US$235,000).
18. Cash and cash equivalents
Bank balances
Cash and cash equivalents in the statement of cash flows
19. Restricted cash
Bearer deposit notes
2016
2015
US$’000 US$’000
3,389
3,389
8,929
8,929
2016
2015
US$’000 US$’000
2,495
3,339
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. An additional Letter of Credit of US$843 was
obtained during the year in connection with an additional reclamation and closure liability for an extension of the
waste stockpile. The bearer deposit notes mature on differing dates throughout fiscal 2016 and have a nominal value
of US$3,339,000 (2015 - US$2,495,000) giving an effective yield of 1.2% (2015 – 1.2%).
Page 63
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
20. Acquisition of subsidiary
The Group acquired the entire share capital of Thundermin Resources Inc. by way of an amalgamation into 1948565
Ontario Inc. on January 12, 2016. The fair value of the assets acquired was as follows:
Exploration and evaluation assets
Listed investments
Trade and other receivables
Cash at bank
Trade and other payables
Net assets acquired
Issue of share capital
Cash consideration
Total consideration
Book value
Fair value adjustment
Fair value
US$’000
US$’000
US$’000
3
21
21
21
(308)
(242)
1,421
-
-
-
-
1,421
1,424
21
21
21
(308)
1,179
1,109
70
1,179
The acquisition was accounted for as an asset acquisition as the definition of a business in IFRS 3 – Business
Combinations was not met.
21. Capital and reserves
Share capital and share premium – group and company
In issue at 1 August 2014
Issued during the year
In issue at 31 July 2015
In issue at 1 August 2015
Issued during the year
In issue at July 31, 2016
Share
Share
Number
capital
premium
US$’000 US$’000
Number
‘000
72,128 144,168
-
72,128 144,168
-
2,471
2,471
2,471
3,903
6,374
72,128 144,168
9,327 270,122
81,455 414,290
At July 31, 2016, 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.
On January 12, 2016 the Company issued 7,142,857 shares for US$0.15 each raising a total of US$1,050,000 as
part consideration for the acquisition of Thundermin Resources Inc.
On February 5, 2016 the Company issued 1,614,981 shares for US$0.04 each raising a total of US$60,055 as part
consideration for the acquisition of Thundermin Resources Inc.
On June 3, 2016 the Company issued 261,363,636 ordinary shares for US$0.06 (GBP0.04) each. The Company also
issued 200,000,000 warrants to purchase ordinary shares at US$0.07 per share (GBP0.05). Of the total proceeds of
US$15.1 million, US$3.8 million was credited to share capital, US$9.2 million to share premium account and US$2.1
million was credited to the warrants reserve representing the fair value of the warrants issued.
Page 64
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Capital and reserves (continued)
Warrants reserve
At August 1, 2015
Fair value of warrants issued during the year
At July 31, 2016
Number
‘000
$’000
-
200,000
200,000
-
2,089
2,089
On June 3, 2016 the Company issued 200,000,000 share purchase warrants at an exercise price of US$0.07 (GBP
0.05). The share purchase warrants expire on 3 June 2018. The fair value of the share purchase warrants is
measured using the Black-Scholes model assuming an expected volatility of 100%, a risk-free interest rate of 1%
and a contractual life of the warrant of 2 years. The fair value of services received in return for the warrants issued is
measured by reference to the fair value of the warrants issued in the absence of information on the fair value of the
services provided. The share warrant reserve reflects the value of outstanding share warrants based on the fair
value of the share warrants at the time of issue.
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
Advance purchase loan
Gold loan
Net debt
Equity
Total capital
Details of employee share options outstanding are set out in note 5.
2016
US$’000
2015
US$’000
8,929
(3,195)
(1,979)
(13,702)
(9,947)
(61,686)
(71,633)
3,389
(3,566)
(1,879)
(13,351)
(15,407)
(59,183)
(74,590)
Page 65
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at July 31, 2016 was based on the loss attributable to ordinary
shareholders of $12,806,000 and a weighted average number of ordinary shares outstanding during the period
ended July 31, 2016 of 191,132,000 calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period
Loss attributable to ordinary shareholders
Weighted average number of ordinary shares
At August 1, 2014
Effect of shares issued during the year
At July 31, 2015
In issue at August 1, 2015
Effect of shares issued during year
Weighted average number of ordinary shares at July 31, 2016
2016
US$’000
2015
US$’000
(12,806)
(12,806)
(8,352)
(8,352)
Number ‘000
144,168
-
144,168
144,168
46,964
191,132
There is no material difference between the basic and diluted loss per share. At July 31, 2016 there were 5,373,157
(2015: 5,189,667) share options in issue of which 578,925 (2015: 578,925) were considered to be dilutive and may
have a dilutive effect on the basic earnings or loss per share in the future. At July 31, 2016 there were 200,000,000
(2015: nil) warrants in issue of which none were considered to be dilutive.
23. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
2016
2015
US$’000 US$’000
3,396
193
1,271
4,860
3,996
217
1,064
5,277
24. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For
more information about the Group’s exposure to interest rate and foreign currency risk, see note 26.
Page 66
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Interest-bearing loans and borrowings (continued)
Non-current liabilities
Finance lease liabilities
Gold Loan
Current liabilities
Current portion of finance lease liabilities
Advance Purchase Facility
Current portion of Gold Loan
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than one year
Between one and five years
2016
2015
US$’000
US$’000
1,550
12,100
13,650
1,320
11,412
12,732
1,645
1,980
1,601
5,226
2,246
1,879
1,939
6,064
Minimum
lease
Payments
2016
Interest
2016
Principal
2016
Minimum
lease
Payments
2015
Interest
2015
Principal
2015
US$’000 US$’000 US$’000
US$’000
US$’000
US$’000
1,730
1,611
3,341
85
61
146
1,645
1,550
3,195
2,356
1,360
3,716
110
40
150
2,246
1,320
3,566
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are secured
on the underlying assets.
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 175,000 ounces 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 realised 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 175,000 ounces 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 realised
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 67
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. 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 US$2,648,000 (2015: US$3,180,000 reversed) was charged during the period.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
Advance Purchase Facility
In July 2015 the Group entered into a purchase agreement with Transamine Trading S.A. (“Transamine”) wherein
Rambler has extended its off-take agreement with Transamine with respect to concentrate from the Ming Copper-
Gold Mine until December 31, 2021.
Pursuant to the terms of the Purchase Agreement, Transamine agreed to purchase in advance, at Rambler’s option,
up to US$5 million of concentrate (the “Advance Purchase Payments”). to be used for working capital requirements
along with the development and construction of Rambler’s Lower Footwall Zone optimisation plan (Phase II) at the
Ming Mine.
The Company drew down US$3 million of Advance Purchase Payments and further advances are no longer available
under the agreement.
At July 31, 2016 the balance was US$1,980,000 which, following an addendum to the Purchase Agreement which
saw a lump sum of US$1,000,000 repaid on June 17,2016. The remainder is repayable by twelve monthly
instalments of US$176,005 plus interest at 3 month LIBOR plus 7.5%. The repayment by instalments commenced
July 15, 2016.
The advance purchase payments of US$3,000,000 have been accounted for as a financial liability carried at
amortised cost.
25. Provision
Reclamation and closure provision
Opening balance
Charged/(credited) to Mineral Property
Unwinding of discount
Effect of movements in foreign exchange
Ending balance
2016
2015
US$’000
US$’000
1,297
498
38
-
1,833
1,727
(200)
44
(274)
1,297
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. During the year the Company made an additional provision in respect of
its extended stockpile resulting in an amount of US$498,000 being debited to mineral properties (2015: US$200,000
credited to the Mineral Property). The liability is secured by Letters of Credit for US$3,338,728.
Page 68
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Financial instruments
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale
investments, derivative financial instruments and other receivables. In addition the Company’s financial assets
include amounts due from subsidiaries. The Group and Company’s financial liabilities comprise: trade payables;
other payables; and accrued expenses. The Group’s financial liabilities also include interest bearing loans and
borrowings.
All of the Group’s and Company’s financial liabilities are measured at amortised cost and their financial assets are
classified as loans and receivables and measured at amortised cost with the exception of available for sale
investments and derivative financial instruments as described in notes 13 and 16 respectively.
The Group held the following categories of financial instruments at July 31, 2016:
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments – level 2 fair value
Available for sale investments:
Investment in quoted equity securities – level 1 fair value
Loans and receivables:
Trade receivables
Other receivables
Sales taxes recoverable
Cash at bank
Restricted cash
Total financial assets
Liabilities at amortised cost or equivalent:
Trade payables
Non trade payables
Accrued expenses
Loans and borrowings
Total financial liabilities
2016
2015
US$’000
US$’000
587
240
2,402
994
-
206
250
8,929
3,339
12,724
15,713
207
232
402
3,389
2,495
6,725
7,959
2016
2015
US$’000 US$’000
(3,996)
(3,396)
(217)
(193)
(1,064)
(1,271)
(18,796)
(18,876)
(24,073)
(23,736)
The board of directors determines, as required, the degree to which it is appropriate to use financial instruments and
hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are liquidity risk,
credit risk and market risk which includes foreign currency risk, interest rate risk and commodity price risk each of
which is discussed below.
Page 69
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Financial instruments (continued)
Liquidity risk
With finite cash resources the liquidity risk is significant. This risk is managed by controls over expenditure and
concentrating on achieving the payment milestones under the financing arrangement. Success will depend largely
upon the outcome of on-going and future exploration and development programmes. Given the nature of the Group’s
current activities the entity will remain dependent on a mixture of debt and equity funding in the short to medium term
until such time as the Group becomes self-financing from the commercial production of mineral resources. The
liabilities of the parent company are due within one year. The parent company has adequate financial resources to
meet the obligations existing at July 31, 2016.
The Group’s and Company’s trade payables, other payables and accrued expenses are generally due between one
and three months and the Group’s other financial liabilities are due as follows:
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
Due after five years
2016
US$’000
2015
US$’000
5,516
3,464
2,516
2,341
2,204
14,450
30,491
6,412
3,482
2,046
1,964
2,012
14,368
30,284
Fixed rate financial liabilities
At the year end the analysis of finance leases and hire purchase contracts which were all due in Canadian Dollars
and are at fixed interest rates was as follows:
Fixed rate liabilities
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
2016
US$’000
2015
US$’000
1,731
772
601
218
19
3,341
2,356
1,125
214
20
1
3,716
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2016 was
4.6%.
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
16). The Group maximum exposure to credit risk at July 31, 2016 was represented by receivables and cash
resources.
Page 70
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Financial instruments (continued)
Market risk
Foreign currency risk
The Company has a small amount of cash resources and certain liabilities including the Gold loan and the advance
purchase agreement denominated in US dollars. All other assets and liabilities are denominated in Canadian dollars
and GB pounds. Revenue is generated in US dollars while the majority of the expenditure is incurred in Canadian
dollars and, to a lesser extent, GB pounds. The Company has a downside exposure to any strengthening of the
Canadian Dollar or GB pound as this would increase expenses in US dollar terms. This risk is mitigated by reviewing
the holding of cash balances in Canadian Dollars and GB pounds. Any weakening of the Canadian Dollar or GB
pound would however result in the reduction of the expenses in US dollar terms. In addition movements in the
Canadian dollar and GB pound/US Dollar exchange rates would affect the Consolidated Balance Sheet.
The policy in relation to the translation of foreign currency assets and liabilities is set out in note 2(d), 'Accounting
Policies Foreign Currency' 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 and Canadian Dollar against the 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 Canadian dollar
10% weakening of Canadian dollar
Equity
2016
2015
US$’000
US$’000
(783)
712
(291)
265
(47)
43
(404)
367
Page 71
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Financial instruments (continued)
Market risk (continued)
Foreign currency risk (continued)
At the year end the cash and short term deposits were as follows:
At July 31, 2016
Canadian $
US $
Sterling
At July 31, 2015
Canadian $
US $
Sterling
Floating
rate
Assets
Total
$’000
$’000
757
17
8,155
8,929
720
17
8,192
8,929
$’000
$’000
1,205
2,101
83
3,389
1,205
2,101
83
3,389
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve
month's maximum duration. Details of the Group’s borrowings are described in note 24.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group’s and
Company’s reported results.
Commodity price risk
Commodity price risk is the risk that the Group’s future earnings will be adversely impacted by changes in the market
prices of commodities. The Group is exposed to commodity price risk as its future revenues will be derived based on
contracts with customers at prices that will be determined by reference to market prices of copper and gold at the
delivery date.
As explained in note 3 the Group calculates the effective interest rate on the Gold Loan based on estimates of future
cash flows arising from the sale of payable gold. In estimating the cash flows the following table details the Group’s
sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent management’s
assessment of the reasonable possible exposure.
10% increase in the price of gold
25% decrease in the price of gold
Gross assets
2015
2016
US$’000
US$’000
(1,370)
3,425
(1,609)
4,021
Page 72
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. Financial instruments (continued)
Market risk (continued)
Commodity price risk (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
2015
2016
$’000
$’000
434
(434)
804
(804)
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.
Fair values
In the directors’ opinion there is no material difference between the book value and fair value of any of the
Company’s financial instruments.
Page 73
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
27. 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
N Williams
Fees – non-executive
B A Mills
B Labatte
M V Sander
T I Ackerman
G Poulter
G Ogilvie
L D Goodman
T S Chan
J Thomson
E C Chen
Share options held by directors were as follows:
G Ogilvie
N Williams1
J Thomson
D H W Dobson
L D Goodman
2016
$’000
2015
$’000
282
292
5
5
5
5
17
32
23
10
18
14
416
-
-
-
-
13
63
24
24
24
24
464
At 31.07.16 At 31.07.15
No.
No.
‘000
N/A
1,175
N/A
N/A
N/A
1,175
‘000
1,100
1,175
400
45
45
2,765
1 100,000 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.
Total key management personnel compensations were as follows:
Short term employee benefits
Social security costs
Share based payments
2016
$’000
2015
$’000
412
37
19
468
656
41
61
758
Page 74
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
27. Related parties (continued)
Subsidiaries
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
1948565 Ontario Resources Inc.
Common
100%
development and
mining
Exploration
Canada
Ultimate and controlling party
CE Mining II Rambler Limited, a controlling shareholder of the Company, holds 200,000,000 warrants
which equates to US$2.089m (see Note 21).
Following the allotment of 261,363,636 shares during the year to CE Mining II Rambler Limited, CE
Mining Fund II L.P. became the controlling shareholder of the Company.
28. Subsequent events
On August 22, 2016 the Company issued 9,405,000 options to employees at an exercise price of US$0.06.
The options were issued to advance the interests of the Company by providing the directors, senior officers
and employees a performance incentive for continued and improved service enhancing their contribution to
increased shareholder return by encouraging share ownership.
On August 29, 2016 and September 8, 2016 the Company sold 1,176,500 and 190,000 common shares
respectively of Marathon Gold Corporation thereby divesting approximately 50% of its equity stake for gross
proceeds of US$0.8 million.
Page 75
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2016
(EXPRESSED IN US DOLLARS)
Loss for the year
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into presentation currency
Other comprehensive loss for the year
Total comprehensive loss for the year
2016
US$’000
2015
US$’000
5,870
(5,594)
(9,252)
(9,252)
(5,156)
(5,156)
(3,382)
(10,750)
Page 76
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at July 31, 2016
(EXPRESSED IN US DOLLARS)
Assets
Investments
Deferred tax
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Issued capital
Share premium
Warrants reserve
Translation reserve
Retained profit
Total equity
Liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
ON BEHALF OF THE BOARD:
Note
C3
C4
C5
C6
21
C7
2016
US$’000
2015
US$’000
55,861
1,567
57,428
41
8,155
8,196
65,624
6,374
81,455
2,089
(8,746)
(15,759)
65,413
211
211
211
51,968
1,651
53,619
61
86
147
53,766
2,471
72,128
-
506
(21,643)
53,462
304
304
304
65,624
53,766
N P Williams
Director
Approved and authorised for issue by the Board on October 21, 2016.
Page 77
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN US DOLLARS)
Balance at August 1, 2014
Comprehensive income
Loss for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive loss for the year
Share based payments
Transactions with owners
Balance at July 31, 2015
Balance at August 1, 2015
Comprehensive income
Loss for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive loss for the year
Issue of shares
Share issue expenses
Share based payments
Transactions with owners
Balance at July 31, 2016
Share
capital
US$’000
Share
premium
US$’000
Warrants
reserve
US$’000
Translation
reserve
US$’000
Accumulated
losses
US$’000
Total
US$’000
2,471
72,128
-
-
-
-
-
-
-
-
-
-
-
-
2,471
72,128
2,471
72,128
-
-
-
-
3,903
-
-
3,903
6,374
-
-
-
-
10,223
(896)
-
9,327
81,455
-
-
-
-
-
-
-
-
-
-
-
-
-
2,089
-
2,089
2,089
5,662
(16,107)
64,154
-
(5,594)
(5,156)
(5,156)
(5,156)
-
-
506
-
-
(5,594)
58
58
(21,643)
(5,594)
(5,156)
(5,156)
(10,750)
58
58
53,462
506
(21,643)
53,462
-
5,870
(9,252)
(9,252)
(9,252)
-
-
-
-
(8,746)
-
-
5,870
-
-
14
14
(15,759)
5,870
(9,252)
(9,252)
(3,382)
16,215
(896)
14
15,333
65,413
Page 78
RAMBLER METALS AND MINING PLC
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2016
(EXPRESSED IN US DOLLARS)
Cash flows from operating activities
Operating profit/(loss)
Share based payments
Foreign exchange losses
Decrease/(increase) in debtors
Increase in creditors
Net cash utilised in operating activities
Cash flows from investing activities
Acquisition of subsidiary
Advances to subsidiaries
Loans repaid by subsidiaries
Net cash generated from/( utilised in) investing
activities
Cash flows from financing activities
Proceeds from the issue of share capital
Share issue expenses
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
2016
$’000
5,695
14
(7,258)
20
(92)
(1,621)
(70)
(5,277)
1,530
2015
$’000
(5,848)
58
4,573
26
91
(1,100)
-
-
1,063
(3,817)
1,063
15,105
(896)
14,209
8,771
86
(702)
8,155
-
-
-
(37)
133
(10)
86
Page 79
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1. Accounting policies
The accounting policies of the Company are consistent with those adopted by the Group with the addition of the
following:
Investments
Investments are stated at their cost less impairment losses.
C2. Loss of parent company
As permitted by section 408 of the Companies Act 2006, the income statement of the parent company is not
presented as part of these financial statements. The parent company’s profit for the financial year was $5,925,000
(2015: loss $5,594,000).
C3. Investments
Cost
Balance at August 1, 2014
Repayments (net)
Effect of movements in foreign exchange
Balance at July 31, 2015
Balance at August 1, 2015
Acquisition of subsidiary
Advances
Repayments
Effect of movements in foreign exchange
Balance at July 31, 2016
Investment in
subsidiary
$’000
Loans
$’000
Total
$’000
406
-
(33)
373
373
1,110
-
-
15
1,498
62,262
(1,064)
(9,603)
51,595
51,595
-
5,277
(1,530)
(979)
54,363
62,668
(1,064)
(9,636)
51,968
51,968
1,110
5,277
(1,530)
(964)
55,861
The company has interests in the following 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
1948565 Ontario Inc.
Common
100%
development and
mining
Exploration
Canada
The aggregate value of shares in subsidiary undertakings is stated at cost.
The loans to the subsidiary undertakings are interest free.
Page 80
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 $1.6 million (2015: US$1.6 million).
C5. Trade and 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
2016
2015
$’000
$’000
24
17
41
14
47
61
2016
2015
$’000
$’000
8,155
8,155
86
86
2016
$’000
105
1
105
211
2015
$’000
82
1
221
304
The Company has a related party relationship with its subsidiaries (see note C3) and with its directors and executive
officers (see note 27).
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 27.
Page 81