REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
ANNUAL REPORT AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2017
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Company Information
Chairman’s Statement
Management’s Discussion and Analysis
Strategic Report
Report of the Directors
Directors’ Responsibilities
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 DECEMBER 31, 2017
Directors:
T I Ackerman
E C Chen
B Labatte
B A Mills
G R Poulter
M V Sander
N P Williams
Secretary:
P Mercer
Registered office:
Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number:
5101822 (England and Wales)
Auditor:
Bankers:
Solicitors:
Deloitte LLP
2 New Street Square
London EC4A 3BZ
HSBC plc
69 Pall Mall
London SW1Y 5EY
Norton Rose Fulbright
3 More London Riverside
London SE1 2AQ
Page 1
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
In 2016 the Company changed its fiscal year from July 31 to December 31. The current reporting period is the three
and twelve month periods ended December 31, 2017 (”Q4/17”). Comparative information has been restated for the
year ended December 31, 2016 (“2016”) and in line with calendar quarters and has been provided for the three
month period ended September 30, 2017 (“Q3/17”) and the three month period ended December 31, 2016
(‘Q4/16’). In addition comparative information for the five months ended December 31, 2016 has been provided in
the financial statements as required under UK regulations.
Fiscal 2017 saw the continuation of Phase II expansion plan for the Ming Copper-Gold Mine, targeting production of
1,250 metric tonnes per day (‘mtpd’) with a life of mine now over 20 years based on current mineral reserves. As
previously reported, the Company originally targeted to hit this production level mid-2017, however, delays in
underground development resulted in a slippage of the schedule which was further compounded by delays in
bringing the new underground ventilation system online. As a result, the Company revised its production targets to
accommodate the delay. Under the revised production guidance the operation was successful in setting a production
record for the year producing approximately 340,000 dry metric tonnes (‘dmt’), a twenty seven percent increase year
over year. At the Nugget Pond copper and gold milling facility high capacity testing was completed to determine the
plant’s ability to process at the targeted throughput rate while achieving record ore throughput during the fourth
quarter, processing 97,997 dry metric tonnes (‘dmt’). The quarterly production included 17 days running at an
average of 1,260 mtpd, confirming that the Company’s mill improvements would allow the facility to produce at a
sustained rate at or greater than 1,250 mtpd.
At year end work continued on the ventilation project at the mine site which was successfully completed during
March 2018. Upon completion the mine’s ventilation system will be reversed allowing for increased “in mine time”
which should provide for consistent increases in mine production and improved cycle times. Given the productivity
improvements just around the corner we are now turning our attention to increasing the overall mill feed grade and
returning the Company to positive cash flows. The project’s expansion will be completed during a time that has seen
significant run up in short term copper and gold price forecasts with a positive long term outlook. The Company has
now completed the capital improvements for its Phase II expansion with sustained production of 1,250 mtpd mining
and milling to follow shortly.
With the completion of Phase II expansion, and the return to positive cash flow, the Company will continue its
evaluation on a potential Phase III expansion to demonstrate the full value of the copper-gold asset with an optimized
mine and mill production plan. Given its successes during the year the Company will also look to continue its surface
exploration drill program. In 2017 the surface drilling program demonstrated that the Lower Footwall Zone (‘LFZ’)
mineralization continues well beyond the currently defined mineral reserves with increases in grade and thickness at
depth. The final drill hole in the 2017 returned the thickest LFZ mineralization discovered on the property to date,
returning 1.65% copper over 102 meters including 36 meters of 2.59% copper. These initiatives could potentially
add significant longer term value to the project.
FINANCIAL RESULTS
The Company’s financial results for the period reflect the stage reached in its expansion plans. As a result, the
Company generated lower revenue compared with prior periods due to lower copper head grades and lower than
planned production while the Company continues to develop the mine to achieve its production target of 1,250 mtpd.
The results include:
•
•
The Company generated revenue of US$28.3 million (2016: US$28.0 million) from the sale of copper
concentrate containing gold and silver by-products.
An operating loss of US$9.4 million (2016: US$4.8 million loss before impairment).
• Cash of US$1.3 million generated from operations (2016 US$0.7 million) during the year.
Page 2
•
•
•
•
The consolidated loss after taxation for the year amounted to US$4.1 million (loss per share of US$0.008)
US$12.7 million for 2016 (loss per share of US$0.032) after a provision for impairment of US$11.3 million before
tax.
Earnings before interest, taxes, depreciation, amortisation (“EBITDA”) for the year were US$2.2 million (2016:
US$4.6 million).
The gross assets of the Company amounted to US$97.1 million at the end of the year. This included Mineral
property of US$38.8 million and intangible assets of US$3.4 million which consists of accumulated deferred
exploration and evaluation expenditures.
The Company’s cash balance at year end was US$3.4 million and cash net of debt, excluding Gold Loan, was
US$(6.6) million.
• Copper prices improved materially during the year rising from US$ 2.50/lb on January 1st to US$3.28/lb on
December 31st 2017. The primary driver for an improving price outlook has been increasing shortages of metal
and continued pressures from further downside supply issues.
We are confident that we will reach our targeted production in 2018 and we look forward to updating the market on
our progress over the coming months.
B Mills
Chairman
April 30, 2018
Page 3
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
This MD&A, including appendices, is intended to help the reader understand Rambler Metals and Mining
plc (‘the parent company’) and its subsidiaries (the ‘Company’ or ‘Rambler’), our operations and our
present business environment. It has been prepared as of April 30, 2018 and covers the results of
operations for the year ended December 31, 2017. This discussion should be read in conjunction with the
audited Financial Statements for the year ended December 31, 2017 and notes thereto. These
consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) and their interpretations adopted by the International Accounting Standards Board
(“IASB”), as adopted by the European Union and with IFRS and their interpretations adopted by the IASB.
The Company’s presentation currency is US dollars (US$) 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 Project (‘the Project’) with a fully funded
expansion. Its principal activity is the development, mining and exploration of the Project in Newfoundland
and Labrador (see map referenced in Appendix 1) with a longer term goal of continued exploration and
development of other properties in its portfolio, all located in Canada.
The Company is looking forward to:
1. Finalizing the implementation of its Phase II expansion and optimisation strategy with the completion
of its ventilation system upgrade in Q1/18.
2. Optimizing production at the reserve grade to further reduce costs to the 1,250 mtpd optimized
design. The focus of the cost improvement efforts will be; maintenance practice improvements to
increase equipment availability in the mine; cycle time improvements for improved productivity in the
mine; improving grade control and upgrading low grade material by crushing and screening; and,
improving gold and silver recovery in the plant.
3. Following sustained production at the planned tonnes and grade the Company will continue with
engineering studies with a view to further increase production to 2,000 mtpd. Detailed engineering
will continue later in 2018 and will include: underground material handling options; shaft
rehabilitation; expanding the Nugget Pond mill versus building a higher capacity mill nearer to the
mine.
4. Continue the diamond drilling exploration programs, from underground and surface, aiming to
increase available resources and reserves through continued exploration within the Ming mine
mineralized trend.
See Forward Looking Information in Appendix 6.
The Company’s 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”.
Page 4
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
CHANGE IN FISCAL YEAR
In 2016 the Company changed its fiscal year from July 31 to December 31. The current reporting period is the three
and twelve month periods ended December 31, 2017 (”Q4/17”). Comparative information has been restated for the
year ended December 31, 2016 (“2016”) and in line with calendar quarters and has been provided for the three
month period ended September 30, 2017 (“Q3/17”) and the three month period ended December 31, 2016
(‘Q4/16’). In addition comparative information for the five months ended December 31, 2016 has been provided in
the financial statements as required under UK regulations.
Due to the change in fiscal year end, the comparative figures are not representative of equivalent reporting periods
and, as such, have greater variances.
HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2017
Production of 97,997 dmt (Q3/17: 79,300 dmt, Q4/16: 72,036 dmt) for the quarter with copper
concentrate grade of 28% (Q3/17: 29%, Q4/16: 27%). Increased total production to 339,631 dmt for
the year (2016: 267,347 dmt) , a 27% increase, with copper concentrate grade of 28% (2016: 27%).
Intersected significant Lower Footwall Zone mineralization in the surface drilling program extending
the zone 550 meters below the current reserves. RM17-25b returned 102 meters of 1.65% copper
including 36 meters of 2.59% copper.
Revenue for the year was US$28.3 million (2016: US$28.0 million) and for the Q4/17, US$8.4 million
(Q3/17: US$7.3 million, Q4/16 US$5.4 million). The increase in revenue compared to prior periods is
mainly due to higher copper prices.
Average prices for the year were US$2.79 (2016: US$2.17) per pound of copper and US$1,257
2016: US$1,248) per ounce gold. Average prices for the quarter were US$3.10 (Q3/17: US$2.86,
Q4/16: US$2.40) per pound of copper and US$1,279 (Q3/17: US$1,273, Q4/16: US$1,245) per
ounce of gold.
Operating loss for the year was US$9.4 million (2016: US$15.6 million) and for Q4/17 US$1.0 million
(Q3/17: US$2.5 million, Q4/16: US$3.4 million). Earnings before interest, taxes, depreciation,
amortisation (‘EBITDA’) for the year were US$2.2 million (2016: US$4.6 million) and for Q4/17 of
US$1.3 million (Q3/17: US$1.1 million, Q4/16 US$(1.0 million)).
Cash production costs for the year were US$25.4 million (2016: US$18.0 million). Net direct cash
costs net of by-product credits (‘C1 costs’) for the year were US$2.86 per pound of saleable copper
(2016: US$1.96) and for the quarter US$2.84 (Q3/17: US$2.87, Q4/16: US$2.99). See appendix 4
for the reconciliation of the non-GAAP financial measures.
Cash flows generated from operating activities for the year were US$1.3 million (2016: US$4.8
million) and for the quarter were US$0.7 million (Q3/17: US$2.2 million, Q4/16: US$0.1 million).
SUBSEQUENT EVENTS
On March 5, 2018 the Company announced the completion of a new mineral and reserves estimate for the
Ming mine. Contained copper in the mineral reserves is estimated at 329 million pounds with gold of 114
thousand ounces, fully replacing reserves after two years of mining. Mineral resource tonnes (M+I) have
declined from the 2015 estimate by 18%, however, the copper grade has improved 9% and gold grade by
14%. The change in measured and indicated resources is a result of an extensive diamond drilling program
in an underexplored area of the Lower Footwall Zone. The life of mine, production, cost and financial
highlights are as follows:
Page 5
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
• Over a planned 20 year life-of-mine, ending 2037, the project will produce 514 thousand tonnes of
high-grade copper concentrate containing saleable metal of 312 million pounds of copper and 57
thousand ounces of gold. Average annual sales is 26 thousand tonnes of copper concentrate
• Average annual cash operating cost of US$1.98 per pound of copper net of by-product credits (‘C1’),
with an all-in pre-tax costs of US$2.37 per pound of copper and after-tax cost of US$2.49 per pound.
• Net undiscounted cash flow from operations of US$277 million. Net pre-tax cash flow of US$195
million (after-tax US$157 million).
• Project pre-tax net present value (‘NPV7%’) of US$100 million. After-tax NPV7% of US$83 million.
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017
Revenue
A total of 15,214 dmt (2016 – 15,239 dmt) of concentrate was provisionally invoiced during the year
containing 4,026 (FY2016 – 3,992) tonnes of saleable copper metal, 3,410 (2016 – 6,057) ounces of
saleable gold at an average price of US$2.79 (FY2016 – US$2.17) per pound copper and US$1,257
(FY2016 - US$1,248) per ounce gold, generating revenue of US$28.3 million (2016 – US$28.0 million).
Costs
Cash production costs for the year were US$25.4 million (2016: US$18.0 million). Net cash direct costs
per pound of copper net of by-product credits (‘C1’) for the year were US$2.86 (2016 - US$1.96) and for
the quarter US$2.84 (Q3/17: US$2.87, Q4/16: US$2.99). Saleable copper in the period was 8.7 million
pounds (2016 – 8.8 million pounds) and in the quarter was 2.3 million pounds (Q3/17: 2.2 million, Q4/16
2.1 million). Lower head grade, together with increased operating development costs from mining the
post pillar cut and fill (‘PPCF’) areas in the LFZ contributed to the rise in C1 costs compared to 2016.
Once Phase II expansion throughput reaches sustained production at 1,250 mtpd, C1 costs will decline
towards US$2.00 and will decline further as production moves away from PPCF mining
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 increase in costs between Q2/17 and Q3/17 was a result of lower
copper production as the mine moves toward its production target of 1,250 mtpd.
C1 and C3 costs per pound of
saleable copper
C1 cost
C3 cost
5.00
4.00
3.00
2.00
1.00
-
7
1
1
Q
7
1
2
Q
7
1
3
Q
7
1
4
Q
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 6
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED)
Loss
The net loss before tax for the year was US$5.4 million (2016: US$19.4 million (US$8.1 million before
impairment)). The net profit after tax for Q4/17 was US$0.7 million or US$0.001 per share which
compares to a loss of US$1.4 million for Q3/17 and a loss of US$1.1 million for Q4/16.
Earnings before interest, taxes, depreciation, amortisation (“EBITDA”) for the year were US$2.2 million
(2016: US$4.6 million).
Cash flow and cash resources
Cash flows generated from operating activities for the year were US$1.3 million (2016: US$4.8 million)
and for the quarter were US$0.7 million (Q3/17: US$2.2 million, Q4/16: US$0.1 million). The decrease in
the cash generated relates to the operating loss and changes in working capital. The cash balance at
December 31, 2017 was US$3.4 million.
Financing and Investment
During the year repayment of US$1.1 million (project to date $18.1 million) was made on the Company’s
Gold Loan from the delivery of 876 payable ounces of gold (project to date 12,862 ounces have been
delivered).
Net debt excluding the Gold loan was as follows:
Cash
Finance leases
Related party loan
Government assistance
Advance purchase agreement
Net debt
Q4/FY17
US$’000
3,351
(4,570)
(1,002)
(390)
(3,996)
(6,607)
Q3/17
US$’000
1,323
(4,161)
-
(227)
-
(3,065)
Q4/16
US$’000
2,156
(2,656)
-
-
(1,120)
(1,620)
Page 7
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
FINANCIAL RESULTS FOR YEAR ENDED DECEMBER 31, 2017 (Continued)
OPERATIONAL SUMMARY
Ore and Concentrate Production Summary for Fiscal 2017
PRODUCTION
Dry Tonnes Milled
Q1
2017
Q2
2017
Q3
2017
Q4
2017
FY2017
Revised F2017
Guidance
75,438
86,895
79,300
97,997
339,631
Copper Recovery (%)
Gold Recovery (%)
Copper Head Grade (%)
Gold Head Grade (g/t)
96.6
64.0
1.13
0.30
94.2
56.5
1.41
0.67
CONCENTRATE
(Delivered to Warehouse)
Copper (%)
Gold (g/t)
Dry Tonnes Produced
Saleable Copper Metal
(tonnes)
Saleable Gold (ounces)
Q1
2017
Q2
2017
28.2
5.2
2,930
794
391
26.6
7.7
4,359
1,112
939
95.4
61.7
1.38
0.66
Q3
2017
28.9
9.0
3,614
1,004
930
96.1
61.0
1.17
0.65
95.6
60.7
1.27
0.58
330,000 -
360,000
94 – 96
60 – 65
1.3 – 1.6
0.5 – 1.0
Q4
2017
27.5
9.6
FY2017
27.7
8.0
F2017
Guidance
26 – 28
4.0 – 8.0
4,014
14,907
14,000 - 16,000
1,061
1,112
3,968
3,357
3,800 - 4,200
3,400 - 3,900
• For Q4 and the fiscal year the Nugget Pond copper and gold milling facility achieved record throughput for ore
processed. The facility processed 97,997 dry metric tonnes (‘dmt’) at a feed grade of 1.17% copper and 0.65 g/t
gold for the quarter with 339,631 dmt at 1.27% copper and 0.58 g/t gold for the 2017 fiscal year. The quarterly
production included 17 days running at an average of 1,260 mtpd, confirming the Company’s mill improvements
should allow the facility to produce at a sustained rate at or greater than 1,250 mtpd.
• Recovery of metal to concentrate was 96.1% and 61.0% for copper and gold respectively for the quarter (95.6%
and 60.7% for the 2017 fiscal year). Production of concentrate was 4,014 dmt containing saleable metal of 1,061
tonnes of copper and 1,112 ounces of gold. For the full year the operation produced 14,907 tonnes of concentrate
containing saleable metal of 3,968 tonnes of copper and 3,357 ounces of gold.
• Revised guidance targets were met for mill throughput, copper and gold head grades and metal recovery to
concentrate. Guidance for saleable metal produced was also met for copper and just under for gold.
• Rambler delivered on all of its safety targets during 2017. For the fiscal year there were no lost time incidents or
medical aids, with the twelve-month rolling average lost time frequency rate remaining at 0%.
• Mine performance has shown significance improvements from Q4/17 compared to the same quarter in 2016.
Mostly notably improvements include:
o Daily development meters increased 33% (Q4/17: 12.1 m/ day, Q4/16: 9.1 m/ day)
o Total material hauled increased 21% (Q4/17: 1,486 mtpd, Q4/16: 1,223 mtpd)
o Backfill placed increased 53% (Q4/17: 286 mtpd, Q4/16: 187 mtpd)
o Mine ore produced increase 38% (Q4/17: 1,061 mtpd, Q4/16: 767 mtpd)
Page 8
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
OPERATIONAL SUMMARY (continued)
OUTLOOK
Management continues to pursue the following objectives:
Finalize Phase II mine expansion with production sustained at 1,250 mtpd delivering improved grades from fiscal
2018 onward. Targeting grades between 1.3% to 1.5% Cu and 0.6 to 0.9 g/t Au in 2018 with copper grade
continuing to improve as production moves further into the LFZ. As we continue to develop deeper into the LFZ,
over the projected 20 year mine life, diamond drill results show that grades and mineralized thickness continue to
strengthen at depth. At this time, it is expected that the mine will deliver 1,250 mtpd to the mill after completion
of the underground ventilation upgrade in March 2018.
Further evaluate the potential of a Phase III operation with increase in mine production and mill throughput to
about 2,000 mtpd.
Continuing with the underground exploration program to allow for further exploration of the mineralized trends
both up-dip and down-dip with the goal to increase near-mine mine resource and reserves.
Continue with the surface exploration diamond drilling program aimed to double the current plunge length of the
known massive sulphide and LFZ mineralization.
Page 9
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
FINANCIAL REVIEW
Fiscal
2017
(US$000’s)
28,324
Commentary
Revenue of US$28.3 million was generated through the sale of 15,214 dmt of copper concentrate
containing 4,026 tonnes of accountable copper metal and 3,410 ounces of accountable gold. This
compared with revenue of US$28.0 million in 2016 generated through the sale of 15,239 dmt of
copper concentrate containing 3,992 tonnes of saleable copper metal and 6,057 ounces of saleable
gold.
Comparatives
2016
(US$000’s)
B/ (W)*
28,021
1%
34,242
Production costs relate to the processing and mining costs associated with the Company’s Ming
Mine and include processing costs of US$5.6 million (2016: US$5.3 million), mining costs US$20.8
million (2016: US$17.0 million) and depreciation and amortisation of US$7.8 million (2016: US$7.3
million). The cost of production of pounds of copper increased during the year due to lower head
grades compared to the previous year.
29,609
(15)%
3,441
General and administrative expenses were slightly higher than the previous year by US$0.3
million.
3,164
(11)%
-
Provision for impairment represents the provision for impairment on the Ming Mine of US$ nil
(2016: US$11.3 million). Management have assessed that there are no indicators of impairment at
the end of the year. This assessment considered financial and operating performance compared to
forecasts, changes in the current market outlook regarding commodity prices and any changes in the
current market cost of capital. The provision for impairment on the Ming Mine in the previous period
was mainly because of the then current market outlook regarding commodity prices, foreign
exchange rates and the current market cost of capital.
2,015
Gain on derivative financial instruments. The Company realised a gain on derivative financial
assets of $1,297,000, being the difference in the commodity prices at time of provisional invoicing,
and actual commodity prices realised on final settlement of the shipment. An unrealised gain of
$718,000 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.
11,284
100%
1,327
63%
940
Foreign exchange gains arising on the Gold Loan increased in the year as a result of strengthening
of the Canadian dollar against the US dollar during the period.
288
226%
1,296
Income tax credit The income tax credit is the deferred tax credit arising from the recognition of
losses. The credit for 2016 includes an amount of US$1.5 million in respect of mining tax.
6,752
(81)%
5,278
8,053
Mineral property The Company incurred costs of US$5.3 million in the period which included labour
costs of US$2.6 million and underground development costs of US$2.7 million. In 2016 the Company
incurred costs of US$3.8 million in the year including labour of US$2.1 million and underground
development costs of US$2.2 million offset by an adjustment of $0.5 million to the reclamation and
closure provision.
Capital spending on property, plant and equipment during the year included US$6.1 million spent
on underground equipment and addition US$2.8 million was spent on assets under construction
including ventilation upgrades and reclamation and closure works related directly to the Phase II
expansion.
3,766
(40)%
5,573
(44)%
1,020
Capital spending on exploration and evaluation in the year mainly related to the Board approved
unbudgeted surface drilling program designed to test the down plunge continuity of the Lower Footwall
Zone in support of the Phase III evaluation.
197
(418)%
*B / (W) = Better / (Worse)
Page 10
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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
Calendar 2017
Revenue
Profit/(loss) before tax
Net income/(loss)
Earnings/(loss) per Share (Basic & Diluted)
Fully allocated cost net of by-products (C3) per
pound of saleable copper
Calendar 2016
Revenue
(Loss)/profit before impairment and tax
Net (loss) income
(Loss)/earnings per Share (Basic & Diluted)
Oct - Dec
Jul – Sep
Apr – Jun
Jan – Mar
8,380
1,316
686
0.001
7,280
(1,905)
(1,353)
(0.003)
6,939
(949)
(702)
(0.001)
5,725
(3,906)
(2,779)
(0.005)
3.09
4.10
3.53
4.57
Oct - Dec
Jul - Sep
Apr - Jun
Jan – Mar
5,396
(4,423)
(1,565)
(0.004)
6,686
(3,256)
(10,794)
(0.026)
8,278
(1,490)
(1,050)
(0.007)
7,660
1,030
737
0.005
Fully allocated cost net of by-products (C3) per
pound of saleable copper
4.27
2.94
2.79
2.26
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 eight quarters 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 11
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
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. The financial statements have been prepared on a going concern basis which assumes that the Group will be
able to realise its assets and settle its obligations in the normal course of business. The financial statements do not
reflect adjustments to the carrying values and classification of assets and liabilities that would be necessary should
the Group be unable to continue as a going concern. Such adjustments might be material.
The Group intends to fund its operations and growth from the operating cash flows of the Ming mine, and to the
extent required, through the accessing of equity and debt markets and the proceeds from the exercise of warrants.
Management believes that the Ming Mine will generate sufficient operating cash flows to support the day to day
activities and future growth requirements of the business, but there is a risk that lower than forecast commodity
prices or production issues will result in the need for additional financing.
Historically the Company has been successful in accessing equity and debt markets to finance the acquisition and
development of the Ming Mine site, and management is currently finalising talks with a third party to obtain additional
funding within the coming weeks. However, as this funding is not yet committed, it is not wholly within the Group’s
control and this represents a material uncertainty which casts significant doubt upon the Group’s continued ability to
operate as a going concern, such that it may be unable to realise its assets and discharge its liabilities in the normal
course of business.
Cash flows utilized in investing activities amounted to US$10.4 million for the year (2016: US$7.8 million). Cash of
US$5.3 million (2016: US$3.8 million) was spent on the Company’s Mineral Property, US$4.1 million (2016: US$3.0
million) was spent on property, plant and equipment, US$1.0 million (2016: US$0.2 million) on exploration at the Ming
mine.
Cash flows generated from financing activities during the year amounted to US$10.2 million (2016: US$8.1 million)
and included repayments of the gold loan of US$1.1 million (2016: US$2.4 million), finance lease repayments of
US$2.6 million (2016: US$2.4 million) and advanced purchase facility repayments US$1.1 million (2016: US$2.1
million) and in 2017 offset by a receipt of US$4.0 million from an advanced purchase facility, US$1.0 million from CE
II Mining Rambler Limited, US$0.6 million from government assistance and funds received, net of expenses, on issue
of share capital of US$8.3 million (2016: 14.1 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$3.5 million (SY2017: US$3.2 million).
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
24 of the financial statements for the year ended December 31, 2017.
Page 12
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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 to the Company totalling US$20 million in return for gold.
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 to Sandstorm 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$0.6 million (2016: US$3.0 million charged) was credited during the period.
The Gold Loan is secured by a fixed and floating charge over the assets of the Company.
Government Assistance
To date Company has received US$0.6 in interest free repayable contributions from a Canadian government agency.
Contributions to a total of US$1.6 million are available in support of the Phase II expansion project for the mine. The
contributions are repayable over eight years from May 2019.
The fair value of the contributions received calculated at a market interest rate of 10% have been classified as a
financial liability with the difference between the fair value and the amount received credited against the cost of
assets under construction.
Advance Purchase Agreement
During the year the Company repaid the balance of the advance purchase agreement originally signed in July 2015
and in December 2017 the Group entered into another amended and restated purchase agreement with Transamine
Trading S.A. (“Transamine”).
Pursuant to the terms of the Purchase Agreement, Transamine agreed to purchase in advance, at Rambler’s option,
up to US$4 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
Project.
The Company drew down US$4 million of Advance Purchase Payments on December 29, 2017.
At December 31, 2017 the balance was US$4 million. The loan is repayable by eighteen monthly instalments of
US$222,222 plus interest at 6.75% per annum commencing June 28, 2018.
Page 13
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
COMMITMENTS AND LOANS (CONTINUED)
The advance purchase payments of US$4 million have been accounted for as a financial liability carried at amortised
cost.
Related party loan
In October 2017 the Company received a loan of US$1 million from CE Mining II Rambler Limited. The loan is
unsecured, repayable by October 17, 2018 and carries interest at 9.5% per annum.
Finance lease balances
At December 31, 2017 the Company had finance lease commitments of US$4.6 million. The Company entered into
finance lease commitments of US$2.2 million to finance the acquisition of underground mobile equipment during the
period.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off balance sheet arrangements.
RELATED PARTY TRANSACTIONS
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its directors and executive officers.
Transactions with key management personnel
The directors’ compensations were as follows:
Salary – executive
N Williams
Fees – non-executive
B A Mills
B Labatte
M V Sander
T I Ackerman
G Poulter
E C Chen
Share options held by directors were as follows:
N Williams1
Five month
period ended
Dec 31, 2017
Dec 31, 2016
US$’000
US$’000
242
130
19
19
19
19
15
19
6
6
6
6
6
8
352
168
At 31.12.17 At 31.12.16
No.
No.
‘000
4,575
4,575
‘000
4,575
4,575
1 100,000 options at an exercise price of US$0.71 expiring on July 7, 2018, 75,000 options at an exercise price of US$0.13 expiring on
November 10, 2018, 250,000 options at an exercise price of US$0.37 expiring on May 7, 2020, 750,000 options at an exercise price of US$0.37
expiring on February 19, 2024 and 3,400,000 options at an exercise price of US$0.06 expiring on August 22, 2021.
Page 14
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
Total key management personnel compensations were as follows:
Short term employee benefits
Social security costs
Share based payments
Dec 31,
Five month
2017
period
ended Dec
31, 2016
$’000
$’000
508
26
58
592
253
16
20
289
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
Ordinary
100%
Holding company England
Rambler Metals and Mining
Canada Limited
Common
100% (indirectly) Exploration,
Canada
1948565 Ontario Inc.
Common
100%
development and
mining
Exploration
Canada
The registered address of Rambler Mines Limited is Salatin House, 19 Cedar Road, Sutton, Surrey SM2 5DA,
England and for the two Canadian subsidiaries the registered address is P.O. Box 610, Baie Verte, NL, Canada A0K
1B0.
CE Mining II Rambler Limited, a controlling shareholder of the Company, holds 65,000,000 warrants
which equates to US$859,000.
Ultimate and controlling party
CE Mining II Rambler Limited is the ultimate and controlling party of the Company.
Page 15
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
APPENDIX 1 – LOCATION MAP
Page 16
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED
DECEMBER 31, 2017
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL
PERFORMANCE
Financial Highlights
(All amounts in 000s of US Dollars,
unless otherwise stated)
Period ended
Year to
Dec 31, 2017
Year to
Dec 31,
2016
5 months to
Dec 31,
2016
Year to
July 31, 2016
Concentrate sales (dmt)
15,214
15,239
5,106
17,048
Average provisional price ($ per tonne
Cu, Ag & Au concentrate)
Average revenue per pound of Cu ($)
Revenue
Production Expenses
Exploration Expenditure
Administrative expenses
Impairment charge
Net (loss) income
Cash Flow generated from operating
activities
Cash Flow used in investing activities
Cash Flow from (used in) financing
activities
Net increase (decrease) in cash
Cash and cash equivalents at end of
period
Total Assets
Total Liabilities
Working Capital
1,931
2.79
28,324
(26,444)
(6)
(3,441)
-
(4,148)
1,322
(10,358)
10,190
1,154
3,351
97,142
(32,710)
(5,576)
1,783
2.17
28,021
(29,609)
(32)
(3,165)
(11,268)
(12,672)
2,000
(6,125)
6,436
2,311
2,156
82,491
(26,122)
(3,214)
1,796
2.22
9,680
(12,782)
(14)
(1,299)
-
(2,745)
(947)
(3,302)
(2,264)
(6,513)
2,156
82,491
(26,122)
(3,214)
Weighted average number of shares
outstanding (000s)
Earnings (loss) per share ($US)
532,673
(0.008)
414,290
(0.007)
414,290
(0.007)
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)
Page 17
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
APPENDIX 3 - FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2017
Q4/17
Results
(US$000’s)
Commentary
8,380
7,058
1,010
1,051
Revenue of US$8.4 million in Q4/17 was generated through the sale of 3,984 dmt of copper concentrate containing
1,049 tonnes of saleable copper metal and 1,137 ounces of saleable gold compared with US$7.3 million from the
sale of 3,681 dmt of copper concentrate in Q3/17. The increase in revenue reflects higher copper prices. Revenue
in Q4/16 was generated through the sale of 2,599 dmt of copper concentrate containing 670 tonnes of saleable
copper metal and 863 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$1.6 million (Q3/17: US$1.4 million, Q4/16: US$1.3 million) and
US$5.5million (Q3/17: US$5.3 million, Q4/16: US$4.9 million) respectively.
General and administrative expenses were higher than the previous quarter by US$280,000 due mainly to
increased legal and professional and marketing expenses. The costs were in line with Q4/16 which were net of
US$172,000 of other income.
Gain on derivative financial instruments. During the quarter the net unrealised fair value gain adjustment
recognized was US$752,000 being the difference in the commodity prices at time of provisional invoicing and
anticipated commodity prices upon final settlement. In addition there was a realised gain of US$299,000 on the final
settlement of the Company’s sixteenth concentrate shipment. During Q3/17 the net unrealised fair value loss
adjustment recognized was $384,000 being the difference in the commodity prices at time of provisional invoicing
and anticipated commodity prices upon final settlement offset by a realised gain of US$1,203,000 on the second
provisional invoice for the Company’s sixteenth concentrate shipment.
During Q4/16 the net unrealised fair value loss adjustment recognized was US$117,000 being the difference in the
commodity prices at time of provisional invoicing and anticipated commodity prices upon final settlement offset by a
realised gain of US$1,155,000 on the final settlement of the Company’s fourteenth concentrate shipment..
Comparatives
Q3/17
B/ (W)*
Q4/16
B/ (W)
7,280
15%
5,396
55%
6,728
(5)%
6,225
(13)%
730
(38)%
793
(27)%
819
28%
1,038
1%
(71)
Foreign exchange differences arising on the Gold Loan resulted in a loss in Q417 as a result of the weakening of
the Canadian dollar against the US dollar during the period.
460
(115)%
(373)
81%
(630)
Income tax credit/(expense). A deferred tax expense of US$0.6 million was recognised on the result for the
quarter. This compares with a credit of US$0.6 million in Q3/17 and a credit of US$2.9 million for Q4/16 which
included a credit of US$1.5 million in respect of mining tax.
552
(214)%
2,859
(122)%
Page 18
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
APPENDIX 3 - FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2017 (continued)
Q4/17
Results
(US$000’s)
Commentary
1,034
Mineral property The Company incurred US$1 million in the quarter. The cost includes labour costs of US$0.5
million and underground development costs of US$0.5 million. The costs were lower than in Q3/17 due to lower
capital development meters in the quarter.
In Q4/16 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.
Comparatives
Q3/17
B/ (W)*
Q4/16
B/ (W)
1,792
42%
1,013
(2)%
2,306
Capital spending on property, plant and equipment increased by US$1.3 million during the quarter compared to
Q3/17 and included the purchase of underground equipment.
994
(132)%
1,344
(72)%
258
Capital spending on exploration and evaluation costs in Q4/17 mainly relates to the surface drilling in the Ming
mine’s Lower Footwall Zone..
509
49%
-
N/a%
*B / (W) = Better / (Worse)
Page 19
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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 December 31, 2017:
Cash Operating Cost
All amounts in 000s of US Dollars except pounds of saleable copper
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
$
$
$
$
$
$
3 months to
Dec 31, 2017
3 months to
Sept 30, 2017
3 months to
Dec 31, 2016
Year to Dec
31, 2017
12 months to
Dec 31, 2016
7,058 $
7,058 $
622 $
(1,119) $
6,561 $
2,312
6,728 $
6,728 $
510 $
(868) $
6,370 $
2,216
6,225 $
26,444 $
6,225 $
26,444 $
312 $
2,173 $
22,345
22,345
1,572
(990) $
(3,224) $
(5,892)
5,547 $
25,393 $
18,025
1,855
8,876
9,180
2.84
$
2.87
$
2.99
$
2.86
$
1.96
Page 20
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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
3 months to
Dec 31, 2017
3 months to
Sept 30, 2017
3 months to
Dec 31, 2016
Year to Dec
31, 2017
12 months to
Dec 31, 2016
Net direct cash costs (see above)
$
6,561 $
6,370 $
5,547 $
25,393 $
18,025
Depreciation and amortisation
Corporate Cash Expense
Cash Interest Expense
Fully allocated costs (C3 cost)
Pounds of saleable copper
C3 cost per pound of saleable copper
1,321
303
2,350
236
1,773
481
7.824
1,061
7,321
1,536
151
129
114
463
487
7,147 $
9,085 $
7,915 $
34,741 $
27,369
2,312
2,216
1,855
8,876
9,180
3.09 $
4.10 $
4.27 $
3.91 $
2.98
$
$
Page 21
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
APPENDIX 4 - NON-GAAP FINANCIAL MEASURES (continued)
Earnings before interest, tax and depreciation
All amounts in 000s of US Dollars
3 months to
Dec 31, 2017
3 months to
Sept 30, 2017
3 months to
Dec 31, 2016
12 months to
Dec 31, 2017
12 months to
Dec 31, 2016
Profit/(loss) after tax per Financial statements
$
686 $
(1,353) $
(1,565) $
(4,148) $
(12,672)
Impairment charge
Taxation
Net interest
Depreciation and amortisation
630
(1,340)
1,321
(552)
664
2,350
-
(2,859)
1,692
1,773
-
(1,296)
(187)
7,824
EBITDA
$
1,297 $
1,109 $
(959) $
2,193 $
11,284
(6,752)
5,434
7,321
4,615
Page 22
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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 period.
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 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. The financial statements have been prepared on a going concern basis which assumes that the Group will be
able to realise its assets and settle its obligations in the normal course of business. The financial statements do not
reflect adjustments to the carrying values and classification of assets and liabilities that would be necessary should
the Group be unable to continue as a going concern. Such adjustments might be material.
The Group intends to fund its operations and growth from the operating cash flows of the Ming mine, and to the
extent required, through the accessing of equity and debt markets and the proceeds from the exercise of warrants.
Management believes that the Ming Mine will generate sufficient operating cash flows to support the day to day
activities and future growth requirements of the business, but there is a risk that lower than forecast commodity
prices or production issues will result in the need for additional financing.
Historically the Company has been successful in accessing equity and debt markets to finance the acquisition and
development of the Ming Mine site, and management is currently finalising talks with a third party to obtain additional
funding within the coming weeks. However, as this funding is not yet committed, it is not wholly within the Group’s
control and this represents a material uncertainty which casts significant doubt upon the Group’s continued ability to
operate as a going concern, such that it may be unable to realise its assets and discharge its liabilities in the normal
course of business.
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 December 31, 2017.
Page 23
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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 22 of the financial statements for the year ended December 31, 2017). 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.
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.
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.
Page 24
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
APPENDIX 5 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)
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 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 2017. 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 December 31, 2017:
Title
IFRS
/Amend
ment
IFRS 9 Financial instruments:
Classification and
Measurement
Nature of change to accounting
policy
Application date
of standard
Application date
for Company
No change to accounting policy,
therefore, no impact
January 1, 2018 January 1, 2018
IFRS 15 Revenue from contracts with
customers
IFRS 16 Leases
No change to accounting policy,
therefore, no impact
Accounting policy will be updated to
reflect requirements of IFRS 16
January 1, 2018 January 1, 2018
January 1, 2019 January 1, 2019
IFRS 15 ‘Revenue from Contracts with Customers’ was issued by the IASB in May 2014. It is effective for accounting
periods beginning on or after 1 January 2018. The new standard will replace existing accounting standards, and
provides enhanced detail on the principle of recognising revenue to reflect the transfer of goods and services to
customers at a value which the company expects to be entitled to receive. The standard also updates revenue
disclosure requirements. The directors have carefully considered the potential effects in the context of the group’s
revenues and have concluded that on adoption there will be no significant changes to the way in which the group’s
performance obligations to customers are identified or deemed to be satisfied and, therefore, no material impact on
the revenues recognised in the financial statements.
IFRS 9 was published in July 2014 and will be effective from 1 January 2018. It is applicable to financial assets and
financial liabilities, and covers the classification, measurement, impairment and de-recognition of financial assets and
financial liabilities together with a new hedge accounting model. The directors have carefully considered the potential
effect of the implementation of IFRS9 and the current expectation is that it is unlikely to have a material impact on the
classification, measurement, impairment and de-recognition of the Group’s financial assets and liabilities.
IFRS 16 ‘Leases’ – IFRS 16 ‘Leases’ was issued by the IASB in January 2016 and is effective for accounting periods
beginning on or after 1 January 2019. The new standard will replace IAS 17 ‘Leases’ and will eliminate the
classification of leases as either operating leases or finance leases and, instead, introduce a single lessee
accounting model. The Standard Provides a single lessee accounting model, specifying how leases are recognised,
measured, presented and disclosed. The Group does not expect any significant changes to the accounting treatment
of its existing lease arrangements and the Directors do not consider that the financial and operational impact of this
standard, will have a material impact but are continuing to assess the impact of this new standard.
Details of the main accounting policies of the Company are included in note 2 of the financial statements for the year
ended December 31, 2017.
Page 25
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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
549,289,702
Warrants
Options
65,000,000
13,247,000*
*if all options have fully vested
Weighted Average Exercise Price
--
US$0.064
US$0.13
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 December 31, 2017. 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 26
RAMBLER METALS AND MINING PLC
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2017
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
market and
forward prices of
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
to allow commencement of
bays
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 27
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2017
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 improved
since the last financial reporting period end and the Company has not made any further provision for impairment
during the period.
Copper Cash Official LME (US$/lb) - Price
4.00
3.50
3.00
2.50
2.00
1.50
3
1
0
2
-
r
p
A
3
1
0
2
-
l
u
J
3
1
0
2
-
t
c
O
4
1
0
2
-
n
a
J
4
1
0
2
-
r
p
A
4
1
0
2
-
l
u
J
4
1
0
2
-
t
c
O
5
1
0
2
-
n
a
J
5
1
0
2
-
r
p
A
5
1
0
2
-
l
u
J
5
1
0
2
-
t
c
O
6
1
0
2
-
n
a
J
6
1
0
2
-
r
p
A
6
1
0
2
-
l
u
J
6
1
0
2
-
t
c
O
7
1
0
2
-
n
a
J
7
1
0
2
-
r
p
A
7
1
0
2
-
l
u
J
7
1
0
2
-
t
c
O
8
1
0
2
-
n
a
J
Page 28
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2017
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
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.
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. Should any additional equity financing
be required this 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
April 30, 2018
Page 29
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 2017
The Directors present their report with the audited financial statements of the Company for the year ended December
31, 2017.
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
E C Chen
B Labatte
B A Mills
G R Poulter
M V Sander
N P Williams
DIVIDENDS
No dividends will be distributed for the year ended December 31, 2017.
SUBSTANTIAL SHARE INTERESTS
At April 27, 2018 the parent company was aware of the following substantial share interests:
CE Mining II Rambler
Compagnie Odier SCA
CI Financial
Tinma International Ltd.
FINANCIAL INSTRUMENTS
Number of Ordinary Shares
% of Share Capital
396,363,636
31,793,340
27,636,906
22,736,992
72.10
5.78
5.03
4.14
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
24 to the financial statements.
Page 30
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 2017
(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
Each of the persons who is a director at the date of approval of this annual report confirms that:
•
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware;
and
the director has taken all the steps that he/she ought to have taken as a director in order to make himself/herself
aware of any relevant audit information and to establish that the company's auditor is aware of that information.
•
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act
2006.
AUDITOR
Deloitte LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them will
be proposed at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD:
P Mercer
Company Secretary
April 30, 2018
Page 31
RAMBLER METALS AND MINING PLC
DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors are required to prepare the group financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European and have also chosen to prepare the parent company financial
statements under IFRSs as adopted by the EU. Under company law the directors must not approve the accounts
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 and company for that period. In preparing these financial statements, International
Accounting Standard 1 requires that directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the entity's
financial position and financial performance; and
• make an assessment of the company's ability to continue as a going concern.
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 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.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
•
•
•
the financial statements, prepared in accordance with International Financial Reporting Standards as
adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit
or loss of the company and the undertakings included in the consolidation taken as a whole;
the strategic report includes a fair review of the development and performance of the business and the
position of the company and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
the annual report and financial statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the company’s position and performance,
business model and strategy.
This responsibility statement was approved by the board of directors on 27 April 2018 and is signed on its behalf by:
Norman Williams
Chief Executive Officer
April 30, 2018
Page 32
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RAMBLER METALS AND MINING PLC
Report on the audit of the financial statements
Opinion
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and
of the parent company’s affairs as at 31 December 2017 and of the group’s loss
for the year then ended;
the group financial statements have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union and IFRSs as issued by the International Accounting Standards Board
(IASB);
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.
•
•
•
We have audited the financial statements of Rambler Metals and Mining PLC (the ‘parent
company’) and its subsidiaries (the ‘group’) 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 flow; and
the related notes 1 to 26 to the group financial statements and notes C1 to C7 to the
parent company financial statements.
The financial reporting framework that has been applied in their preparation is applicable law and
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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the
auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to note 2 in the financial statements, which indicates that there is a risk that
lower than forecast commodity prices or production issues will result in the need for the Group to
obtain additional financing for the development of the Ming Mine site.
In response to this, we have evaluated the design and implementation of key internal controls
over management’s assessment of going concern.
In addition, we performed the following procedures:
•
•
•
•
Tested the clerical accuracy of management’s cash flow forecast and agreed key
assumptions to supporting evidence;
Considered the historical accuracy of forecasts prepared by management;
Considered the ability of the group to meet production figures forecast by the latest N143-
101 technical report, especially in light of actual production in the first quarter of the year;
and
Understood the impact of a range of reasonable sensitivities on the forecast headroom.
Page 33
As stated in note 2, these events or conditions, along with the other matters as set forth in note
2 to the financial statements, indicate that a material uncertainty exists that may cast significant
doubt on the group’s and the company’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
•
Impairment of in-production and development assets; and
• Going concern (see material uncertainty relating to going concern
section above).
Materiality
Scoping
The materiality for the group financial statements as a whole was set at
$950,000. This was determined with reference to a benchmark of 1.5%
of the net assets of the group.
We have performed full-scope audit procedures for the significant entities
Rambler Metals & Mining Canada and Rambler Metals & Mining PLC which
constitutes 97% of the group’s Net Assets and 100% of the group’s
Revenue.
This is the first year that Deloitte have audited Rambler Metals & Mining
PLC.
Significant
changes in our
approach
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team.
These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the material uncertainty relating to going concern section,
we have determined the matters described below to be the key audit matters to be
communicated in our report.
Impairment of in-production and development assets
Key audit matter
description
At December 31, 2017 in-production and development assets are carried
at $38.8 million and $3.4 million respectively and the in-production Ming
Mine is carried net of significant impairment provisions previously
recorded. IAS36 requires that for assets other than goodwill, where there
has been a positive change in the estimates used to determine an asset’s
recoverable amount since an impairment loss was recognized, the
impairment loss shall be reversed.
The impairment assessment is an inherently judgemental process that
requires the estimation of several key assumptions. As a consequence of
the continued volatility in the forecast gold price, the assessment of the
recoverable amount of in-production and development assets in
accordance with IAS36 “Impairment of Assets” or IFRS6 “Exploration for
and Evaluation of Mineral Resources” is a key audit matter.
The accounting policies for impairment and impairment reversal are set
out in note 2 to the financial statements.
Page 34
How the scope of
our audit
responded to the
key audit matter
We have evaluated the design and implementation of entity level controls
over the impairment assessment process for in-production mining and
development assets.
We have reviewed and challenged management’s assessment as to
whether indicators of impairment or impairment reversal exist.
For development assets we have assessed whether mining licenses and
permits remain in good standing and management continues to incur
expenditure in respect of the project.
Where indicators have been identified in respect of in-production assets
we obtained copies of the valuation models and performed the following
procedures:
• Determined that mining licenses and permits remain in good
standing;
• Reviewed the forecasts within the models and assessed the
historical accuracy of management’s forecasting process by
comparing current year actual performance to prior year budgets;
• Reviewed and challenged the most recent N43-101 technical
report against management’s production plans and capital and
operating forecasts. We have also assessed the competence,
capability and objectivity of management’s expert;
Independently tested key macro assumptions including the
forecast gold and copper prices and foreign exchange rates; and
•
• Utilized internal Deloitte valuation specialists to evaluate the
Group’s cost of capital.
Key observations
We concur with the key assumptions used by Management including the
forecast gold price and discount rate although these are at the
conservative end of our acceptable range.
We concur with Management’s assessment that at the reporting date the
carrying value of in-production mining asset is supported by its value in
use, and no impairment or impairment reversal is required. We did not
identify any audit adjustments that warranted reporting to the Audit
Committee.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the
results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Group financial statements
Parent company financial
statements
Materiality
$950,000 (2016: $145,000)
$807,500 (2016: £23,000)
Basis for
determining
materiality
Rationale
for the
benchmark
applied
1.5% of net assets
1.25% of net assets
We consider net assets to be an
appropriate basis for materiality as
the users of the financial statements
will be most interested in balance
sheet based metrics whilst the
Group’s operations are still evolving,
and the income statement does not
We consider net assets to be an
appropriate basis for materiality for
the Company as it acts as a holding
company for the group.
Page 35
fully reflect the size and scale of the
business.
We agreed with the Audit Committee that we would report to the Committee all audit differences
in excess of $47,500 for the group and $40,375 for the parent company, as well as differences
below that threshold that, in our view, warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material misstatement at the Group
level.
We have performed full-scope audit procedures for the significant entities Rambler Metals &
Mining Canada and Rambler Metals & Mining PLC which constitutes 97% of the group’s Net
Assets and 100% of the group’s Revenue. The component materiality for Rambler Metals &
Mining Canada and Rambler Metals & Mining PLC were both set at $807,500. As the operations
are principally based out of St John’s, Canada, we have focused our audit work in this
geographical area. The senior statutory auditor visited St. John’s during the year end audit.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon.
We have nothing to
report in respect of these
matters.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and
the parent company’s ability to continue as a going concern, disclosing as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
Page 36
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended December 31, 2017
(EXPRESSED IN US DOLLARS)
Revenue
Production costs
Depreciation and amortisation
Gross loss
Administrative expenses
Exploration expenses
Operating loss before impairment
Impairment charge
Operating loss after impairment
Exchange gain/(loss)
Bank interest receivable
Profit on disposal of available for sale investments
Gain on derivative financial instruments
Net finance costs
Net expense
Loss before tax
Income tax credit
Loss for the period
Loss per share
Basic loss per share
Diluted loss per share
Note
Year to
31 December
2017
US$’000
Five months
to
31 December
2016
US$’000
Year to
31 December
2016
US$’000
4
5
7
8
9
28,324
(26,444)
(7,798)
(5,918)
(3,441)
(6)
(9,365)
-
(9,365)
940
43
779
2,015
144
3,921
9,680
(9,845)
(2,937)
(3,102)
(1,299)
(14)
(4,415)
-
(4,415)
(452)
17
451
1,504
(3,176)
(1,656)
28,021
(22,344)
(7,322)
(1,645)
(3,107)
(32)
(4,784)
(11,284)
(16,068)
288
30
463
1,327
(5,464)
(3,356)
(5,444)
(6,071)
(19,424)
1,296
3,326
6,752
(4,148)
(2,745)
(12,672)
Note
20
20
Year to
31 December
2017
US$
Five months
to
31 December
2016
US$
Year to
31 December
2016
US$
(0.008)
(0.007)
(0.032)
(0.008)
(0.007)
(0.032)
Page 38
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2017
(EXPRESSED IN US DOLLARS)
Loss for the period
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign operations (net of tax)
Disposal of available for sale investment (net of tax)
(Loss)/gain on available for sale investment (net of tax)
Other comprehensive gain/( loss) for the period
Year to
31 December
2017
US$’000
5 Months to
31 December
2016
US$’000
Year to
31 December
2016
US$’000
(4,148)
(2,745)
(12,672)
4,165
(250)
(140)
3,775
(1,993)
(383)
(216)
(2,592)
491
-
619
1,110
Total comprehensive loss for the period
(373)
(5,337)
(11,562)
Page 39
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2017
(EXPRESSED IN US DOLLARS)
Note 31 December
2017
US$’000
31 December
2016
US$’000
10
11
12
13
9
18
14
15
16
17
19
19
19
19
19
19
22
23
22
21
3,397
38,834
28,443
610
13,851
3,530
88,665
2,467
829
1,830
3,351
8,477
2,169
34,453
23,056
1,333
11,545
3,243
75,799
2,496
1,284
756
2,156
6,692
97,142
82,491
8,061
89,309
859
180
(14,584)
86
(19,479)
64,432
16,696
1,961
18,657
6,739
7,314
14,053
32,710
97,142
6,374
81,442
2,089
180
(18,749)
476
(15,443)
56,369
14,412
1,804
16,216
4,814
5,092
9,906
26,122
82,491
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:
N P Williams
Director
Approved and authorised for issue by the Board on April 30, 2018
Page 40
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
(EXPRESSED IN US DOLLARS)
Group
Balance at August 1, 2016
Comprehensive income
Loss for the year
Foreign exchange translation differences
Disposal of available for sale investment (net of
tax)
Gain on available for sale investments (net of tax)
Total other comprehensive income
Total comprehensive (loss)/income for the year
Transactions with owners
Share issue expenses
Share-based payments
Transactions with owners
Balance at December 31, 2016
Balance at January 1, 2017
Comprehensive income
Loss for the period
Foreign exchange translation differences
Disposal of available for sale investment (net of
tax)
Gain on available for sale investments (net of tax)
Total other comprehensive income
Total comprehensive income/(loss) for the period
Transactions with owners
Issue of share capital (note 19)
Share issue expenses
Share-based payments
Transactions with owners
Balance at December 31, 2017
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
6,374
81,455
2,089
180
(16,756)
1,075
(12,731)
61,686
-
-
-
-
-
-
-
-
-
6,374
-
-
-
-
-
-
(13)
-
(13)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,993)
-
-
(1,993)
(1,993)
-
-
-
-
-
(2,745)
-
(383)
(216)
(599)
(599)
-
-
-
-
-
-
(2,745)
-
33
33
(2,745)
(1,993)
(383)
(216)
(2,592)
(5,337)
(13)
33
20
81,442
2,089
180
(18,749)
476
(15,443)
56,369
6,374
81,442
2,089
180
(18,749)
476
(15,443)
56,369
-
-
-
-
-
-
1,687
-
-
1,687
8,061
-
-
-
-
-
-
-
-
-
-
-
-
7,979
(112)
-
7,867
89,309
(1,230)
-
(1,230)
859
Page 41
-
-
-
-
-
-
-
-
-
-
-
4,165
-
-
4,165
4,165
-
-
-
-
-
-
(4,148)
-
(240)
(150)
(390)
(390)
-
-
-
-
-
-
-
(4,148)
-
-
112
112
(4,148)
4,165
(240)
(150)
3,775
(373)
8,436
(112)
112
8,436
180
(14,584)
86
(19,479)
64,432
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2017
(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
Decrease in derivative financial instruments
Increase/(decrease) 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 subsidiary net of cash
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 (note 19)
Share issue expenses
Disposal of available for sale investments
Loans received (note 22)
Repayment of Gold Loan (note 22)
Repayment of Loans
Capital element of finance lease payments
Net cash utilised in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
Page 42
31 December 5 months to 31
2017
$’000
December
2016
$’000
Year to 31
December
2016
$’000
(9,365)
7,824
-
-
112
(259)
29
455
941
1,961
1,698
(376)
1,322
43
-
-
(1,020)
(5,277)
(4,103)
-
(10,357)
8,436
(112)
1,103
5,598
(1,105)
(1,137)
(2,593)
10,190
1,155
2,156
40
3,351
(4,415)
2,927
(12)
-
33
(126)
(114)
(685)
1,335
232
(825)
(122)
(947)
17
-
-
-
(1,673)
(1,676)
30
(3,302)
-
(13)
783
-
(1,255)
(913)
(866)
(2,264)
(6,513)
8,929
(260)
2,156
(16,068)
7,308
(12)
11,268
45
(1,996)
(842)
(81)
1,530
(200)
952
(275)
677
30
(844)
(49)
(197)
(3,766)
(2,974)
30
(7,770)
15,106
(909)
783
-
(2,411)
(2,093)
(2,365)
8,111
1,018
1,166
(28)
2,156
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Nature of operation and going concern
The principal activity of the Company and its subsidiaries (“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 4 to 26. In addition, notes 19 and 24 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.
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. The financial statements have been prepared on a going concern basis which assumes
that the Group will be able to realise its assets and settle its obligations in the normal course of business. The
financial statements do not reflect adjustments to the carrying values and classification of assets and liabilities
that would be necessary should the Group be unable to continue as a going concern. Such adjustments might
be material.
The Group intends to fund its operations and growth from the operating cash flows of the Ming mine, and to the
extent required, through the accessing of equity and debt markets and the proceeds from the exercise of
warrants. Management believes that the Ming Mine will generate sufficient operating cash flows to support the
day to day activities and future growth requirements of the business, but there is a risk that lower than forecast
commodity prices or production issues will result in the need for additional financing.
Historically the Company has been successful in accessing equity and debt markets to finance the acquisition
and development of the Ming Mine site, and management is currently finalising talks with a third party to obtain
additional funding within the coming weeks. However, as this funding is not yet committed, it is not wholly within
the Group’s control and this represents a material uncertainty which casts significant doubt upon the Group’s
continued ability to operate as a going concern, such that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
2 Significant accounting policies
Rambler Metals and Mining Plc (the “Company”) is a public company limited by shares registered in England
and Wales. The Company changed its fiscal year in 2016 from July 31 to December 31. The current reporting
period is for the twelve month period from January 1, 2017 to December 31, 2017 with comparatives for the five
months period August 1, 2016 to December 31, 2016 as required by UK law and, additionally, for the twelve
months from January 1, 2016 to December 31, 2016 as required by Canadian Securities Law. The consolidated
financial statements of the Company for the year ended December 31, 2017 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 2017. None of the new and
revised Standards and Interpretations adopted had a material impact in the year.
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
Page 43
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(a)
Statement of compliance (continued)
Accounting Standards Board but have not been adopted will have a material impact on the financial statements.
Title
IFRS
/Amend
ment
IFRS 9 Financial instruments:
Classification and
Measurement
Nature of change to accounting
policy
Application date
of standard
Application date
for Company
No change to accounting policy,
therefore, no impact
January 1, 2018 January 1, 2018
IFRS 15 Revenue from contracts with
customers
IFRS 16 Leases
No change to accounting policy,
therefore, no impact
Accounting policy will be updated to
reflect the requirements of IFRS 16
January 1, 2018 January 1, 2018
January 1, 2019 January 1, 2019
IFRS 15 ‘Revenue from Contracts with Customers’ was issued by the IASB in May 2014. It is effective for
accounting periods beginning on or after 1 January 2018. The new standard will replace existing accounting
standards, and provides enhanced detail on the principle of recognising revenue to reflect the transfer of goods
and services to customers at a value which the company expects to be entitled to receive. The standard also
updates revenue disclosure requirements. The directors have carefully considered the potential effects in the
context of the group’s revenues and have concluded that on adoption there will be no significant changes to the
way in which the group’s performance obligations to customers are identified or deemed to be satisfied and,
therefore, no material impact on the revenues recognised in the financial statements.
IFRS 9 was published in July 2014 and will be effective from 1 January 2018. It is applicable to financial assets
and financial liabilities, and covers the classification, measurement, impairment and de-recognition of financial
assets and financial liabilities together with a new hedge accounting model. The directors have carefully
considered the potential effect of the implementation of IFRS9 and the current expectation is that it is unlikely to
have a material impact on the classification, measurement, impairment and de-recognition of the Group’s
financial assets and liabilities.
IFRS 16 ‘Leases’ – IFRS 16 ‘Leases’ was issued by the IASB in January 2016 and is effective for accounting
periods beginning on or after 1 January 2019. The new standard will replace IAS 17 ‘Leases’ and will eliminate
the classification of leases as either operating leases or finance leases and, instead, introduce a single lessee
accounting model. The Standard Provides a single lessee accounting model, specifying how leases are
recognised, measured, presented and disclosed. The Group does not expect any significant changes to the
accounting treatment of its existing lease arrangements and the Directors do not consider that the financial and
operational impact of this standard, will have a material impact but are continuing to assess the impact of this
new standard..
(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 December 31, 2017 the closing rate of exchange of US dollars to 1 GB
pound was 1.35 (December 31, 2016: 1.23) and the average rate of exchange of US dollars to 1 GB pound for
the year was 1.28 (for the five months to December 31, 2016: 1.33).
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.
Page 44
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(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 Group are translated to US dollars at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of the Group 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.
(e)
Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost. The cost of self-constructed assets includes the cost
of materials, direct labour and the initial estimate of the costs of dismantling and removing the items and
restoring the site on which they are located, where an obligation to incur such costs exists.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. All other leases are classified as operating leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing
part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with
the item will flow to the Group and the cost of the item can be measured reliably. All other costs are
recognised in the income statement as an expense as incurred.
Page 45
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(e)
Property, plant and equipment (continued)
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation costs or
Mineral 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.
(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.
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Available for sale investments
(h)
Available for sale investments are recognised at fair value with changes in value recorded in other
comprehensive income. Subsequent to initial recognition available-for-sale financial assets are stated at fair
value. Movements in fair values are recognised in other comprehensive income, with the exception of
impairment losses which are recognised in profit or loss. Fair values are based on prices quoted in an active
market if such a market is available. If an active market is not available, the 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.
)
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
Restricted cash is not available for use by the
cash equivalents for the purpose of the statement of cash flows.
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(t)), 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.
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(m)
Impairment of non-financial assets (continued)
(i) Calculation of recoverable amount
The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. For an
asset that does not generate largely independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
(ii) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(n) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets
of the Group after deducting all of its liabilities.
Financial liabilities include finance leases and hire purchase contracts which are recognised initially at fair value
less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption value being recognised in the statement of
comprehensive income over the period of the borrowings on an effective interest basis except where the
difference between cost and redemption value qualify to be capitalised as part of the cost of a qualifying asset.
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.
Page 48
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
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.
(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 49
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,
•
• and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit,
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.
Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics
of an income tax.
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 16)
- Available for sale investments (note 13)
For more detailed information in relation to the fair value measurement of the items above, please refer to the
applicable notes.
Page 50
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Critical judgements and accounting estimates
(a) Critical judgements in applying the Company’s accounting policies
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 judgements in applying the Company’s accounting policies,
Going concern
Judgements are necessary in applying the going concern basis in the preparation of the Company’s financial
statements in respect of the Company’s ability to continue as a going concern for a period of at least 12 months
from the date of signing the current period’s report.
Mineral Property, Property, Plant and Equipment and Exploration and Evaluation Costs
Notes 2(g) and 2(m) describe the judgements necessary to implement the Company’s policy with respect to the
carrying value of the Company’s mineral property and exploration and evaluation costs. Management considers
these assets for impairment at least annually with reference to the following indicators:
Reviewing the financial performance compared to forecast;
Reviewing the key production and milling statistics to forecast;
Reviewing the commodity price forecasts against assumptions in the previous impairment model; and
Considering any significant changes to the cost of capital.
Judgements necessary for the amortisation of the mineral property, closure costs, share-based payments, Gold
Loan, Revenue and Available for Sale Investments are described in the relevant accounting policies in Note 2.
(b) Key sources of estimation uncertainty
The Company uses 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.
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Critical judgement and accounting estimates (continued)
(b) Key sources of estimation uncertainty (continued)
Mineral Property, Property, Plant and Equipment and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property,
property, plant and equipment and exploration and evaluation costs totalling US$70.6 million. In making this
assessment they have considered the Group’s business plan which includes resource estimates, future
processing capacity, future exchange rates, the forward market and longer term price outlook for copper and
gold and assumptions regarding weighted average cost of capital. 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.
Amortisation of Mineral Property
Amortisation of the Mineral Property is calculated on a unit of production method expected to amortise the cost
including future forecast capital expenditure over the expected life of the mine based on the tonnes of ore
expected to be extracted. Any changes to these estimates may result in an increase in the amortisation charge
with a corresponding reduction in the carrying value of the Mineral Property.
Closure costs
The Group has an obligation to restore its properties after the minerals have been mined from the site, and has
estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a
liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves to be
inaccurate, the Group could be required to increase the provision for site closure and reclamation costs, which
would increase the amount of future reclamation expense, resulting in a reduction in the Group’s earnings and
net assets.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option/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 22).The cash flows will be dependent on the production of gold and its
selling price at the time of delivery which have been estimated in line with the mine plan, future prices of gold
and reserve estimates. Management’s estimates of these factors are subject to risk and uncertainties affecting
the amount of the interest charge. Any changes to these estimates may result in a significantly different interest
charge which would affect the carrying value of the exploration and evaluation costs and the corresponding Gold
Loan liability.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and foreign exchange fluctuations.
Management monitors these changes closely and at the end of the period the directors will consider whether the
effect of these variations are material on the whole and determine whether an adjustment is therefore
appropriate.
Available for sale investment
Management consider that they do not have significant influence over the financial and policy decisions of
Maritime and therefore have included the investment as an available for sale investment.
Page 52
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Critical judgement and accounting estimates (continued)
(b) Key sources of estimation uncertainty (continued)
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 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.
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
Year to Dec 31, 2017
UK
Canada
Consolidated
Five months to Dec 31, 2016
Canada
Consolidated
UK
Revenue
-
28,324
28,324
-
9,680
9,680
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Non-current assets
1,680
86,788
88,468
1,429
74,370
75,799
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
Customer A
Year to
5 months to
Dec 31, 2017
US$’000
Dec 31, 2016
US$’000
28,324
28,324
9,680
9,680
Page 53
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Operating loss
The operating loss is after charging:
Depreciation – owned assets
Gain on disposal of property, plant and equipment
Amortisation
Impairment charges
Directors’ emoluments (see note 25)
Auditor’s remuneration:
Audit of these financial statements
Fees payable to the auditor for other services:
Other assurance services
Year to
5 months to
Dec 31, 2017
Dec 31, 2016
US$’000
US$’000
4,469
-
3,355
-
351
1,483
(12)
1,444
-
168
132
125
6
2
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is maintained.
6. Personnel expenses
Salary costs
Wages and salaries
Other short term benefits
Compulsory social security contributions
Share based payments
Group
Year to
Group
5 months to
Dec 31, 2017
Dec 31, 2016
US$’000
US$,000
10,074
565
1,675
112
12,426
3,988
219
602
33
4,842
Salary costs of US$533,000 (Five months to December 31, 2016: US$138,000, year to July 31, 2016: US$259,000)
were capitalised as part of the cost of assets under construction costs during the year.
Number of employees
The average number of employees during the period was as follows:
Directors
Administration
Production and development
Group
Group
Year to
5 months to
Dec 31, 2017
Dec 31, 2016
7
14
164
185
6
11
131
148
Page 54
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Personnel expenses (continued)
During the period the Group granted share options to key personnel to purchase shares in the entity. The options are
exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the period
Granted during the period
Exercised during period
Cancelled during the period
Expired during the period
Outstanding at the end of the period
Exercisable at end of period
2017
US$
0.38
0.09
0.06
0.11
0.82
0.13
0.35
Weighted
average
exercise
Number
price
of options
Dec 31,
Dec 31,
Weighted
average
exercise
price
Dec 31,
2016
US$
2017
‘000
13,014
1,230
(450)
(355)
0.36
0.06
-
0.28
(210)
0.52
13,229
3,239
0.14
0.38
Number
of options
Dec 31,
2016
‘000
5,079
9,580
-
(1,620)
(25)
13,014
3,430
The options outstanding at December 31, 2017 have an exercise price in the range of US$0.05 to US$0.82
(December 31, 2016: US$0.05 to US$0.82) and a weighted average remaining contractual life of 3.8 years
(December 31, 2016: 4.8 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 period
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)
Year to Dec
5m to Dec
31,2017
31,2016
US$0.07 US$0.04
US$0.09 US$0.06
US$0.09 US$0.06
116%
5
-
1.41%
94%
5
-
0.64%
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Personnel expenses (continued)
The expected volatility is based on the historical volatility (calculated based on the weighted average remaining life of
the share options), adjusted for any expected changes to future volatility due to publicly available information.
There is no performance or market conditions associated with the share option grants.
The share-based payment expense relates to the following grants:
Year to Dec
31, 2017
5m to Dec
31, 2016
US$’000
US$’000
-
110
2
112
1
32
---
33
Year to
Dec 31, 2017
5 months to
Dec 31, 2016
US$’000
US$’000
2,015
1,504
Year to
Dec 31, 2017
5 months to
Dec 31, 2016
US$’000
US$’000
175
(566)
17
40
162
28
(144)
46
3,003
51
-
66
10
3,176
Year to
Dec 31, 2017
US$,000
5 months to
Dec 31, 2016
US$,000
-
-
(1,460)
55
22
(1,296)
(1,601)
(1,496)
(229)
(3,326)
Share options granted in 2014
Share options granted in 2016
Share options granted in 2017
Total expense recognised as employee costs
7. Gain on derivative financial instruments
Gain on concentrate receivables from off-taker
8. Finance costs
Finance lease interest
Gold loan interest
Advance purchase facility interest and charges
Other loan interest
Off-take provisional payment interest
Unwinding of discount on reclamation provision
9.
Income tax
Recognised in the income statement
Current tax expense
Current period
Deferred tax credit
Origination and reversal of temporary timing differences
Mining tax – origination and reversal of temporary differences
(Under)/over provision in previous year
Total income tax (credit)/charge in income statement
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax (continued)
Reconciliation of effective tax rate
A reconciliation between the tax credit and the product of the Group’s accounting loss multiplied by the
Group’s statutory income tax rate for the year ended December 31, 2017 and the five months ended
December 31, 2016 is as follows:
Loss before tax
Income tax using the UK corporation tax rate of 19.25% (2016:
20%)
Effect of tax rates in foreign jurisdictions (rates increased)
Mining tax
Net permanent differences
Effect of tax rates on chargeable gain
Effect of change in tax rates
Effect of tax losses and credits
(Under)/over provision in previous year
Exchange difference
Recognised in other comprehensive income
Current tax expense
Current year
Deferred tax credit
Fair value re-measurement of available for sale investments
Exchange difference on retranslation of UK deferred tax asset
Total income tax expense/(credit) in statement of other
comprehensive income
Year to
5 months to
Dec 31, 2017
US$’000
Dec 31, 2016
US$’000
(5,444)
(6,071)
(1,048)
(458)
56
46
(115)
107
87
23
6
(1,296)
(1,214)
(542)
(1,496)
31
(62)
162
3
(229)
21
(3,326)
Year to
5 months to
Dec 31, 2017
Dec 31, 2016
US$,000
US$,000
-
-
(87)
(48)
(93)
59
(135)
(34)
Page 57
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax credit (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan and government assistance
Mining tax
Other timing differences
Tax value of loss carry-forwards and
credits recognised
Net tax assets /(liabilities)
Assets
Liabilities
Net
Balance
Balance
Balance
Balance
Balance
Balance
Dec 31, 2017 Dec 31, 2016
Dec 31, 2017 Dec 31, 2016 Dec 31, 2017 Dec 31, 2016
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
-
2,283
118
-
1,581
1,536
-
-
3,064
109
3
26
1,496
-
(3,471)
-
-
-
-
-
(217)
(3,112)
-
-
-
-
-
(94)
(3,471)
2,283
118
-
1,581
1,536
(217)
(3,112)
3,064
109
3
26
1,496
(94)
12,020
17,538
10,053
14,751
-
-
(3,688)
(3,206)
12,020
13,850
10,053
11,545
Movement in recognised deferred tax assets and liabilities
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan
Mining tax
Other timing differences
Tax value of loss carry-forwards and credits – Canada
Tax value of loss carry-forwards – UK
Recognised in
Recognised in
Balance
income
other
Exchange
Balance
Aug 1, 2016
comprehensive
difference
Dec 31, 2016
US$’000
US$’000
US$’000
US$’000
US$’000
income
3,264
(3,328)
(106)
91
634
-
(29)
(7,379)
(1,567)
(8,420)
(59)
169
(4)
-
(645)
(1,496)
117
(1,280)
(128)
(3,326)
-
-
-
(93)
-
-
-
-
59
(34)
(93)
95
1
(1)
(15)
-
6
35
207
235
3,112
(3,064)
(109)
(3)
(26)
(1,496)
94
(8,624)
(1,429)
(11,545)
Recognised in
Balance
Recognised in
other
Exchange
Balance
Jan 1, 2017
income
comprehensive
difference
Dec 31, 2017
US$’000
US$’000
US$’000
US$’000
US$’000
income
Property, plant and equipment
Mineral property
Intangible assets
Available for sale investment
Gold loan and government assistance
Mining tax
Other timing differences
Tax value of loss carry-forwards and credits – Canada
Tax value of loss carry-forwards – UK
3,112
(3,064)
(109)
(3)
(26)
(1,496)
94
(8,624)
(1,429)
133
945
(2)
90
(1,548)
55
191
(942)
(218)
-
-
-
(87)
-
-
-
-
(48)
(11,545)
(1,296)
(135)
226
(164)
(7)
-
(85)
(95)
10
(774)
15
(874)
3,471
(2,283)
(118)
-
(1,659)
(1,536)
295
(10,340)
(1,680)
(13,850)
Page 58
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax credit (continued)
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$13.9 million (December 31,
2016: US$11.6 million).
The Group has recognised a deferred tax liability in respect of mining tax of US$55,000 during the year bringing the
balance to US$1.5 million (five months to December 31, 2016: recognised deferred tax asset of US$1.5 million). The
group considers that with recent increases in the market outlook for copper prices that it has sufficient evidence of
future mining profits to justify the recognition of this asset.
10. Intangible assets
Cost
Balance at 1 August, 2016
Effect of movements in foreign exchange
Balance at 31 December, 2016
Balance at 1 January, 2017
Additions
Effect of movements in foreign exchange
Balance at December 31, 2017
Carrying amounts
At 1 August, 2016
At 31 December, 2016
At 1 January, 2017
At December 31, 2017
Exploration and evaluation costs
Ming Mine
Little Deer Project
Total
US$’000
US$’000
US$’000
-
-
-
-
979
15
994
-
-
-
994
2,233
(64)
2,169
2,169
41
193
2,403
2,233
2,169
2,169
2,403
2,233
(64)
2,169
2,169
1,020
208
3,397
14,084
2,169
2,169
3,397
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. Following the assessment, management concluded that no impairment triggers had been noted that would
require a formal impairment test and impairment charge against exploration and evaluation costs has been recorded.
Page 59
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Mineral property
Cost
Balance at August 1, 2016
Additions
Effect of movements in foreign exchange
Balance at December 31, 2016
Balance at January 1, 2017
Additions
Effect of movements in foreign exchange
Balance at December 31, 2017
Amortisation and impairment
Balance at August 1, 2016
Amortisation charge
Effect of movements in foreign exchange
Balance at December 31, 2016
Balance at January 1, 2017
Amortisation charge
Effect of movements in foreign exchange
Balance at December 31, 2017
Carrying amounts
At August 1, 2016
At December 31, 2016
At January 1, 2017
At December 31, 2017
Mineral
property
US$’000
70,058
1,673
(2,030)
69,701
69,701
5,278
5,064
80,043
34,820
1,444
(1,016)
35,248
35,248
3,355
2,606
41,209
35,238
34,453
34,453
38,834
Consideration of impairment for mineral property costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property
costs. See note 3 for an explanation of the factors considered in respect of the Ming Mine. After consideration of
those factors management concluded that no impairment triggers had been noted that would require a formal
impairment test and no further impairment charge against in-production mining assets has been recorded.
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Property, plant and equipment
Land and
Assets under
Motor
Plant and
fittings and
Computer
buildings
construction
vehicles
equipment
equipment
equipment
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000 US$’000
Fixtures,
4,063
10
-
(117)
3,956
3,956
25
-
279
4,260
2,045
156
-
(60)
2,141
2,141
362
163
2,666
2,018
1,815
1,815
1,594
728
654
-
(25)
1,357
1,357
2,814
(319)
159
4,011
-
-
-
-
-
-
-
-
-
728
1,357
1,357
4,011
228
-
-
(6)
222
222
-
-
15
237
217
4
-
(6)
215
215
7
15
237
11
7
7
-
39,885
1,407
(823)
(1,107)
39,362
39,362
5,143
319
3,024
47,848
19,549
1,302
(805)
(523)
19,523
19,523
4,073
1,501
25,097
20,336
19,840
19,840
22,751
96
-
-
(2)
94
94
1
-
6
764 45,764
2,097
(823)
(1,278)
26
-
(21)
769 45,760
769 45,760
8,053
-
3,540
70
-
57
101
896 57,353
90
2
-
(3)
89
89
4
7
738 22,639
1,483
(805)
(613)
19
-
(21)
736 22,704
736 22,704
4,468
1,738
22
52
100
810 28,910
6
5
5
1
26 23,125
33 23,056
33 23,056
86 28,443
Cost
Balance at August 1, 2016
Additions
Disposals
Effect of movements in foreign exchange
Balance at December 31, 2016
Balance at January 1, 2017
Additions
Reclassification
Effect of movements in foreign exchange
Balance at December 31, 2017
Depreciation and impairment losses
Balance at August 1, 2016
Depreciation charge for the year
Eliminated on disposals
Effect of movements in foreign exchange
Balance at December 31, 2016
Balance at January 1, 2017
Depreciation charge for the year
Effect of movements in foreign exchange
Balance at December 31, 2017
Carrying amounts
At August 1, 2016
At December 31, 2016
At January 1, 2017
At December 31, 2017
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 December 31, 2017, the net
carrying amount of leased plant and machinery was US$5.1 million (December 31, 2016: US$3.3 million). The leased
plant and machinery secures lease obligations (see note 22). During the period plant and equipment additions of
US$4.2 million (2016: US$0.5 million) were acquired through finance lease arrangements.
Page 61
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Available for sale investments
Cost or valuation
Balance at August 1, 2016
Disposals
Revaluation
Effect of movements in foreign exchange
Balance at December 31, 2016
Balance at January 1, 2017
Disposals
Revaluation
Effect of movements in foreign exchange
Balance at December 31, 2017
Carrying amounts
At December 31, 2016
At December 31, 2017
Available for sale
investments
US$’000
2,402
(783)
(245)
(41)
1,333
1,333
(324)
(389)
(10)
610
1,333
610
Rambler holds an 8.4% 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
per share at December 31, 2017 was US$0.08 (December 31, 2016: US$0.10).
During the year the Company disposed of its remaining shareholding in Marathon Gold Corporation for US$1.1
million.
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$1,148,000
(December 31, 2016: US$1,399,000).
14. Inventory
Metals in process
Operating supplies
15. Trade and other receivables
Trade receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
Dec 31,
Dec 31,
2017
2016
US$’000 US$’000
884
1,612
2,496
561
1,906
2,467
Dec 31,
Dec 31,
2017
2016
US$’000 US$’000
-
-
200
260
684
412
400
157
1,284
829
There are no trade receivables past due or considered impaired (period ended December 31, 2016: $nil).
Page 62
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. Derivative financial asset
Concentrate receivables from off-taker
Dec 31,
2017
Dec 31,
2016
US$’000 US$’000
756
1,830
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$1,104,000 (December 31, 2016: US$375,000).
17. Cash and cash equivalents
Bank balances
Cash and cash equivalents in the statement of cash flows
18. Restricted cash
Bearer deposit notes
Dec 31,
2017
Dec 31,
2016
US$’000 US$’000
2,156
3,351
3,351
2,156
Dec 31,
Dec 31,
2017
2016
US$’000 US$’000
3,243
3,530
The Group is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in respect
of the reclamation and closure liability associated with the Ming Mine. The bearer deposit notes mature on differing
dates throughout fiscal 2017 and have a nominal value of US$3,530,000 (December 31, 2016 - US$3,243,000)
giving an effective yield of 1.2% (December 31, 2016 – 1.2%).
19. Capital and reserves
Share capital and share premium – group and company
In issue at August 1, 2016
Share issue expenses
In issue at December 31, 2016
In issue at January 1, 2017
Issued on February 6, 2017
Issued on November 6, 2017
Shares issued during the year
Transfer from share warrant reserve
Share issue expenses
In issue at December 31, 2017
Share
Share
capital
premium
Total
US$’000 US$’000
US$’000
Number
‘000
6,374
-
81,455
(13)
87,829 414,290
-
(13)
6,374
81,442
87,816 414,290
6,374
81,442
87,816 414,290
1,681
6
1,687
-
-
6,726
23
6,749
1,230
(112)
8,407 135,000
450
29
8,436 135,450
1,230
(112)
-
-
8,061
89,309
97,370 549,740
At December 31, 2017, 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.
Page 63
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Capital and reserves (continued)
Warrants reserve
At August 1, 2016
At December 31, 2016
At January 1, 2017
Fair value of warrants exercised on February 6, 2017 at US$0.0623
At December 31, 2017
Number
‘000
200,000
200,000
$’000
2,089
2,089
200,000
(135,000)
2,089
(1,230)
65,000
859
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.
Page 64
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Capital and reserves continued
Capital management continued
The Group’s capital was as follows:
Cash and cash equivalents
Finance leases
Advance purchase loan
Government assistance
Loan from related party
Gold loan
Net debt
Equity
Total capital
20. Earnings per share
Dec 31, 2017 Dec 31, 2016
US$’000
US$’000
3,351
(4,570)
(3,997)
(390)
(1,002)
(13,476)
(20,084)
(64,432)
(84,516)
2,156
(2,656)
(1,120)
-
-
(15,450)
(17,079)
(56,369)
(73,439)
Basic earnings per share
The calculation of basic earnings per share at December 31, 2017 was based on the loss attributable to ordinary
shareholders of $4.3 million and a weighted average number of ordinary shares outstanding during the year ended
December 31, 2017 of 535.7 million calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period
Loss attributable to ordinary shareholders
Weighted average number of ordinary shares
At August 1, 2016
Effect of shares issued during the year
At December 31, 2016
In issue at January 1, 2017
Effect of shares issued during period
Weighted average number of ordinary shares at December 31, 2017
Dec 31, 2017 Dec 31, 2016
US$’000
(4,341)
(4,341)
US$’000
(1,747)
(1.747)
Number ‘000
414,290
-
414,290
414,290
121,383
535,673
There is no material difference between the basic and diluted loss per share. At December 31, 2017 there were
13,229,000 (December 31, 2017: 13,014,000) share options in issue of which 4,742,472 (December 31, 2017:
2,909,049) were considered to be dilutive and may have a dilutive effect on the basic earnings or loss per share in
the future. At December 31, 2017 there were 65,000,000 (December 31, 2016: 200,000,000) warrants in issue of
which 29,649,555 were considered to be dilutive (December 31, 2016: 49,785,331).
Page 65
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Trade and other payables
Trade payables
Other payables
Accrued expenses
Dec 31,
Dec 31,
2017
2016
US$’000 US$’000
5,383
320
1,611
7,314
3,669
125
1,298
5,092
22. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For
more information about the Group’s exposure to interest rate and foreign currency risk, see note 24.
Non-current liabilities
Finance lease liabilities
Gold Loan
Advance purchase agreement
Repayable contribution
Current liabilities
Current portion of finance lease liabilities
Advance Purchase Facility
Loan from related party
Current portion of Gold Loan
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum
Minimum
Dec 31,
2017
Dec 31,
2016
US$’000
US$’000
3,000
10,624
2,682
390
16,696
1,371
13,041
-
14,412
1,570
1,315
1,002
2,852
6,739
1,284
1,121
-
2,409
4,814
lease
Payments
Dec 31,
2017
Principal
Dec 31,
2017
US$’000 US$’000 US$’000
Interest
Dec 31,
2017
lease
Payments
Dec 31,
2016
Principal
Dec 31,
2016
US$’000 US$’000 US$’000
Interest
Dec 31,
2016
Less than one year
Between one and five years
1,743
3,146
4,889
173
146
319
1,570
3,000
4,570
1,354
1,430
2,784
70
59
129
1,284
1,371
2,655
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are secured
on the underlying assets.
Page 66
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22. Interest-bearing loans and borrowings (continued)
Gold Loan
In March 2010, the Company entered into an agreement (“Gold Loan”) with Sandstorm Resources Ltd. (‘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 oz of payable gold has been
produced, the Company has agreed to sell to Sandstorm, at market price, a percentage equal to 25% x (85% divided
by the actual percentage of metallurgical recovery of gold realized in the immediately preceding production year)
provided that, if the payable gold production in any production year after the third production year is less than 15,000
ounces, then in each such production year, Sandstorm payable gold shall not be less than 25% of the payable gold.
The percentage of payable gold of 25% falls to 12% after 175,000 oz of payable gold has been produced and
remains payable 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.
At September 30, 2017, the Company has produced 42,355 payable ounces of gold of which 13,068 ounces were
transferrable to Sandstorm under the agreement as follows:
Production year
Payable gold
ounces produced
Ounces
transferrable
Pre-production
1
2
3
4
5
6 (to date)
Total
15,429
4,888
5,945
5,408
6,905
3,040
740
42,355
4,937
1,280
1,904
1,689
2,069
955
234
13,068
The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective interest
rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end based on
management’s best estimates of the time of delivery of payable gold, the total amount of gold expected to be
produced over the mine life and the timing of that production.
Total interest of US$606,000 (five months ended December 31, 2016: US$3,003,000) was credited during the year.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
Government Assistance
During the year the Company received US$622,000 in interest free repayable contributions from a Canadian
government agency. Contributions to a total of US$1.59 million are available in support of the Phase II expansion
project for the mine. The contributions are repayable over eight years from May 2019.
The fair value of the contributions received calculated at a market interest rate of 10% have been classified as a
financial liability with the difference between the fair value and the amount received credited against the cost of
assets under construction.
Page 67
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22. Interest-bearing loans and borrowings (continued)
Related party loan
In October 2017 the company received a loan of US$1 million from CE Mining II Rambler Limited. The loan is
unsecured, repayable by October 17, 2018 and carries interest at 9.5% per annum.
Advance Purchase Facility
During the year the Company repaid the balance of the advance purchase agreement originally signed in July 2015
and in December 2017 the Group entered into another amended and restated purchase agreement with Transamine
Trading S.A. (“Transamine”).
Pursuant to the terms of the Purchase Agreement, Transamine agreed to purchase in advance, at Rambler’s option,
up to US$4 million of concentrate (the “Advance Purchase Payments”) to be used for working capital requirements.
The Company drew down US$4 million of Advance Purchase Payments on December 29, 2017.
At December 31, 2017 the balance was US$4 million which is repayable by eighteen monthly instalments of
US$222,222 plus interest at 6.75% per annum commencing on June 28, 2018.
The advance purchase payments of US$4 million have been accounted for as a financial liability carried at amortised
cost.
23. Provision
Reclamation and closure provision
Opening balance
Unwinding of discount
Effect of movements in foreign exchange
Ending balance
Dec 31,
2017
Dec 31,
2016
US$’000
US$’000
1,804
28
129
1,961
1,833
10
(39)
1,804
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 expected useful life of 20 years. The provision has been
calculated based on the present value of the expected future cash flows associated with reclamation and closure
activities as required by the Government of Newfoundland and Labrador. The provision relates to restoration of all
three sites associated with the Ming Mine project: mill, mine and port sites. The liability is secured by Letters of Credit
for US$3.5 million.
24. Financial instruments
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale
investments, derivative financial instruments and other receivables. In addition the Company’s financial assets
include amounts due from subsidiaries. The Group and Company’s financial liabilities comprise: trade payables;
other payables; and accrued expenses. The Group’s financial liabilities also include interest bearing loans and
borrowings.
All of the Group’s and Company’s financial liabilities are measured at amortised cost and their financial assets are
classified as loans and receivables and measured at amortised cost with the exception of available for sale
investments and derivative financial instruments as described in notes 14 and 17 respectively.
Page 68
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Financial instruments (continued)
The Group held the following categories of financial instruments at December 31, 2017:
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments – level 2 fair value
Available for sale investments:
Investment in quoted equity securities – level 1 fair value
Loans and receivables:
Trade receivables
Other receivables
Sales taxes recoverable
Cash at bank
Restricted cash
Total financial assets
Liabilities at amortised cost or equivalent:
Trade payables
Other payables
Accrued expenses
Loans and borrowings
Total financial liabilities
Dec 31,
2017
Dec 31,
2016
US$’000
US$’000
1,830
756
610
1,333
-
260
412
3,351
3,530
7,553
9,993
-
200
684
2,156
3,243
6,283
8,372
Dec 31,
2017
Dec 31,
2016
US$’000 US$’000
(3,669)
(5,383)
(125)
(320)
(1,298)
(1,611)
(19,226)
(23,435)
(30,749)
(24,318)
The board of directors determines, as required, the degree to which it is appropriate to use financial instruments and
hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are liquidity risk,
credit risk and market risk which includes foreign currency risk, interest rate risk and commodity price risk each of
which is discussed below.
Liquidity risk
With finite cash resources the liquidity risk is significant. This risk is managed by controls over expenditure and
concentrating on achieving the payment milestones under the financing arrangement. Success will depend largely
upon the outcome of on-going and future exploration and development programmes. Given the nature of the Group’s
current activities the entity will remain dependent on a mixture of debt and equity funding in the short to medium term
until such time as the Group becomes self-financing from the commercial production of mineral resources. The
liabilities of the parent company are due within one year. The parent company has adequate financial resources to
meet the obligations existing at December 31, 2017.
Page 69
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Financial instruments (continued)
The Group’s and Company’s trade payables, other payables and accrued expenses are generally due between one
and three months and the Group’s other financial liabilities are due as follows:
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
Due after five years
Dec 31,
2017
Dec 31,
2016
US$’000
US$’000
7,436
8,763
4,516
2,717
946
13,155
37,533
5,945
2,443
2,893
2,605
2,615
17,318
33,819
Fixed rate financial liabilities
At the year end the analysis of finance leases and hire purchase contracts which were all due in Canadian Dollars
and are at fixed interest rates was as follows:
Fixed rate liabilities
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
Due after five years
Dec 31,
2017
Dec 31,
2016
US$’000
US$’000
3,306
4,402
1,317
408
81
352
9,866
1,354
662
574
194
-
-
2,784
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at December 31, 2017
was 5.3%.
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
15). The Group maximum exposure to credit risk at December 31, 2017 was represented by receivables and cash
resources.
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.
Page 70
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Financial instruments (continued)
Market risk (continued)
Foreign currency risk (continued)
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
At the period end the cash and short term deposits were as follows:
Canadian $
US $
Sterling
Equity
Dec 31,
2017
US$’00
0
(17)
16
(295)
269
Dec 31,
2016
US$’000
98
(89)
(107)
97
Dec 31,
Dec 31,
2017
US$’000
644
2,692
15
3,351
2016
US$’000
948
37
1,171
2,156
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 22.
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.
Page 71
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Financial instruments (continued)
Market risk (continued)
Commodity price risk (continued)
Dec 31,
2017
US$’000
Gross assets
Dec 31,
2016
US$’000
10% increase in the price of gold
25% decrease in the price of gold
(1,348)
3,369
(1,368)
3,397
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
Dec 31,
2017
$’000
Gross assets
Dec 31,
2016
$’000
587
(587)
603
(603)
Financial assets
The floating rate financial assets comprise interest earning bank deposits at rates set by reference to the prevailing
LIBOR or equivalent to the relevant country. Fixed rate financial assets are cash held on fixed term deposit.
Fair values
In the directors’ opinion there is no material difference between the book value and fair value of any of the
Company’s financial instruments.
Page 72
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
25. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its directors and executive officers.
Transactions with key management personnel
The directors’ compensations were as follows:
Salary – executive
N Williams
Fees – non-executive
B A Mills
B Labatte
M V Sander
T I Ackerman
G Poulter
E C Chen
Share options held by directors were as follows:
N Williams1
Dec 31, 2017 Dec 31, 2016
US$’000
US$’000
242
130
19
19
19
19
15
19
6
6
6
6
6
8
352
168
At 31.12.17 At 31.12.16
No.
No.
‘000
4,575
4,575
‘000
4,575
4,575
1 100,000 options at an exercise price of US$0.71 expiring on July 7, 2018, 75,000 options at an exercise price of US$0.13 expiring on November
10, 2018, 250,000 options at an exercise price of US$0.37 expiring on May 7, 2020, 750,000 options at an exercise price of US$0.37 expiring on
February 19, 2024 and 3,400,000 options at an exercise price of US$0.06 expiring on August 22, 2021.
Total key management personnel compensations were as follows:
Short term employee benefits
Social security costs
Share based payments
Dec 31,
Dec 31,
2017
$’000
2016
$’000
508
26
58
592
253
16
20
289
Page 73
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
25. 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
Ordinary
100%
Holding company England
Rambler Metals and Mining
Canada Limited
Common
100% (indirectly) Exploration,
Canada
development and
mining
1948565 Ontario Resources Inc.
Common
100%
Exploration
Canada
The registered address of Rambler Mines Limited is Salatin House, 19 Cedar Road, Sutton, Surrey SM2 5DA,
England and for the two Canadian subsidiaries the registered address is P.O. Box 610, Baie Verte, NL, Canada A0K
1B0.
CE Mining II Rambler Limited, a controlling shareholder of the Company, holds 65,000,000 warrants at a valuation of
US$858,000 (see Note 19). Details of related party transactions with CE Mining II Rambler Limited are included in
note 22.
Ultimate and controlling party
CE Mining II Rambler Limited is the ultimate and controlling party of the Company.
26. Subsequent events
On March 5, 2018 the Company announced the completion of a new mineral and reserves estimate for the
Ming mine. Contained copper in the mineral reserves is estimated at 329 million pounds with gold of 114
thousand ounces, fully replacing reserves after two years of mining. Mineral resource tonnes (M+I) have
declined from the 2015 estimate by 18%, however, the copper grade has improved 9% and gold grade by
14%. The change in measured and indicated resources is a result of an extensive diamond drilling program
in an underexplored area of the Lower Footwall Zone. The life of mine, production, cost and financial
highlights are as follows:
• Over a planned 20 year life-of-mine, ending 2037, the project will produce 514 thousand tonnes of
high-grade copper concentrate containing saleable metal of 312 million pounds of copper and 57
thousand ounces of gold. Average annual sales is 26 thousand tonnes of copper concentrate
• Average annual cash operating cost of US$1.98 per pound of copper net of by-product credits (‘C1’),
with an all-in pre-tax costs of US$2.37 per pound of copper and after-tax cost of US$2.49 per pound.
• Net undiscounted cash flow from operations of US$277 million. Net pre-tax cash flow of US$195
million (after-tax US$157 million).
• Project pre-tax net present value (‘NPV7%’) of US$100 million. After-tax NPV7% of US$83 million.
Page 74
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2017
(EXPRESSED IN US DOLLARS)
Year to
December 31,
2017
5 months to
December 31,
2016
Year to
December 31,
2016
$’000
$’000
$’000
(Loss)/profit for the period
(2,799)
1,348
8,025
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into presentation currency
Other comprehensive profit/(loss) for the year
6,603
6,603
(4,426)
(4,426)
(11,310)
(11,310)
Total comprehensive profit/(loss) for the year
3,804
(3,078)
(3,285)
Page 75
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at December 31, 2017
(EXPRESSED IN US DOLLARS)
Assets
Investments
Loans
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
Note
December 31, December 31,
2017
$’000
2016
$’000
C2
C2
C3
C4
C5
20
C6
71,458
1,532
1,680
74,670
28
15
43
74,713
8,061
89,309
859
(6,599)
(17,134)
74,496
217
217
217
58,408
1,398
1,429
61,235
46
1,171
1,217
62,452
6,374
81,442
2,089
(13,202)
(14,394)
62,309
143
143
143
74,713
62,452
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the company
is not presented as part of these financial statements. The company's total comprehensive profit for
the financial year was US$3.8m (five months ended December 31, 2016: US$3.1m loss, year ended
December 31, 2016: US$3.3 million loss).
ON BEHALF OF THE BOARD:
N P Williams
Director
Approved and authorised for issue by the Board on April 30, 2018.
Page 76
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN US DOLLARS)
Balance at August 1, 2016
Comprehensive income
Profit for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive loss for the year
Share issue expenses
Share based payments
Transactions with owners
Balance at December 31, 2016
Balance at January 1, 2017
Comprehensive income
Loss for the year
Foreign exchange translation differences
Total other comprehensive income
Total comprehensive loss for the year
Issue of share capital
Share issue expenses
Share based payments
Transactions with owners
Balance at December 31, 2017
Share
capital
US$’000
Share
premium
US$’000
Warrants
reserve
US$’000
Translation
reserve
US$’000
Accumulated
losses
US$’000
Total
US$’000
6,374
81,455
2,089
(8,746)
(15,759)
65,413
-
-
-
-
-
-
-
-
-
-
-
(13)
-
(13)
-
-
-
-
-
-
-
1,345
(4,456)
(4,456)
(4,456)
-
-
-
-
-
1,345
-
20
20
1,345
(4,456)
(4,456)
(3,111)
(13)
20
7
6,374
81,442
2,089
(13,202)
(14,394)
62,309
6,374
81,442
2,089
(13,202)
(14,394)
62,309
-
-
-
-
1,687
-
-
1,687
8,061
-
-
-
-
7,979
(112)
-
7,867
89,309
-
-
-
-
(1,230)
-
-
(1,230)
-
6,603
6,603
6,603
-
-
-
-
(2,799)
(2,799)
-
-
(2,799)
-
-
59
59
6,603
6,603
3805
8,436
(112)
59
8,383
859
(6,599)
(17,134)
74,496
Page 77
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2017
(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 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
Year to
December 31,
2017
5 months to
December 31,
2016
$’000
$’000
(2,906)
59
1,657
18
74
(1,098)
-
(9,133)
707
1,383
20
(2,132)
(4)
(69)
(802)
-
(6,243)
364
(8,426)
(5,879)
8,435
(112)
8,323
(1,201)
1,171
45
15
-
(46)
(46)
(6,727)
8,155
(257)
1,171
Page 78
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1. Accounting policies
The accounting policies of the Company are consistent with those adopted by the Group with the addition of the
following:
Investments
Investments are stated at their cost less impairment losses.
C2. Investments and loans
Cost
Balance at August 1, 2016
Advances
Repayments
Effect of movements in foreign exchange
Balance at December 31, 2016
Balance at January 1, 2017
Advances
Repayments
Effect of movements in foreign exchange
Balance at December 31, 2017
Investment in
subsidiary
$’000
Loans
$’000
Total
$’000
1,498
-
-
(100)
1,398
54,363
6,243
(364)
(1,834)
58,408
55,861
6,243
(364)
(1,934)
59,806
1,398
58,408
59,806
-
-
134
9,133
(707)
4,624
9,133
(707)
4,758
1,532
71,458
72,990
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
Ordinary
100%
Holding company England
Rambler Metals and Mining
Canada Limited
Common
100% (indirectly) Exploration,
Canada
development and
mining
1948565 Ontario Inc.
Common
100%
Exploration
Canada
The registered address of Rambler Mines Limited is Salatin House, 19 Cedar Road, Sutton, Surrey SM2 5DA,
England and for the two Canadian subsidiaries the registered address is P.O. Box 610, Baie Verte, NL, Canada
A0K 1B0.
The aggregate value of shares in subsidiary undertakings is stated at cost.
The loans to the subsidiary undertakings are interest free.
Page 79
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C3. Deferred tax
The Company has incurred losses which will be available for offset against future taxable profits. Given the continuing
profitability of one of the Company’s subsidiaries it has been concluded that the Company has sufficient evidence of
future taxable profits to justify the recognition of a deferred tax asset of $1.7 million (2016: US$1.4 million).
C4. Trade and other receivables
Sales taxes recoverable
Prepayments and accrued income
C5. Cash and cash equivalents
Bank balances
Cash and cash equivalents in the statement of cash flows
C6. Trade and other payables
Trade payables
Non trade payables
Accrued expenses
C7. Related party transactions
December
31, 2017
December
31, 2016
$’000
$’000
16
12
28
7
39
46
December
31, 2017
December
31, 2016
$’000
$’000
15
15
1,171
1,171
December
31, 2017
December
31, 2016
$’000
67
-
150
217
$’000
1
-
142
143
The Company has a related party relationship with its subsidiaries (see note C2) and with its directors and executive
officers (see note 25).
Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note C2.
Other related parties
Transactions with other related parties are detailed in note 25.
Page 80