REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
ANNUAL REPORT AND
AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2018
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Company Information
Chairman’s Statement
Strategic Report
Corporate Governance Statement
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, 2018
Directors:
Secretary:
Registered office:
T I Ackerman#
E C Chen#
B Labatte#
B A Mills#
G R Poulter#
M V Sander#
A A Booyzen (appointed 1st April 2019)
N P Williams (resigned 31st March 2019)
P Mercer (resigned 18th April 2019)
T Sanford (appointed 19th April 2019)
3 Sheen Road
Richmond Upon Thames
Surrey
TW9 1AD
Registered number:
5101822 (England and Wales)
Auditor:
Bankers:
Solicitors:
#Independent directors
Deloitte LLP
Hill House
1 Little New St
London EC4A 3TR
HSBC plc
69 Pall Mall
London SW1Y 5EY
Norton Rose Fulbright
3 More London Riverside
London SE1 2AQ
Page 2
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2018
Fiscal 2018 saw the completion of the 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. The
operation was successful in setting a throughput record for the year of approximately 364,000 dry metric tonnes (‘dmt’),
a seven percent increase year over year. At the Nugget Pond copper and gold milling facility processing improvements
continued to show the plant’s ability to process at the targeted throughput rate while achieving daily record ore
throughput as high as 1,395 dmt per day.
The mine ventilation project was successfully completed during March 2018. The mine’s ventilation system was
reversed allowing for increased “in mine time” which has provided for consistent increases in mine production and
improved cycle times. Given the productivity improvements we are now turning our attention to increasing the overall
mill feed grade and returning the Company to positive cash flows. There is a positive long term outlook for the copper
price, which bodes well for future mine expansion plans.
With the completion of the Phase II expansion, and an expected 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.
The Board appointed Andre Booyzen as the Chief Executive Officer effective 3rd April 2019. Andre will strengthen
Rambler’s position as an expanding, profitable copper
gold producer with a long life and extensive growth opportunities
looking ahead. Mr. Booyzen has over 15 of years of experience in positions of growing accountability in the mining
sector. He has a history of consistent delivery of safety improvements, operational performance improvements, and
financial turnarounds at underground mines, most recently at Mandalay Resources’ Costerfield mine, Australia.
‐
FINANCIAL RESULTS
The Company’s financial results for the period reflect the stage reached in its Phase II expansion. As a result, the
Company generated higher revenue compared with prior periods as well as higher production.
The results include:
• The Company generated revenue from sale of commodity and related services of US$31.4 million (2017: US$28.3
million) from the sale of copper concentrate containing gold and silver by-products.
•
An operating loss of US$17.2 million (2017: US$7.4 million loss).
• Cash outflow of US$2.3 million from operations (2017 cash generated of US$1.3 million) during the year.
•
•
•
•
The consolidated loss after taxation for the year amounted to US$20.0 million (loss per share of US$0.033)
compared to a loss of US$4.1 million for 2017 (loss per share of US$0.008).
Earnings before interest, taxes, depreciation, amortisation (“EBITDA*”) for the year was a loss of US$7.5 million
(2017: earnings of US$2.8 million).
The gross assets of the Company amounted to US$82.2 million (2017: US$97.1 million) at the end of the year.
This included mineral property of US$35.4 million (2017: US$38.8 million) and intangible assets of US$3.2 million
(2017: US$3.4 million) which consists of accumulated deferred exploration and evaluation expenditures.
The Company’s cash balance at year end was US$0.2 million and net debt* was US$11.4 million (2017: US$6.6
million). Cash balance as of signing date was US$2.8 million.
Words with the symbol * are defined as Alternative Performance Measures. For more information on APMs used by
the Group, including definitions, please refer to page 18 of the Annual Report.
Page 3
RAMBLER METALS AND MINING PLC
CHAIRMAN’S STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
• Copper prices diminished materially during the year dropping from US$ 3.26/lb on January 1st 2018 to US$2.71/lb
on December 31st 2018. The Company remains confident of an improving price outlook due to increasing
shortages of metal and continued pressures from further downside supply issues.
We are confident that we will reach our targeted production in 2019 and we look forward to updating the market on our
progress over the coming months.
B Mills
Chairman
June 4, 2018
Page 4
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018
STRATEGIC REPORT, including appendices, is intended to help the reader understand Rambler Metals
and Mining plc (‘the parent company’) and its subsidiaries (the ‘Company’ or ‘Rambler’), our operations and
our present business environment. It has been prepared as of April 30, 2019 and covers the results of
operations for the year ended December 31, 2018. This discussion should be read in conjunction with the
audited Financial Statements for the year ended December 31, 2018 and notes thereto. These consolidated
financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) and their interpretations adopted by the International Accounting Standards Board (“IASB”), as
adopted by the European Union and with IFRS and their interpretations adopted by the IASB. The
Company’s presentation currency is US dollars (US$) and the financial information is in US$ unless
otherwise stated. These statements together with the following STRATEGIC REPORT are intended to
provide investors with a reasonable basis for assessing the potential future performance. See Forward
Looking Statement disclosure in other matters (page 20).
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 on page 17) 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. Optimizing production to above the 1,300 mtpd optimized design and further reducing costs. 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.
2. Following sustained production and improved cash flow at the planned tonnes and grade the Company
will continue with engineering studies with a view to further increase production to 2,000 mtpd and
beyond. Detailed engineering will continue in 2019/2020 and will include: underground material
handling options; shaft rehabilitation; expanding the Nugget Pond mill versus building a higher capacity
mill nearer to the mine.
3. 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, as well as some nearby properties.
See Forward Looking Information in other matters (page 20).
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 Company’s Ordinary Shares trade on the London AIM market under the symbol “RMM”.
Page 5
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2018
Production of 364,176 dmt for the year (2017: 339,631 dmt), a 7% increase, with copper concentrate
grade of 28% (2017: 28%).
Intersected significant Ming North Zone mineralization in the underground drilling program including
hole R18-722-12 which returned 25.5 meters downhole length of 9.4% copper with 5.1 g/t gold.
Revenue for the year was US$31.4 million (2017: US$28.3 million). The increase in revenue compared
to prior year is mainly due higher production and higher copper prices during the year.
Average prices for the year were US$2.93 (2017: US$2.79) per pound of copper and US$1,265 (2017:
US$1,257) per ounce gold.
Operating loss for the year was US$17.2 million (2017: US$7.4 million). EBITDA* for the year was a
loss of US$7.5 million (2017: earnings of US$2.8 million).
Cash production costs for the year were US$32.0 million (2017: US$25.4 million). Net direct cash
costs net of by-product credits (‘C1 costs*’) for the year were US$3.52 per pound of saleable copper
(2017: US$2.86). Refer page 18.
Cash outflow from operations for the year was US$2.3 million (2017: Cash generated of US$1.3
million).
SUBSEQUENT EVENTS
•
•
In January 2019 the Company, via its wholly-owned subsidiary, Rambler Metals and Mining Canada
Limited, received a bridge loan from CE Mining III Rambler Limited (“CEIII”) of US$1 million bearing
interest of 10% per annum in support of short-term working capital requirements at its Canadian
operation.
In March 2019 the Company closed a private placement funding of US$11 million by way of an
issuance of 599,781,897 new ordinary shares in the capital of Rambler at a subscription price of
US$0.018 (£0.014) per ordinary share. The proceeds of the subscription were for working capital
purposes and to repay the US$1 million unsecured loan owing to CEIII. The loan was fully repaid in
March 2019 including interest.
• An Open Offer for shares was closed in April 2019 with 37,940,043 ordinary shares issued for proceeds of
£524,860.58.
• The shares of the company delisted from TSX Venture Exchange (TSXV) at the close of 15th January
2019. The minimal trading activity of the Company’s Shares on the TSXV no longer justified the
expense and administrative requirements associated with maintaining this dual listing.
Page 6
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2018
Revenue
A total of 15,525 dmt (2017 – 14,907 dmt) of concentrate was provisionally invoiced during the year
containing 4,187 (2017 – 3,968) tonnes of saleable copper metal and 4,189 (2017 – 3,357) ounces of
saleable gold at an average price of US$2.93 (2017 – US$2.79) per pound copper and US$1,264 (2017 -
US$1,257) per ounce gold, generating revenue of US$29.7 million (2017 – US$30.3 million).
Costs
Cash production costs for the year were US$32.0 million (2017: US$25.4 million). Net cash direct costs
per pound of copper net of by-product credits (‘C1*’) for the year were US$3.52 per saleable copper pound
(2017 - US$2.86). Saleable copper in the period was 9.1 million pounds (2017 – 8.7 million pounds).
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 2017.
Sustained throughput at 1,250 mtpd and improvements in grade towards an average of 1.5% Cu will have
a positive effect on C1 costs* which are expected to decline towards US$2.00 and will decline further as
production moves away from PPCF mining towards less expensive bulk mining methods (longitudinal
stoping).
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.
C1 and C3 costs per pound of
saleable copper
C1
C3
6.00
5.00
4.00
3.00
2.00
1.00
0.00
8
1
0
2
1
Q
8
1
0
2
2
Q
8
1
0
2
3
Q
8
1
0
2
4
Q
Avg Cu
price per
pound
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 Alternative Performance Measures (page 18)
for a reconciliation of these measures to reported production expenses.
Page 7
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
Loss
The net loss before tax for the year was US$18.3 million (2017: US$5.4 million).
EBITDA* for the year was a loss of US$7.5 million (2017: earnings of US$2.8 million).
Cash flow and cash resources
Cash outflow from operations for the year were US$2.3 million (2017: cash generated of US$1.3 million).
The decrease in the cash generated relates to the operating loss and changes in working capital. The cash
balance at December 31, 2018 was US$0.2 million (2017: 3.4 million).
Financing and Investment
During the year, a repayment of US$1.8 million (2017: US$1.1 million) (project to date $20.4 million) was
made on the Company’s Gold streaming from the delivery of 1,395 payable ounces (2017: 876) of gold
(project to date 14,257 (2017: 12,862) ounces have been delivered).
Net debt* excluding the Gold streaming was US$11.4 million (2017: US$6.6 million).
In March 2019 the Company closed a private placement funding of US$11 million by way of an issuance
of 599,781,897 new ordinary shares in the capital of Rambler at a subscription price of US$0.018 (£0.014)
per ordinary share. The proceeds of the subscription were for working capital purposes and to repay the
US$1 million unsecured loan owing to CEIII. The loan was fully repaid in March 2019 including interest.
An Open Offer for shares was closed in April 2019 with 37,940,043 ordinary shares issued for proceeds of
£524,860.58.
Page 8
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
FINANCIAL RESULTS FOR YEAR ENDED DECEMBER 31, 2018 (Continued)
OPERATIONAL SUMMARY
Ore and Concentrate Production Summary for Fiscal 2018
PRODUCTION
2018
2017
Dry Tonnes Milled
364,176
339,631
Copper Recovery (%)
96.3
95.6
Gold Recovery (%)
70.7
60.7
Copper Head Grade (%)
1.24
1.27
Gold Head Grade (g/t)
0.57
0.58
CONCENTRATE
(Delivered to Warehouse)
Copper (%)
Gold (g/t)
2018
2017
28.1
27.7
9.4
8.0
Dry Tonnes Produced
15,525
14,907
Saleable Copper Metal (tonnes)
4,187
3,968
Saleable Gold (ounces)
4,189
3,357
• For the fiscal year the Nugget Pond copper and gold milling facility achieved record throughput for ore processed.
The facility processed 364,176 dmt at 1.24% copper and 0.58 g/t gold in 2018.
• Recovery of metal to concentrate was 96.3% and 70.7% for copper and gold respectively for the quarter (96.1%
and 61.0% for the 2017 fiscal year). For the full year the operation produced 15,525 tonnes (2017: 14,907 tonnes)
of concentrate containing saleable metal of 4,187 tonnes (2017: 3,968 tonnes) of copper and 4,189 ounces (2017:
3,357 ounces) of gold.
• Rambler delivered on all of its safety targets during 2018. For the fiscal year there was one lost time incident and
no fatalities.
• Mine performance has shown significance improvements from 2018 compared to 2017. Mostly notably
improvements include:
o Production drilling meters increased 20% (2018: 38,179 m, 2017: 31,857 m)
o Total material hauled increased 8% (2018: 1,508 mtpd, 2017: 1,399 mtpd)
o Production blasting increased 27% (2018: 141,660 dmt, 2017: 111,531 dmt)
o Mine ore produced increase 6% (2018: 364,363 dmt, 2017: 343,032 dmt)
Page 9
OUTLOOK
Management continues to pursue the following objectives:
Further evaluate the potential of a Phase III operation with increase in mine production and mill throughput to 2,000
mtpd, and beyond.
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.
Updating the resource model and mine plans to enable access to higher grade areas of the mine, sooner.
In late 2019 and/or early 2020 to continue with the surface exploration diamond drilling program aimed to double
the current plunge length of the known massive sulphide and LFZ mineralization.
Page 10
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
FINANCIAL REVIEW
Fiscal
2018
(US$000’s)
Commentary
Revenue of US$31.4 million was generated through the sale of 15,525 dmt of copper concentrate
containing 4,187 tonnes of accountable copper metal and 4,189 ounces of accountable gold. This
compared with revenue of US$28.3 million in 2017 which was generated through the sale of 14,907 dmt
of copper concentrate containing 3,968 tonnes of accountable copper metal and 3,357 ounces of
accountable gold. Revenue also includes a decrease in fair value adjustments with regards to provisional
invoices of US$1.7 million (2017: increase of 2.0 million)
Production costs relate to the processing and mining costs associated with the Company’s Ming Mine
and include processing costs of US$6.3 million (2017: US$5.6 million), mining costs of US$24.9 million
(2017: US$20.8 million) and depreciation and amortisation of US$9.9 million (2017: US$7.8 million). The
cost of production of pounds of copper increased during the year due to lower head grades compared to
the previous year.
General and administrative expenses were higher than the previous year by US$2.4 million mainly due
to increase in legal and professional fees by US$ 2.2 million as Highland Group, a consulting firm,
conducted an efficiency program during the year.
Foreign exchange gains/(losses) arising on the Gold streaming increased in the year as a result of
weakening of the Canadian dollar against the US dollar during the period.
Income tax debit The income tax debit is the deferred tax debit due to full reversal deferred tax asset of
Rambler UK as it is not expected the company will make profit to recover losses. The credit for 2017
includes an amount of US$1.2 million in respect of mining tax.
29,718
41,091
5,823
(1,503)
(1,680)
3,879
Addition to Mineral property The Company incurred costs of US$3.9 million in the year which included
labour costs of US$1.9 million and underground development costs of US$2.9 million. In 2017 the
Company incurred costs of US$5.3 million including labour of US$2.6 million and underground
development costs of US$2.7 million.
3,189
Capital spending on property, plant and equipment during the year included US$1.7 million (2017:
US$6.1 million) spent on underground equipment and US$1.5 million (2017: US$2.7 million) spent on
assets under construction including ventilation upgrades and reclamation and closure works related
directly to the Phase II expansion.
Comparatives
2017
(US$000’s)
B/ (W)*
30,339
(2)%
34,242
(20)%
3,441
(69)%
940
(260)%
1,296
(229)%
5,278
(27)%
8,053
(60)%
Capital spending on exploration and evaluation in the year relates to Little Deer US$ 30K (2017:
US$41K) and Mine Ming US$18K (2017: 979K), the spend reduced compared to prior year due to
increased focus on delineation drilling at the Ming Mine operation.
48
1,020
(95)%
*B / (W) = Better / (Worse)
Page 11
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
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 enough operating cash flows to support the day to day activities
and future growth requirements of the business, but there is a risk that production not ramping up in line with forecasts
or lower than forecast commodity prices will result in the need for additional financing. Refer to the “subsequent events”
above for details of equity raising.
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$6.6 million for the year (2017: US$10.4 million). Cash of
US$3.9 million (2017: US$5.3 million) was spent on the Company’s Mineral Property, US$3.2 million (2017: US$4.1
million) was spent on property, plant and equipment and US$0.05 million (2017: US$1.0 million) was spent on
exploration at the Ming mine.
Cash flows generated from financing activities during the year amounted to US$5.8 million (2017: US$10.2 million) and
included repayments of the Gold streaming of US$1.8 million (2017: US$1.1 million), finance lease repayments of
US$2.1 million (2017: US$2.6 million) and advanced purchase facility repayments US$1.5 million (2017: US$1.1
million) offset by US$2.0 million received from CE III Mining Rambler Limited, US$0.6 million from government
assistance, US$1.5 million from Sandstorm and funds received, net of expenses, on issue of share capital of US$7.3
million (2017: 8.3 million).
The Company is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in
respect of the reclamation and closure liability at the existing Nugget Pond Mill and Ming mine. At period end the
Company holds bearer deposit notes totalling US$3.2 million (FY2017: US$3.5 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 streaming 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, equity 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 the Company’s financial liabilities are measured at amortised cost.
Page 12
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION (CONTINUED)
Financial Instruments (continued)
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, 2018.
COMMITMENTS AND LOANS
Gold streaming
In March 2010, the Company entered into an agreement (“Gold streaming”) 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. Rambler purchases the payable gold from the market and repayment is made in kind to Sandstorm.
The Gold streaming is accounted for as a financial liability carried at fair value through profit and loss. The liability is
based on management’s best estimate of the time of delivery of payable gold, the total amount of gold expected to be
produced over the life of the mine, the timing of production, the Company’s view on forecast gold prices and the rate
implicit in the loan at the date of inception.
The movement in the fair value of the liability recognised in the income statement during the period was a credit of
US$1.3 million (2017: US$0.6 million charge).
The Gold streaming is secured by a fixed and floating charge over the assets of the Company.
Government Assistance
To date the Company has received US$1.2 million (2017: US$0.6 million) 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.
Page 13
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
COMMITMENTS AND LOANS (CONTINUED)
Advance Purchase Facility
During 2017, the Company repaid the balance of an advanced purchase agreement originally signed in July 2015 with
Transamine Trading S.A. (“Transamine”). Then in December 2017, the Company entered into a new advance purchase
facility with 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.
At December 31, 2018 the balance was US$3.8 million (2017: US$4.0 million). The loan is repayable by eighteen
monthly instalments of US$222,222 plus interest at 6.75% per annum commencing June 28, 2018.
Related party loan
CE Mining III Rambler Limited
In November 2018 the Company received a convertible loan of US$2 million from CE Mining III Rambler Limited with
a maturity of one year. The loan is unsecured, convertible at the option of CE Mining III Rambler Limited on or before
November 26, 2019 at a share price of C$0.05. It carries interest at 10.0% per annum. Expenses worth US$0.3 million
were spent with regards to the loan, these expenses have been classified as deferred expenses and will be amortised
during the loan term. At 31st December 2018 the balance was US$1.7 million including interest of US$0.02 million and
deferred cost of US$0.3 million.
CE Mining II Rambler Limited
In October 2017 the company received a loan of US$1 million from CE Mining II Rambler Limited. The loan was
unsecured and carried interest at 9.5% per annum. In June 2018 Company repaid U$1.0 million including interest.
Finance lease balances
At December 31, 2018 the Company had finance lease commitments of US$3.7 million (2017: US$4.6 million). The
Company entered into finance lease commitments of US$1.6 million (2017: US$2.2 million) to finance the acquisition
of underground mobile equipment during the period.
Subsequent events
The group received a bridge loan from CE Mining III Rambler Limited (“CEIII”) of US$1 million subsequent to the year
end. Refer to note 26 for further details.
Page 14
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off balance sheet arrangements.
RELATED PARTY TRANSACTIONS
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its directors and executive officers.
Transactions with key management personnel
The directors’ compensations were as follows:
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
255
242
21
19
21
19
86
19
21
19
17
15
21
19
442
352
Dec 31, 2018
Dec 31, 2017
No.
‘000
No.
‘000
7,800
4,575
7,800
4,575
Dec 31, 2018
Dec 31, 2017
$’000
$’000
585
508
27
26
116
58
728
592
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 Williams
Total key management personnel compensations were as follows:
Short-term employee benefits
Social security costs
Share-based payments
*Norman Williams resigned as a director from 31st March 2019.
Page 15
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
RELATED PARTY TRANSACTIONS (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
Registered address
Rambler Mines Limited
Ordinary
100%
Holding company
England
Rambler Metals and
Mining Canada Limited
Common
100%
(indirectly)
Exploration,
development and
mining
Canada
1948565 Ontario Inc.
Common
100%
Exploration
Canada
3 Sheen Road
Richmond Upon
Thames, Surrey
TW9 1AD
PO Box 610
Baie Verte, NL A0K
1B0
PO Box 610
Baie Verte, NL A0K
1B0
Ultimate and controlling party
CE Mining II Rambler had shareholding of 60% as of 31st December 2018. The Group also has a number of related
party loans, details of which are disclosed on page 14.
Page 16
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
LOCATION MAP
Page 17
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
ALTERNATIVE PERFORMANCE MEASURES
The Company has included Alternative 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, earnings before
interest, taxes, depreciation, amortisation (‘EBITDA’) and net debt.
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
C3 per Pound of Saleable Copper
All amounts in 000s of US Dollars except pounds of saleable copper
Net direct cash costs (see above)
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
Year to Dec
31, 2018
Year to Dec
31, 2017
$
$
$
$
$
$
31,204
31,204
4,564
(3,730)
32,038
9,091
$
$
$
$
$
26,444
26,444
2,173
(3,224)
25,393
8,876
3.52
$
2.86
Year to Dec
31, 2018
Year to Dec
31, 2017
$
32,038
$
9,921
878
653
43,490
$
9,091
25,393
7,824
1,061
463
34,741
8,876
4.78
$
3.91
$
$
Page 18
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
ALTERNATIVE PERFORMANCE MEASURES (continued)
EBITDA is a widely used metric of corporate profitability. EBITDA is a measure of a company's overall financial
performance and is used as an alternative to simple earnings or net income in some circumstances. EBITDA is used
to analyze and compare profitability among companies and industries, as it eliminates the effects of financing and
capital expenditures.
Earnings before interest, tax and depreciation
All amounts in 000s of US Dollars
Profit/(loss) after tax per Financial statements
Taxation
Net interest
Depreciation and amortisation
EBITDA
$
$
Year to Dec
Year to Dec
31, 2018
31, 2017
(20,046)
$
(4,148)
1,680
895
(1,296)
379
9,921
7,824
(7,550)
$
2,759
Net debt is a liquidity metric used to determine how well a company can pay all its debts if they were due immediately.
Net debt shows much debt a company has on its balance sheet compared to its liquid assets. Net debt shows how
much cash would remain if all debts were paid off and if a company has enough liquidity to meet its debt obligations.
Cash
Finance leases
Related party loan
Government assistance
Sandstorm loan
Advance purchase facility
Net debt
2018
US$’000
2017
US$’000
241
3,351
(3,707)
(1,733)
(796)
(1,505)
(3,864)
(11,364)
(4,570)
(1,002)
(390)
-
(3,996)
(6,607)
Page 19
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
OTHER MATTERS
Outstanding Share & Option Data
As at the date of this STRATEGIC REPORT the following securities are outstanding:
Security
Shares issued or
Issuable
Common Shares
659,139,702
Warrants
Options
-
20,677,000*
*if all options have fully vested
Weighted Average Exercise Price
--
--
US$0.06
For further assistance Mr. Tim Sanford, Corporate Secretary can be reached directly at +1-709- 532-5736 or
tsanford@ramblermines.com.
Forward Looking Information
This STRATEGIC REPORT 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, 2018. 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 STRATEGIC REPORT, there may
be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Page 20
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
OTHER MATTERS (continued)
Forward Looking Information(continued)
Unless stated otherwise, statements containing FLI herein are made as of the date of this STRATEGIC REPORT 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 STRATEGIC
REPORT 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
STRATEGIC REPORT 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
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
copper
and/or
concentrator
simultaneously with
the
Assumptions
Risk Factors
Actual expenditures from operations will
not exceed revenues
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
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 grade shortfalls
Development delays
access to production ore
reducing
Economic viability
Further information
Additional information relating to the Company is on London Stock Exchange at www.londonstockexchange.com and
on the Company’s web site at www.ramblermines.com.
Page 21
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
A review of the Company’s business and future developments is set out in the Strategic Report 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)
$4.50
$3.50
$2.50
$1.50
Page 22
RAMBLER METALS AND MINING PLC
STRATEGIC REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED)
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Foreign currency risk
The Company has a small amount of cash resources and certain liabilities including the Gold streaming and the
advance purchase facility 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. Please refer to page 12 for further information on the liquidity of 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:
A A Booyzen
President and CEO
Director
June 4, 2019
Page 23
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT
The Board of Rambler Metals and Mining Plc (the “Company”) is committed to the principles of good corporate
governance and recognises the importance of improving the opportunity and potential for the success of the Company
and increasing shareholder value over the medium to long-term.
We believe strongly in the value and importance of robust corporate governance and in our accountability to all the
Company’s stakeholders, including shareholders, employees, customers, contractors, suppliers and the communities
in which the Company operates.
Rambler currently complies with the principles of the Quoted Companies Alliance Corporate Governance Code (the
“QCA Code”) to the extent that the Directors consider it appropriate, having regard to the Company’s size, board
structure, nature of operations and available resources.
The QCA Code identifies ten principles to be followed for companies to deliver growth in long term shareholder value,
encompassing an efficient, effective and dynamic management framework accompanied by good communication to
promote confidence and trust. The sections below set out the ways in which the Company applies the ten principles
of the QCA Code in support of the Company’s medium to long-term success, together with any areas of non-
compliance.
ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTE LONG-TERM VALUE FOR SHAREHOLDERS
The strategy and business operations of the Company are set out in the Strategic Report of the Company’s Annual
Report.
The Company’s strategy and business model and amendments thereto, are developed by the Chief Executive Officer
and his senior management team and approved by the Board. The senior management team, led by the Chief
Executive Officer, is responsible for implementing the strategy and managing the business at an operational level.
More specifically, and in order to deliver the optimal medium- and long-term value for its shareholders, the Board has
adopted a three-fold strategy of operational reliability, increased production and cost management, resulting in an
optimal and financially viable company.
The Board recognizes that through execution of this strategy, there will be opportunities to convert resources into
reserves and thereby extend the mine life beyond the current life-of-mine plan.
The Company’s ability to execute its strategy is highly dependent on the skills and abilities of its people. We undertake
ongoing initiatives to foster effective and good staff engagement and ensure that remuneration packages are
competitive in the market in which the company operates.
The Board manages the risk via the Safety and Health Committee and the Technical Committee.
SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND EXPECTATIONS
The Board is committed to maintaining a regular dialogue with both existing and potential new shareholders in order to
communicate the Company’s strategy and progress and to understand the needs and expectations of shareholders.
The Chief Executive Officer and Chief Financial Officer are principally responsible for shareholder liaison and have
regular dialogue with institutional investors in order to develop an understanding of their views.
The Company’s investor relations activities encompass dialogue with both institutional and private investors. This could
include meetings with analysts, investors and institutional shareholders of the Company.
The Company also endeavours to maintain a dialogue and keep shareholders informed through its public
announcements and its corporate website, www.ramblermines.com where the Annual Report as well as investor
presentations and interim accounts are available. The Annual General Meeting of the Company, attended by a quorum
of Directors, also gives the Directors the opportunity to report to shareholders on current and proposed operations
which are in the public domain and enables them to express their views of the Company's business activities. The
Board attaches importance to maintaining good relationships with all its shareholders and ensures that all price
sensitive information is released to all at the same time in accordance with the AIM Rules.
Page 24
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND EXPECTATIONS (CONTINUED)
The Company has not historically announced the detailed results of shareholder voting to the market. However, the
Board may consider doing so going forward.
The Company also maintains dialogue with interested equity research analysts and whilst the Company has not
historically hosted dedicated analyst meetings in respect of its annual and interim financial results, the Chief Executive
Officer and Chief Financial Officer may also consider doing so in future.
TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES AND THEIR IMPLICATIONS FOR
LONG-TERM SUCCESS
The Board recognises that the success of the Company is reliant on the stakeholders of the business and, to this effect,
the Company engages with these stakeholder groups on a regular basis. The Board recognises its responsibility under
UK and Canadian corporate law to promote the success of the Company for the benefit of its members. The Board
also understands that it has a responsibility towards employees, partners, suppliers, contractors and the local
communities in which it operates and has in place a range of processes and systems to ensure that there is close
oversight and contact with its key resources and relationships.
The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the
opportunity to raise issues and provide feedback to the Company. This feedback can be provided either during formal
feedback sessions or using the ’contact us’ page of our website (www.ramblermines.com/contact.php).
Stakeholder
Shareholders
Customers
of
Reason for
Engagement
Shareholders are the
the
owners
the
Company and
board’s
primary
mission is to increase
shareholder value
Our customers are
for
essential
generation
of
revenues
Suppliers and partners The
Company
Staff and Employees
engages
with external suppliers
Recruiting
and
retaining highly skilled
motivated
and
professions is one of
the key drivers of our
success
How we engage
As described in section “Seek to understand and meet
shareholder needs and expectations”.
Senior executives maintain regular dialogue with the
company that buys the Company’s concentrates to
ensure a good relationship that encourages pro-active
issue resolution.
We work to ensure that relevant members of staff
engage in a respectful and professional manner with
suppliers. We operate systems to ensure that supplier
invoices are processed and paid within agreed
timeframes.
In addition
regular communication between
Directors and employees, site management conducts
regular staff meetings to promote effective two -way
communication with agreement on goals, targets and
aspirations of the employees and the Company.
to
Page 25
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
EMBED EFFECTIVE RISK MANAGEMENT, CONSIDERING BOTH OPPORTUNITIES AND THREATS
The Board has overall responsibility for ensuring risk is appropriately managed across the business. The Board sets
clear strategic objectives for the business. The risks to the achievement of those objectives are identified by corporate
and divisional management and a few examples are shown below. The audit committee provides further independent
review and robust challenge.
The Board is satisfied with the effectiveness of the system of internal controls but, by their very nature, these procedures
can provide reasonable, not absolute, assurance against material misstatement or loss. Identified risks are evaluated,
both before and after controls and mitigating actions have been applied, as to their likelihood of occurring and potential
financial and reputational impact. Risks are treated in accordance with risk appetite, which has been defined by the
Board across a range of risk categories.
Risk Example 1: 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. The Group maximum
exposure to credit risk at December 31, 2018 was represented by receivables and cash resources.
Risk Example 2: Foreign currency risk
The Company has a small amount of cash resources and certain liabilities including the Gold streaming and the
advance purchase facility denominated in US dollars. All other assets and liabilities are denominated in Canadian
dollars and GB pounds. Revenue is generated in US dollars while the majority of the expenditure is incurred in
Canadian dollars and, to a lesser extent, GB pounds. The Company has a downside exposure to any strengthening of
the Canadian Dollar or GB pound as this would increase expenses in US dollar terms. This risk is mitigated by reviewing
the holding of cash balances in Canadian Dollars and GB pounds. Any weakening of the Canadian Dollar or GB pound
would however result in the reduction of the expenses in US dollar terms. In addition, movements in the Canadian
dollar and GB pound/US Dollar exchange rates would affect the Consolidated Balance Sheet.
The Audit Committee meets not less than twice a year and considers the Company's financial reporting (including
accounting policies) and internal financial controls. The committee receives reports from management and from the
Company's auditors. The Company has in place a series of procedures and controls designed to identify and prevent
the risk of loss. These procedures are formally documented and are reported on. The Audit Committee has reviewed
the systems in place and considers these to be appropriate. The success of the Company depends on its ability to
mitigate and understand the risks facing the business and take appropriate action in a timely manner. The Board meets
at least quarterly to evaluate the Company’s risk appetite.
Risk Example 3: Cost Control
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The
Company’s actual performance, compared to the budget, are reported to the Board on a monthly basis.
The Company maintains appropriate insurance cover in respect of actions taken against the Directors because of their
roles, as well as against material loss or claims against the Company. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
The CEO and CFO conduct meetings with their team at least once a week to discuss their business area and to
consider new risks and opportunities presented to the Company, making recommendations to the Board and/or Audit
Committee as appropriate. The management discussions and analysis are presented in a director’s report presented
twice a year and is available on the website.
A summary of the principal risks and uncertainties facing the Company, as well as mitigating actions, are available in
the Company’s Annual Reports which are available on the company website at:
http://www.ramblermines.com/financial-statements.php
Page 26
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY THE CHAIR
Rambler’s Board currently consists of six non-executive directors and one executive director. It is the Board's policy to
maintain independence by having at least half of the Board comprising non-executive directors who are free from any
business or other relationship with the Company. The structure of the Board ensures that no one individual or group
dominates the decision-making process.
All the directors are subject to election by shareholders at the first Annual General Meeting after their appointment to
the Board and then subject to re-election at annual intervals.
Details of the directors including brief biographies are set out at http://www.ramblermines.com/directors-and-
officers.php
The Board is responsible to the Company’s shareholders for the proper management of the Company and formally
meets at least on a quarterly basis.
The Compensation, Corporate Governance and Nominating Committee meets at least once a year and is responsible
for making decisions on directors' remuneration packages. Remuneration of executive directors is established by
reference to the remuneration of executives of equivalent status both in terms of level of responsibility of the position
and by reference to their job qualifications and skills. The Compensation Committee will also have regard to the terms
which may be required to attract an executive of equivalent experience to join the Board from another company. Such
packages include performance related bonuses and the grant of share options.
Other committees such as the Safety, Health and Environment Committee and the Technical Committee provide
technical oversight directly to operations and key management personnel.
The Board considers it collectively has an appropriate balance of skills and experience, as well as an appropriate
balance of personal qualities and capabilities. Further, the Board believes it has a good balance between executive
and non-executive Directors and considers all six non-executive directors as being independent, thus considers that
the balance is appropriate for a company of its size.
At this stage the CFO is not a member of the Board of Directors. However, given the size and culture of the company,
the CFO is invited to attend and participate in every board meeting to provide expertise and report on the financial
health of the company.
Board members are all expected to fully engage in board meetings and activities they have committed to. All board
members are part of, and actively participate in at least one board sub-committee. Board members are also expected
to review weekly and monthly operations reports, as well as half yearly and annual reports.
ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY UP-TO-DATE SKILLS
The Board considers that all the directors are of sufficient competence and calibre to add strength and objectivity to its
activities and bring considerable experience in the financial and operational development of the Company.
Details of the directors including brief biographies are set out at http://www.ramblermines.com/directors-and-
officers.php
The Board also has the relevant professional and technical skills to ensure they can fulfil their duties.
The Board believes that the current skills of the directors reflect a broad range of both commercial and professional
skills across the relevant industries and territories in which the Company operates, plus the Board has sufficient
experience of operating in public markets.
The Board shall review annually the appropriateness and opportunity for continuing professional development whether
formal or informal.
The Company is committed to a culture of equal opportunities for all employees regardless of gender. The Board will
be diverse in terms of its range of culture, nationality and international experience. Six Directors are currently male
and there is one female on the Board. The Board will seek opportunities in future to increase the diversity of the Board.
Page 27
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT OBJECTIVES, SEEKING CONTINUOUS
IMPROVEMENT
The members of the Board are evaluated each year by way of peer appraisal. The appraisal seeks to determine the
effectiveness and performance of each member with regards to their specific roles as well as their role as a Board
member in general.
The appraisal system seeks to identify areas of concern and make recommendations for any training or development
to enable the Board member to meet their objectives which will be set for the following year. The appraisal process will
also review the progress made against prior year targets to ensure any identified skill gaps are addressed. Details of
the reviews, the findings and agreed actions may be made available in future Annual Reports, at the discretion of the
Board.
Whilst the Board considers this evaluation process is currently best carried out internally, the Board will keep this under
review and may consider independent external evaluation reviews in due course as the Company grows.
As well as the appraisal process, the Board monitors the non-executive directors’ status as independent to ensure a
suitable balance of independent non-executive and executive directors remains in place.
The Board may utilise the results of the evaluation process when considering the adequacy of the composition of the
Board and for succession planning. Succession planning is formally considered by the Board on an annual basis, in
conjunction with the appraisal process. Due to the importance of succession planning, the Board will also consider this
on an ad hoc basis as required.
PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND BEHAVIOURS
The board believes that the promotion of a corporate culture based on sound ethical values and behaviours is essential
to maximise shareholder value. Our core values serve as a common language that allows all members of staff to work
together as an effective team and it is these values and our shared long-term business vision and strategy that we
believe will drive growth in shareholder value over the long term.
The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Company’s operations
because the Board recognises that the culture of any business is set by the actions and conduct of its Board of
Directors. These values are enshrined in the written policies and working practices adopted by all employees in the
Company.
The Board takes the time to consider the wider ramifications to its stakeholders when making strategic and corporate
decisions, whilst at the same time delivering the long-term objectives of stakeholders.
Having open communications with stakeholders allows them to give constructive feedback to the Board and enables
the Board to monitor the reactions of those stakeholders to decisions made.
The Company operates in international markets and is mindful that respect of individual cultures is critical to corporate
success. Accordingly, the Board endeavours to promote sound ethical values and behaviours and treats its customers,
suppliers and business partners with such respect at all times.
The Board has implemented a code for Directors' and employees' dealings in securities which it considers to be
appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market
Abuse Regulation.
The Company is committed to providing a safe environment for its staff and all other parties for which the Company
has a legal and moral responsibility. The Company operates a Health and Safety Committee which meets regularly to
monitor, review and make decisions concerning health and safety matters. The Company’s health and safety policies
and procedures are enshrined in the Company’s documented quality systems, which encompass all aspects of the
Company’s day-to-day operations.
Page 28
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR PURPOSE AND SUPPORT
The Board recognises that the responsibility for ensuring the Company operates in the correct manner is ultimately
theirs and as such the Board has implemented various sub-committees which helps implement the strategy of the
Board. The executive director and CFO have day-to-day responsibility for the operational management of the
Company’s activities. The non-executive directors are responsible for bringing independent and objective judgement
to Board decisions.
There is a clear separation of the roles of the Chief Executive Officer and the non-executive Chairman, who is Mr.
Bradford Mills. The Chairman is responsible for overseeing the effectiveness of the Board, ensuring that no individual
or group dominates the Board’s decision-making and ensuring the non-executive directors are properly briefed on
matters. The Chairman has overall responsibility for corporate governance matters in the Company. The Chief
Executive Officer is responsible for implementing the strategy of the Board and managing the day-to-day business
activities of the Company.
The Board has established audit, compensation, safety and technical committees with formally delegated duties and
responsibilities, as set out below.
AUDIT COMMITTEE
The Audit Committee has responsibility for ensuring that the financial performance of the Company is properly reported
on and reviewed, and its role includes monitoring the integrity of the financial statements of the Company (including
annual and interim accounts and results announcements), reviewing internal control and risk management systems
and ensuring that an effective system of internal controls is maintained, reviewing any changes to accounting policies,
reviewing and monitoring the extent of the non-audit services undertaken by external auditors and advising on the
appointment of external auditors. The Audit Committee have unrestricted access to the Company’s external auditors.
The Audit Committee meets at least twice per annum.
The Audit Committee comprises three non-executive directors, with Eason Chen being the elected Chairman. The
other members are Bradford Mills (Chairman) and Glenn Poulter.
COMPENSATION, CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
The Compensation Committee, which meets as required but at least twice per year, has the following responsibilities
with respect to compensation matters:
recruitment, development and retention of senior management;
•
• appointment, performance evaluation and compensation of senior management;
• succession planning systems and processes relating to senior management;
• compensation structure for the Board of Directors and senior management including salaries, annual
and long-term incentive plans and plans involving share options, share issuances and share unit
awards;
• pension and benefit plans; and
• share ownership guidelines.
The Compensation Committee has the following responsibilities with respect to corporate governance and
nominating matters:
• develop and recommend to the Board of Directors criteria for selecting new directors;
• assist the Board of Directors by identifying individuals qualified to become members of the Board of
•
Directors (consistent with criteria approved by the Board of Directors);
recommend to the Board of Directors the director nominees for the next annual meeting of
shareholders and for each committee of the Board of Directors and the chair of each committee;
• develop and recommend to the Board of Directors appropriate corporate governance principles for
•
the Company;
recommend to the Board of Directors procedures for the conduct of Board meetings, and the proper
discharge of the Board of Directors’ mandate;
Page 29
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
COMPENSATION, CORPORATE GOVERNANCE AND NOMINATING COMMITTEE (CONTINUED)
• oversee the annual review of the Board of Directors’, its committees’ and individual directors’
performance and the assessment of the Board of Directors’ and committee charters; and
• undertake such other initiatives that may be necessary or desirable to enable the Board of Directors
to provide effective corporate governance.
The Compensation Committee comprises of three Non-Executive Board members, with Mark Sander being the elected
Chairman of the Compensation Committee. The other members of the Compensation Committee are Eason Chen and
Glenn Poulter.
SAFETY, HEALTH AND ENVIRONMENT COMMITTEE
The Safety, Health and Environment Committee, which meets as required but at least three times per year, is appointed
by the Board of Directors to discharge the Board of Directors’ responsibilities relating to compliance and review of
applicable environmental, community, health and safety legislation, rules and regulations in the jurisdictions in which
the company operates. The purpose of the Safety, Health and Environmental Committee is to assist the Board of
Directors in management of the Company of policies, programs and systems relating to environmental, community and
health and safety issues. They will work with management in reviewing safety, health and environmental performance
and metrics and where necessary provide insight into the development of appropriate safety, health and environmental
performance and metrics. The Committee will further monitor current and future regulatory issues that pertain to the
operations of the Company.
The Safety, Health and Environment Committee (SHEC) comprises of two Non-Executive Board members and one
Executive, with Belinda Labatte being the elected Chairman of the Safety, Health and Environment Committee. The
other members of the SHEC are Terrel Ackerman and Andre Booyzen.
TECHNICAL COMMITTEE
The Technical Committee, which meets as required but at least three times per year, is appointed by the Board of
Directors as a standing committee to assist the Board of Directors in its oversight of technical and operational matters.
The Technical Committee comprises of three Non-Executive Board members, with Terrell Ackerman being the elected
Chairman of the Technical Committee. The other members of the Technical Committee are Mark Sander and Andre
Booyzen.
NON-EXECUTIVE DIRECTORS
The Board adheres to guidelines relating to the appointment of non-executive directors, to ensure good corporate
governance.
Both the Chairman (Mr. Bradford Mills) and non-executive directors are appointed for a year at a time and are re-
elected annually at the Company’s Annual General Meeting.
In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to
promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care,
skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to
declare any interest in a proposed transaction or arrangement.
Page 30
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY MAINTAINING A DIALOGUE WITH
SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
The Board is committed to maintaining good and regular communication with its shareholders and other stakeholders
and aims to ensure that all communications concerning the Company’s activities are clear, fair and accurate. The Board
welcomes an open dialogue with shareholders. The Investor Relations section of the Company’s website also provides
all required regulatory information as well as other helpful information for shareholders and other relevant stakeholders
including podcasts and presentations.
Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory system
and displayed on the Company’s website http://www.ramblermines.com with suitable explanations of any actions
undertaken as a result of any significant votes against resolutions.
Page 31
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 2018
The Directors present their report with the audited financial statements of the Company for the year ended December
31, 2018.
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
A A Booyzen (appointed 1st April 2019)
N P Williams (Resigned 31st March 2019)
DIVIDENDS
No dividends will be distributed for the year ended December 31, 2018.
SIGNIFICANT SHARE INTERESTS
At June 4, 2019 the parent company was aware of the following substantial share interests:
CE Mining III Rambler
CE Mining II Rambler
Compagnie Odier SCA
CI Financial
FINANCIAL INSTRUMENTS
Number of Ordinary Shares
% of Share Capital
431,592,148
396,363,636
185,244,599
124,138,495
33.29
30.57
14.29
9.58
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 32
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 2018
(CONTINUED)
LIKELY FUTURE DEVELOPMENTS
Details of likely future developments are set out in the Strategic Report.
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Strategic Report.
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:
T Sanford
Company Secretary
June 4, 2019
Page 33
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 Union and Article 4 of the IAS Regulation 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 4 June 2019 and is signed on its behalf by:
A A Booyzen
Chief Executive Officer
June 4, 2019
Page 34
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 of Rambler Metals and Mining plc (the ‘parent
company’) and its subsidiaries (the ‘group’) give a true and fair view of the state
of the group’s and of the parent company’s affairs as at 31 December 2018 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 which comprise:
•
•
•
•
•
•
the consolidated income statement;
the consolidated and parent company statement of comprehensive income;
the consolidated and parent company statement of financial position;
the consolidated and parent company statements of changes in equity;
the consolidated statement of cash flows; and
the group related notes 1 to 26 and parent company related notes C1 to C6.
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
Financial Reporting Council’s (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 1 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;
tested the clerical accuracy of management’s cash flow forecast and agreed key
assumptions to supporting evidence;
considered the historical accuracy of forecasts previously prepared by management and
took into account the variances that arose;
considered the ability of the group to meet production figures forecast by the latest NI
43-101 technical report, especially in light of actual production in the first quarter of the
year being lower than forecast; and
understood the impact of a range of reasonable sensitivities on the forecast headroom.
Page 35
As stated in note 1, 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)
The materiality that we used for the group financial statements was
$800,000 which was determined on the basis 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.
There have been no significant changes in our audit approach as
compared to prior year.
Materiality
Scoping
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.
The key audit matters identified are consistent with prior year.
Impairment of in-production and development assets
Key audit matter
description
At December 31, 2018 in-production and development assets are carried
at $35.4 million and $3.2 million respectively and the in-production Ming
Mine is carried net of significant impairment provisions previously
recorded. IAS 36 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 IAS 36 “Impairment of Assets” or IFRS 6 “Exploration for
and Evaluation of Mineral Resources” is a key audit matter. Due to the
level of judgement involved in the valuations, this has been identified as
an area of potential management bias.
The accounting policies for impairment and impairment reversal are set
out in note 2 to the financial statements and key sources of estimation
Page 36
uncertainty set out in note 3. The carrying value of the in-production and
development assets are set out note 10 and note 9 respectively.
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 NI 43-101 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.
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
$800,000 (2017: $950,000)
$792,000 (2017: $807,500)
Basis for
determining
materiality
1.7% of net assets
Parent company materiality equates
to 1.1% of net assets, which is capped
at 99% of group materiality.
Rationale
for the
benchmark
applied
We consider net assets to be an
appropriate basis for materiality as
the users of the financial statements
will be most interested in balance
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 37
sheet based metrics whilst the
Group’s operations are still evolving,
and the income statement does not
fully reflect the size and scale of the
business.
Net Assets $53,628k
Net Assets
Group materiality
Group materiality
$800k
Audit Committee
reporting threshold
$40k
We set our performance materiality at a level lower than materiality to reduce the probability that,
in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
statements as a whole. Group performance materiality therefore was set at 70% of group
materiality for the 2018 audit (2017: 70%), being $560,000 (2017: $665,000).
We agreed with the Audit Committee that we would report to the Committee all audit differences
in excess of $40,000 (2017: $47,500), 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. As the operations are principally based out of St
John’s, Canada, we have focused our audit work in this geographical area and have taken a fully
substantive testing approach similar to prior year.
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
Page 38
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
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
•
In the light of the knowledge and understanding of the group and of the parent company and
their environment obtained in the course of the audit, we have not identified any material
misstatements in the strategic report or the directors’ report.
We have nothing to report
in respect of these
matters.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
•
• we have not received all the information and
explanations we require for our audit; or
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns.
•
Directors’ remuneration
Page 39
Under the Companies Act 2006 we are also required to report if
in our opinion certain disclosures of directors’ remuneration
have not been made.
We have nothing to report
in respect of this matter.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Paul Barnett FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, UK
4 June 2019
Page 40
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended December 31, 2018
(EXPRESSED IN US DOLLARS)
Revenue
Production costs
Depreciation and amortisation
Gross loss
Administrative expenses
Exploration expenses
Operating loss
Exchange (loss)/gain
Loss on disposal of fixed assets
Profit on disposal of equity investments
Gain on fair value of Gold streaming
Net finance costs
Net expense
Loss before tax
Note
Year to
Year to
31 December
31 December
2018
US$’000
2017
US$’000
5
29,718
30,339
(31,204)
(26,444)
(9,887)
(7,798)
(11,373)
(3,903)
(5,823)
(3,441)
-
(6)
6
(17,196)
(7,350)
22
8
(1,503)
940
(95)
-
-
779
1,323
566
(895)
(379)
(1,170)
1,906
(18,366)
(5,444)
Income tax (expense)/credit
9
(1,680)
1,296
Loss for the period
Loss per share
(20,046)
(4,148)
Note
Year to
Year to
31 December
31 December
2018
US$
2017
US$’000
Basic and diluted loss per share
19
(0.033)
(0.008)
Page 41
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2018
(EXPRESSED IN US DOLLARS)
Year to
Year to
31 December
31 December
2018
2017
US$’000
US$’000
Loss for the period
(20,046)
(4,148)
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign operations (net of tax)
(4,608)
4,165
Disposal of equity investment (net of tax)
Items that will not be reclassified to the income statement
Loss on fair value of equity investment (net of tax)
Other comprehensive (loss)/gain for the period
-
(250)
(37)
(140)
(4,645)
3,775
Total comprehensive (loss)/gain for the period
(24,691)
(373)
Page 42
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2018
(EXPRESSED IN US DOLLARS)
Note
31 December
31 December
2018
US$’000
2017
US$’000
10
11
12
13
9
16
15
16
17
21
22
20
21
22
23
18
18
18
18
18
18
3,168
3,397
35,441
38,834
24,634
28,443
102
610
11,192
13,851
3,247
3,530
77,784
88,665
2,333
2,467
1,126
829
730
1,830
241
3,351
4,430
8,477
82,214
97,142
6,897
3,887
2,514
2,852
11,195
7,314
20,606
14,053
16,176
5,576
4,708
6,072
7,829
10,624
1,855
1,961
14,392
18,657
47,216
64,432
9,524
8,061
95,999
89,309
-
859
180
180
(19,192)
(14,584)
80
86
(39,375)
(19,479)
47,216
64,432
Assets
Intangible assets
Mineral property
Property, plant and equipment
Equity 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
Liabilities
Interest-bearing loans and borrowings
Gold streaming
Trade and other payables
Total current liabilities
Net current liabilities
Interest-bearing loans and borrowings
Gold streaming
Provision
Total non-current liabilities
Net assets
Equity
Issued capital
Share premium
Share warrants reserve
Merger reserve
Translation reserve
Other reserves
Retained profits
Total equity
ON BEHALF OF THE BOARD:
A A Booyzen
Director
Approved and authorised for issue by the Board on June 4, 2019
Page 43
RAMBLER METALS AND MINING PLC
Consolidated Statement of Changes
in Equity
(EXPRESSED IN US DOLLARS)
Group
Balance at January 1, 2017
Comprehensive income
Loss for the period
Foreign exchange translation differences
Disposal of equity investment (net of tax)
Gain on equity investments (net of tax)
Total other comprehensive income
Total comprehensive income/(loss) for the period
Transactions with owners
Issue of share capital (note 18)
Warrants exercised
Share issue expenses
Share-based payments
Transactions with owners
Balance at December 31, 2017
Balance at January 1, 2018
Comprehensive income
Loss for the period
Foreign exchange translation differences
Loss on equity investments (net of tax)
Total comprehensive income/(loss) for the period
Transfer to Retained profits on disposal of equity investment
(note 13)
Transactions with owners
Issue of share capital (note 18)
Warrants exercised
Share issue expenses
Share-based payments
Transactions with owners
Balance at December 31, 2018
Share
Capital
US$’000
Share
Warrants
Merger
Translation
Other
Retained
Premium
US$’000
Reserve
US$’000
Reserve
US$’000
Reserve
US$’000
Reserve
US$’000
Profits
Total
US$’000
US$’000
6,374
81,442
2,089
180
(18,749)
476
(15,443)
56,369
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,165
- (240)
- (150)
- (390)
(390)
4,165
(4,148)
(4,148)
- 4,165
- (240)
- (150)
- (390)
- 3,775
1,687
-
6,749
1,230
- (112)
-
1,687
8,061
7,867
89,309
-
-
(1,230)
-
(1,230)
859
-
-
-
-
-
-
-
-
-
180
-
-
-
(14,584)
-
-
-
86
-
- 8,436
-
- (112)
112
112
8,436
112
64,432
(19,479)
8,061
89,309
859
180
(14,584)
86
(19,479)
64,432
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,608)
-
-
- (37)
(37)
(4,608)
(20,046)
(20,046)
- (4,608)
- (37)
(4,645)
-
-
-
-
-
-
31
(31)
-
1,463
-
5,847
859
- (16)
-
1,463
9,524
6,690
95,999
-
-
(859)
-
(859)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 180
(19,192)
80
-
- 7,310
-
- (16)
182
182
7,476
182
47,216
(39,374)
Page 44
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2018
(EXPRESSED IN US DOLLARS)
Cash flows from operating activities
Operating loss
Depreciation and amortisation
Loss/(gain) on derivative financial instrument (note 5)
Share based payments (note 7)
Foreign exchange difference
Decrease in inventory
(Increase)/decrease in debtors
Decrease/(increase) in derivative financial instruments
Increase/(decrease) in creditors
Cash (utilised in)/generated from operations
Interest paid
Net cash (utilised in)/generated from operating activities
Cash flows from investing activities
Interest received
Disposal of equity investment (note 13)
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 18)
Share issue expenses
Loans received
Repayment of Gold streaming (note 22)
Repayment of Loans
Capital element of finance lease payments
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
Page 45
31 December
31 December
2018
$’000
2017
$’000
(17,196)
(7,350)
9,921
1,711
182
458
134
(297)
(611)
3,827
7,824
(2,015)
112
(259)
29
455
941
1,961
(1,871)
1,698
(478)
(376)
(2,349)
1,322
78
43
485
(48)
(3,879)
(3,189)
1,103
(1,020)
(5,277)
(4,103)
-
(6,553)
(9,254)
7,310
8,436
(16)
3,815
(1,755)
(1,460)
(112)
5,598
(1,105)
(1,137)
(2,116)
(2,593)
5,778
9,087
(3,124)
1,155
3,351
14
2,156
40
241
3,351
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 Strategic
Report on pages 5 to 23. In addition, notes 18 and 21 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 production not ramping up in line
with forecasts or lower than forecast commodity prices 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
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 accounting policies applied are consistent with those adopted and disclosed in the Group financial statements
for the year-ended 31 December 2017, except for changes arising from the adoption of the following new
accounting pronouncements which became effective in the current reporting period:
•
IFRS 9 Financial Instruments
•
IFRS15: Revenue from Contracts with Customers
•
IFRIC 22: Foreign Currency Transactions and Advance Consideration
• Annual Improvements to IFRSs: 2014-2016 Cycle: IFRS1 and IAS28
IFRS 15 Revenue from Contracts with Customers:
IFRS 15 Revenue from Contracts with Customers became effective for the Group from 1 January 2018, replacing
all previous revenue standards and interpretations.
Page 46
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(a)
Statement of compliance (continued)
IFRS 15 Revenue from Contracts with Customers (continued)
The Group’s revenue is primarily derived from commodity sales, for which the point of recognition is dependent on
the contract sales terms, known as the International Commercial Terms (Incoterms). As the transfer of risks and
rewards generally coincides with the transfer of control at a point in time under the Incoterms, the timing and
amount of revenue recognised by the Group for the sale of commodities is not materially affected.
For the Incoterms Cost, Insurance and Freight (CIF) and Cost and Freight (CFR) the seller must contract for and
pay the costs and freight necessary to bring the goods to the named port of destination. Consequently, the freight
service on export commodity contracts with CIF/CFR Incoterms represents a separate performance obligation as
defined under the new standard, and a portion of the revenue earned under these contracts, representing the
obligation to perform the freight service, is deferred and recognised over time as this obligation is fulfilled, along
with the associated costs. There have been no significant judgements made in the application of IFRS 15.
There was no material impact on opening retained earnings as at 1 January 2018 as a result of this transition
difference on group and company only financial statements.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments became effective for the Group from 1 January 2018, replacing IAS 39 Financial
Instruments: Recognition and Measurement. The impacts of adopting IFRS 9 on the Group results have been as
follows:
Impairment: The standard introduces an expected credit loss (ECL) model for the assessment of impairment of
financial assets held at amortised cost. For trade receivables and contract assets, the Company applies a
simplified approach in calculating ECLs and recognizes a loss allowance based on lifetime ECLs at each reporting
date. The Company has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment.
Classification and measurement: The measurement and accounting treatment of the Group’s financial assets is
materially unchanged on application of the new standard with the exception of equity investments previously
categorised as available for sale. These are now held at fair value through other comprehensive income, meaning
the recycling of gains and losses on disposal and impairment losses is no longer permitted for this category of
asset. There is no material impact to the net assets of the Group at 1 January 2017, 31 December 2017 or 1
January 2018, or to the Group’s results for the year ended 31 December 2017 from this change.
Financial instrument
Classification under IFRS 9
Classification under IAS 39
Derivative financial instruments
Fair value through profit and loss
Fair value through profit and loss
Equity investments
Fair value through other
comprehensive income
Trade receivables and other
receivables
Trade payables and other payables Amortised cost
Gold streaming
Amortised cost
Fair value through profit and loss
Available for sale
Loans and receivables
Amortised cost
Fair value through profit and loss
Loans and borrowings
Amortised cost
Amortised cost
Page 47
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
The Group has not adopted any standards or interpretations in advance of the required implementation dates. It
is not expected that adoption of standards or interpretations which have been issued by the International
Accounting Standard Board but have not adopted will have a material impact on the financial statements.
The following are the major new IFRS accounting standards in issue but not effective the annual reporting period
ended December 31, 2018:
IFRS
/Amendment
IAS 19
IFRS 10
Title
Employee Benefits, amendments regarding plan
amendments, curtailments or settlements
Consolidated Financial Statements
Application date of
standard
January 1, 2019
Application date for
Company
January 1, 2019
Not confirmed
As and when
become effective
January 1, 2019
IFRIC 23
Uncertainty over Income Tax Treatments
January 1, 2019
IAS 28
IFRS
IFRS 16
Investments in Associates and Joint Ventures
January 1, 2019
January 1, 2019
Annual improvement to IFRS standards 2015-
2017
Leases
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019
IFRS 16 Leases
IFRS 16 Leases became effective for the Group from 1 January 2019, replacing IAS 17 Leases. The Group has
completed the necessary changes to internal systems and processes to embed the new accounting
requirements.
The principal impact of IFRS 16 is to change the accounting treatment by lessees of leases currently classified
as operating leases. Lease agreements will give rise to the recognition by the lessee of a right-of-use asset and
a related liability for future lease payments.
The Group expects an impact of circa US$1,000 on transition as the majority of existing leases are accounted as
finance lease.
(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, 2018 the closing rate of exchange of US dollars to 1 GB
pound was 1.28 (December 31, 2017: 1.35) and the average rate of exchange of US dollars to 1 GB pound for the
year was 1.33 (December 31, 2017: 1.28).
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 48
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 statement of comprehensive income upon disposal.
(e)
Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated
impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour and the 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 49
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 50
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
Equity investments
(h)
Equity investments are recognised at fair value with changes in value recorded in other comprehensive income as
they are not held for short-term profit-taking trading under the company’s business model. Subsequent to initial
recognition these are stated at fair value. Movements in fair values are recognised in other comprehensive income.
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 fair value reserve are transferred to Retained profits.
Inventory
(i)
Stockpiled ore is recorded at the lower of production cost and net realisable value. Production costs include all
direct costs plus an allocation of fixed costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value. Cost is determined on an average
cost basis.
Trade and other receivables
(j)
Trade and other receivables are generally stated at their cost less impairment losses. Receivables in respect of
the sale of copper concentrate which contain an embedded derivative linking them to future commodity prices are
measured at fair value through profit and loss and are treated as derivative financial assets or liabilities.
Receivables with a short duration are not discounted.
)
Financial instruments measured at fair value through profit and loss
(k)
Financial instruments measured at fair value through profit and loss, which includes all derivative financial
instruments and receivables containing embedded derivatives arising from sales of concentrate, are measured
at fair value at each balance sheet date with changes in value reflected directly within the income statement.
Cash and cash equivalents
(l)
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
Restricted cash (note 17) is not available for
use by the Group and therefore is not considered highly liquid.
Impairment of non-financial assets
(m)
The carrying amounts of the Group’s assets (except deferred exploration and evaluation costs (see accounting policy
(g)(ii)) and deferred tax assets (see accounting policy 2(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.
(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.
Page 51
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2
Significant accounting policies (continued)
(m)
Impairment of non-financial assets
(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 Gold streaming is accounted for under IFRS 9 and is considered a financial liability as the Group purchases
the payable gold from the market in order to repay Sandstorm based on actual production in the period. It is stated
at fair value through profit and loss (note 22).
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.
(q)
Revenue recognition
The Group is engaged principally in sales of metal concentrate that are stated at their invoiced amount which is
net of treatment and refining charges. Revenue for sale of commodity is recorded when control of the commodity
passes to the customer. Sales of commodities are provisionally priced such that the price is not settled until a
predetermined future date and is based on the market price at that time. These sales are marked to market at
each reporting date using the forward price for the period equivalent to that outlined in the contract. Revenue on
provisionally priced sales is recognised at the forward market price when control passes to the customer and is
RAMBLER METALS AND MINING PLC
Page 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 Significant accounting policies (continued)
(q)
Revenue recognition (continued)
classified as revenue from contracts with customers. Subsequent mark-to-market adjustments are recognised in
revenue from other sources.
Revenues from the sale of material by-products are recognised within revenue at the point control passes. Where
a by-product is not regarded as significant, revenue may be credited against the cost of sales.
Revenue from services is recognised over time in line with the policy above. Our revenue contract contains
separate performance obligations for the sale of commodities and the provision of freight services, the portion of
the revenue representing the obligation to perform the freight service is deferred and recognised over time as the
obligation is fulfilled based on the estimated time taken to port of delivery, along with the associated costs. In
situations where the Group is acting as an agent, amounts billed to customers are offset against the relevant
costs
(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 53
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)
- Equity 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 54
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.
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.
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$63.2 million (2017: 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. The Company continues to invest
in exploration which has the potential to extend mine life and increase the rate of production. 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.
Page 55
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Critical judgement and accounting estimates (continued)
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.
(b) Key sources of estimation uncertainty
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 7 and 19.
Gold streaming
The Group calculates the movement on the fair value of the Gold streaming liability 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 fair value movement. Any changes to these estimates may result in a significantly
different fair value movement recognised in the income statement.
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, 2018
Year to Dec 31, 2017
UK
Canada
Consolidated
UK
Canada
Consolidated
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Revenue
-
29,718
29,718
-
30,339
30,339
Non-current
assets
-
77,784
77,784
1,680
86,985
88,665
Page 56
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Revenue
Revenue from sale of commodity
Freight and Insurance revenue related to sale of commodity
(Loss)/gain on fair value of derivatives
Information about major customers
All our revenue is sold to one customer (2017: one customer).
6. Operating loss
The operating loss is after charging:
Depreciation – owned assets
Amortisation
Directors’ emoluments (see note 25)
Auditor’s remuneration:
Audit of these financial statements
Fees payable to the auditor for other
services:
Other assurance services
Year to
Year to
Dec 31, 2018
Dec 31, 2017
30,320
27,751
1,109
573
(1,711)
2,015
29,718
30,339
Year to
Year to
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
5,787
4,134
442
4,469
3,355
351
116
132
41
6
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is maintained.
7. Personnel expenses
Salary costs
Wages and salaries
Other short term benefits
Compulsory social security contributions
Share based payments
Group
Year to
Group
Year to
Dec 31, 2018
Dec 31, 2017
US$’000
US$,000
10,659
10,074
628
565
1,620
1,675
182
112
13,089
12,426
Salary costs of US$222,000 (2017: US$533,000) were capitalised as part of the cost of assets under construction costs
during the year.
Page 57
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Personnel expenses (continued)
Number of employees
The average number of employees during the period was as follows:
Directors
Administration
Production and development
Group
Year to
Group
Year to
Dec 31, 2018
Dec 31, 2017
7
7
14
14
180
164
201
185
During the period the Group granted share options to key personnel to purchase shares in the entity. The options are
exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the period
Granted during the period
Exercised during period
Forfeited during the period
Expired during the period
Outstanding at the end of the period
Exercisable at end of period
Weighted
average
exercise price
Number
of options
Weighted
average
exercise price
Number
of options
Dec 31, 2018
Dec 31, 2018
Dec 31, 2017
Dec 31, 2017
US$
0.08
0.05
‘000
13,229
9,790
-
-
0.07
0.17
0.06
0.18
(1,912)
(430)
20,677
2,478
US$
0.38
0.09
0.06
0.11
0.82
0.13
0.35
‘000
13,014
1,230
(450)
(355)
(210)
13,229
3,239
The options outstanding at December 31, 2018 have an exercise price in the range of US$0.05 to US$0.82 (December
31, 2017: US$0.05 to US$0.82) and a weighted average remaining contractual life of 2.8 years (December 31, 2017:
3.8 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.
Page 58
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Personnel expenses (continued)
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
Year to Dec
31, 2018
31, 2017
US$0.07
US$0.07
US$0.09
US$0.07
US$0.09
106%
5
-
116%
5
-
2.07%
1.41%
The expected volatility is based on the historical volatility (calculated based on the weighted average remaining life of
the share options), adjusted for any expected changes to future volatility due to publicly available information.
There is no performance or market conditions associated with the share option grants.
The share-based payment expense relates to the following grants:
Year to Dec
Year to Dec
31, 2018
31, 2017
US$’000
US$’000
112
-
70
110
2
-
182
112
Year to
Year to
Dec 31, 2018 Dec 31, 2017
US$’000
US$’000
(78)
(43)
223
175
5
-
283
17
138
40
274
162
50
28
895
379
Share options granted in 2016
Share options granted in 2017
Share options granted in 2018
Total expense recognised as employee costs
8. Net finance costs
Bank interest receivable
Finance lease interest
Sansdtorm loan interest
Advance purchase facility interest and charges
Other loan interest
Off-take provisional payment interest
Unwinding of discount on reclamation provision
Page 59
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax
Recognised in the income statement
Current tax expense
Current period
Deferred tax expense/(credit)
Origination and reversal of temporary timing differences
Deferred income tax asset not recognised
Mining tax – origination and reversal of temporary differences
(Under)/over provision in previous year
Total income tax (credit)/charge in income statement
Year to
Dec 31, 2018
US$,000
Year to
Dec 31, 2017
US$,000
-
-
-
1,680
-
-
1,680
(1,373)
55
22
(1,296)
Reconciliation of effective tax rate
A reconciliation between the tax credit and the product of the Group’s accounting loss multiplied by the
Group’s statutory income tax rate for the year ended December 31, 2018 and year ended December 31,
2017 is as follows:
Year to
Dec 31, 2018
Year to
Dec 31, 2017
US$’000
US$’000
(18,366)
(5,444)
(3,535)
(1,872)
-
213
6,839
(27)
-
-
62
-
1,680
(1,048)
(458)
56
46
-
(115)
107
87
23
6
(1,296)
Year to
Dec 31, 2018
Year to
Dec 31, 2017
US$,000
US$,000
-
-
-
-
-
(87)
(48)
(135)
Loss before tax
Income tax using the UK corporation tax rate of 19.00% (2017:
19.25%)
Effect of tax rates in foreign jurisdictions (rates increased)
Mining tax
Net permanent differences
Deferred income asset not recognised
Effect of tax rates on chargeable gain
Effect of change in tax rates
Effect of tax losses and credits
(Under)/over provision in previous year
Exchange difference
Recognised in other comprehensive income
Current tax expense
Current year
Deferred tax credit
Fair value re-measurement of available for sale investments
Exchange difference on retranslation of UK deferred tax asset
Total income tax expense/(credit) in statement of other
comprehensive income
Page 60
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Income tax credit (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
Balance
Balance
Balance
Balance
Balance
Balance
Dec 31, 2018 Dec 31, 2017
Dec 31, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017
US$’000
US$’000
US$’000
-
2,283
118
-
1,581
-
1,992
86
-
919
Property, plant and equipment
Mineral property
Intangible assets
Equity investment
Gold streaming and government
assistance
Mining tax
Other timing differences
Tax value of loss carry-forwards and
credits recognised
Net tax assets /(liabilities)
Movement in recognised deferred tax assets and liabilities
1,413
-
9,782
14,192
12,020
17,538
1,536
-
(2,827)
-
-
-
-
-
(173)
-
(3,000)
US$’000
(3,471)
-
-
-
-
-
(217)
-
(3,688)
US$’000
(3,471)
2,283
118
-
1,581
1,536
(217)
9,782
11,192
US$’000
(3,471)
2,283
118
-
1,581
1,536
(217)
12,020
13,850
Recognised in
income
Balance
Jan 1, 2017
Recognised in
other
comprehensive
income
Exchange
difference
Balance
Dec 31, 2017
US$’000
US$’000
US$’000
US$’000
US$’000
Property, plant and equipment
Mineral property
Intangible assets
Equity investment
Gold streaming
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)
Balance
Jan 1, 2018
Written off
Recognised in
other
comprehensive
income
Exchange
difference
Balance
Dec 31, 2018
US$’000
US$’000
US$’000
US$’000
US$’000
Property, plant and equipment
Mineral property
Intangible assets
Equity investment
Gold streaming and government assistance
Mining tax
Other timing differences
Tax value of loss carry-forwards and credits – Canada
Tax value of loss carry-forwards – UK
3,471
(2,283)
(118)
-
(1,659)
(1,536)
295
(10,340)
(1,680)
(13,850)
-
-
-
-
-
-
-
-
1,680
1,680
-
-
-
-
-
-
-
-
-
-
(644)
291
32
-
740
123
(122)
558
-
978
2,827
(1,992)
(86)
-
(919)
(1,413)
173
(9,782)
-
(11,192)
Page 61
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$11.1 million (December 31, 2018: US$13.9
million). As at 31st December 2018, the Group had the total losses carried forward of US$25.1 million (2017: Nil) for
which the deferred tax asset has not been recognised.
The Group did not recognised a deferred tax assets in respect of mining tax (2017: deferred tax liability US$55,000)
during the year bringing the balance to US$1.5 million (December 31, 2017: 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.
During the year the Company written off the deferred tax assets relating to the Parent Company US$1.7 million (2017:
Nil) as the Company does not expect to generate income to set off against accumulated losses.
10. Intangible assets
Cost
Exploration and evaluation costs
Ming Mine
Little Deer Project
Total
US$’000
US$’000
US$’000
Balance at 1 January, 2017
-
2,169
2,169
Additions
979
41
1,020
Effect of movements in foreign exchange
15
193
208
Balance at December 31, 2017
994
2,403
3,397
Balance at 1 January, 2018
994
2,403
3,397
Additions
18
30
48
Effect of movements in foreign exchange
(82)
(195)
(277)
Balance at December 31, 2018
930
2,238
3,168
Carrying amounts
At 1 January, 2017
At December 31, 2017
At 1 January, 2018
At December 31, 2018
-
2,169
2,169
994
2,403
3,397
994
2,403
3,397
930
2,238
3,168
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 62
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Mineral property
Cost
Balance at January 1, 2017
Additions
Effect of movements in foreign exchange
Balance at December 31, 2017
Balance at January 1, 2018
Additions
Effect of movements in foreign exchange
Balance at December 31, 2018
Amortisation and impairment
Balance at January 1, 2017
Amortisation charge
Effect of movements in foreign exchange
Balance at December 31, 2017
Balance at January 1, 2018
Amortisation charge
Effect of movements in foreign exchange
Balance at December 31, 2018
Carrying amounts
At January 1, 2017
At December 31, 2017
At January 1, 2018
At December 31, 2018
Mineral property
US$’000
69,701
5,278
5,064
80,043
80,043
3,879
(6,629)
77,293
35,248
3,355
2,606
41,209
41,209
4,134
(3,491)
41,852
34,453
38,834
38,834
35,441
Consideration of impairment for mineral property costs
As a result of the loss in the year, the directors concluded that there was an impairment indicator at 31 December 2018.
A valuation model was completed with the critical assumptions being as set out in Note 3. This showed that the
Page 63
recoverable amount was greater than the carrying value of the fixed assets and consequently no impairment was
required.
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Property, plant and equipment
Cost
Balance at January 1, 2017
Additions
Reclassification
Effect of movements in foreign
exchange
Balance at December 31, 2017
Land and
buildings
Assets
under
constructi
on
US$’000
US$’000
Motor
vehicle
s
US$’00
0
Plant and
equipment
Fixtures,
fittings and
equipment
Computer
equipment
Total
US$’000
US$’000
US$’000
US$’000
3,956
1,357
222
39,362
25
2,814
-
(319)
-
-
5,143
319
94
1
769
45,760
70
8,053
-
-
-
279
159
15
3,024
6
57
3,540
4,260
4,011
237
47,848
101
896
57,353
Balance at January 1, 2018
4,260
4,011
237
47,848
101
896
57,353
Additions
Disposals
Reclassification
Effect of movements in foreign
exchange
Balance at December 31, 2018
Depreciation and impairment losses
Balance at January 1, 2017
Depreciation charge for the year
Effect of movements in foreign
exchange
Balance at December 31, 2017
Balance at January 1, 2018
Depreciation charge for the year
Disposals
Effect of movements in foreign
exchange
Balance at December 31, 2018
Carrying amounts
At January 1, 2017
At December 31, 2017
At January 1, 2018
81
1,573
-
2,743
2
82
4,481
-
-
-
(1,168)
-
(2,133)
-
2,133
-
-
-
(1,168)
-
-
(347)
(335)
(19)
(4,133)
3,994
3,116
218
47,423
(8)
95
(76)
(4,918)
902
55,748
2,141
-
215
19,523
89
736
22,704
362
163
-
7
4,073
-
15
1,501
4
7
22
52
4,468
1,738
2,666
-
237
25,097
100
810
28,910
2,666
-
237
25,097
100
810
28,910
399
-
-
-
-
5,354
1
33
5,787
-
(1,073)
-
-
(1,078)
(234)
-
(19)
(2,182)
2,831
-
218
27,196
1,815
1,357
7
19,839
1,594
4,011
-
22,751
1,594
4,011
-
22,751
(8)
93
5
1
1
(67)
(2,505)
776
31,114
33
23,056
86
28,443
86
28,443
Page 64
At December 31, 2018
1,163
3,116
-
20,227
2
126
24,634
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Property, plant and equipment (CONTINUED)
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, 2018, the net
carrying amount of leased plant and machinery was US$3.7 million (December 31, 2017: US$5.1 million). The leased
plant and machinery secure lease obligations (see note 21). During the period plant and equipment additions of US$1.6
million (2017: US$4.2 million) were acquired through finance lease arrangements.
13. Equity Investments
Cost or valuation
Balance at January 1, 2017
Disposals
Revaluation
Effect of movements in foreign exchange
Balance at December 31, 2017
Balance at January 1, 2018
Revaluation
Disposals
Effect of movements in foreign exchange
Balance at December 31, 2018
Carrying amounts
At December 31, 2017
At December 31, 2018
Equity investments
US$’000
1,333
(324)
(389)
(10)
610
610
(37)
(443)
(28)
102
610
102
In 2017 the Company disposed all its remaining shareholding in Marathon Gold Corporation for US$1.1 million which
was the fair value, the total gain was of US$0.8 million. Then in 2018 Company disposed of its remaining shareholding
in Maritime Resources Corp for US$0.5 million which was the fair value, the total loss was of US$0.6 million.
The carrying amount of the remaining US$102,000 of equity investments relates to investments in eleven companies
(2017: twelve companies) which are listed. The valuation is determined using the closing market price of the shares
on the respective stock exchange and is considered level 1 in the IFRS13 fair value hierarchy.
Page 65
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Inventory
Metals in process
Operating supplies
Dec 31, 2018 Dec 31, 2017
US$’000
608
1,725
2,333
US$’000
561
1,906
2,467
The cost of inventories recognised as an expense and included in cost of sales amounted to US$41.1 million (2017:
US$34.2 million)
15. Trade and other receivables
Trade receivables
Other receivables
Sales taxes recoverable
Prepayments and accrued income
Dec 31, 2018
US$’000
Dec 31,
2017
US$’000
-
-
349
672
105
1,126
260
412
157
829
The Company applies a simplified approach in calculating expected credit losses (ECL) and recognizes a loss
allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment.
There are no trade receivables past due or considered impaired (period ended December 31, 2017: $nil).
16. Derivative financial asset
Concentrate receivables from off-taker
Dec 31, 2018 Dec 31, 2017
US$’000
730
US$’000
1,830
The carrying amount of the derivative financial asset is
2 fair value determined using forward prices of copper, gold and silver. The cost of the concentrate receivables is
US$779,000 (December 31, 2017: US$1,104,000).
considered level 2 under the IFRS13 fair value hierarchy level
17. Restricted cash
Bearer deposit notes
Dec 31, 2018 Dec 31, 2017
US$’000
3,247
US$’000
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 2018 and have a nominal value of US$3,247,000 (December 31, 2017 - US$3,530,000) giving
an effective yield of 1.2% (December 31, 2017 – 1.2%).
Page 66
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Capital and reserves
Share capital and share premium – group and company
In issue at January 1, 2017
Issued on February 6, 2017
Issued on November 6, 2017
Share issue expenses
Shares issued during the year
Share capital
Share premium
Total
US$’000
US$’000
US$’000
Number
‘000
6,374
81,442
87,816
414,290
1,681
6,726
8,407
135,000
6
23
29
450
-
(112)
(112)
-
1,687
6,637
8,324
135,450
Transfer from share warrant reserve
-
1,230
1,230
-
In issue at December 31, 2017
8,061
89,309
97,370
549,740
In issue at January 1, 2018
Issued on May 25, 2018
Issued on June 01, 2018
Issued on June 13, 2018
Share issue expenses
8,061
89,309
97,370
549,740
334
1,338
1,672
25,000
868
3,474
4,342
65,000
261
1,035
1,296
19,400
-
(16)
(16)
-
Shares issued during the year
1,463
5,831
7,294
109,400
Transfer from share warrant reserve
-
859
859
-
In issue at December 31, 2018
9,524
96,999
105,523
659,140
At December 31, 2018, the authorised share capital comprised 1,000,000,000 (2017: 1,000,000,000) ordinary shares
of 1p each.
On May 25, 2018, the Company through a private placement of 25,000,000 shares at a price of US$ 0.0669 per
share.with Lombard Odier Asset Management (USA) Corp raised US$1.7 million,
On June 1, 2018, Aether Real Assets Co-Investment I L.P exercised 65,000,000 warrants at an exercise price of
US$0.0668 raising funds of US$4.3 million.
On June 13, 2018, the Company through a private placement of 19,400,000 shares at a price of US$ 0.0668 per
share with Lombard Odier Asset Management (USA) raised US$1.3 million.
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.
Warrants reserve
At January 1, 2017
Fair value of warrants exercised on February 6, 2017 at US$0.0623
At December 31, 2017
At January 1, 2018
Fair value of warrants exercised on June 01, 2018 at US$0.0668
At December 31, 2018
Page 67
Number
‘000
$’000
200,000
2,089
(135,000)
(1,230)
65,000
859
65,000
859
(65,000)
(859)
-
-
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Capital and reserves (continued)
Warrants reserve (continued)
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 fair value of the share purchase warrants was 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 was measured by reference to the fair value of the warrants
issued in the absence of information on the fair value of the services provided. 135 million warrants were exercised in
the prior year and 65 million warrants were exercised during the year.
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 equity investments.
Capital management
The Group’s objectives when managing capital are to safeguard the entity’s ability to continue as a going concern
so that it can continue to increase the value of the entity for the benefit of the shareholders. Given the nature of the
Group’s current activities the entity will remain dependent on a mixture of debt and equity funding until such a time
as the Group becomes self-financing from the commercial production of mineral resources.
The Group’s capital was as follows:
Cash and cash equivalents
Finance leases
Advance purchase facility
Government assistance
Loan from related party
Sandstorm loan
Gold streaming
Net debt
Equity
Total capital
Page 68
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
241
3,351
(3,707)
(4,570)
(3,864)
(3,997)
(796)
(390)
(1,733)
(1,002)
(1,505)
-
(10,343)
(13,476)
(21,171)
(20,084)
(47,216)
(64,734)
(69,923)
(84,818)
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Loss per share
Basic loss per share
The calculation of basic earnings per share at December 31, 2018 was based on the loss attributable to ordinary
shareholders of $20.0 million (2017: US$4.1 million) and a weighted average number of ordinary shares outstanding
during the year ended December 31, 2018 of 613.7 million (2017: 535.7 million) calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period attributable to ordinary shareholders
Weighted average number of ordinary shares
At January 1, 2017
Effect of shares issued during the year
Weighted average number of ordinary shares at December 31, 2017
In issue at January 1, 2018
Effect of shares issued during period
Weighted average number of ordinary shares at December 31, 2018
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
(20,046)
(4,148)
Number ‘000
414,290
121,383
535,673
549,740
63,983
613,723
For the year ended 31 December 2018, because there would be a further reduction in loss per share resulting from the
assumption that share options, warrants and convertible loan are exercised or converted, all these instruments are
considered anti-dilutive and are ignored in the computation of loss per share. As there were no other instruments that
may have a potentially dilutive impact, the basic and diluted loss per share is the same for the year-ended 31 December
2018. At December 31, 2018 there were 20,677,000 (December 31, 2017: 13,014,000) share options in issue of which
none (December 31, 2017: 4,742,472) were considered to be dilutive. At December 31, 2018 there were no warrants
outstanding (December 31, 2017: 65,000,000) warrants in issue of which nil were considered to be dilutive (December
31, 2017: 29,649,555).
20. Trade and other payables
Trade payables
Other payables
Accrued expenses
Dec 31, 2018 Dec 31, 2017
US$’000
8,314
1,022
1,859
11,195
US$’000
5,383
320
1,611
7,314
Other payables include payroll taxes and social contribution in relation to Rambler Metals and Mining
Canada Limited
RAMBLER METALS AND MINING PLC
Page 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For
more information about the Group’s exposure to interest rate and foreign currency risk, see note 24.
Non-current liabilities
Sandstorm loan
Government assistance
Advance purchase facility
Finance lease liabilities
Current liabilities
Sandstorm loan
Government assistance
Loan from related party
Advance purchase facility
Finance lease liabilities
Sandstorm Loan
Dec 31, 2018 Dec 31, 2017
US$’000
US$’000
790
-
777
390
1,094
2,682
2,047
3,000
4,708
6,072
715
-
19
-
1,733
1,002
2,770
1,315
1,660
1,570
6,897
3,887
In December 2018, Company received a loan of US$1.5 million carrying interest rate of 9.5% per annum. The loan is
repayable by twenty-one monthly instalments of US$ 69,000 including interest after the first interest payment of US$
0.2m which was paid on 1 April 2019.
Government Assistance
During the year the Company received US$632,000 in interest free repayable contributions from a Canadian
government agency. Contributions to a total of US$1.25 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.
Related party loan
CE Mining III Rambler Limited
In November 2018 the Company received a convertible loan of US$2 million from CE Mining III Rambler Limited with
the maturity of one year. The loan is unsecured, convertible at the option of CE Mining III Rambler Limited on or before
November 26, 2019 at share price of C$0.05. It carries interest at 10.0% per annum. Expenses worth US$0.3 million
were spent with regards to the loan, these expenses have been classified as deferred expenses and will be amortised
during the loan term. At 31st December 2018 the balance was US$1.7 including interest of US$0.02 million and
deferred cost of US$0.3 million. The fair value of the conversion option was calculated line to be immaterial with
reference to a normal loan without conversion option.
CE Mining II Rambler Limited
In October 2017 the company received a loan of US$1 million from CE Mining II Rambler Limited. The loan was
unsecured and carried interest at 9.5% per annum. In June 2018 Company repaid U$1.0 million including interest.
RAMBLER METALS AND MINING PLC
Page 70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. Interest-bearing loans and borrowings (continued)
Advance Purchase Facility
During the year 2017 the Company repaid the balance of the advance purchase facility 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.
At December 31, 2018 the balance was US$3.8 million. The loan is repayable by eighteen monthly instalments of
US$222,222 plus interest at 6.75% per annum commencing June 28, 2018.
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum lease
Payments
Interest
Principal
Minimum lease
Payments
Interest
Principal
Dec 31, 2018
Dec 31,
2018
Dec 31,
2018
Dec 31, 2017
Dec 31,
2017
Dec 31,
2017
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Less than one year
1,791
131
1,660
1,743
173
1,570
Between one and five years
2,118
71
2,047
3,146
146
3,000
3,909
202
3,707
4,889
319
4,570
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are secured on
the underlying assets.
22. Gold streaming
Fair Value of Gold Loan liability opening balance
Movement in fair value of gold loan
Gold payment for the year
Fair Value of Gold Loan liability closing balance
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
13,476
15,449
(1,323)
(566)
(1,810)
(1,407)
10,343
13,476
In March 2010, the Company entered into an agreement (“Gold streaming”) 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
Page 71
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22. Gold streaming (continued)
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. Rambler purchases the payable gold
from the market and repayment is made in kind to Sandstorm.
At December 31, 2018, the Company has produced 46,526 payable ounces of gold of which 14,535 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
7 (to date)
Total
15,429
4,888
5,945
5,408
6,905
3,040
3,889
1,022
46,526
4,937
1,280
1,904
1,689
2,069
955
1,342
359
14,535
The Gold streaming is accounted for as a financial liability carried at fair value through profit and loss. The liability is
based on management’s best estimate of the time of delivery of payable gold, the total amount of gold expected to be
produced over the life of the mime, the timing of production, the Company’s view on forecast gold prices and the rate
implicit in the loan at the date of inception.
The movement in the fair value of the liability recognised in the income statement during the period was a credit of
US$1.3 million (2017: US$0.6 million charge).
The Gold streaming is secured by a fixed and floating charge over the assets of the Group.
23. Provision
Reclamation and closure provision
Opening balance
Unwinding of discount (note 8)
Effect of movements in foreign exchange
Ending balance
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
1,961
1,804
50
28
(156)
129
1,855
1,961
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 discounting at 3.02% 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$3.5 million.
Page 72
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Financial instruments
The Group’s principal financial assets comprise: cash and cash equivalents, restricted cash, equity investments,
derivative financial instruments and other receivables. In addition the Company’s financial assets include amounts due
from subsidiaries. The Group and Company’s financial liabilities comprise: trade payables; other payables; and accrued
expenses. The Group’s financial liabilities also include interest bearing loans and borrowings and Gold streaming.
All of the Group’s and Company’s financial liabilities are measured at amortised cost
with the exception of Gold
streaming as described in note 22 and their financial assets are classified as loans and receivables and measured at
amortised cost with the exception of equity investments and derivative financial instruments as described in notes 13
and 16 respectively.
The Group held the following categories of financial instruments at December 31, 2018:
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments – level 2 fair value
Equity investments:
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
730
1,830
Investment in quoted equity securities – level 1 fair value
102
610
Loans and receivables:
Trade receivables
Other receivables
Sales taxes recoverable
Cash at bank
Restricted cash
Total financial assets
Liabilities at amortised cost or equivalent:
Trade payables
Other payables
Accrued expenses
Loans and borrowings
Liabilities at fair value through P&L
Gold streaming
Total financial liabilities
-
-
349
260
672
412
241
3,351
3,247
3,530
4,509
7,553
5,341
9,993
Dec 31, 2018 Dec 31, 2017
US$’000
US$’000
(8,314)
(5,383)
(1,022)
(320)
(1,859)
(1,611)
(11,605)
(9,959)
(22,800)
(17,273)
(10,343)
(13,476)
(33,143)
(30,749)
The carrying amounts of financial instrument are representative of the fair value related to each class of financial assets
and liabilities in both years.
Page 73
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Financial instruments (continued)
The board of directors determines, as required, the degree to which it is appropriate to use financial instruments and
hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are liquidity risk,
credit risk and market risk which includes foreign currency risk, interest rate risk and commodity price risk each of which
is discussed below.
Liquidity risk
With finite cash resources the liquidity risk is significant. This risk is managed by controls over expenditure and
concentrating on achieving the payment milestones under the financing arrangement. Success will depend largely
upon the outcome of on-going and future exploration and development programmes. Given the nature of the Group’s
current activities the entity will remain dependent on a mixture of debt and equity funding in the short to medium term
until such time as the Group becomes self-financing from the commercial production of mineral resources. The liabilities
of the parent company are due within one year. The parent company has adequate financial resources to meet the
obligations existing at December 31, 2018.
Fixed rate financial liabilities
At the year end the analysis of finance leases and hire purchase contracts which were all due in Canadian Dollars and
are at fixed interest rates was as follows:
Due within one year
Due within one to two years
Due within two to three years
Due within three to four years
Due within four to five years
Due after five years
Dec 31, 2018
Dec 31, 2017
US$’000
4,491
3,514
US$’000
3,306
4,402
857
1,317
190
408
151
81
499
352
9,702
9,866
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at December 31, 2018
was 5.1% (2017: 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, 2018 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 streaming and the
advance purchase facility 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 74
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, 2018 Dec 31, 2017
US$’000
(199)
US$’000
(17)
181
16
(979)
(295)
890
269
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
105
-
136
241
644
2,692
15
3,351
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve
month's maximum duration. Details of the Group’s borrowings are described in note 21.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group’s and Company’s
reported results.
Commodity price risk
Commodity price risk is the risk that the Group’s future earnings will be adversely impacted by changes in the market
prices of commodities. The Group is exposed to commodity price risk as its future revenues will be derived based on
contracts with customers at prices that will be determined by reference to market prices of copper and gold at the
delivery date.
Page 75
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24 Financial instruments (continued)
Commodity price risk (continued)
As explained in note 3 the Group calculates the fair value of the Gold streaming based on estimates of future cash
flows arising from the sale of payable gold. In estimating the cash flows the following table details the Group’s
sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent management’s
assessment of the reasonable possible exposure.
10% increase in the price of gold
25% decrease in the price of gold
Gross assets
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
(1,212)
(1,348)
3,029
3,369
Receivables in respect of the sale of copper concentrate which contain an embedded derivative linking them to future
commodity prices are measured at fair value through profit and loss and are treated as derivative financial assets or
liabilities. In estimating the value of the derivative the following table details the Group’s sensitivity to a 5% increase
and a 5% decrease in the price of copper, gold and silver. These percentages represent management’s assessment
of the reasonable possible exposure.
5% increase in the price of copper, gold and silver
5% decrease in the price of copper, gold and silver
Gross assets
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
918
587
(918)
(587)
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 76
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:
Dec 31, 2018
Dec 31, 2017
US$’000
US$’000
255
242
21
19
21
19
86
19
21
19
17
15
21
19
442
352
Dec 31, 2018
Dec 31, 2017
No.
‘000
No.
‘000
7,800
4,575
7,800
4,575
Dec 31, 2018
Dec 31, 2017
$’000
$’000
585
508
27
116
26
58
728
592
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 Williams
Short term employee benefits
Social security costs
Share based payments
*Norman Williams resigned as a director from 31st March 2019.
Page 77
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
Registered address
Rambler Mines Limited
Ordinary
100%
Holding company
England
Rambler Metals and
Mining Canada Limited
Common
100%
(indirectly)
Exploration,
development and
mining
Canada
1948565 Ontario Inc.
Common
100%
Exploration
Canada
3 Sheen Road
Richmond Upon
Thames, Surrey
TW9 1AD
PO Box 610
Baie Verte, NL A0K
1B0
PO Box 610
Baie Verte, NL A0K
1B0
CE Mining II Rambler Limited is a controlling shareholder of the Company. Details of related party transactions with
CE Mining II Rambler Limited are included in note 21.
Ultimate and controlling party
CE Mining II Rambler had shareholding of 60% as of 31st December 2018.
26. Subsequent events
•
•
In January 2019 the Company, via its wholly-owned subsidiary, Rambler Metals and Mining Canada
Limited, received a bridge loan from CE Mining III Rambler Limited (“CEIII”) of US$1 million bearing
interest of 10% per annum in support of short-term working capital requirements at its Canadian
operation.
In March 2019 the Company closed a private placement funding of US$11 million by way of an
issuance of 599,781,897 new ordinary shares in the capital of Rambler at a subscription price of
US$0.018 (£0.014) per ordinary share. The proceeds of the subscription were for working capital
purposes and to repay the US$1 million unsecured loan owing to CEIII. The loan was fully repaid in
March2019 including interest.
• An Open Offer for shares was closed in April 2019 with 37,940,043 ordinary shares issued for
proceeds of £524,860.58.
• The shares of the company delisted from TSX Venture Exchange (TSXV) at the close of 15th January
2019. The minimal trading activity of the Company’s Shares on the TSXV no longer justifies the
expense and administrative requirements associated with maintaining this dual listing.
Page 78
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2018
(EXPRESSED IN US DOLLARS)
Year to
December 31,
Year to
December 31,
2018
U$’000
2017
U$’000
(Loss)/profit for the period
(4,591)
(2,799)
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into presentation currency
(4,271)
6,603
Other comprehensive profit/(loss) for the year
(4,271)
6,603
Total comprehensive profit/(loss) for the year
(8,862)
3,804
Page 79
REGISTERED NUMBER: 05101822 (ENGLAND AND WALES)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at December 31, 2018
(EXPRESSED IN US DOLLARS)
Note
December 31,
December 31,
Assets
Investments
Loans
Deferred tax
Total non-current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Loan
Trade and other payables
Total current liabilities
Total liabilities
Net current assets
Net assets
Equity
Issued capital
Share premium
Warrants reserve
Translation reserve
Retained profit
Total equity
C2
C2
C3
C4
C5
C5
2018
U$’000
2017
U$’000
1,449
1,532
73,509
71,458
-
1,680
74,958
74,670
13
28
136
15
149
43
75,107
74,713
1,733
-
334
217
2,067
217
2,067
217
(1,918)
(174)
73,040
74,496
17
9,524
8,061
95,999
89,309
-
859
(10,870)
(6,599)
(21,613)
(17,134)
73,040
74,496
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 loss for the financial year was US$8.9
million (2017: profit of US$3.8 million).
ON BEHALF OF THE BOARD:
A A Booyzen
Director
Approved and authorised for issue by the Board on June 4, 2018.
Page 80
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
(EXPRESSED IN US DOLLARS)
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Share capital Share premium Warrants reserve Translation reserve Accumulated losses
Total
Balance at January 1, 2017
Comprehensive income
Loss for the year
6,374
81,442
2,089
(13,202)
(14,394)
62,309
-
-
-
-
(2,799)
(2,799)
Foreign exchange translation differences
-
-
-
6,603
- 6,603
Total other comprehensive income
-
-
-
6,603
(2,799)
3,804
Total comprehensive loss for the year
-
-
-
6,603
(2,799)
3,804
Issue of share capital
Share issue expenses
Share based payments
Transactions with owners
1,687
7,979
(1,230)
-
- 8,436
-
(112)
-
-
- (112)
-
-
-
-
59
59
1,687
7,867
(1,230)
-
59
8,383
Balance at December 31, 2017
8,061
89,309
859
(6,599)
(17,134)
74,496
Balance at January 1, 2018
Comprehensive income
Loss for the year
8,061
89,309
859
(6,599)
(17,134)
74,496
-
-
-
-
(4,591)
(4,591)
Foreign exchange translation differences
-
-
-
(4,271)
- (4,271)
Total other comprehensive income
-
-
-
(4,271)
(4,591)
(8,862)
Total comprehensive loss for the year
-
-
-
(4,271)
(4,591)
(8,862)
Issue of share capital
Warrants exercised
Share issue expenses
Share based payments
Transactions with owners
1,463
5,847
-
-
- 7,310
-
859
(859)
-
-
-
-
(16)
-
-
- (16)
-
-
-
-
112
112
1,463
6,690
(859)
-
112
7,406
Balance at December 31, 2018
9,524
95,999
-
(10,870)
(21,613)
73,040
Page 81
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 loss
Share based payments
Foreign exchange losses
Decrease in debtors
(Decrease)/increase in creditors
Cash generated from operations
Interest paid
Net cash utilised in operating activities
Cash flows from investing activities
Advances to subsidiaries
Loans repaid by subsidiaries
Net cash utilised in investing activities
Cash flows from financing activities
Proceeds from the issue of share capital (note 18)
Loan received
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
Year to
December 31,
Year to
December 31,
2018
U$’000
2017
U$’000
(2,766)
(2,906)
112
59
1,747
1,657
15
18
(150)
74
(1,072)
(1,098)
(55)
-
(1,127)
(1,098)
(8,879)
(9,133)
827
707
(8,040)
(8,426)
7,294
8,323
2,000
-
9,294
8,323
127
(1,201)
15
1,171
(4)
45
136
15
Page 82
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 January 1, 2017
Advances
Repayments
Effect of movements in foreign exchange
Balance at December 31, 2017
Balance at January 1, 2018
Advances
Repayments
Effect of movements in foreign exchange
Balance at December 31, 2018
Investment in
subsidiary
Loans
$’000
$’000
Total
$’000
1,398
58,408
59,806
-
9,133
9,133
-
(707)
(707)
134
4,624
4,758
1,532
71,458
72,990
1,532
71,458
72,990
-
8,879
8,879
-
(839)
(839)
(83)
(5,989)
(6,072)
1,449
73,509
74,958
The company has interests in the following subsidiary undertakings, which are included in the consolidated financial
statements.
Name
Class
Holding
Activity
Country of
Incorporation
Registered address
Rambler Mines Limited
Ordinary
100%
Holding company
England
Rambler Metals and
Mining Canada Limited
Common
100%
(indirectly)
Exploration,
development and
mining
Canada
1948565 Ontario Inc.
Common
100%
Exploration
Canada
The aggregate value of shares in subsidiary undertakings is stated at cost.
The loans to the subsidiary undertakings are interest free.
3 Sheen Road
Richmond Upon
Thames, Surrey
TW9 1AD
PO Box 610
Baie Verte, NL A0K
1B0
PO Box 610
Baie Verte, NL A0K
1B0
Page 83
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 Company
does not generate any income to set off against the available losses the Company has completely written off the deferred
tax asset of $1.7 million (2017: Nil) in current year. Therefore, deferred tax asset as at 31 December 2018 was Nil
(2017: 1.7 million)
C4. Trade and other receivables
Sales taxes recoverable
Prepayments and accrued income
C5. Trade and other payables
Loan
Trade payables
Accrued expenses
C6. Related party transactions
December December
31, 2018
31, 2017
$’000
$’000
10
16
3
12
13
28
December
31, 2018
$’000
December
31, 2017
$’000
1,733
100
234
-
67
150
2,067
217
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 84