Annual Report
and Accounts
2013
0
CONTENTS
Page
Chairman’s address to the shareholders
Chief Executive Officer’s Review
Directors’ report
Corporate governance
Independent auditor’s report
Financial Statements
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
Annual General Meeting
Notice of meeting
Corporate Information
Country of incorporation
Guernsey
Company registration number
43133
Secretary
William Hunter
Suite A 55 Baker Street
St Peter Port House
Sausmarez Street
St Peter Port
Guernsey GY1 2PU
London
W1U 7EU
Auditor
BDO LLP
2
3
6
9
10
11
11
12
13
14
15
36
Registered office
Suite A
St Peter Port House
Sausmarez Street
St Peter Port
Guernsey GY1 3LL
Nature of business
Gold exploration and
mining in Tanzania
Website
www.shantagold.com
Nominated advisor and broker
Peel Hunt LLP
Moor House
120 London Wall
London
EC2Y 5ET
Second broker
GMP Securities Europe LLP
5 Stratton Street
London
W1J 8LA
____________________________________________________________________________________________________
1
Shanta Gold Limited
Chairman’s Address to Shareholders Annual Report & Accounts 2013
Dear Shareholder,
I am pleased to present my first report as Chairman of your Company. I am particularly encouraged with your Company’s first
year of production which was slightly ahead of guidance and the operation is well set to achieve its 2014 objectives.
During the past year, Shanta Gold continued its efforts to cement its positive and supportive relationship with the local
communities. Already, many of the Company’s workers are drawn from the local communities and despite having to strictly
manage cash resources; we have financed a number of projects in the health and educational spheres both at New Luika and
Singida. A CSR strategy has been developed and its implementation from 2014 will see a further strengthening of relations with
the local communities.
Relations between Shanta Gold and the Government of Tanzania remain good and your Board has had several positive
interactions with this important stakeholder. I am also pleased to report that even in its first year of production, your Company
is making a positive contribution to the economy of Tanzania. At the end of December 2013, Shanta Gold and its contractors
employed 740 Tanzanians on a permanent basis. In addition, we have paid to the Tanzanian Government, in direct and indirect
taxes (excluding VAT), US$9.4 million in the year just ended.
Board of Directors
The process of restructuring and strengthening of your Board to reflect the Company’s transition from an exploration to a
producing Company continued during the year with Robin Fryer and John Rickus joining as Non-Executive Directors. Rob recently
retired after many years as a partner at Deloitte (USA) where he was Global Head of Mining whilst John was for many years a
senior mining executive at Rio Tinto. We welcome Rob and John and look forward to their contributions to the Board’s
deliberations.
During the period, Edward Johnstone resigned from the Board and from his position as Chief Financial Officer. The Board extends
its gratitude to Edward for his contribution to the Company and wishes him well for the future.
Investor Relations
In keeping with the objective of keeping the market fully informed on developments, a number of roadshows were held during
the past year with presentations to both shareholders and potential investors. It is pleasing that the support of existing
shareholders has remained strong.
Appreciation
Walton Imrie retired as Executive Chairman at the last AGM having led the Company since listing in 2005. The Board and
shareholders are indebted to Walton for his leadership of the Company through the transitional period of exploration to
development and production. We wish Walton well in his retirement.
On behalf of the Board, I would like to thank the management team and the rest of our employees for the hard work during the
year. While there remain significant milestones still to be achieved in the coming 12 months and beyond, what has been
accomplished thus far has set the platform for future growth.
Lastly, I would like to thank my fellow Directors for their support and wise counsel since my appointment.
A P W Durrant
Chairman
17 April 2014
2
Shanta Gold Limited
Chief Executive Officer’s Review Annual Report & Accounts 2013
It gives me great pleasure to report on Shanta Gold’s first full year of production. It was a year in which some important
milestones were achieved and the foundations for the continued growth of the Company were laid.
2013 Production Summary
Tonnes ore milled
Grade (g/t)
Recovery (%)
Gold produced (oz)
Gold sold
Price achieved (US$/oz)
H1
160,484
6.73
86.5
25,579
23,842
1,523
H2
231,408
6.12
88.7
38,475
38,035
1,343
2013 Total
391,892
6.23
87.9
64,054
61,877
1,409
The past year could be broken into two distinct periods, the first half whereby the Company was obliged to right skill the
operation, upgrade the crushing circuit with new and rented equipment, modify gold smelting activities and build up the
necessary spares inventory to be able to run the plant at an economic level. During that period, to support cash flow initiatives,
mining volumes were reduced and the large ore stocks, built up during the mine development period, were gradually reduced to
more manageable levels to supplement the necessary feed to the plant.
In the second half of the year, the focus was on optimising gold production through increased mining activities and improving
plant availability and efficiencies. There were significant improvements as can be seen by the 50% increase in gold production in
the second half of the year.
Ore milled for the year was 391,892 tonnes at an average head grade of 6.23 g/t to produce 64,054 ounces of gold. Overall plant
recovery was satisfactory at 87.9%; however, the net metal recovery suggests a buildup in the in-circuit which management
believes is largely associated with our inability to move gold and silver through the Carbon in Leach process efficiently enough
due to a bottleneck in the incinerating circuit.
During 2013, it was decided that a new crushing circuit and an electro-winning elution plant were critical to provide a robust life
of mine plant that could deliver material improvements in recovery of both gold and silver and on an annualised basis, a 35%
volume increase from the 2013 figure. The capacity of the new circuits will also allow the introduction of a third mill if the
Company chooses to increase production in future. Good progress has been made on delivering these plant upgrades which are
on track to be commissioned by the end of Q2 2014.
The one common theme throughout the past year was the review of the cost structures which included bringing in-house a
number of operations considered core and the renegotiation of all major contracts. This will remain an ongoing exercise in 2014.
The Company released maiden reserve statements for both New Luika in October 2013 and Singida in February 2014.
The New Luika statement confirmed that there is a high grade five year mine life from 2014 within conservative economic
parameters. The Company also announced a resource update following a drilling exercise at depth at both Bauhinia Creek and
the adjoining Luika pit. The outcome was encouraging with an increase in the indicated resource and the results suggesting that
underground mining opportunities potentially exist on both deposits.
As a result of the above, a project was initiated to review the total resource on the New Luika mining claims, where we
currently have over 900,000 ounces in an indicated category at a 1 g/t cut-off, to establish what the most economic mining
methods would be to exploit this resource and potentially extend the life of mine. We anticipate this exercise to be completed
by end of Q2 2014.
The Singida maiden reserve statement proved that we have an attractive ore body that can be exploited initially through open
cast mining at an average grade of 5.1 g/t with a five and half-year life at 40,000 ounces per annum which would be produced at
a very competitive cost, free of overheads. The pre-feasibility study on the Singida Project is currently in progress and is
scheduled to be completed by end of Q2 2014. This ore body is open at depth and with additional evaluation work could provide
an extension to the life of mine.
Projects
The New Luika mine development and plant construction project was fully commissioned by 31 March 2013 at a total cost of
US$125 million. As a result of net revenue generated during the commissioning phase and also the transfer of stocks to
inventory, in the net project cost was reduced by US$37 million. Total new capital expenditure, for the year amounted to
US$6.3 million, most of which was on the new crusher and screening and elution/electro-winning plants.
3
Shanta Gold Limited
Chief Executive Officer’s Review (continued) Annual Report & Accounts 2013
The crusher and screening and elution/electro-winning plants are part of the on-going plant de-bottlenecking and efficiency
improvement efforts as stated earlier. Delivery and installation of the units is currently in progress and both are scheduled to be
operational from the beginning of the second half of 2014. We anticipate minimal disruption to current operations as we will be
able to run the current crushing circuit and smelting facilities in parallel with the new equipment. The two projects are
expected to cost US$8 million. Vendor funding has been secured for US$2.9 million of the crusher and screening plant cost at an
all-in interest rate of 6% per annum repayable over five years.
Due to cash constraints during the mine development and plant construction phase, there remains a number of areas mainly in
supportive infrastructure that under normal circumstances would have been completed as part of the main project. These
include a more secure water supply, employee accommodation and warehouse facilities. This capital expenditure forecast at
approximately US$7 million, will be spent over the next two years.
Exploration
Exploration activities although partially curtailed as part of our cash preservation strategy in light of the volatile and declining
gold price, had a successful year. On mine exploration included the successful drilling at depth at Bauhinia Creek and Luika and
the off mine development of targets continued with 8,000 metres of reverse circulation drilling. The Company has established a
number of potential targets within trucking distance of the current plant which we will continue to evaluate in 2014. In the Lupa
goldfields there are large deposits of gravels which if correctly screened can be a low cost ore feed source.
To date the Company has not properly evaluated the full potential of this asset and brought economic volumes into the resource
statement but this assessment is now underway.
Finance
As previously reported, for accounting purposes, commercial production at New Luika commenced on 1 April 2013. Therefore,
whilst gold sales for the year totaled 61,877 ounces, 13,424 ounces were in respect of the pre-production period and thus of the
total revenue for the year amounting to US$88 million, US$22 million relating to that period was capitalised. Revenue for the
nine months to December 2013 amounting to US$66 million was generated from 48,453 ounces at an average price of US$1,361.
Gross profit for the year amounted to US$12.2 million, giving a gross margin of 19% after low grade ore stocks valued at US$3
million were written off. Whilst turnover and operating costs reported are in respect of the nine months from 1 April 2013,
administration costs are for a full year and at US$12.5 million were 58% up on prior year largely reflecting the impact on the
overhead base of the Company now being in full production. In addition, one-off contract termination costs, share based
employment costs and an exchange loss incurred in the year amounted to US$2.8 million. Exploration expenditure at US$2.9
million was 233% higher than 2012, as a result of exploration activities following on from the acquisition of Shield Resources.
A charge of US$1.5 million was incurred on the termination of the Shield Joint Venture following the acquisition of Boulder
Investments (Private) Limited in April 2013. In addition, a previously provided bad debt amounting to US$1.7 million was
reversed.
An operating loss of US$3.2 million was incurred in the year, compared to a loss of US$10.6 million for the previous year.
Revaluation of warrants accounted for as derivative financial liabilities resulted in a fair value gain of US$6.0 million whilst total
cost of borrowings in the year amounted to US$7.2 million, giving a net finance expense of US$1.2 million.
As a result of the above, a loss before tax of US$4.4 million was recorded for the year, compared to a loss for the previous year
of US$14.7 million. The Group has accumulated tax losses brought forward from the development phase which will be offset
against future profits and accordingly a deferred tax asset of US$5.1 million has been recognised, resulting in a profit after tax
of US$0.8 million.
Non-current assets at year end amounted to US$119.1 million, a 3.4% reduction from last year mainly as a result of the
capitalisation of pre-production revenue, offset against the addition to intangible assets resulting from the acquisition of Shield
Resources Limited. In line with the Company’s transition from development to production, there was a significant investment in
working capital during the year. Inventories of ore, gold, spares and consumables at year end amounted to US$17 million.
Total borrowings at 31 December 2013 amounted to US$64.3 million compared to US$40 million at the end of the prior year. The
increase reflects the higher bank borrowings after a new US$30 million loan was secured from FBN Bank (UK) Ltd in January
2013 as well as US$5.5 million payable as part of purchase consideration on the acquisition of Boulder Investments (Private)
Limited. As previously reported, we restructured and consolidated our bank loans in August 2013, on improved interest and
repayment terms. The interest rate on the loan was reduced to LIBOR plus 6.5% whilst the repayment period was extended from
12 months to 36 months from January 2014, after a 6 month repayment holiday. Total loan repayments in the year amounted to
US$15.3 million.
The loan restructuring and positive cash flows from operations resulted in the Company ending the year in a strong cash position
of US$14.6 million, up from US$4.3 million last year. US$3 million in respect of gold sold in December was received immediately
after year end.
4
Shanta Gold Limited
Chief Executive Officer’s Review (continued) Annual Report & Accounts 2013
Hedging
As reported last year, Shanta Gold has a forward sales contract in terms of which the Company can sell forward a maximum of
25,000 ounces of its production. During the year, a total of 27,000 ounces were sold forward at an average price of US$1,402 and
as at end of December 2013, 19,500 ounces had been sold forward at an average price US$1,331. We will continue with a
prudent hedging policy to protect cash flows especially in this time of price volatility whilst remaining cognisant of debt service
commitments.
Community Social Responsibility
In 2013, we undertook a baseline study of the requirements of the communities around Shanta operations from which a CSR
strategy has been developed and will be implemented in 2014. We have meanwhile funded a number of health and education
community projects.
Outlook
I am pleased with the progress that we made in the past year. The review of operations has unlocked operating and cost
efficiencies that I am confident will enable Shanta Gold to meet the challenges of a difficult gold market as well as achieve the
2014 production and cost guidance.
In 2014, our focus will be on the following areas:
Ongoing review of the cost structure both at New Luika and at a corporate level;
Commissioning the crusher/screening and elution/electro-winning plants and realisation of the targeted volume and
recovery uplifts;
Complete evaluation work at New Luika with the aim of extending life of mine beyond five years;
Complete the Singida Bankable Feasibility Study during Q2 2014;
Review the long term water and power options;
Roll out the CSR strategy.
Acknowledgement
I would like to thank the Shanta Gold employees, contractors, advisors and the management team for their considerable efforts
in making 2013 a successful year.
I would also like to give a special thanks to our principal financiers, FBN Bank for their on-going support and assisting in the
restructuring of our debt facility.
I would like to thank both Walton and Tony and board members for their support and guidance during the year.
Last but not least, a special thanks to our shareholders for their patience and continued support.
M J Houston
Chief Executive Officer
17 April 2014
5
Shanta Gold Limited
Directors’ Report Annual Report and Accounts 2013
The Directors present their report and financial statements of the Group for the year ended 31 December 2013.
General
The Company was established in 2005. On 11 July 2005, its shares were listed on the London Stock Exchange's AIM market. The Company is a non-
cellular Company limited by shares incorporated in Guernsey.
Principal activity
The Group’s principal activity is that of investment in gold exploration and gold production in Tanzania.
Business review
A review of the business during the year is contained in the Chairman's statement on page 2 and in the Chief Executive Officer’s review on pages
3 to 5. The Group's business and operations and the results thereof are reflected in the attached financial statements. It is the business of the
Group and its subsidiaries to explore for value adding resources, financed by the Company and to turn commercially viable findings into a
mineral production asset.
The activities for the year have resulted in the Group’s net profit of US$0.8 million (2012: net loss of US$14.7 million)
Except as disclosed in Note 30 to the financial statements, no other material fact or circumstance has occurred between the accounting date
and the date of this report.
Nominated advisor
The Company’s nominated advisor is Peel Hunt LLP.
Financial results
The results for the year are set out in the attached financial statements. Although the Group made a profit for the year ended 31 December
2013 no dividends were proposed by the Board of Directors (2012: US$Nil).
Directors
The Directors who served during the year and to the date of this report are as follows:
Walton Imrie (resigned 20 May 2013)
Anthony PW Durrant (appointed 20 May 2013)
Robin A Fryer (appointed 29 July 2013)
Michael John Houston
Paul David Heber
Edward Johnstone (resigned 31 July 2013)
Ketankumar Vinubhai Patel
Nicholas Davis
Luke Leslie
John Rickus (appointed 20 December 2013)
Maheshkumar Raojibhai Patel (Alternate Director)
As an alternate Director to Mr. K V Patel, Mr M R Patel is allowed to attend and vote at any board meeting at which Mr. K V Patel is not present.
No Director shall be requested to vacate his office at any time by reason of the fact that he has attained any specific age. The Board considers
that there is a balance of skills within the Board and that each of the Directors contributes effectively.
Directors’ Remuneration
31-Dec-2013
Performance
Termination
31-Dec-2012
Performance
bonus
Fees/salary
Payment
Total
Bonus
Fees/salary
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000 US$’000
Walton Imrie
Paul Heber
Ketankumar Patel
Gareth Taylor
Michael Houston
Edward Johnstone
Nicholas Davis*
Luke Leslie
Anthony Durrant
Robin Fryer
John Rickus
Sub-total
Share based payments
Grand Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
163
65
65
-
477
211
78
65
56
27
2
1,209
-
1,209
410
-
-
-
-
226
-
-
-
-
-
636
-
636
573
65
65
-
477
437
78
65
56
27
2
1,845
515
2,360
The Executive Directors are provided with life assurance cover of four times their Directors' fees.
* N Davis was paid US$13,000 relating to 2012.
-
-
-
-
40
-
-
-
-
-
-
40
-
40
390
47
47
289
140
68
17
9
-
-
-
390
47
47
289
180
68
17
9
-
-
-
1,007
-
1,007
1,047
291
1,338
6
Shanta Gold Limited
Directors’ Report (continued) Annual Report and Accounts 2013
On appointment as Chairman, Anthony Durrant was granted 225,606 shares in the Company.
A list of Mr. Durrant's current and past directorships held within the last five years is shown below:
Current: Court & Smith Ltd, Gazelle Partners Ltd, Mussel Inn Ltd, Trimalgam Investments Ltd, The Native Flora Company Ltd, Amref Flying
Doctors Ltd, AKT Foundation, Jura Management Ltd.
Past: Conrico International Ltd, The New Shakespeare Company Ltd, African Medical & Research Foundation.
A list of Mr. Rickus's current and past directorships held within the last five years is shown below:
Mr. Rickus is currently a Director of Kincora Copper Ltd and Rickus Partners Ltd.
Past: None
A list of Mr. Fryer's current and past directorships held within the last five years is shown below:
Mr. Fryer is a past Partner of Deloitte LLP and has no other current directorships.
Directors’ responsibilities statement
The Directors are responsible for preparing financial statements for each financial year which give a true and fair view of the state of affairs of
the Group and of the profit or loss of the Group for that period and are in accordance with applicable laws. In preparing those financial
statements the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of
the Group and to enable them to ensure that the financial statements have been properly prepared in accordance with the Companies
(Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
So far as the Directors are aware, there is no relevant audit information of which the Group's auditor is unaware; having taken all the steps the
Directors ought to have taken to make themselves aware of any relevant audit information and to establish that the Group's auditor is aware of
that information.
A statement of corporate governance is included on page 9.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements
are published on the Company's website in accordance with applicable legislation in Guernsey governing the preparation and dissemination of
financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the
responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Going concern
After making enquiries, and bearing in mind the nature of the Group’s business and assets, the Directors consider that the Group has adequate
resources to continue its operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Auditor
BDO LLP has expressed their willingness to continue in office as auditors and a resolution to re-appoint BDO LLP will be proposed at the
forthcoming annual general meeting.
7
Shanta Gold Limited
Director’s Report (continued) Annual Report & Accounts 2013
Share options
Share options have been granted to the following current and past Directors under the Share Option Plan:
Walton Norman Brian Imrie (former Chairman)
Walton Norman Brian Imrie (former Chairman)
Walton Norman Brian Imrie (former Chairman)
Walton Norman Brian Imrie (former Chairman)
Walton Norman Brian Imrie (former Chairman)
Walton Norman Brian Imrie (former Chairman)
Gareth Taylor (former Director)
Gareth Taylor (former Director)
Gareth Taylor (former Director)
Gareth Taylor (former Director)
Ketankumar Vinubhai Patel
Ketankumar Vinubhai Patel
Nicholas Davis
Nicholas Davis
Nicholas Davis
Walter David Scott (former Director)
Walter David Scott (former Director)
Walter Egmund Vorwerk (former Director)
Walter Egmund Vorwerk (former Director)
Walter Egmund Vorwerk (former Director)
Walter Egmund Vorwerk (former Director)
Walter Egmund Vorwerk (former Director)
Maheshkumar Raojibhai Patel (alternate Director)
Grant date
29 July 2005
7 Sept 2009
16 Nov 2010
26 Oct 2011
26 Oct 2011
26 Oct 2011
16 Nov 2010
26 Oct 2011
26 Oct 2011
26 Oct 2011
29 July 2005
7 Sept 2009
23 Aug 2012
23 Aug 2012
23 Aug 2012
7 Sept 2009
16 Nov 2010
29 July 2005
14 July 2006
7 Sept 2009
16 Nov 2010
26 Oct 2011
29 July 2005
Number of
share options
168,006
350,000
250,000
250,000
750,000
1,000,000
125,000
250,000
750,000
1,000,000
168,006
150,000
250,000
500,000
500,000
250,000
250,000
466,685
363,718
350,000
250,000
250,000
168,000
Option
price
25p
6p
28.25p
25p
30p
35p
28.25p
25p
30p
35p
25p
6p
25p
30p
35p
6p
28.25p
25p
59p
6p
28.25p
25p
25p
The share option plan was adopted by the board of Directors on 1 July 2005, details of which are available at the Company's registered office.
No Directors’ options lapsed as a result of vesting conditions not being met. No Directors’ options were exercised during the year.
Under the share option plan where the option holder relinquishes his contract of employment with the Group, any vested options will expire
upon 12 months from the date of termination of their contract, unless otherwise agreed by the Directors.
Upon the resignation of Edward Johnstone, 500,000 share options lapsed as per the share option plan.
Further details, including share options provided to employees of the Group, are contained in note 24 to the financial statements.
Shares
Rock Investments Trading Limited (a Company in which Michael Houston has an interest) has been awarded 2,250,000 shares. Half of these
shares will vest when the average market capitalisation of Shanta Gold Limited equals or exceeds US$250 million during five consecutive working
days, and the other half will vest when the average market capitalisation of Shanta Gold Limited equals or exceeds US$350 million during five
consecutive working days, as shown on the London Stock Exchange website and converted from Pounds Sterling to US Dollars using such rate as
the Board determines to be the prevailing rate or rates for that period, and that on the date when this performance condition is satisfied, that
he still remains an employee of Rock Investments Trading Limited, or that Rock Investments Trading Limited continues to provide services to
Shanta Gold Limited or a Group Company.
Signed on behalf of the Board of Directors on 17 April 2014.
Michael J Houston
Chief Executive Officer
Anthony P W Durrant
Chairman
8
Shanta Gold Limited
Corporate Governance Annual Report and Accounts 2013
Guernsey does not have its own corporate governance regime. As a Guernsey-registered Company traded on the AIM Market of the London Stock
Exchange, the Company is not required to comply with the UK Corporate Governance Code (the ‘Code’) issued by the Financial Reporting
Council. However, the Group aims to comply with best practice in the industry and has provided details of its internal best practices below.
Board of Directors
The Company had one Executive Director and seven Non-Executive Directors at the year end. All major decisions relating to the Group are made
by the Board as a whole. Operations are conducted by the subsidiaries of the Company (principally Shanta Mining Company Limited) under the
direction of the Chairman of each of the subsidiary companies. The Company is represented on the board of Shanta Mining Company Limited.
The Board reviews key business risks regularly, including the financial risks facing the Group in the operation of its business.
The Group operates a share dealing code for Directors on the basis set out in the AIM Rules.
Board meetings
The Board aims to meet at least quarterly and as required from time to time to consider specific issues required for decision by the Board.
The table below shows the attendance at board meetings during the year to 31 December 2013:
Directors
Walton Norman Brian Imrie
Ketankumar Vinubhai Patel
Paul David Heber
Maheshkumar Raojibhai
Michael John Houston
Edward Richard Melville Johnstone
Nicholas Davis
Luke Leslie
Antony P W Durrant
Robin A Fryer
John Rickus
Board
Audit
Remuneration
Sustainability
Meeting
Committee
Committee
Committee
Non-Executive
Non-Executive
Non-Executive
Alternate
Executive
Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
Non-Executive
2
4
5
-
8
6
5
6
5
3
-
-
1
-
-
-
-
-
1
-
2
-
-
-
2
-
-
-
1
1
-
-
-
-
1
1
-
-
-
-
-
-
1
-
Audit Committee
The Group has an Audit Committee, comprised of three Non-Executive Directors being Robin Fryer (Chairman), Ketankumar Patel and Luke
Leslie. The Audit Committee aims to meet at least once each year and is responsible for ensuring that appropriate financial reporting procedures
are properly maintained and reported on, and for meeting with the Group's auditor and reviewing their reports and accounts and the Group's
internal controls.
Remuneration Committee
The Group has a Remuneration Committee, comprised of three Non-Executive Directors being Nicholas Davis (Chairman), Luke Leslie and Paul
Heber. The Remuneration Committee aims to meet at least once a year and is responsible for reviewing the performance of the senior staff,
setting their remuneration, determining the payment of bonuses, considering the grant of options under any share option plan and, in particular,
the price per share and the application of the performance standards which may apply to any grant.
Sustainability Committee
The Group has established a Sustainability Committee, comprised of Non-Executive Directors being Ketankumar Patel (Chairman), John Rickus
and Paul Heber. The Sustainability Committee aims to meet at least once a year and is responsible for reviewing the Group’s safety,
occupational health, environmental as well as community and social responsibility practices.
Signed on behalf of the Board of Directors on 17 April 2014
Michael J Houston
Chief Executive Officer
Anthony P W Durrant
Chairman
9
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SHANTA GOLD LIMITED
We have audited the Consolidated Financial Statements of Shanta Gold Limited for the year ended 31 December 2013 which comprise the
Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union.
This report is made solely to the Company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our
audit work is undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Directors and auditor
As explained more fully in the Directors' Responsibilities Statement within the Directors' Report, the Directors are responsible for the preparation
of the Consolidated Financial Statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the Consolidated Financial Statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that
the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition,
we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial
statements, and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of any apparent misstatements or inconsistencies we consider the
implications for our report.
Opinion on the financial statements
In our opinion the Consolidated Financial Statements:
give a true and fair view of the state of the Group’s affairs as at 31 December 2013 and of the Group’s profit for the year then ended
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
proper accounting records have not been kept by the Company; or
the Consolidated Financial Statements are not in agreement with the accounting records; or
we have failed to obtain all the information and explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
BDO LLP
Chartered Accountants and registered auditors
London
United Kingdom
17 April 2014
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
_____________________________________________________________________________________________________________________________
10
Shanta Gold Limited Annual Report & Accounts 2013
Consolidated income statement
Revenue
Cost of Sales
Gross Profit
Administration expenses
Exploration and evaluation costs
Loss on settlement of pre-existing relationship
Reversal of provision for bad debts
Impairment of intangible assets
Operating loss
Finance income
Finance expense
Notes
9
14
9
4
5
Loss before taxation
Taxation
Profit/(Loss_ for the year attributable to the equity
holders of the parent Company
Profit/(Loss) per share attributable to the equity
holders of the parent Company
6
7
Basic profit/(loss) per share (US$ cents)
Diluted profit/(loss) per share (US$ cents)
8
8
Consolidated statement of comprehensive income
Profit /(loss) after taxation
Other comprehensive income:
Exchange differences on translating foreign entities which
can subsequently be reclassified to profit or loss (see note 9)
Total comprehensive profit/(loss) attributable to the equity
shareholders of the parent
31 December
2013
US$’000
Restated
31 December
2012
US$’000
65,989
(53,816)
12,173
(12,525)
(2,988)
(1,500)
1,668
-
(3,172)
6,019
(7,213)
(4,366)
5,125
759
0.164
0.163
-
-
-
(7,890)
(897)
-
(1,668)
(189)
(10,644)
263
(4,366)
(14,747)
–
(14,747)
(4.42)
(4.42)
331December
31 December
2013
US$’000
2012
US$’000
759
(14,747)
407
-
1,166
(14,747)
The profit/(loss) for the year and the total comprehensive loss for the year are attributable to the equity holders of the Parent
Company. There are no non-controlling interests.
The items in the above statement are derived from continuing operations.
The accompanying notes on pages 15 to 35 form an integral part of these financial statements.
11
Shanta Gold Limited Annual Report & Accounts 2013
Consolidated statements of financial position
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Restricted cash
Cash and cash equivalents
Total current assets
TOTAL ASSETS
CAPITAL AND RESERVES
Equity
Share capital
Share premium
Share option reserve
Convertible loan note reserve
Shares to be issued
Translation reserve
Retained deficit
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Loans and other borrowings
Convertible loan notes
Provision for decommissioning
Provision for deferred taxation
Total non-current liabilities
Current liabilities
Loans payable to related parties
Trade and other payables
Loans and other borrowings
Total current liabilities
Total equity and liabilities
Notes
9
10
7
15
13
16
22
24
19
20
21
9
17
18
19
31 December
31 December
2013
US$’000
23,495
90,437
5,125
119,057
16,949
8,334
600
14,638
40,521
2012
US$’000
10,380
112,929
-
123,309
-
8,643
-
4,277
12,920
159,578
136,229
76
132,797
4,286
5,374
-
807
(60,192)
83,148
27,342
20,240
5,825
5,197
58,604
337
6,543
10,946
17,826
75
132,139
3,258
5,374
293
400
(61,043)
80,496
-
18,637
4,129
-
22,766
337
17,308
15,322
32,967
159,578
136,229
The financial statements were approved and authorised for issue by the board of Directors on 17 April 2014 and signed on its behalf by:
Michael J Houston
Chief Executive Officer
Anthony P W Durrant
Chairman
The accompanying notes on pages 15 to 35 form an integral part of these financial statements.
12
Shanta Gold Limited Annual Report & Accounts 2013
Consolidated statement of changes in equity
Total equity
31 December 2011
Total comprehensive
loss for the year
Share based payments
Shares issued for cash
Share issue costs
Shares to be issued
Warrants exercised
Convertible loan notes
Total equity
31 December 2012
Profit for the year
Comprehensive income for the year
Total comprehensive profit for year
Share based payments
Shares issued
Lapsed options
Total equity
31 December 2013
Share
capital
US$’000
Share
premium
US$’000
Share
option
reserve
US$’000
Convertible
loan note
reserve
US$’000
Translation
reserve
US$’000
Shares
to be
issued
US$’000
Retained
deficit
US$’000
Total
Equity
US$’000
45
81,029
1,722
-
400
-
(46,296)
36,900
-
-
30
-
-
-
-
75
-
-
-
-
1
-
-
-
54,113
(3,736)
733
-
-
1,536
-
-
-
-
-
132,139
3,258
-
-
-
-
658
-
-
-
-
1,426
(306)
(92)
-
-
-
-
-
-
5,374
5,374
-
-
-
-
-
-
-
-
-
-
-
-
-
400
-
407
407
-
-
-
-
-
-
-
293
-
-
(14,747)
-
-
-
-
-
-
(14,747)
1,536
54,143
(3,736)
293
733
5,374
293
(61,043)
80,496
-
-
-
-
(293)
-
759
-
759
-
-
92
759
407
1,166
1,426
60
-
76
132,797
4,286
5,374
807
-
(60,192)
83,148
The nature and purpose of each reserve within Shareholders’ equity is described as follows:
Reserve
Share capital
Share premium
Share Option reserve
Convertible loan note reserve
Translation reserve
Shares to be issued
Retained deficit
Description and purpose
Amount subscribed for share capital at nominal value
Amount subscribed for share capital in excess of nominal value
Cumulative fair value of options charged to the statement of comprehensive income net of
transfers to the profit and loss reserve on exercised and cancelled/lapsed options
Equity element of convertible loan note.
Cumulative gains and losses on translating the net assets of overseas operations to the
presentation currency
Nominal value of share capital and premium on shares to be issued
Cumulative net gains and losses recognised in the consolidated statement of comprehensive
income
The accompanying notes on pages 15 to 35 form an integral part of these financial statements
13
Shanta Gold Limited Annual Report & Accounts 2013
Consolidated statement of cash flows
31 December
2013
US$’000
Notes
Restated
31 December
2012
US$’000
Net cash flows used in operating activities
25
19,529
(4,330)
Investing activities
Purchase of intangible assets
Purchase of plant and equipment
Asset under construction
Proceeds from disposal of asset
Transfer to restricted cash
Purchase of subsidiary
Net cash flows used in investing activities
Financing activities
Proceeds from issue of ordinary share capital (net of share
issue costs)
Proceeds from issue of convertible loan notes
Loans repaid
Loan interest paid
Loans received
Net cash flows from financing activities
(62)
(10,185)
(9,452)
31
(600)
(2,400)
(22,668)
60
-
(15,323)
(4,683)
33,446
13,500
(43)
(1,171)
(73,471)
-
-
-
(74,685)
45,078
23,375
(17,900)
(2,931)
35,098
82,720
Net increase in cash and cash equivalents
10,361
3,705
Cash and cash equivalents at beginning of year
4,277
572
Cash and cash equivalents at end of year
14,638
4,277
The accompanying notes on pages 15 to 35 form an integral part of these financial statements
14
Shanta Gold Limited Annual Report & Accounts 2013
Notes to the financial statements
1. General information
Shanta Gold Limited (the Company) is a limited Company incorporated in Guernsey. The address of its registered office is Suite A, St
Peter Point House, Sausmarez Street, St Peter Port, Guernsey. The nature of the Group's operations and its principal activities are set
out in the Chairman's address to shareholders, the Chief Executive Officer’s review and the Directors' report on pages 2 to 9.
These financial statements were approved and authorised for issue on 17 April 2014 by Michael J Houston and Antony W P Durrant on
behalf of the Board.
2. Accounting policies
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies
have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements have been prepared under the historical cost convention except for certain financial instruments
which are carried at fair value, as explained in the accounting policies below. They are presented in US Dollars, which is also the
Group’s functional currency. Amounts are rounded to the nearest thousand, unless otherwise stated.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC
Interpretations) issued by the International Accounting Standards Board (“IASB”), as adopted by the European Union (“IFRS”).
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It
also requires Group management to exercise judgment in applying the Group’s accounting policies. The areas where significant
judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 3.
The prior year comparative information has been reclassified to show separately provision for bad debt which was subsequently
reversed in 2013. The provision for bad debt was previously included within exploration expenses. The cashflow has also been adjusted
to reflect the above reanalysis.
Adoption of new and revised Standards
a)
(i) Standards, amendments and interpretations effective in 2013:
The following new standards and amendments to standards are mandatory for the first time for the Group for the financial year beginning
1 January 2013. Except as noted, the implementation of these standards did not have a material effect on the Group:
Standard
IAS 1 (Amendment)
IFRS 13
IAS 19 (Amendment 2011)
IAS 16 (Improvements)
IFRIC 20
Presentation of items of other comprehensive income
Fair value measurement
Employee benefits
Classification of servicing equipment
Stripping costs in the production phase of a surface mine
(ii) Standards, amendments and interpretations that are not yet effective and have not been adopted early:
Standard
Consolidated financial statements
Joint arrangements
Disclosure of interest in other entities
Separate financial statements
Investments in associates and joint ventures
Offsetting Financial Assets and Financial Liabilities
Recoverable amounts disclosures for non-financial assets
Novation of Derivatives and Continuation of Hedge Accounting
Financial Instruments
Defined Benefit Plans: Employee Contributions
IFRS 10
IFRS 11
IFRS 12
IAS 27 (Amendment 2011)
IAS 28 (Amendment 2011)
IAS 32 (Amendment)
IAS 36 (Amendment)
IAS 39 (Amendment)
IFRS 9
IAS 19 (Amendment)
IFRIC 21
Annual Improvements to IFRSs
Annual Improvements to IFRSs
Interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets on
the accounting for levies imposed by governments.
2010-2012 Cycle
2011-2013 Cycle
1 January 2014*
1 January 2014*
1 January 2014*
*Not yet endorsed by the European Union
The Group is evaluating the impact of the above pronouncements, but they are not expected to have a material impact on the Group’s
earnings or shareholder’s funds.
15
Effective date
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2013
Effective date
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
To be confirmed
1 January 2014*
Shanta Gold Limited Annual Report & Accounts 2013
The principal accounting policies adopted are set out below.
2.2 Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments
are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of
the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Investments in subsidiaries are stated at cost less accumulated impairment losses.
Business combinations
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the
acquisition of a business is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date.
2.3 Foreign currencies
Functional and Presentation Currency
The individual financial statements of each Group Company are prepared in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position
of each Group Company are expressed in US dollars, which is the functional currency of the Company and the presentation currency for
the consolidated financial statements.
Assets and liabilities of foreign entities (i.e. those with a functional currency other than US$) are translated at rates of exchange ruling
at the financial year end and the results at rates approximating to those ruling when the transactions took place. Exchange differences
arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognized in
other comprehensive income and accumulated in the foreign exchange translation reserve.
Transactions and balances
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date,
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting
date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit
or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in
profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and
losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised
directly in equity.
2.4 Revenue recognition
The Group enters into contracts for the sale of refined gold and silver. Revenue arising from sales under these contracts is recognised
when the price is agreed, the product has been delivered in accordance with the terms of the contract, the significant risks and
rewards have been transferred to the customer.
2.5 Inventory
Stores and consumables are stated at the lower of cost and net realisable value. The cost of stores and consumables includes
expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.
Gold ore stockpiles are valued at the lower of weighted average cost, including related overheads and net realisable value, using assay
data to determine the amount of gold contained in the stockpiles, adjusted for expected gold recovery rates.
Gold bullion and gold in process are stated at the lower of weighted average cost and net realisable value. Cost includes direct
materials, direct labour costs and production overheads, including depreciation of relevant mining properties.
Net realisable value is the estimated selling price less all expected costs to completion and costs to be incurred in selling.
16
Shanta Gold Limited Annual Report & Accounts 2013
2.6 Exploration and evaluation assets and expenditure
Exploration and evaluation expenditure, which is defined as expenses incurred until an ore body is considered commercially
recoverable, is, with the exception of costs of acquiring tenement rights, expensed. The costs of acquiring mining and prospecting
licenses, which are reflected in the financial statements as intangible assets, are capitalised and will be amortised when mining
operations commence over the mine life or unit of production method. Costs of entering into option agreements to explore and
evaluate other license holders' rights, with the option of converting these licenses are also capitalised and treated on the same basis.
Subsequent to initial recognition, tenement rights are assessed for impairment annually and when facts and circumstances indicate
they may be no longer viable, or where licenses have expired with no intention of renewal, an impairment loss is recognised as
exploration costs in the statement of comprehensive income. Where expiring licenses are in the renewal process they are not
considered impaired unless the Directors are doubtful that the renewal will not be granted.
2.7 Property, plant and equipment
Items of property, plant and equipment are recorded at purchase cost less accumulated depreciation and impairment losses. Gains or
losses on disposal of property, plant and equipment are determined by reference to their carrying amount and estimated useful life.
Depreciation is charged on a straight-line basis at rates calculated to write down the cost of each asset to its residual value over its
expected useful life. The applicable rates are as follows:
Description
Mine and related equipment
Office equipment
Motor vehicles
Furniture and fittings
Rates (%)
25.0
12.5
25.0
16.7
Mining properties (mine development and gold processing plant) depreciation is by the unit of production method
The useful lives and residual values are re-assessed annually.
2.8 Assets under construction
Pre-production expenditure, including evaluation costs, incurred to establish or expand productive capacity, to support and maintain
that productive capacity incurred on mines is capitalised to property, plant and equipment. The recognition of costs in the carrying
amount of an asset ceases when the item is in the location and condition necessary to operate as intended by management.
Any net income earned while the item is not yet capable of operating as intended, reduces the capitalised amount. Interest on
borrowings, especially to finance the establishment of mining assets, is capitalised during the construction phase.
2.9 Deferred Stripping
Production stripping costs in the open pit mines are capitalised to non-current assets if all of the following criteria are met:
It is probable that the future economic benefit associated with the stripping activity will flow to the entity;
The entity can identify the component of the ore body for which access has been improved;
The costs relating to the stripping activity associated with that component can be measured.
If the above criteria are not met, stripping costs are recognised directly in profit or loss.
The Group initially measures the stripping activity asset at cost, this being the accumulation of costs directly incurred to perform the
stripping activity that improves access to the identified component ore.
After initial recognition, the stripping activity asset is carried at cost less accumulated amortisation and impairment losses.
2.10 Impairment of Property, plant and equipment
The carrying amount of the Group’s non-current assets is compared to the recoverable amount of the assets whenever events or
changes in circumstances indicate that the net book value may not be recoverable. The recoverable amount is the higher of value in
use and the fair value less costs to sell.
Value in use is estimated by reference to the net present value of expected future cash flows of the relevant cash generating unit.
Individual mining properties are considered to be separate income generating units for this purpose, except where they would be
operated together as a single mining business.
If the recoverable amount is less than the carrying amount of an asset, an impairment loss is recognised. The revised carrying amount
is amortised in line with the Group’s accounting policy.
A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a reversal of the conditions that
originally resulted in the impairment. The reversal is recognised in the income statement and is limited to the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised in the previous reporting period.
17
Shanta Gold Limited Annual Report & Accounts 2013
2.11 Taxation
From 1 January 2008, the Company is taxed at the standard rate of income tax for Guernsey companies, which is 0%.
The Group is liable for Tanzanian tax arising on activities in the Tanzanian subsidiaries, which are liable for Tanzanian Corporation Tax
at 30%. In addition the Group may be liable for withholding taxes on the repatriation of assets and income from the Tanzanian
subsidiaries to the Company as there is no double tax treaty between Guernsey and Tanzania.
Taxation on the profit or loss for the year comprises both current and deferred taxes. Current taxation is provided for on the basis of
the results for the year computed in accordance with tax legislation and any adjustment of the tax payable for the previous year.
The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting
date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of the assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent it is probable that taxable profits will be available against which deductible temporary differences
can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited to the statement of comprehensive income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
2.12 Provisions
Provisions are recognised when the Group has a present obligation, legal or constructive, resulting from past events and it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the obligation.
2.13 Decommissioning, site rehabilitation and environmental costs
Group companies are required to restore mine and processing sites at the end of their producing lives to a condition acceptable to the
relevant authorities and consistent with the Group’s environmental policies. The net present value of estimated future rehabilitation
costs is provided for in the financial statements and capitalised within property, plant and equipment on initial recognition. The
capitalised cost is amortised over the life of the operation. Unwinding of the discount is recognised as finance cost in the statement of
comprehensive income as it occurs. Changes in estimates are dealt with on the prospective basis as they arise. The costs of on-going
programmes to prevent and control pollution and to rehabilitate the environment are charged to profit or loss as incurred.
2.14 Share-based payment/incentive programmes
The Group has applied the requirements of IFRS 2: Share-Based Payments.
a) The Group issues share options to certain employees and Directors. Share options are measured at fair value (excludes the effect
of non-market based vesting conditions) at the date of grant. The fair value is measured using an option pricing model at the grant
date and is expensed on a straight line basis over the vesting period. Share based payments made to employees are expensed in
the statement of comprehensive income over the vesting period.
b) Where the Group issues equity instruments to persons other than employees, the statement of comprehensive income is charged
with the fair value of goods and services received.
2.15 Warrants
Warrants are separated from the host contract as their risks and characteristics are not closely related to those of the host contracts.
Due to the exercise price of the warrants being in a different currency to the functional currency of the Company, at each reporting
date the warrants are valued at fair value with changes in fair values recognised through profit or loss as they arise. The fair values of
the warrants are calculated using the Black-Scholes model.
2.16 Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Board of Directors of the Company.
For management purposes, the Group is organised into one main operating segment, this being mining, processing, exploration and
related activities. The Group also operates in one geographical location, Tanzania. All of the Group’s activities are interrelated and
each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Group as one
segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.
18
Shanta Gold Limited Annual Report & Accounts 2013
All the Group’s non-current assets are located in Tanzania.
Total Revenues
Loss Before Tax
Total Non-Current Assets
Total Non-Current Liabilities
Exploration
and mining of minerals
2013
US$’000
65,989
(4,366)
119,057
58,604
2012
US$’000
-
(14,747)
123,309
22,766
Non-Current Assets comprises investment in mining and exploration assets (see notes 9 to 10). All revenues arise from sales to one
customer.
2.17 Financial instruments
Financial assets and financial liabilities are recognised in the Group and Company statement of financial position when the Group and
Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and
the net amount reported in the consolidated statement of financial position and statement of comprehensive income when there is a
currently enforceable legal right to offset the recognised amounts and the Group intends to settle on a net basis or realise the asset
and liability simultaneously.
Financial assets
The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its
characteristics. All financial assets are initially recognised at fair value. All purchases of financial assets are recorded at trade date,
being the date on which the Company or Group became party to the contractual requirement of the financial asset.
The Group has not classified any of the financial assets as held to maturity or as available for sale. The Group and Company had also
not designated any financial assets as fair value through profit or loss. The Company's financial assets comprise of loans and
receivables. Unless otherwise indicated the carrying amounts of the Company's financial assets approximate to their fair values.
Restricted cash are those amounts held by third parties on behalf of the Group and are not available for the Group’s use; these are
accounted for separately from cash and cash equivalents.
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
principally comprise loans, trade and other receivables and cash and cash equivalents. They are initially recognised at fair value plus
transaction costs that are directly attributable to the acquisition, and subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment. The effect of discounting on these financial instruments is not considered to be
material.
a) Derecognition of financial assets
A financial asset (in whole or in part) is derecognised either:
when the Group has transferred substantially all the risk and rewards of ownership or,
when it has neither transferred nor retained substantially all the risk and rewards and when it no longer has control over the
financial asset or a portion of the asset; or
when the contractual right to receive cash flow has expired.
b)
Impairment of financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the
estimated future cash flows of that asset.
An impaired loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant
financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that
share similar credit risk characteristics.
All impairment losses are recognised in the income statement.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was
recognised.
c)
Cash and cash equivalents
Cash and cash equivalents are carried at cost and include all highly liquid investments with a maturity of three months or less.
Financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its
characteristics.
19
Shanta Gold Limited Annual Report & Accounts 2013
All financial liabilities are initially recognised at fair value net of transaction costs incurred. All purchases of financial liabilities are
recorded on trade date, being the date on which the Company or Group becomes party to the contractual requirements of the
financial liability. Unless otherwise indicated the carrying amounts of the Company and Group’s financial liabilities approximate to
their fair values.
The Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through
profit or loss.
d)
Financial liabilities measured at amortised cost
Loans and trade payables
These include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest rate method.
Convertible Loan Notes
Convertible loan notes are assessed in accordance with IAS 32 Financial Instruments: Presentation to determine whether the conversion
element meets the fixed-for-fixed criterion. Where this is met, the instrument is accounted for as a compound financial instrument
with appropriate presentation of the liability and equity components. Where the fixed-for-fixed criterion is not met, the conversion
element is accounted for separately as an embedded derivative which is measured at fair value through profit or loss.
On issue of a convertible borrowing, the fair value of the liability component is determined by discounting the contractual future cash
flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost
basis until extinguished on conversion or redemption. The remainder of the proceeds is allocated, net of issue costs, to a separate
component of equity or a separate liability. Issue costs are apportioned between the components based on their respective carrying
amounts when the instrument was issued.
On conversion, the liability is reclassified to equity and no gain or loss is recognised in the profit or loss. Where the convertible
borrowing is redeemed early or repurchased in a way that does not alter the original conversion privileges, the consideration paid is
allocated to the respective components and the amount of gain or loss relating to the liability element in profit or loss. The finance
costs recognised in respect of the convertible borrowings includes the accretion of the liability.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the Company or Group has extinguished its contractual obligations, it
expires or is cancelled. Any gain or loss on derecognition is taken to the statement of comprehensive income.
Fair Value measurement hierarchy
IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value
using a fair value hierarchy that reflects the significance of the input used in making the fair value measurement.
The fair value hierarchy has the following levels:
a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
b) input other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived prices (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable input) (level 3).
c)
The level in the fair value hierarchy within which the financial asset or financial liability is categorised is determined on the basis of
the lowest level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their entirety into only one of the three levels.
Capital
Financial instruments issued by the Company and Group are treated as equity if the holder has only a residual interest in the assets of
the Company and Group after the deduction of all liabilities. The Company's ordinary shares are classified as equity instruments.
For the purpose of disclosure given in note 26 the Company considers its capital to comprise its ordinary share capital, share premium
and retained losses. There has been no change in what the Group considers to be capital since the previous period. The Group is not
subject to any externally imposed capital requirements.
Effective interest rate method
The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest
income/expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash
receipts/payments through the expected life of the financial asset/liability or, where appropriate, a shorter period.
3. Accounting judgments and estimation
The preparation of financial statements in conformity with IFRS requires management to make judgments, 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 judgments 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 ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects both current and future periods.
20
Shanta Gold Limited Annual Report & Accounts 2013
Key sources of estimation uncertainty and judgment are:
Mining Property Policy
Depreciation of the mining properties is by the unit of production method. Units of production are significantly affected by
resources, exploration potential and production estimates together with economic factors, commodity prices, foreign currency,
exchange rates, estimates of costs to produce reserves and future capital expenditure.
Inventories
Stock is valued at the lower of cost or net realisable value. Costs that are incurred in or benefit the production process are
accumulated as ore stockpiles, gold in process and gold bullion. Although the quantities of recoverable metal are reconciled by
comparing the grades of ore to the quantities of gold and silver actually recovered (metallurgical balancing), the nature of the
process inherently limits the ability to precisely monitor recoverability levels. Net realisable value tests are performed at least
annually and represent the estimated future sales value less estimated costs to complete production and bring the product to sale.
Impairment of acquired exploration and evaluation assets
The Group tests the carrying value of acquired exploration and evaluation assets when circumstances suggest that the carrying
amount may not be recoverable. As part of this review process the recoverable amount of the asset is determined using value in
use calculations, which requires estimates of future cash flows and as such is subject to estimates and assumptions. The key
assumptions are disclosed in note 9.
The Group tests whether mining options and license acquisition costs have suffered any impairment when facts and circumstances
suggest that the carrying amount may not be recoverable. The recoverable amounts are determined based on an assessment of the
economically recoverable mineral reserves, and future profitable production or proceeds from the disposition of recoverable
reserves. Actual outcomes may vary. As at 31 December 2013 the intangibles amounted to US$ 23,495,000 (2012: US$10,380,000).
As disclosed in the accounting policies, licenses which are viable and within the license renewal processes are not considered
impaired. The Directors have no reason to believe renewal will not be granted on the licenses.
The Government of Tanzania has enacted a new Mining Act 2011, which has replaced the previous Mining Act 1998; the new Act
became effective from 1 November 2011. The Act has introduced new procedures on renewal of Prospecting Licences (PL’s) that
now involves a tender process. The changes increase the risk of the Company not being able to retain PL’s that have or are due to
expire.
Depreciation of plant and equipment
Depreciation is provided in the consolidated financial statements so as to write down the respective assets to their residual values
over their estimated useful lives and as such the selection of the estimated useful lives and the expected residual values of the
assets require the use of estimates and judgments. The amount of plant and equipment net of depreciation as at 31 December
2013 was US$90,437,000 (2012: US$112,928,995).
Impairment of plant and equipment
Where potential triggers for impairment are identified which may indicate that the carrying value of items of plant and equipment
may have been impaired, a review will be undertaken of the recoverable amount of that asset based on value in use calculations
which will involve estimates and assumptions to be made by management. These estimates include an indicated and inferred
resource base of 1.48m ounces for the New Luika Mine. Using a range of discount rates, gold prices and cash costs, no impairment
indicators were identified. No impairments were recognised in 2013 and 2012.
Warrants and Share based payments
The Group has not issued any warrants during the period. The Group operates an equity settled share based remuneration scheme
for key employees. Employees’ services received and the corresponding increase in equity are measured by reference to the fair
value of equity instruments at the date of the grant. In 2013, no share options were granted. But in 2013, a total of 6,680,000
shares were awarded as part of the Group’s policy on attraction and retention of skills. Further details are given in note 24.
Exploration and evaluation expenditure
Exploration and evaluation expenditure such as costs of acquiring tenement rights, mining and prospecting licences are capitalised.
The cost of entering into an option agreement to explore and evaluate other licence holders’ rights, with the option of converting
these licences is also capitalised. The Directors consider that all other expenses incurred in exploration and evaluation should be
expensed until the ore body is considered to be commercially recoverable. As at 31 December 2013 exploration costs amounting to
US$2,988,000 (2012: US$897,000 have been expensed. This included the costs of work performed on the licences covered by Great
Basin Gold Joint Venture (JV) which were funded by the Group in line with its obligations under the JV agreement.
Decommissioning, site rehabilitation and environmental costs
The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the
environment. The Group recognises management’s best estimate of the rehabilitation costs in the period in which they are
incurred. Actual costs incurred in future periods could differ materially from the estimates. Additionally, future changes to
environmental laws and regulations, life of mine estimates and discount rates could affect the carrying amount of this provision.
Such changes could similarly impact the useful lives of assets depreciated on a straight-line-basis, where those lives are limited to
the life of mine. A 1% change in the discount rate on the Group’s rehabilitation estimates would result in an impact of US$0.5m
(2012: US$0.4m) on the provision for environmental and site restoration.
21
Shanta Gold Limited Annual Report & Accounts 2013
4. Finance income
Decrease in fair value of warrants (Note 23)
Bank interest
2013
US$’000
2012
US$’000
5,979
40
6,019
-
263
263
The fair value of warrants at 31 December 2013 is based on the prevailing Company share price of 11.38 pence on that date; and has
been calculated using the Black-Scholes model which takes into account the historical share price volatility of 60%.
5. Finance expense
Loan Interest
Unwinding of discount on decommissioning liability
Convertible Loan Note accretion
2013
US$’000
2012
US$’000
5,387
324
1,502
7,213
3,615
-
751
4,366
The above finance expense arises on financial liabilities measured at amortised cost using the effective interest rate method. No other
losses have been recognised in respect of financial liabilities at cost.
6. Loss before taxation
Loss before tax is arrived at after charging/(crediting):
Foreign exchange loss/(gain)
Impairment loss
Depreciation/amortisation
Share based payment costs
Directors’ remuneration
Auditors’ remuneration
– Audit fees of the Company and Group
– Audit fees of the Company’s subsidiaries
- Audit fees of subsidiaries by associates of Group auditor
7. Taxation
2013
US$’000
734
-
4,783
1,426
2,360
84
-
52
2012
US$’000
(35)
189
401
1,368
1,338
95
9
45
Effective I January 2008, the Company is taxed at the standard rate of income tax for Guernsey companies which is 0%. Taxation for
other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
There are no current tax charges for the year as the Group has a computed loss. Tax credit for the year relates to:
Current tax charge
Deferred tax asset recognised in the year
Closing balance
2013
2012
US$’000
US$’000
-
5,125
5,125
-
-
-
22
Shanta Gold Limited Annual Report & Accounts 2013
The tax charge for the year can be reconciled to the loss per the statement of comprehensive income as follows:
2013
US$’000
(4,366)
(1,310)
2,630
10,801
(4,019)
1,055
(9,157)
(31,291)
26,166
(5,125)
2012
US$’000
(14,747)
(4,424)
-
1,188
2,875
361
-
-
-
-
2013
2012
US$’000
US$’000
-
-
-
-
-
Loss before taxation
Tax at the standard tax rate
Tanzanian Corporation tax at 30%
Different tax rates applied in overseas jurisdictions
Tax effect of expenses that are not deductible in determining taxable profit
Tax effect of income not subject to tax
Unrecognised taxable losses
Tax losses utilised in the year
Recognised taxable losses
Accelerated capital allowances
Tax credit
Deferred Tax Asset movement
At 1 January
Movement in the year:
Recognition of deferred tax asset arising on taxable losses
31,291
Recognition of deferred tax liability arising on accelerated
capital allowances
At 31 December (net deferred tax asset)
(26,166)
5,125
At year end, the Group has unused tax losses of US$104,303,036 (2012: US$134,827,393) available for offset against future profits and
can be carried forward indefinitely. A deferred tax asset of US$5,125,101 has been recognised (2012: US$Nil).
Additionally, the Group has accumulated expenditure of US$8,794,755 (2012: US$6,018,107) arising on a number of its exploration
projects for off-set against future profits generated from those projects and can be carried forward indefinitely. No deferred tax asset
has been recognised on these losses as their utilisation is uncertain at this stage.
Deferred Tax Liability movement
Balance at 1 January
Movement for the year (note 9)
Balance at the end of the year
8. Profit/(loss) per share
2013
2012
US$’000
US$’000
-
5,197
5,197
-
-
-
Basic profit/(loss) per share is computed by dividing the profit/(loss) attributable to ordinary shareholders by the weighted average
number of Ordinary Shares outstanding during the year.
The earnings and weighted average number of ordinary shares
used in the calculation of basic profit/(loss) per share is:
Profit/(loss) for the year attributable to equity holders of the
Company
Profit/(loss) used in calculation of basic profit/(loss) per share
(see below)
Basic profit/(loss) per share (US cents)
Weighted average number of shares in issue
US$’000
US$’000
759
(14,747)
759
0.164
462,728,634
(14,747)
(4.42)
333,900,244
There were share incentives outstanding at the end of the year that could potentially dilute basic earnings per share in the future as
shown in the table below:
23
Shanta Gold Limited Annual Report & Accounts 2013
The Group has the following instruments which could potentially dilute
basic earnings per share in the future:
Share options
Warrants
2013
Number
2012
Number
2,140,722
-
3,049,110
1,986,355
*In 2013 the warrants were anti-dilutive as their price exceeded the average market price of the Company’s ordinary shares.
The earnings and weighted average number of ordinary
shares used in the calculation of diluted profit/(loss)
per share is:
Profit/(loss) for the year attributable to equity holders of
the Company
Profit/(loss) used in the calculation of diluted profit/(loss)
per share as shown below:
Diluted profit/(loss) per share (US cents)
Weighted average number of shares
9. Intangible assets
2013
US$’000
2012
US$’000
759
(14,747)
759
0.163
464,869,355
(14,747)
(4.42)
333,900,244
The Group has capitalised exploration and evaluation assets relating to amounts spent on the purchase of licences and to acquire rights
to explore and evaluate mineral deposits. These assets have been classified as intangible assets.
All of the licences are held by the subsidiary companies.
All of the intangible assets have a finite life and have been externally generated. These licences will be amortised when mineral
development commences, over the life of the mine or unit of production method.
Owned
prospecting
licences
US$’000
Third party
primary
mining
licences
US$’000
Third party
prospecting
licences
US$’000
Owned
Mining
Licence
US$’000
Third party
mining
licence
US$’000
201
–
(58)
(22)
121
–
(5)
116
316
240
-
(58)
498
-
-
498
330
-
(110)
(118)
102
62
-
164
-
-
-
22
22
-
-
22
29
-
(21)
168
176
-
-
176
Acquired
exploration
and evaluation
Assets
US$’000
Total
US$’000
-
876
9,461
-
-
9,461
13,058
-
9,701
(189)
(8)
10,380
13,120
(5)
22,519
23,495
At 31 December 2011
Additions
Impairments
Reallocation
At 31 December 2012
Additions
Amortisation
At 31 December 2013
Impairment of licences
Impairments relate to projects which have been assessed for impairment and found to be no longer viable or where licences have
expired with no intention of renewal. Licences currently under renewal but viable are not considered impaired. The Directors have no
reason to believe that renewal will not be granted. The recoverable amounts are determined based on an assessment of economically
recoverable mineral resources.
The government of Tanzania has enacted a new Mining Act 2011, which has replaced the previous Mining Act 1998; the new Act
became effective from1 November 2011. The Act has introduced new procedures on renewal of Prospecting Licences (PL’s) that now
involves a tender process. The changes increase the risk of the Group not being able to retain PL’s that have or are due to expire.
Owned prospecting licences
These licences are acquired from the Ministry of Minerals and are held in the subsidiary Company’s name.
Third party primary mining licences
These licences relate to primary mining licences held by an unrelated party, but in terms of which the subsidiary Company holds rights
to explore and evaluate with the option to purchase mining rights at a later stage. Under the agreement the subsidiary company pays
the licence acquisition and subsequent maintenance costs.
24
Shanta Gold Limited Annual Report & Accounts 2013
Third party prospecting licences
These are prospecting licences held by an unrelated party, but in terms of which the subsidiary Company holds the right to explore and
evaluate the site. Under the agreement the subsidiary company pays the third party for this right. In addition, the agreement provides
for additional payments to be made which will be linked to certain events, for example establishment of proven and probable reserves
or future sales.
Third party mining licences
This licence relates to a mining licence held by an unrelated party but in terms of which the subsidiary Company holds the right to
prospect on the licensed area and confers upon the subsidiary an exclusive option to purchase the licence if the Company in its sole
discretion requires it for mining.
Owned mining licences
These licences are acquired from the Ministry of Minerals and are held in the subsidiary Company’s name.
Acquired exploration and evaluation assets
On 15 April 2013, the Group acquired 100% of the share capital of Boulder Investments (Private) Limited (“Boulder”), which owns 100%
of Shield Resources Limited and the prospective Lupa Licences, from RK Mine Finance 1. The licences cover a significant portion of the
exploration ground surrounding the Company's New Luika Gold Mine including active licences of 1,313 sq km and a further 1,237 sq km
of licences under application. This is a large area of prospective exploration ground with a number of priority targets for further
investigation by the Company.
The Company paid US$2.4 million on 12 April 2013, with an additional US$2.4 million deferred over 24 months and US$3.1 million
issued as a promissory note due on 12 April 2017, both bearing interest at 2.6%. The consolidation of the prospective exploration
ground secures 100% control and ownership over the prospective Lupa licences.
Consequent upon the acquisition, the previous exploration joint venture with Great Basin Gold entered into in June 2011, which
included a conditional payment obligation on Shanta Gold subject to exploration results, was terminated. The termination of the joint
venture eliminated all potential dilution to Shanta Gold whereby it would have been obliged to issue shares in the Company to the
value of US$70 per oz for Measured & Indicated ounces and US$20 per oz for Inferred ounces for any gold resource defined above
500,000 oz and all mined gold ounces. This transaction also eliminated the Company's remaining minimum exploration spend of over
US$10 million to earn its 80% interest in Shield Resources, resulting in a loss of US$1.5 million on settlement of a pre-existing
relationship.
Details of the fair value of the identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book Value
FV of assets
Deferred tax
Fair value
Non-current assets
Current assets
Current liabilities
Provision for deferred taxation
Total net assets
Fair value of consideration paid
Net total cash paid
Fair value of deferred consideration (note 19 (1))
Fair value of shares and warrants issued (a)
Total consideration payable
Less fair value of net assets acquired
Less loss on settlement of pre-existing relationship (b)
Goodwill arising on acquisition
US$'000
-
64
(2,411)
-
(2,347)
acquired
US$'000
17,322
-
-
-
17,322
US$'000
5,197
-
-
(5,197)
-
US$'000
22,519
64
(2,411)
(5,197)
14,975
US$’000
2,400
4,614
9,461
16,474
(14,975)
(1,500)
-
(a)
In 2012, the Group recognised the initial costs of the transaction (US$9.5m) as incurred by the creation of the JV, by issuing
12.4 m shares at 21.19p each (US$4.2m) and 21.6m warrants (US$5.2m).
(b) The loss of US$1.5m arises on the settlement of the JV agreement with Great Basin Gold which represents the provision
within the JV agreement to transfer the Group’s loan receivable balance of US$2m at a 25% discount to other parties in the
JV.
If the entity had been part of the Group for the whole year, the impact on the income statement would have been a further
expenditure of US$452,000.
25
Shanta Gold Limited Annual Report & Accounts 2013
10. Mining properties, and other equipment
Gold
processing
plant
US$'000
Mining
assets
Assets
Mining and
TOTAL
Under
Other
Construction
equipment
US$'000
US$'000
US$'000
US$'000
Cost
At 1 January 2012
Additions
Asset transfers
Disposals/write off
At 31 December 2012
Accumulated Depreciation
At 1 January 2012
Charge for the year
Disposals/written off
At 31 December 2012
Cost
At 1 January 2013
Asset transfers
Additions
Sales from test production
Reclassification to inventories
Disposals/write off
At 31 December 2013
Accumulated Depreciation
At 1 January 2013
Charge for the year
Disposals/written off
At 31 December 2013
Net book value
At 31 December 2013
At 31 December 2012
At 31 December 2011
-
-
-
-
-
-
-
-
-
-
26,886
449
-
-
-
27,335
-
1,333
-
1,333
26,002
-
-
-
-
56,873
-
56,873
-
-
-
-
56,873
-
9,124
-
(9,544)
-
56,453
-
2,571
-
2,571
53,882
56,873
-
39,444
71,977
(56,873)
-
54,548
-
-
-
-
54,548
(26,886)
9,452
(21,687)
(6,094)
-
9,333
-
268
-
268
9,065
54,548
39,444
11. Subsidiary companies
At 31 December 2013, the Group had the following subsidiary undertakings:
Name of company
Shanta Gold Holdings Limited
Chunya Gold Holdings Limited
Shanta Mining Company Limited
Boulder Investments Limited
Shield Resources Limited
Mgusu Mining Limited
Nsimbanguru Mining Limited
Chunya Resources Limited
Songea Resources Limited
Holding
100%
100%
100%
100%
100%
100%
100%
100%
100%
Country of
Incorporation
Guernsey
Guernsey
Tanzania
Cyprus
Tanzania
Tanzania
Tanzania
Tanzania
Tanzania
Principal activity
Holding Company
Holding Company
Exploration and mining
Investment Company
Exploration and mining
Exploration and mining
Exploration and mining
Dormant
Dormant
1,799
1,049
-
(17)
2,831
937
401
(15)
1,323
41,243
73,026
-
(17)
114,252
937
401
(15)
1,323
2,831
114,252
-
612
-
-
(36)
3,407
1,323
606
(10)
1,919
1,487
1,508
862
-
19,637
(21,687)
(15,638)
(36)
96,528
1,323
4,778
(10)
6,091
90,437
112,929
40,306
26
Shanta Gold Limited Annual Report & Accounts 2013
12. Categories of financial assets and liabilities
Loans and receivables
Trade and other receivables excluding prepayments
Restricted cash
Cash and cash equivalents
Total financial assets
Financial liabilities measured at amortised cost
Current financial liabilities
Loans and other borrowings (note 19)
Trade and other payables excluding warrants
Loans payable to related parties (note 17)
Non-current financial liabilities
Convertible Loan (note 20)
Loans and other borrowings (note 19)
31 December
31 December
2013
US$’000
7,246
600
14,638
22,484
10,946
6,006
337
17,289
20,240
27,342
47,582
2012
US$’000
8,244
-
4,277
12,521
15,322
10,792
337
26,451
18,637
-
18,637
Total financial liabilities measured at amortised cost
64,871
45,088
Financial liabilities at fair value through profit or loss
Current financial liabilities
Derivative financial liability - warrants (note 23)
Total financial liabilities at fair value through profit or
loss
537
537
6,516
6,516
Fair values
The fair values of the Group’s cash trade and other receivables and trade and other payables are considered equal to the book value as
they are all short term.
Loans payable to related parties are repayable on demand and their fair value is considered to approximate their book value (note 17).
Loans and other borrowings and convertible loans are initially measured at fair value and subsequently at amortised costs.
Warrants instruments measured at fair value through profit or loss have been deemed to be level 3 liabilities under the fair value
hierarchy as the fair value measured of these liabilities are not based on observable market data (unobservable input).
The reconciliation of the opening and closing fair value balance of level 3 financial instruments is provided below:
Level 3
At 1 January
Additions in the year
Movement in fair value (note 4)
At 31 December 2013
2013
US$’000
6,516
-
(5,979)
537
2012
US$’000
-
6,516
-
6,516
The sensitivity analysis of a reasonable change in one significant unobservable input, holding other inputs constant, of level 3 financial
instruments is provided below:
10% change in volatility
10% change in risk free rate
Income Statement
Increase
US$’000
Decrease
US$’000
277
229
(237)
(184)
27
Shanta Gold Limited Annual Report & Accounts 2013
13. Trade and other receivables
Trade receivables
Prepayment
Other receivables
31 December
31 December
2013
US$’000
2,999
1,088
4,247
8,334
2012
US$’000
–
399
8,244
8,643
During the year no impairments were recognised (2012: US$Nil). The Directors consider that the carrying amount of trade and other
receivables approximates their fair value.
14. Reversal of bad debt
In 2012, Shanta Mining Company Limited, a group subsidiary provided US$1,668 million for an irrecoverable debt that it had incurred on
behalf of its then joint venture partner Shield Resources Limited. In 2013, after conclusion of the 100% acquisition of Boulder
Investments, this provision was reversed.
15. Inventories
Plant spares and consumables
Gold in ore stockpile, gold room and CIL
TOTAL
2013
2012
US$’000
US$’000
3,118
13,831
16,949
-
-
-
The amount of inventory which has been recognised as an expense in the year is US$53,815,506 (2012: US$Nil).
16. Restricted cash
As per IAS 7 (Classification of Restricted Cash), an amount of US$600,000 has been shown separately as it has an external restriction
placed upon it. The amount is being held by Auramet Trading LLP as collateral fees for the hedging that is in place with the Company.
This amount is not for use by Auramet.
17. Loans payable to related parties
Loans from shareholders
2013
US$’000
337
2012
US$’000
337
The loans payable to related parties are interest free, unsecured and repayable on demand. During the period, there were no changes
to the fair value of the loans. The fair value is determined, based on amounts expected by the counter party in settlement of the loan,
which is considered to be its face value as the loans are repayable on demand.
18. Trade and other payables
Trade payables
Accruals and other payables
Derivative financial liability – warrants (note 23)
31 December
31 December
2013
US$’000
2,169
3,837
537
6,543
2012
US$’000
7,009
3,783
6,516
17,308
Trade payables and accruals primarily comprise amounts outstanding for trade purchases and ongoing costs. The Group has financial
risk management policies in place to ensure that the payables are paid within the credit time frame. The Directors consider that the
carrying amounts of trade payables approximate their fair value.
28
Shanta Gold Limited Annual Report & Accounts 2013
19. Loans and other borrowings
Current liabilities
Loans payable to FBN Bank less than 1 year (2)
Non-current liabilities
Promissory notes (1)
Loans payable to FBN Bank after more than 1 year (2)
Total loans and other borrowings
(1) Promissory Notes
31 December
31 December
2013
US$’000
2012
US$’000
10,946
10,946
4,842
22,500
27,342
38,288
15,322
15,322
-
-
-
15,322
Promissory notes relate to Promissory Note 1 of US$2.4 million and Promissory Note 2 of US$3.1 million issued in consideration for the
acquisition of Boulder (note 9) and are repayable on 15 April 2015 and 15 April 2017 respectively. The notes bear an annual interest of
2.6% and are payable semi-annually in arrears. The promissory notes are recognised at fair value and subsequently accounted at
amortised cost. The fair value of the notes has been determined by discounting the cash flows using a market rate of interest which
would be payable on a similar debt instrument obtained from an unconnected third party. Using a market interest rate of 9% and a
contractual rate of 2.6%, the fair value of the two promissory notes of US$2.4 million and US$3.134 million was calculated to be US$
4.82 million.
(2) Loan from FBN Bank
Loan from FBN Bank UK Ltd relates to a US$ 15 million working capital loan facility obtained in 2012 from FBN Bank UK Ltd, which
bears an annual interest rate of LIBOR +7%. The loan is secured on the bank account which is credited with gold sales, the shares in
Shanta Mining Company Limited (SMCL) and a charge over the assets of SMCL. At 31 December 2012, US$10 million was outstanding on
this loan. Capital repayments of US$1.25 million were made per month from January 2013 to August 2013 to clear this loan. In January
2013, a further working capital loan facility of US$30 million was obtained, and it was secured similarly to the US$15 million loan.
In August 2013, the Group’s loan facilities were restructured. Repayments amounting to US$3.75m on the US$15 million loan together
with the US$ 30 million loan were made available to the Group as one loan of US$33.75 million. This loan bears interest at an annual
rate of LIBOR + 6.5%, and is repayable over 36 months from January 2014 at US$937,500 per month.
In summary, the Group had a new loan facility in January 2013 of US$30 million to which a further US$3.75 million was taken in August
making the total amount borrowed from the bank of US$33.75 million. Capital repayments of US$937,500 per month are being made
from January 2014.
20. Convertible Debt
Balance at 1 January
Issued convertible notes
Cash paid interest
Equity element
Coupon interest
Accreted Interest (note 5)
Debt issue costs
Amortisation of warrant costs
At 31 December
31 December
2013
US$’000
18,637
-
(2,125)
-
2,125
1,502
-
101
20,240
31 December
2012
US$’000
-
25,000
(1,517)
(5,875)
1,418
751
(1,140)
-
18,637
The convertible loan notes relate to US$25 million fixed coupon convertible loan notes which are due for repayment on 13 April 2017
and contain a conversion option at a price of US$0.4686 per 1 Company share. The notes incur an interest charge of 8.5% per annum
and interest is payable half yearly in April and October. They are not secured against any assets of any Group Company. The Group has
determined them to be a compound financial instrument requiring a proportion of the loan to be classified as equity. The equity
element represents the difference between the fair value of a similar liability with no equity conversion option and the fair value of
the existing convertible notes in issue. Accreted interest is charged to the statement of comprehensive income over the life of the
notes.
29
Shanta Gold Limited Annual Report & Accounts 2013
21. Provision for Decommissioning
Balance at 1 January
Increase in provision
Unwinding of discount (note 5)
At 31 December
31 December
31 December
2013
US$’000
2012
US$’000
4,129
1,372
324
5,825
1,014
3,035
80
4,129
The above provision relates to site restoration at the New Luika project, which is expected to be utilised by 2022 based on the current
mineable resource. The amount of US$5,824,658 (2012: US$4,129,833) is included in mining properties within property, plant and
equipment. The provision represents the net present value of the best estimate of the expenditure required to settle the obligation to
rehabilitate environmental disturbances caused by mining operations.
22. Share capital
Authorised
665,000,000 ordinary shares of 0.01 pence each
Issued and fully paid
At 1 January 2012
Issued in year
As at 31 December 2012
Issued in year
As at 31 December 2013
2013
2012
£66,500
£
US$’000
£66,500
Number
271,560,546
190,266,921
461,827,467
2,335,606
27,155
19,027
46,182
233
464,163,073
46,415
45
30
75
1
76
All shares issued rank pari passu in all respects with the existing shares in issue. The Company has one class of ordinary shares which
carry no right to fixed income.
23. Warrants issued
During the year no warrants were issued. As at 31 December 2013, the total number of warrants deemed to be issued amounted to
31,388,089 (2012: 31,388,089) at a weighted average fair value at the grant date of GBP0.14. The fair value of these warrants was
calculated using the Black-Scholes model. The warrants have decreased in value due to the fall in the share price. The exercise price
of the warrants was 35 pence, and the share price at 31 December 2013 was 11.38 pence.
24. Share-based payments
Equity-settled share option scheme
Options in issue at the year-end are as follows:
Number of options
Grant date
Exercise price
Final exercise date
1,146,697
407,367
550,000
1,495,000
1,345,000
875,000
100,000
2,750,000
1,500,000
2,000,000
2,955,000
250,000
500,000
500,000
29 July 2005
10 August 2006
25 April 2008
8 September 2009
27 July 2010
17 November 2010
16 February 2011
26 September 2011
26 September 2011
26 September 2011
6 January 2012
23 August 2012
23 August 2012
23 August 2012
25p
59p
8.5p
6p
18.2p
28.3p
35.13p
25p
30p
35p
23.13p
25p
30p
35p
29 July 2015
10 August 2016
25 April 2018
8 September 2019
27 July 2020
17 November 2020
16 February 2021
26 September 2021
26 September 2021
26 September 2021
6 January 2022
23 August 2022
23 August 2022
23 August 2022
There were no market conditions within the terms of the grant of the options. The main vesting condition for all the options awarded
was that the employee or Director remained contracted to the Company at the date of exercise. All such options, subject to the
remuneration committee discretion, lapse 12 months after an employee or Director leaves the Group before the options vest. All
options vest over a three-year period in tranches of 25%, 25% and 50% respectively.
30
Shanta Gold Limited Annual Report & Accounts 2013
31 December 2013
Weighted
average
exercise
price
Number
31 December 2012
Weighted
average
exercise
price
Number
Details of the share options outstanding during the year are:
Outstanding at 1 January
16,909,064
0.251
12,866,564
0.25
Adjustment – Shares lapsed
Options voided during the year
Granted in the year
Granted in the year
Granted in the year
Granted in the year
-
-
-
-
-
-
Share options cancelled during the year
Share options cancelled during the year
Outstanding at end of year
Exercisable share options at the end of year
(500,000)
(35,000)
16,374,064
9,394,064
0.31
0.2313
0.249
0.191
40,000
(150,000)
2,990,000
250,000
500,000
500,000
-
(87,500)
16,909,064
7,480,000
0.2313
0.25
0.30
0.35
-
0.251
0.191
The Binomial formula is the option pricing model applied to the grant of all options in respect of calculating the fair value of the
options. The following inputs to the Binomial formula have been used in calculating the fair value of options granted in 2012:
31 December 2012
Share price at grant
Option exercise price
Expected life of options
Expected volatility
Expected dividend yield
Risk free rate
Grant date
Fair value per share option
Exchange rate used
Total charge over the vesting period
£0.34
£0.25
£0.34
£0.30
£0.34
£0.35
10 years
10 years
10 years
55%
0%
1.70%
55%
0%
55%
0%
1.70%
1.70%
23-Aug-12
23-Aug-12
23-Aug-12
£0.240
1.585
£0.229
1.585
£0.219
1.585
$94,989
$181,336
$173,645
£0.23
£0.231
10 years
55%
0%
1.70%
6-Jan-12
£0.148
1.56
$700,984
Volatility has been based on the Company’s trading performance to 31 December 2012. The risk free rate has been determined from
government zero coupon stock of equivalent maturity.
Share based payments
Long-term incentive plan (LTIP)
Share awards are granted to employees and Directors on a discretionary basis, and the remuneration committee decides whether to
make share awards under the LTIP at any time. During the year, the following shares were awarded:
Number of shares
Grant date
Exercise price
Final exercise date
1,110,000
2,310,000
1,010,000
2,250,000
01 April 2013
01 April 2013
01 April 2013
1 January 2013
0p
0p
0p
0p
01 April 2017
01 April 2017
01 April 2017
1 October 2022
The Company’s mid-market closing share price at 31 December 2013 was 11.38 pence (2012: 18 pence). The lowest and highest mid-
market closing price during the year was 8.88 pence (2012: 17.1 pence) and 23.75 pence (2012: 31.96 pence) respectively.
The 1,110,000 shares awarded on 1 April 2013, were vested on the date of grant. The full fair value on the date of grant has been
charged to the Income Statement.
The vesting conditions of the 2,310,000 shares awarded on 1 April 2013 are dependent on meeting certain market conditions. The fair
value at the date of grant was determined using a probability of meeting the market conditions using the Monte Carlo method.
Monte Carlo inputs for shares awarded
Share price (£)
Share price (£)
Total options
Total Options value
Exchange rate
20p
0.1255
30p
0.089
1,155,000
1,155,000
144,953
102,795
1.51820
1.51820
31
Shanta Gold Limited Annual Report & Accounts 2013
The vesting periods for the 1,010,000 shares awarded on 1 April were that 25% would vest on 31 March 2015, another 25% would vest on
31 March 2016, and then 50% would vest on 31 March 2017, subject to the recipients being in the Group’s employment on these dates.
The vesting periods for the 2,250,000 shares awarded to Rock Investments Trading Limited (a Company in which Michael Houston has
an interest) were that half will vest when the average market capitalisation of Shanta Gold Limited equals or exceeds US$250 million
during five consecutive working days, and the other half will vest when the average market capitalisation of Shanta Gold Limited
equals or exceeds US$350 million during five consecutive working days, as shown on the London Stock Exchange website and converted
from Pounds Sterling to US Dollars using such rate as the Board determines to be the prevailing rate or rates for that period, and that
on the date when this performance condition is satisfied, that he is still an employee of Rock Investments Trading Limited, or that
Rock Investments Trading Limited continues to provide services to Shanta Gold Limited or a Group Company.
The fair value at the date of grant was determined using a probability of meeting the market conditions using the Monte Carlo method.
Monte Carlo Model inputs for Rock Investments shares
Market capitalisation
Market capitalisation
Per Simulation model provided by Valuations department : Option
value
Total options
Total Options value
Exchange rate
25. Net cash flows from operating activities
0.1699
0.1559
1,125,000
1,125,000
191,138
1.61620
175,388
1.61620
Profit / (Loss) for the year
Adjustments for:
Taxation
Depreciation /amortisation
Gain on disposal of assets
Impairment of prospecting licences
Share option costs
Reversal of provision for bad debt
Loss on settlement of pre-existing relationship
Capitalised sales from test production
Costs transferred from mining properties
Exchange loss
Finance income (note 4)
Finance expense (note 5)
Operating cash flow before movement in working capital
Increase in inventories
Decrease/(Increase) in receivables
(Decrease)/increase in payables
Interest received
Net cash flow from operating activities
26. Financial risk management
31 December
31 December
Restated
2013
US$’000
2012
US$’000
759
(14,747)
(5,125)
4,783
(5)
-
1,426
(1,668)
1,500
21,687
15,638
726
(6,019)
7,213
40,915
(16,949)
309
(4,786)
19,489
40
19,529
-
401
-
189
1.368
1,668
-
-
-
-
(263)
4,366
(7,018)
-
(8,330)
10,755
(4,593)
263
(4,330)
In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the
Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these financial statements.
32
Shanta Gold Limited Annual Report & Accounts 2013
There have been no substantive changes in the Group's exposure to financial instrument risk nor its objectives, policies and processes
for managing those risks or the method used to measure them from the previous period unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial Instrument risk arises are as follows:
• Loans and receivable
• Cash and cash equivalents
• Restricted cash
• Trade and other payable
• Loans
• Convertible Loan Notes
• Loans to related parties
The Group held no derivative financial instruments during the years ended 31 December 2012 and 31 December 2013.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining
ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group's finance function. The Board receives quarterly information from the
Group's management through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives
and policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility.
The Group is exposed to interest rate risks, credit risks, liquidity risks and currency risks arising from the financial instruments it holds.
The risk management policies employed by the Group to manage these risks are set out below.
26.1 Interest rate risk
The Group's exposure to interest rate risk relates to the Group's cash and cash equivalents and FBN loans. Interest rate risk is the risk
that the value of financial instruments will fluctuate due to the changes in market interest rates. All cash deposits as well as FBN loans
are at floating rates and the Group exposes itself to the fluctuation of the interest rate that is inherent in such a market.
The current LIBOR rate for US$ (1 month) is 0.15%. The FBN loans bear interest at LIBOR + 6.5%. Currently, the interest charge per
month is an average of US$170,000. A 0.1% change in the LIBOR rate will increase or decrease the interest charge by US$3,000.
The Group's cash and cash equivalents are carried at an effective interest rate of 1% (2012: 1%). The annualised effect of a 1%
(2012:1%) decrease in the interest rate at the reporting date on that variable rate deposits carried at that date with all other variables
held constant, would have resulted in an increase in a post-tax gain for the year of US$7,590 (2012: US$147,470). A 1% (2012:1%)
increase in the interest rate would, on the same basis, decrease post tax gain by the same amount.
26.2 Credit risk
Credit risk arises when a failure by counter-parties to discharge their obligations could reduce the amount of future cash inflows from
financial assets on hand at the reporting date.
The Group’s exposure to credit risk is explained below:
a) Trade and other receivables
The Group generates revenue from the sale of gold and silver. In the event of a default by a debtor of amounts due from other
receivables, the Group will be able to meet those costs. Sales are made principally to one customer. However, the Group has no
significant credit risk exposure as majority of the sale is paid for on the same day or soon after the delivery. The Group did not
recognise any impairment during the year and there were no other receivables that were past due. As a condition of the forward
sales contracts, an amount of US$ 600,000 was paid to Auramet Trading LLC as collateral fees.
b) Cash and cash equivalents
The Group has significant concentration of credit risk arising from its bank holdings of cash and cash equivalents.
To manage this exposure, the Group has a policy of maintaining its cash and cash equivalents with counterparties that have a
credit listing of at least A from independent rating agencies. Given this high credit rating, the Directors do not expect any
counterparty to fail. The Board has reviewed the maximum exposure on the Group financial assets and has concluded that the
carrying values as at reporting date are fully recoverable.
c) Restricted cash
The Group has paid to Auramet Trading LLC, an amount of US$600,000 as collateral fees for the forward sales contracts that it has
set up with Auramet. Although the Group has no control over the money, Auramet cannot use the money.
26.3 Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially
enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses
33
Shanta Gold Limited Annual Report & Accounts 2013
such as maintaining sufficient cash and other highly liquid current assets. Cash and cash equivalents are placed with financial
institutions on a short-term basis reflecting the Group's desire to maintain high levels of liquidity in order to enable timely completion
of transactions. All financial liabilities have a maturity of less than three years or have no specific repayment dates.
The maturity of financial liabilities is as follows:
Loans to related parties
Loans and other borrowings
Promissory notes
Other payables and accruals
Loans from shareholders
Loans and other borrowings
Other payables and accruals
26.4 Currency risk
31 December 2013
US$’000
US$’000
US$’000
On demand
Within 1 year
After 1 year
(337)
-
-
(6,006)
(6,343)
-
(10,946)
-
-
(10,946)
-
(22,500)
(5,534)
-
(28,034)
31 December 2012
US$’000
On demand
(337)
-
(10,792)
(11,129)
US$’000
Within 1 year
–
(15,323)
–
(15,323)
US$’000
After 1 year
–
(25,000)
–
(25,000)
Currency risk is the risk that the value of financial instruments will fluctuate due to change in foreign exchange rates.
Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in the currency that is
not the Group's measurement currency.
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Tanzanian Shilling
and Sterling, but these are not significant as most of the transactions are in USD. However, the Group's management monitors the
exchange rate fluctuations on a continuous basis and acts accordingly.
31 December 2013
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Loans payable to related parties
Restricted cash
Loans and other borrowings
Convertible loan notes
Net exposure
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Loans payable to related parties
Loans and other borrowings
Convertible loan notes
Net exposure
US$
US$’000
8,334
14,429
(5,889)
(337)
600
(38,288)
(20,240)
(41,391)
US$
US$’000
8,244
4,277
(10,544)
(337)
(15,322)
(18,637)
(32,319)
TZS
US$’000
-
110
(73)
-
-
-
-
GBP
US$’000
-
99
Total
US$’000
8,334
14,638
(581)
(6,543)
-
-
-
-
(337)
600
(38,288)
(20,240)
37
(482)
(41,836)
31 December 2012
TZS
US$’000
-
GBP
US$’000
-
Total
US$’000
8,244
-
-
-
-
-
-
1,068
5,345
(6,764)
(17,308)
-
-
-
(337)
(15,322)
(18,637)
(5,696)
(38,015)
The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency. In order to
monitor the continuing effectiveness of this policy, the Board reviews quarterly the liabilities, analysed by the major currencies held
by the Group of liabilities due for settlement and expected cash reserves.
34
Shanta Gold Limited Annual Report & Accounts 2013
The following significant exchange rates applied during the year:
Average rate
2013
0.001
1.5643
2012
0.001
1.588
TZS 1
GBP 1
Spot rate
2013
0.001
1.6488
2012
0.001
1.616
26.5 Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide
returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the costs of capital.
In order to maintain or adjust the capital structure the Company may return capital to shareholders and issue new shares, or when
profitable, adjust the amount of dividends paid to shareholders.
The Group has a US$33.75 million loan facility from FBN Bank in the United Kingdom, all of which has been drawn down. Additional
funding could be required if revenue is not as expected.
27. Related party transactions
Details of the Directors' remuneration, share options and other key management personnel are contained within note 6 and the
Directors report. Michael Houston, the CEO, is the only executive Director. Directors are considered key management.
Details of Directors’ share based payments are disclosed in the Directors’ Report.
The loans from related parties (Note 17) are from those companies in which K Patel, M Patel and W Imrie have an indirect interest namely
Export Holdings Limited and Trade Finance Services Limited – each lending US$168,294 to the Group.
Payments of US$38,235 for accounting services were made to Annandale Limited, a Company in which E Johnstone (Director) had an
interest during the part of the period that he was a Director. There were no balances owed at 31 December 2013 (2012: US$2,333).
Payments of US$78,083 as Directors’ fees were made to N Davis, a partner of Memery Crystal LLP. This firm also provides legal services to
the Group. Fees totalling US$335,587 were paid to Memery Crystal during the year for both the services of N Davis as a Director of the
Group as well as the firm’s legal services to the Group. At 31 December 2013, there was US$23,922 owing to Memery Crystal.
Payments of US$51,000 were made to J Leslie, Strategic Advisor to the Board, for consultancy work carried out for the Group.
28. Commitments
The Directors confirm that the Group has a capital commitment of US$9.87 million (2012: US$11.4 million) relating to plant equipment,
infrastructure projects and feasibility studies at Singida. As at 31 December 2013, the Group had forward sales commitments of 19,500
ounces of gold. Since year end, the Group has entered into additional forward sales contracts for 4,500 ounces of gold to bring the total
forward sales commitments to 24,000 ounces.
29. Contingent liabilities
Shanta Mining Company Limited (“SMCL”) has acquired certain prospecting licences and mining licences under agreements which provide
for payments to be made in certain circumstances to the party from whom the licence was acquired. Payments under these agreements
are unquantified at this time but may cause the Company to have a material cash requirement at some time in the future. Such payments
are linked to the proven and probable reserves once established.
The Directors confirm that there are no contingent liabilities against the Group as at 31 December 2013. (2012: US$Nil)
30. Events after reporting date
No events have occurred since the balance sheet date.
35
Shanta Gold Limited Annual Report & Accounts 2013
Meeting
Shanta Gold Limited
(a non-cellular company limited by shares incorporated under the laws of the Island of Guernsey with registered number 43133) (the
“Company”)
Notice is hereby given that the Ninth Annual General Meeting of the shareholders of the Company will be held at Suite A, St Peter Port
House, Sausmarez Street, St Peter Port, Guernsey, on 30 May 2014 at 10.00am. All details including the resolutions and the proxy forms
will be sent in due course.
36