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201(cid:25) / 201(cid:26)
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Overview of the year
Chairman’s Report
Strategic Report
Report of the Directors
Statement of Directors’
responsibilities
2
4
6
13
16
Group Statement of Changes in Equity
Company Statement of Changes in Equity
Group and Company statements of
(cid:428)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)
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Group and Company statements of cash
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Statement of Accounting Policies
Independent Auditor’s Report to
the Members of Vast Resources Plc
17
Notes to Financial Statements
Group statement of
comprehensive income
Company information
19
20
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23
24
(cid:22)(cid:21)
(cid:25)(cid:20)
Overview of the year
Vast Resources plc (‘Vast’ or the ‘Company’) has focussed its portfolio of mining assets
towards a Romania centric polymetallic mining base with the partial divestiture of its gold
mining holding in Zimbabwe agreed during the year under review, and completed post
period end. Production at Vast’s initial two mines, the Manaila Polymetallic Mine in Romania
(‘MPM’) and the Pickstone-Peerless Gold Mine in Zimbabwe (‘PPGM’) increased considerably
over prior year levels. The Company’s mineralised footprint in Romania was materially
expanded with the award of several exploration licences culminating post period end in a
landmark step towards achieving the Baita Plai Polymetallic Mine (‘BPPM’) right to mine,
following success in a formal selection process.
Financial
•
230% increase in revenue to $23.8 million (2016: $7.2 million)
•
•
•
72% decrease in loss from continuing operations to $2.4 million (2016: $8.5 million) – mining and
production operations in Zimbabwe performed strongly. However delays in improvements to operational
performance in Romania and the corporate overhead continued to weigh heavily on profitability
There were no discontinued operations in the year under review whereas a loss of $8.7 million from
discontinued operations was incurred in 2016
Cash balance at period end of $1.326 million (2016: $0.831 million)
Post period end:
•
Cash balance of $0.425 million in the Group, plus a further $128,700 held in Breckridge Investments
(Private) Limited (‘Breckridge’) in Zimbabwe as at 31 August 2017
Operational Development
•
Prospecting licence granted over Faneata tailings dam adjacent to BPPM
•
•
•
•
•
Maiden JORC Resource estimate published at MPM which increased the previously estimated open-pit
resources under the Russian classification by approximately 8 times
Zinc production commenced with the installation of a new flotation line in MPM
Construction of a sulphide processing plant at PPGM commenced in the first quarter of calendar 2017 –
construction was funded by an overdraft facility with a local bank, supplemented by internally generated
cash flows
Agreement to dispose of an effective 25% interest in PPGM and Giant Gold Mine for $4 million in
conjunction with a loan of $4 million from Sub-Sahara Goldia Investments (completed post period end)
Agreement to acquire the remaining 49.9% interest in Sinarom Mining Group, the operating company of
MPM, providing the Company with a 100% interest in MPM (completed post period end)
Post period end:
•
Much delayed remedial capital expenditure undertaken to streamline mining and processing operations
at MPM
•
•
•
4,037 Troy Ounces of gold produced at PPGM in quarter ended June 2017
828 and 157 tonnes of copper and zinc concentrate respectively produced at MPM in quarter ended June
2017
Success in formal selection process concerning the award of an association licence at BPPM
2 VAST RESOURCES
Funding
•
Fundraising share issues during the year:
Issue proceeds
US$
Sterling
Shares issued
Issued to
476,314
497,829
198,761
2,054,720
4,354
144,294
2,251,256
368,009
328,124
199,010
6,522,671
324,425
500,000
203,660
1,663,579
3,922
117,000
1,809,561
300,000
263,158
161,570
5,346,876
324,424,770
140,211,632
203,660,040
583,711,881
784,409
42,469,635
999,032,113
75,000,000
52,631,578
161,569,805
2,583,495,863
Crede capital – conversion of warrants
Existing investor group
Exercise of warrants by existing investor group
Open offer and supplementary placing
Exercise of open offer warrants
To settle liabilities
Conversion of Bracknor Fund loan notes
Exercise of Bracknor fund warrants
Exercise of warrants by brokers
Exercise of warrants by Management
Management
•
3 October 2016 – resignation of Graham Briggs as Non-Executive Director and appointment of Brian Moritz
•
•
16 November 2016 – at the Annual General Meeting of the Company William Battershill retired as director
by rotation and did not offer himself for re-election. Brian Moritz was appointed Chairman of the Company
in his place.
13 March 2017 – Appointment of Craig Harvey as Chief Operations Officer
Post period end:
•
30 June 2017 – Appointment of Brian Basham as Non-Executive Director
VAST RESOURCES 3
Chairman’s Report
It gives me great pleasure to present this my first chairman’s report since taking up the role on the 3rd October
2016. I would like to thank William Battershill for his service to the company as chairman and a director during
its transition from an exploration company to a mining company. His enthusiasm, commitment and support
played an important part in this transition of the company’s objectives.
Strategic Highlights
This financial year has seen a significant increase in turnover from US$7.2 million in 2016 to US$23.8 million.
The operating loss has reduced from US$8.0 million in 2016 to US$1.6 million, and the comprehensive loss
attributable to shareholders from US$16.2 million in 2016 to US$3.7 million.
The retention of free cash flow in Zimbabwe to finance the development of the phase two sulphide processing
facilities at the Pickstone-Peerless Gold Mine; the funding of the Romanian overhead costs; the funding of
maintaining the listing in the United Kingdom and the associated overheads; and the financial support for
operations at the Manaila Polymetallic Mine along with the care and maintenance of the Baita Plai Polymetallic
mine in Romania; have required further injection of capital via equity raisings and additional borrowings.
During the year, there were also changes agreed in the ownership of certain subsidiary companies. Following
period end part of our interest in the Pickstone-Peerless Gold Mine was sold, although we retain voting control
over Pickstone-Peerless. The cash generated from that sale was used, in part, to purchase the minority interest
in the Manaila Polymetallic Mine, where we now own a 100% interest. While both of these transactions were
negotiated during the year, they only reached completion following the reporting date.
Zimbabwe
Higher than normal rainfall affected operations at Pickstone-Peerless Gold Mine; nevertheless 239,199 tons of
ore were milled compared to a target of 240,000 tons. Access to the higher-grade areas was restricted and low
grade areas and stockpiles had to be utilised resulting in the production of 16,500 ounces of gold compared to
the target of 18,000 ounces.
Post year end, milling rates and gold production have reverted to expected levels and work on the sulphide
phase two expansion has commenced.
Romania
The improving trend experienced at Manaila Polymetallic Mine in the first three quarters of the financial year
was severely hampered by unexpected extremely cold weather conditions experienced in the fourth quarter.
The cold weather stopped mining and processing operations and therefore the volume of copper and zinc
concentrate production. Post year end, the weather conditions returned to normal and the improvement in
production has resumed.
Significant achievements during the year included: the removal of the high levels of zinc in the copper
concentrate thereby eliminating the zinc penalty; achieving the optimum copper concentrate grade; the
production of a separate zinc concentrate and a second income stream; increased copper and zinc concentrate
quantities; and commencement of the installation of a gravity gold circuit to recover free gold that was not
being recovered in the copper and zinc concentrate production.
The Baita Plai Polymetallic Mine association exploitation licence has remained a key focus of activity in Romania
as the quality of the ore body and the potential profit and cash generation of this mine has persuaded the board
to persevere with the licence application. It is very pleasing to note that this effort has now been rewarded by
the selection announced on 30 August 2017 of our subsidiary company for the award of the licence. We now
anticipate the grant of the right to mine very shortly.
4 VAST RESOURCES
Management
Craig Harvey has been appointed Chief Operating Officer. He is mainly focussed on Romania and improving the
mine planning and mining at Manaila Polymetallic Mine along with the various processing improvements
earmarked for the metallurgical complex at Iacobeni. The granting of the Baita Plai licence will require further
involvement in Romania as this mine is brought back into production.
Craig also continues to provide support for the mining operations at Pickstone-Peerless, the evaluation of the
Giant Gold Mine and other potential gold opportunities in Zimbabwe.
Carl Kindinger has assumed the full functions of the CFO role and the corporate secretarial role has been
transferred to corporate secretaries Shakespeare Martineau. As stated previously, Roy Tucker indicated his
desire to wind down his involvement in the company and these changes in the CFO role and the transfer of the
corporate secretarial role are designed to facilitate this objective.
Funding
US$4.2 million was secured during the year via share issues by way of the conversion of warrants issued in
association with capital raisings; an open offer to shareholders; the settlement of liabilities; and the Bracknor
equity facility for US$5 million that was terminated after its initial tranche of US$2 million. In addition, an
additional US$5.3 million was secured during the year through debt financing, with $3.4 million of debt being
repaid.
The ongoing funding of the U.K. and Romania overheads, and the further support required to bring the
Romanian operations to a cash generative position requires additional capital. The company is in discussions
with potential strategic partners and expects finalisation of the strategic funding options shortly.
Corporate structure and strategy
The geographical and cultural diversity between Romania and Zimbabwe involves the board in reviewing on an
ongoing basis the corporate structure and the strategy going forward. In addition, within the shareholder base
there are differing perceptions and expectations with regards to the countries and metals produced by the
company.
In the event of a separation between the Romanian and Zimbabwe operations there would be individual listed
entities with shareholders initially equally represented in both companies. This would enable shareholders to
focus investment in either, or both companies, as they wished.
The potential strategic investment referred to earlier could be the catalyst to achieving the objective of
establishing separate listed companies to focus on Zimbabwe and Romania.
Appreciation
The continued support of shareholders is appreciated; it is planned that during the current financial year
operations in Romania will become cash generative and that developments in Zimbabwe will enable access to
cash, because of the anticipated strategic investment in the group.
To fellow directors, past and present, thank you for your advice and support, and to management and staff in
both Romania and Zimbabwe for their continued efforts on behalf of the company.
Brian Moritz
Chairman
VAST RESOURCES 5
Strategic Report
Principal activities, review of business and future developments
Vision
The vision of the Company is to become one of the largest copper producers in Eastern Europe whilst retaining
a significant interest in the potential increasing gold production in Zimbabwe.
Principal activities
Vast is a diversified mining company with open pit polymetallic operations and a planned underground
polymetallic mine in Romania, and an open pit gold mine in Zimbabwe. We hold gold and diamond related mining
claims in Zimbabwe and have a presence in Zambia with interests in a rare earth and phosphate project. We
mine and produce copper and zinc concentrate and gold bullion. We operate a regional model, with our
registered office in London, United Kingdom and offices in Bucharest, Romania and Harare, Zimbabwe.
Review of business
Zimbabwe
Pickstone-Peerless Gold Mine – PPGM
PPGM continued to generate free cash flow. This was occasioned by a substantial increase, over prior year levels,
in tonnage milled and gold production despite some weather-related disruptions. Cash costs per ounce of gold
produced declined to $819 /oz on the higher volumes of production. Profitability has exceeded expectations.
Prior to the commencement of the construction of the new sulphide plant cash levels reached $2.5 million. The
sulphide plant will expand milling capacity by 75% to 35,000 tonnes per month and will come on stream in the
third quarter of 2017. The plant is and will be part funded by a bank loan which is expected to be repaid out of
internally generated cash flow within 12 to 18 months of the start of production.
In line with the company’s policy of support for the local community and strengthening relations with
government a joint venture agreement for a toll treatment plant to recover gold from nearby artisanal mining
activities was been concluded and construction was completed during early 2017.
Giant Gold Mine – GGM
Evaluation of GGM, located 28km from PPGM, which has a current JORC-compliant inferred resource of
500,000oz of gold, commenced in the year under review.
Romania
Manaila Polymetallic Mine (“MPM”) together with extensions and proximal licences
Insufficient funding for both pre-stripping activity and remedial capital expenditure, together with unusually
adverse winter weather conditions, took a heavy toll in reduced production levels, which fell well below the
targeted 15,000 tons per month of mill feed. Plant overheads were not fully recovered as a result. Cash costs
of concentrate exceeded realisable sales values per tonne by a wide margin. Nevertheless, noteworthy
achievements during the year include the reduction of zinc contained in copper concentrate to commercially
acceptable levels, a steady improvement in quantity and quality of copper concentrate produced, and the
introduction of a separate zinc concentrate. As a result, a reduction in refining charges and penalties have
secured higher metal concentrate prices.
In March 2017, a gravity concentrator was commissioned in order to recover a pyrite concentrate with gold and
silver credits. Test throughput has proved to be inconsistent in terms of quantity and quality of the concentrate.
Independent process consultants have been brought to site to assist in resolving these issues. We are now
focused on the development required to increase quantity to a level commensurate with our mining rate.
6 VAST RESOURCES
Recent funding made available to the Company has enabled commencement of the necessary remedial capital
expenditure on the plant. Furthermore, a crusher has been ordered which will allow for the crushing circuit to
deliver smaller sized feed in order to decrease milling time. Although the cost of transporting ore 34Km from
the open pit to the plant continues to erode profitability, trucking capacity has been expanded after year end,
thus ensuring this is no longer a limiting factor in production. Together these measures should enable the full
production target of 15,000tpm to be achieved in September 2017. A significant improvement in performance
has already been achieved since the reporting date.
We are undertaking a drilling programme that is nearing completion at the Carlibaba extension to the current
Manaila licence area. Initial drilling results are promising. The objective is to prove the potential of a second
open pit mining operation at Manaila. Full results from the Carlibaba drill programme are anticipated for release
in September 2017 together with an outline of Carlibaba’s development path.
A new metallurgical processing facility is proposed which will deal with ore from Manaila and Carlibaba. This is
intended to reduce significantly the cost of transportation and processing of ore thereby driving down the cash
cost per tonne milled. It will also enable the plant to be contained in a controlled environment, thus materially
reducing the adverse effect of severe winter weather.
In December 2016, the Company expanded its potential resource base through the granting of two prospecting
licences proximal to MPM – Piciorul Zimbrului and Magura Neagra – over which, from previous exploration, there
are initial estimates of substantial polymetallic resources. Exploration licences will be applied for once
prospecting work is complete.
Baita Plai Polymetallic Mine (“BPPM”) and Faneata Tailings Dam
We are aware of shareholders’ frustrations regarding the timescales for the grant of the BPPM mining
association licence (sub-licence), but following the Company’s success in a formal selection process, we are now
very confident that the right to mine will be granted shortly. It needs to be emphasized that the past delays
have arisen from the unusual legal background to the situation for which there is no precedent in Romanian
mining history. Since 2014, Vast, through its subsidiary companies, has been granted five licences all promptly
and without any difficulties.
Once the association licence is granted, the Company anticipates that production could begin within six months
and has forecast a start-up capital expenditure budget of $1.2 million to make the mine operational.
Meanwhile expenditure at BPPM has been limited to the required care and maintenance requirements and
some capital expenditure to comply with health and safety regulations that permit continued access to the
important areas of the mine such as the pumping stations.
A prospecting licence was granted in May 2016 over the Faneata tailings dam located 7km from the BPPM.
Subject to the outcome of the feasibility study the intention is to use the BPPM processing facility.
An internally generated Maiden Faneata JORC Compliant Resource Estimate in March 2017 defined a total
Mineral Resource of 3.0Mt (Gross, 2.4Mt being net to Vast). Metallurgical test work has commenced to
determine an optimal processing method. A feasibility study to recover the contained metals is underway. An
application has been made for an exploitation permit over the tailings dam in anticipation of positive feasibility
results. Preliminary economic assessment indicated a break even total processing recovery of 25%.
VAST RESOURCES 7
Strategic Report
continued
Corporate
In January 2017 the Company contracted with Sub-Sahara Goldia Investments (“Sub-Sahara”) firstly to raise
US$4 million through a divestment of an effective 25% interest in PPGM and GGM, and secondly US$4 million
by way of a loan, both subject to certain conditions precedent. Draw down of a significant part of the monies
was not completed until June 2017 due to delays in complying with the conditions precedent, principally
obtaining consent of the Reserve Bank of Zimbabwe.
In March 2017 the Company announced the acquisition of the remaining 49.9% equity stake in SC Sinarom
Mining Group SRL (“Sinarom”) (the operator of MPM) and also announced that discussions were continuing
concerning further transactions in relation to Sinarom which could include the introduction of a joint venture
partner or securing debt at the subsidiary level in order to increase production at both MPM and the newly
acquired Piciorul Zimbrului and Magura Neagra licences.
In July 2017, it was announced that conditional heads of terms had been signed with a corporate finance and
investment firm with significant experience in, and investment in, Romania (the “Investor”). This provided for a
two-stage investment totalling US$10 million for the purpose of the Company’s capital expenditure and working
capital requirement, mostly for the expansion of Romanian operations. The investment was subject to the rights
of Sub-Sahara under the terms of its loan agreement, which gave Sub-Sahara a right to provide equivalent
finance if the terms and conditions were the same, which right has been exercised by Sub-Sahara in August
2017. Sub-Sahara has indicated it wishes to work with the Investor and the two parties are in discussion with
each other and with Vast to deliver a mutually acceptable investment and corporate strategy. Meanwhile, in
order to prevent any further delay in the grant of the BPPM mining association licence, it was announced on
13 September 2017 that Sub-Sahara had provided an additional loan of $1.68 million for payments in connection
with the BPPM association licence.
Strategy and Key Performance Indicators
Our strategy is to:
•
•
•
•
•
develop an appropriate geographic and product profile consistent with our strengths, available
opportunities and risks;
focus on optimising our operations to produce positive cash flow;
add value to operations by increasing our resources and reserves;
attract appropriate joint venture partners and public institutions to invest in the Company;
maintain optionality on Zimbabwe gold production without significant increase in investment risk in
Zimbabwe.
A key issue for the Company has been a lack of, or delay in obtaining, adequate funding for Romania. This has
caused utilisation of plant in need of refurbishment and without adequate back-up. As a result the necessary
production volume to yield the targeted cash flow has not been achieved. This was partly remedied by the
delayed finance obtained from the January 2017 Sub-Sahara transaction, but would be fully addressed by the
consummation of the funding represented by the heads of terms announced in July 2017 or equivalent finance
from Sub-Sahara or elsewhere.
PPGM in Zimbabwe, which was adequately capitalised for the first phase oxide mining and processing and had
the benefit of new plant, has produced cash flow in excess of targets. The cash generated has been applied in
funding the second phase new sulphide plant at PPGM and subsequently is planned to finance the development
of GGM. The cash generated currently is therefore not available to fund the Company’s overheads or Romanian
development.
Excluding Zimbabwe, the Company was a net cash absorber. Inter alia, a corporate overhead in excess of
$2 million p.a. had to be funded by debt and dilutive equity raises in the absence of a dividend flow from
Zimbabwe.
8 VAST RESOURCES
Management believes that delivering in the next two years on a second open pit at MPM and a new processing
facility at MPM will increase production volumes appreciably and favourably transform the financial metrics of
the Company.
In the light of the explanation of the financial constraints affecting Romania, we should also highlight the fact
that it has been impossible to raise funding for investment in Zimbabwe. This resulted in bringing in a 50%
investor to get the first phase at PPGM into production. Furthermore, cash generated from the first phase is
therefore needed for the second phase development and the development of GGM. Consequently, funding for
head office and Romania was raised through the disposal of 25% of PPGM and a loan from Sub-Sahara.
Key performance indicators
In executing its strategy, the Board considers the Company’s key performance indicators to be:
•
Cash cost per tonne milled
–
–
–
Cash cost per tonne is derived from aggregate cash costs divided by tonnes milled and measures
productivity.
For PPGM the cash cost for the year was $57/t, 10% higher than the 2016 result.
For MPM the cash cost for the year was $47/t, 30% higher than the 2016 result.
•
Cash costs or per ounce sold for gold and per tonne sold for copper concentrate
–
–
–
Cash cost per ounce sold is calculated by dividing aggregate cash cost by gold ounces produced or
concentrate tonnes produced;
For PPGM the cash cost was $819/oz Au, 39% lower than the 2016 result;
For MPM the cash cost was $1,653/t, 36% higher than the 2016 result.
•
Plant utilisation as in targeted production volumes processed
–
–
PPGM processed a mill feed of 239,608 tonnes for the year, 103% higher than the 2016 level. The
targeted plant capacity in 2017 was 240,000 tonnes per annum;
MPM processed a mill feed of 97,285 tonnes for the year, 66% higher than the 2016 level, but 46%
below the target of 180,000 tonnes per annum.
•
Total resources and reserves
–
–
–
–
These measure our ability to discover and develop new ore bodies and to replace and extend the life
of our operating mines.
In Zimbabwe, continual evaluation of dormant operations takes place with a view to supplementing
the mineral resource base in that country.
In Romania, the focus is on converting the significant inferred mineral resources, defined exploration
targets and prospecting licences into measured and indicated mineral resources which would support
a feasibility study.
At MPM, the current drilling programme is expected to outline a second open pit by upgrading
inferred mineral resources to a minimum of indicated mineral resources.
•
The rate of utilisation of the Group’s cash resources. This is discussed further below.
VAST RESOURCES 9
Strategic Report
continued
Cash resources
•
As can be seen from the statement of financial position, cash resources for the Group at 31 March 2017
were approximately $1.3 million (2016: $0.8 million). During the year, the cash inflows from operations
were $2.9 million (2016: $1.7 million outflow) and the inflows from financing activities were a net
$6.1 million (2016: $7.6 million), after the repayment of borrowings of $3.4 million (2016: $1.2 million).
Against this, the outflows from investing activities were $8.5 million (2016: $8.1 million). The Directors
monitor the cash position of the Company closely and seek to ensure that there are sufficient funds within
the business to allow the Company to meet its commitments and continue the development of the assets.
During the year to 31 March 2017, of the $9.4 million of financing raised from share issues and loan
drawdowns, $8.8 million, or 93%, was spent on directly developing the three mining properties in Romania
and Zimbabwe.
•
•
The Directors closely monitor the development of the Company’s assets and focus on ensuring that the
regulatory requirements of the licences are in good standing always and that any capital expenditure on
the assets is closely controlled and monitored. Details of the Company’s spend on capital items in the year
are set out in note 10 of the financial statements.
The loss after tax arising from continuing operations during the year was $3.6 million (2016: $6.9 million)
However, over the year there was net cash generated by operations of $2.9 million as a result of
$6.5 million of non-cash items, principally, depreciation, share option and other share based payment
charges, together with movement of a deferred tax credit. The Company raised fresh share capital of
$4.2 million (2016: $5.2 million), raised new loan finance of $5.3 million (2016: $3.6 million) and retired
debt of $3.4 million (2016: $1.2 million). The net capital expenditure on the development on mine
properties was $8.8 million (2016: $8.7 million). The overall increase in cash available to the Group was
therefore $0.5 million (2016: $2.3 million reduction).
Principal risks and Uncertainties
The Board has identified the following as being the principal strategic and operational risks (in no order of
priority)
•
•
Risk – Going concern
The Group will require more cash for its near term investment purposes – particularly for the development
of the BPPM association licence once it is received and for the expansion of Manaila operations to achieve
planned increases in mining and production capacity – but is confident that it will be able to raise
$10 million in cash from investors with whom the Board is currently in negotiation, or otherwise.
However, this position could be undermined by a failure to secure the $10 million investment. Further
lengthy delays or the failure to be awarded, despite the Company’s selection, the BPPM association licence
could have a material adverse impact on the Company’s cash flow. The inability to have funds externalised
from Zimbabwe to the Company’s treasury in the United Kingdom exacerbates the Company’s dependence
on equity and debt raises to fund corporate overheads. These factors together with unseasonal severe
climatic conditions, unforeseen delays in permitting for new mining or plant capacity, cost overruns or
adverse commodity price movements are indicative of the material uncertainties which may cast significant
doubt about the Company’s ability to continue as a going concern.
Mitigation/Comments
The Board will continue to engage potential investors to aid understanding of the fundamental strength
of the Company’s business to be able to attract additional funding when required. The Board will also
whenever possible retain sufficient cash margin to offset contingencies.
Risk – Mining
Mining of natural resources involves significant risk. Drilling and operating risks include geological,
geotechnical, seismic factors, industrial and mechanical incidents, technical failures, labour disputes and
environmental hazards.
10 VAST RESOURCES
•
•
•
Mitigation/Comments
Use of strong technical management together with modern technology and electronic tools assist in
reducing risk in this area. Good employee relations are also key in reducing the exposure to labour disputes.
The Company is committed to following sound environmental guidelines and is keenly aware of the issues
surrounding each individual project.
Risk – Commodity prices
Commodity prices are subject to fluctuation in world markets and are dependent on such factors as mineral
output and demand, global economic trends and geo-political stability.
Mitigation/Comments
The Company’s management constantly monitors mineral grades mined and cost of production to ensure
that mining output becomes or remains economic always. Mining and production shortcomings mentioned
above have been addressed in Romania and once output has stabilised at satisfactory levels, it will be
possible to hedge future price fluctuations by entering forward selling contracts. Beyond that, the
Company aims to become a low-cost producer of copper and zinc concentrate in Romania by adopting the
expansion strategy for Romania.
Risk – Management and Retention of Key Personnel
The successful achievement of the Company’s strategies, business plans and objectives depends upon its
ability to attract and retain certain key personnel.
Mitigation/Comments
The Company’s policy is to the foster a management culture where management is empowered and where
innovation and creativity in the workplace are encouraged. To retain key personnel, the Company has
introduced a “Share Appreciation Rights Scheme” for directors and senior executives which it will shortly
be reviewing to take account of all current circumstances.
Risk – Country and Political
The Company’s operations are based in Zimbabwe and Romania. Emerging market economies could be
subject to greater risks, including legal, regulatory, economic and political risks, and are potentially subject
to rapid change. In Zimbabwe, the principal risks remain a scarcity of foreign exchange, difficulty with
externalisation of funds, and the risk of indigenisation. The country’s Indigenisation Regulations are subject
to change and are of uncertain effect. Further information on the Indigenisation Regulations is given in
Note 26. With respect to the Giant Gold Mine, where artisanal miners are present, any delay in resolving
this issue could impact development of the mine.
Mitigation/Comments
The Company’s management team is experienced in its areas of operation and skilled at operating within
the framework of the local culture in Romania and Zimbabwe to progress its objectives. In addition, in
Zimbabwe our co-investors, Grayfox and Sub-Sahara are well established locally and also experienced and
skilled in dealing with the authorities and local communities. The Company routinely monitors political
and regulatory developments in each of its countries of operation. In addition, the Company actively
engages in dialogue with relevant Government representatives to keep abreast of all key legal and
regulatory developments applicable to its operations. The Company has several internal processes and
checks in place to ensure that it is wholly compliant with all relevant regulations to maintain its mining or
exploration licences within each country of operation. The Company’s strategy as announced in January
2017 was to reduce exposure to Zimbabwe and focus on developing its interests in Romania.
•
Risk – Social, Safety and Environmental
The Group’s success may depend upon its social, safety and environmental performance, as failures can
lead to delays or suspension of its mining activities.
Mitigation/Comments
The Group takes its responsibilities in these areas seriously and monitors its performance across these
areas on a regular basis.
VAST RESOURCES 11
Strategic Report
continued
Outlook
The current period under review, as with last year, has seen further progress in the development of the
Company’s operational status post its exploration focus which had continued until early 2014.
Once again there have been significant challenges that have been overcome by management’s dedication and
hard work; unusually high rainfall levels in Zimbabwe, and extreme cold coupled with lack of necessary capital
through funding delays in Romania.
Pickstone-Peerless Gold Mine has performed very well and the phase two sulphide processing facility
development is making good progress. The planned increase in annual milling tonnage from circa twenty
thousand tonnes per annum to thirty-five thousand tonnes per annum with an expected grade increase to
3.5 grammes per tonne is expected shortly.
Work on the evaluation of Giant Gold Mine has commenced with a view to increasing the defined resources and
completion of a scoping study as preludes to pre-feasibility and bankable feasibility studies. In addition, further
gold mining opportunities continue to be examined.
In Romania, several significant objectives have been achieved, the most notable being the selection of African
Consolidated Resources SRL as the recipient of the Baita Plai association licence, the funding of the licence
requirements, and the commencement of the final procedures to issue the licence. Additionally, two strategic
investors have indicated interest in funding the reopening and redevelopment of the two existing mining
operations.
The expectation is that phase one of the reopening of the Baita Plai Polymetallic Mine at ten thousand tonnes
ore mined and processed per month will be achieved in mid-2018.
The minority interest of 49.9% in Sinarom Mining Group SRL, the operating company of the Manaila Polymetallic
Mine, has been acquired giving the Vast Group total ownership of the mine. Improvements to the open cut
mining operation at Manaila and to the metallurgical complex at Iacobeni have resulted in high grade copper
and zinc concentrate production and the commencement of a gravity gold concentrate that will provide a third
income stream when optimised.
To complement the expected production from Baita Plai Polymetallic Mine and the improved production at the
Manaila Polymetallic Mine, Vast will, with the benefit of the planned additional funding, be progressing the
construction of a new metallurgical complex adjacent to the Manaila open cut mine. In addition to improved
capacity and the benefit of modern technology in terms of lower costs and improved recoveries, the new
complex will save transport costs of ore and tailings between the mine and the current complex. These transport
costs currently represent up to 33% of the total operating cost of the mine.
The short to medium term objective of Vast is to have two cash generating mines in both Romania and
Zimbabwe, whilst seeking additional and potentially larger mining operations in both countries.
As always, my thanks to fellow board members and management for the commitment and hard work that has
been put into the company.
On behalf of the Board
Roy A. Pitchford
Group Chief Executive Officer
12 VAST RESOURCES
Report of the Directors
The Directors present their report together with the audited financial statements for the year ended
31 March 2017.
Results and dividends
The Group statement of comprehensive income is set out on page 19 and shows the loss for the year.
The Directors do not recommend the payment of a dividend (2016: nil).
Financial instruments
Details of the use of financial instruments by the Company and its subsidiary undertakings are contained in note
20 of the financial statements.
Directors
The Directors who served during the year and up to the date hereof were as follows:
Roy Tucker
Roy Pitchford
William Battershill
Eric Diack
Graham Briggs
Brian Moritz
Brian Basham
Date of Appointment
5 April 2005
7 April 2014
30 May 2014
30 May 2014
22 December 2015
3 October 2016
30 June 2017
Date of resignation
16 November 2016
3 October 2016
Directors’ interests
The interests in the shares of the Company of the Directors who served during the year were as follows:
William Battershill *
Graham Briggs *
Eric Diack
Brian Moritz
Roy Pitchford
Roy Tucker
Total
* Former director
31 March 2017
Share options
31 March 2016
Ordinary shares
–
–
–
–
–
31,607,029
& warrants Ordinary shares
28,750,659
4,166,625
–
–
–
31,607,029
–
–
–
–
–
5,208,313
Share options
& warrants
–
4,166,625
–
–
–
5,208,313
31,607,029
5,208,313
64,524,313
9,374,938
VAST RESOURCES 13
Report of the Directors
continued
Employee Benefit Trust
The following shares are held in an unapproved Employee Benefit Trust. The Directors’ beneficial interest in
these shares is as follows:
Subscription
price
Outstanding at
31 March 2016
Exercised
during last
12 months
Granted
during last
12 months
Roy Tucker
8.75p
1,500,000
9.00p
750,000
6.00p
2,750,000
Total
5,000,000
See note 22 for further details of the EBT
–
–
–
–
–
–
–
–
Outstanding at
31 March 2017
1,500,000
750,000
2,750,000
5,000,000
Exercise date
50% Jul 2010
50% Jul 2011
50% Aug 2011
50% Aug 2012
50% Aug 2012
50% Aug 2013
Share Appreciation Rights Scheme
The following Directors have been granted rights under the Company’s Share Appreciation Rights Scheme:
Vesting period
Grant date
SARs awarded
Start
Finish
1 Jun 2015
12,000,000
31 Mar 2016
31 Mar 2019
1 Jun 2015
20,000,000
31 Mar 2016
31 Mar 2019
1 Jun 2015
12,000,000
31 Mar 2017
31 Mar 2020
1 Jun 2015
10,000,000
31 Mar 2016
31 Mar 2019
1 Jun 2015
8,000,000
31 Mar 2017
31 Mar 2020
Eric Diack
Roy Pitchford
Roy Tucker
See note 22 for further details of the SARS
Directors’ remuneration
2017
William Battershill *
Graham Briggs *
Eric Diack
Brian Moritz
Roy Pitchford
Roy Tucker
Total
* resigned during year
2016
William Battershill *
Graham Briggs *
Eric Diack
Roy Pitchford
Roy Tucker
Total
* Former Director
14 VAST RESOURCES
Salary/Fees
$’000
Other
$’000
35
15
15
14
210
169
458
75
8
60
210
187
540
–
–
–
1
5
6
12
–
–
–
-
–
–
Total
$’000
35
15
15
15
215
175
470
75
8
60
210
187
540
Part of the remuneration of Roy Tucker represents payment for UK office services that are provided by Roy
Tucker under his consultancy contract at his expense. His remuneration also includes irrecoverable VAT. No part
of the remuneration paid, (2016: nil) has been settled by issuing shares.
The Company has qualifying third party indemnity provisions for the benefit of the Directors.
Future developments
The Company’s plans for future developments are more fully set down in the Strategic Report, on pages 6 to 12.
Research and development
During the period at MPM, SGS laboratories in the UK conducted metallurgical test work and ore type
characterisation. Out of this test work regime, independent consultants Minxcon derived the chemical reagent
recipe that has been used to successfully separate the copper and zinc from a single concentrate, and to produce
a saleable copper concentrate and zinc concentrate. Further research into the recovery of a gold rich pyrite
concentrate was implemented in the latter portion of the year.
Further research has been conducted on utilising a thermal process to separate the copper and zinc, which if
successful, may have a material impact on operating costs by reducing the quantity of chemical reagents used
in the current flotation process.
Core drilling at the existing open pit at MPM was undertaken to confirm the polymetallic grades in the
immediate vicinity of the open pit as derived from historic information. This information was then incorporated
into the database used to derive the current mineral resource estimate for MPM.
The Faneata tailings storage facility was drilled during the year with a mineral resource estimation undertaken.
Metallurgical test work at the ALS laboratories in Perth, Western Australia, commenced at year end with a view
to defining a possible process to be utilised to recover the minerals from the tailings storage facility.
Disabled employees
The Company gives full consideration to applications for employment from disabled persons where the
candidate’s particular aptitudes and abilities are consistent with adequately meeting the requirements of the
job. Opportunities are available to disabled employees for training, career development and promotion.
Where existing employees become disabled, it is the Company’s policy to provide continuing employment
wherever practicable in the same or an alternative position and to provide appropriate training to achieve this
aim.
Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Company’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information. The Directors are not aware of any relevant audit information of which
the auditors are unaware. The Company’s auditor, Crowe Clark Whitehill LLP, was initially appointed on 25 April
2016 and it is proposed by the Board that they be reappointed as auditors at the forthcoming AGM.
Events after the reporting date
These are more fully disclosed in Note 28.
By order of the Board
Ben Harber
Secretary
21 September 2017
VAST RESOURCES 15
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards (IFRSs’) as adopted by the EU and applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the
group for that period. In preparing these financial statements, the Directors are required to:
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other
information included in the Annual Report and Financial Statements is prepared in accordance with applicable
law in the United Kingdom.
The maintenance and integrity of the Company’s website is the responsibility of the Directors; the work carried
out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred in the accounts since they were initially presented on
the website.
Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation in other jurisdictions.
16 VAST RESOURCES
Independent Auditor’s Report to the Members of Vast
Resources Plc
We have audited the financial statements of Vast Resources Plc for the year ended 31 March 2017 which
comprise Group and Parent Company Statements of Financial Position, the Group Statement of Comprehensive
Income, the Group and Company Statements of Cash Flow, the Group and Parent Company Statement of
Changes in Equity 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 Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 March 2017 and of the group’s loss for the year then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006 .
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Directors’ Report and Strategic report have been prepared in accordance with applicable legal
requirements.
VAST RESOURCES 17
Independent Auditor’s Report to the Members of Vast
Resources Plc
continued
Emphasis of Matter – Going Concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of
the disclosures made in the statement of accounting policies in the financial statements concerning the Group’s
and Company’s ability to continue as a going concern. Further funds will be required to finance the Group’s and
Company’s working capital requirements and the development of the Group’s Romanian assets. If cash flow
from existing sources was not sufficient to meet the Group’s commitments the Directors are confident that
additional funds could be successfully raised from other sources. However, there are no binding agreements in
place to date. These conditions indicate the existence of a material uncertainty which may cast significant doubt
about the Group’s and Company’s ability to continue as a going concern. The financial statements do not include
the adjustments that would result if the Group and Company were unable to continue as a going concern.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us, or;
the parent company financial statements are not in agreement with the accounting records and returns,
or;
certain disclosures of directors’ remuneration specified by law are not made, or;
we have not received all the information and explanations we require for our audit.
Stephen Bullock
Senior Statutory Auditor
For and on behalf of Crowe Clark Whitehill LLP
Statutory Auditor
St Bride’s House
10 Salisbury Square
London EC4Y 8EH
Dated: 21 September 2017
18 VAST RESOURCES
Group statement of comprehensive income
for the year ended 31 March 2017
31 Mar 2017
Group
$’000
31 Mar 2016
Group
$’000
Note
22
4
4
5
13
Revenue
Cost of sales
Gross profit
Overhead expenses
Depreciation and impairment of property, plant and equipment
Profit (loss) on sale of property, plant and equipment
Share option and warrant expense
Other administrative and overhead expenses
Loss from operations
Finance income
Finance expense
Loss before taxation from continuing operations
Taxation (charge) credit
Loss after taxation from continuing operations
Gain on business combination
Loss on discontinued operations, net of tax
Total profit (loss) for the year
Other comprehensive income
– items that may subsequently be reclassified to either profit or loss
Gain on available for sale financial assets
Exchange gain (loss) on translation of foreign operations
Total comprehensive profit (loss) for the year
Total profit (loss) attributable to:
– the equity holders of the parent company
– non-controlling interests
Total comprehensive profit (loss) attributable to:
– the equity holders of the parent company
– non-controlling interests
Loss per share – basic and diluted
Profit (loss) per share from continuing operations – basic and diluted
8
8
23,767
(17,381)
6,386
(8,047)
(2,593)
81
(1,648)
(3,887)
(1,661)
105
(812)
(2,368)
(1,193)
(3,561)
–
–
(3,561)
7,200
(5,608)
1,592
(9,615)
(2,151)
(57)
(3,368)
(4,039)
(8,023)
1
(509)
(8,531)
1,658
(6,873)
41
(8,739)
(15,571)
3
750
10
(135)
(2,808)
(15,696)
(4,437)
876
(3,561)
(3,684)
876
(2,808)
(0.13)
(0.13)
(16,100)
529
(15,571)
(16,225)
529
(15,696)
(1.02)
(0.44)
The accompanying accounting policies and notes on pages 32 to 60 form an integral part of these financial
statements.
VAST RESOURCES 19
Group Statement of Changes in Equity
for the year ended 31 March 2017
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20 VAST RESOURCES
Company Statement of Changes in Equity
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VAST RESOURCES 21
Group and Company statements of financial position
As at 31 March 2017
31 Mar 2017
Group
$’000
31 Mar 2016
Group
$’000
31 Mar 2017
Company
$’000
31 Mar 2016
Company
$’000
Note
Assets
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Loans to group companies
Deferred tax asset
Current assets
Inventory
Receivables
Available for sale investments
Cash and cash equivalents
Total current assets
Total Assets
Equity and Liabilities
Capital and reserves attributable
to equity holders of the Parent
Share capital
Share premium
Share option reserve
Foreign currency translation reserve
Available for sale reserve
EBT reserve
Retained deficit
Non-controlling interests
Total equity
Non-current liabilities
Loans and borrowings
Provisions
Current liabilities
Loans and borrowings
Trade and other payables
Bank overdraft
Total current liabilities
Total liabilities
Total Equity and Liabilities
10
11
12
5
14
15
16
17
19
17
18
17
38,563
–
–
465
39,028
2,811
5,960
10
1,326
10,107
49,135
19,420
74,802
1,890
(1,228)
–
(3,942)
(69,828)
21,114
12,394
33,508
3,166
1,095
4,261
3,076
7,431
859
11,366
15,627
49,135
32,539
–
–
1,658
34,197
1,912
3,896
8
831
6,647
–
218
35,962
–
36,180
–
1,606
5
1,239
2,850
40,844
39,030
16,105
71,652
2,099
(1,978)
(3)
(3,942)
(67,471)
16,462
11,518
27,980
911
954
1,865
2,504
6,729
1,766
10,999
12,864
40,844
19,420
74,802
1,890
(4,954)
–
(3,942)
(48,633)
38,583
–
38,583
–
–
–
–
447
–
447
447
–
218
33,963
–
34,181
–
412
5
615
1,032
35,213
16,105
71,652
2,099
(4,954)
–
(3,942)
(46,098)
34,862
–
34,862
–
–
–
–
351
–
351
351
39,030
35,213
The accompanying accounting policies and notes on pages 32 to 60 form an integral part of these financial
statements.
The parent Company reported a loss after taxation for the year of $4.615 million (2016: $5.807 million).
The financial statements on pages 19 to 60 were approved and authorised for issue by the Board of Directors
on 21 September 2017 and were signed on its behalf by:
Roy C. Tucker
Director
21 September 2017
22 VAST RESOURCES
Registered number 05414325
Group and Company statements of cash flow
for the year ended 31 March 2017
31 Mar 2017
Group
$’000
31 Mar 2016
Group
$’000
31 Mar 2017
Company
$’000
31 Mar 2016
Company
$’000
CASH FLOW FROM OPERATING ACTIVITIES
Profit (loss) before taxation for the year
Adjustments for:
Depreciation & impairment charges
(Profit) loss on sale of property, plant and equipment
Convertible loan fair value adjustment
Liabilities settled in shares
Warrant and share option expense
Changes in working capital:
Decrease (increase) in receivables
Increase in inventories
Increase (decrease) in payables
Cash generated (used) in operations
Investing activities:
Payments to acquire property, plant and equipment
Proceeds on disposal of property, plant and equipment
Restricted cash movement
(Increase) decrease in loans to group companies
Total cash used in investing activities
Financing Activities:
Proceeds from the issue of ordinary shares,
net of issue costs
Proceeds from loans and borrowings granted
Repayment of loans and borrowings
Total proceeds from financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(2,369)
(8,531)
(4,615)
(5,812)
2,593
(81)
223
2,289
1,648
4,303
(1,657)
(722)
1,010
(1,369)
2,934
(8,769)
234
–
–
(8,535)
4,176
5,272
(3,352)
6,096
495
831
1,326
2,151
57
–
1,457
3,368
(1,498)
670
(1,779)
867
(242)
(1,740)
(8,718)
5
637
–
(8,076)
5,160
3,626
(1,229)
7,557
(2,259)
3,090
831
–
–
223
2,289
1,648
(455)
(1,194)
–
96
(1,098)
(1,553)
–
–
–
(1,999)
(1,999)
4,176
–
–
4,176
624
615
1,239
10
65
–
1,457
3,368
(912)
(67)
–
(145)
(212)
(1,124)
–
–
–
(4,522)
(4,522)
5,160
–
(1,229)
3,931
(1,715)
2,330
615
The accompanying accounting policies and notes on pages 32 to 60 form an integral part of these financial
statements.
VAST RESOURCES 23
Statement of Accounting Policies
General information
Vast Resources plc and its subsidiaries (together “the Group”) are engaged principally in the exploration for and
development of mineral projects in Sub-Saharan Africa and Eastern Europe. Since incorporation the Group has
built an extensive and interesting portfolio of projects in Zimbabwe and more recently in Romania. The
Company’s ordinary shares are listed on the AIM market of the London Stock Exchange.
Vast Resources plc was incorporated on 5 April 2005 as a public limited company under UK Company Law with
registered number 05414325. It is domiciled and registered at 60 Gracechurch Street, London EC3V 0HR.
Basis of preparation and going concern assessment
The principal accounting policies adopted in the preparation of the financial information are set out below. The
policies have been consistently applied throughout the current year and prior year, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by
the European Union and with those parts of the Companies Act 2006 applicable to companies preparing their
accounts under IFRS.
The consolidated financial statements incorporate the results of Vast Resources plc and its subsidiary
undertakings as at 31 March 2017.
The financial statements are prepared under the historical cost convention on a going concern basis.
At the date of these financial statements the Directors expect that the Group’s Zimbabwean operations,
together with a locally agreed overdraft facility, will provide it with sufficient cash flow to support its capital
requirements in Zimbabwe. However, the Group will require further funding to finance the Group’s and
Company’s working capital requirements and the development of the Group’s Romanian assets. The Directors
are confident that the Company will be able to raise funds for such requirements from investors as required
although no binding funding agreement is in place at the date of this Report. These conditions indicate the
existence of material uncertainty which may cast significant doubt about the Group’s and Company’s ability to
continue as a going concern. The financial statements do not include the adjustment that would result if the
Group and Company were unable to continue as a going concern.
Changes in Accounting Policies
At the date of authorisation of these financial statements, a number of Standards and Interpretations were in
issue but were not yet effective. The Directors do not anticipate that the adoption of these standards and
interpretations, or any of the amendments made to existing standards as a result of the annual improvements
cycle, will have a material effect on the financial statements in the year of initial application.
Areas of estimates and judgement
The preparation of the Group financial statements in conformity with generally accepted accounting principles
requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Although these estimates are based on management’s
best knowledge of current events and actions, actual results may ultimately differ from those estimates. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities in the next financial year are discussed below:
Useful lives of property, plant & equipment
a)
Property, plant and equipment are depreciated over their useful economic lives. Useful economic lives are based
on management’s estimates of the period that the assets will be in operational use, which are periodically
reviewed for continued appropriateness. Due to the long life of certain assets, changes to estimates used can
result in significant variations in the carrying value. More details, including carrying values, are included in note 10
to the financial statements.
24 VAST RESOURCES
Impairment of intangibles and mining assets
b)
The Group reviews, on an annual basis, whether deferred exploration costs, acquired as intangible assets or
property, plant & equipment (“PP&E”), mining options and licence acquisition costs have suffered any
impairment. The recoverable amounts are determined based on an assessment of the economically recoverable
mineral reserves, the ability of the Group to obtain the necessary financing to complete the development of
the reserves and future profitable production or proceeds from the disposition of recoverable reserves. Actual
outcomes may vary.
Share based payments
c)
The Group operates an equity settled and cash settled share based remuneration scheme for key employees.
Employee services received, and the corresponding increase in equity, are measured by reference to the fair
value of equity instruments at the date of grant.
In addition, the Group may frequently enter into financial arrangements that involve the convertibility of part
or all of the liabilities assumed under these arrangements into shares in the parent Company, under an option
arrangement.
The fair value of these share options is estimated by using the Black Scholes model on the date of grant based
on certain assumptions. Those assumptions are described in note 22 and include, among others, the expected
volatility and expected life of the options.
Going concern and Inter-company loan recoverability.
d)
The Group’s cash flow projections, which have used conservative assumptions on forward commodity prices,
indicate that the Group should have sufficient resources to continue as a going concern, although, as stated in
the Principal risks section of the strategic report, the Group will require additional funding for its near-term
investment plans. While the Group is confident of its capacity to raise this funding, should it not materialise, or
if the projections not be realised, the Group’s going concern would depend on the success of future fund-raising
initiatives. These conditions indicate the existence of material uncertainty which may cast significant doubt
about the Group’s and Company’s ability to continue as a going concern.
The recoverability of inter-Company loans advanced by the Company to subsidiaries depends also on the
subsidiaries realising their cash flow projections.
Provisions
e)
The Group is required to estimate the cost of its obligations to realise and rehabilitate its mining properties.
The estimation of the cost of complying with the Group’s obligations at future dates and in economically
unpredictable regions, and the application of appropriate discount rates thereto, gives rise to significant
estimation uncertainties.
VAT recoverable
f)
In countries where the Group has productive mining operations carried out by its subsidiaries, those subsidiaries
are registered for Value Added Tax (VAT) with their respective local taxation authorities and, as their outputs
are predominantly zero-rated for VAT, receive net refunds of VAT in respect of input tax borne on their inputs.
This amount is carried as a receivable until refunded by the State, which can take some considerable time, both
in Zimbabwe and Romania.
The amount carried as a receivable is determined in accordance with the returns submitted to the taxation
authorities. While every effort is made by Management to ensure these returns are correct, the aggressive
taxation regime in Zimbabwe, coupled with that nation’s Government’s ongoing and critical fiscal crisis, may
give rise to circumstances where part of these amounts may subsequently prove to be irrecoverable, or only
recoverable after a prolonged period.
Further details of the specific amounts concerned are given in note 15.
VAST RESOURCES 25
Statement of Accounting Policies
continued
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of
control.
De-facto control exists in situations where the Company has the practical ability to direct the relevant activities
of the investee without holding the majority of the voting rights. In determining whether de-facto control exists
the Company considers all relevant facts and circumstances, including:
•
•
•
•
The size of the Company’s voting rights relative to both the size and dispersion of other parties who also
hold voting rights.
Substantive potential voting rights held by the Company and by other parties.
Other contractual arrangements.
Historic patterns in voting attendance.
The consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as
if they formed a single entity. Inter-company transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition
method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations
are included in the consolidated statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control ceases.
Business combinations
The financial information incorporates the results of business combinations using the purchase method. In the
statement of changes in equity, the acquirer’s identifiable assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The results of acquired operations are included in the
Group statement of comprehensive income from the date on which control is obtained. The assets acquired
have been valued at their fair value. Any excess of consideration paid over the fair value of the net assets
acquired is allocated to the mining asset. Any excess fair value over the consideration paid is considered to be
negative goodwill and is immediately recorded within the income statement.
Where business combinations are discontinued, whether by closure or disposal to third parties, any resultant
gain or loss on the discontinued operation is identified separately and dealt with in the Group’s consolidated
income statement as a separate item.
Employee Benefit Trust (“EBT”)
The Company has established an Employee Benefit Trust. The assets and liabilities of this trust comprise shares
in the Company and loan balances due to the Company. The Company includes the EBT within its accounts and
therefore recognises an EBT reserve in respect of the amounts loaned to the EBT and used to purchase shares
in the Company. Any cash received by the EBT on disposal of the shares it holds will be recognised directly in
equity. Any shares held by the EBT are treated as cancelled for the purposes of calculating earnings per share.
Financial assets
The Group’s financial assets consist of cash and cash equivalents, other receivables and available for sale
investments. The Group’s accounting policy for each category of financial asset is as follows:
26 VAST RESOURCES
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are initially recognised at fair value plus transaction costs that are directly attributable to
their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties
on the part of the counterparty or default or significant delay in payment) that the Group will be unable to
collect all of the amounts due under the terms receivable, the amount of such a provision being the difference
between the net carrying amount and the present value of the future expected cash flows associated with the
impaired receivable. For receivables, which are reported net, such provisions are recorded in a separate
allowance account with the loss being recognised within administrative expenses in the statement of
comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of
the asset is written off against the associated provision.
The Group’s loans and receivables comprise other receivables and cash and cash equivalents in the statement
of financial position.
Cash and cash equivalents
These amounts comprise cash on hand and balances with banks. Cash equivalents are short term, highly liquid
accounts that are readily converted to known amounts of cash. They include short-term bank deposits and short-
term investments.
Any cash or bank balances that are subject to any restrictive conditions, such as cash held in escrow pending
the conclusion of conditions precedent to completion of a contract, are disclosed separately as “Restricted
cash”.
There is no significant difference between the carrying value and fair value of receivables.
Available for sale
Non-derivative financial assets not included in the categories above are classified as available-for-sale and
comprise the Group’s strategic investments in entities not qualifying as subsidiaries, associates or jointly
controlled entities. They are carried at fair value with changes in fair value recognised directly in equity. Where
a decline in the fair value of an available-for-sale financial asset constitutes evidence of impairment, for example
if the decline is significant or prolonged, the amount of the loss is removed from equity and recognised in the
profit or loss for the year.
Financial liabilities
The Group’s financial liabilities consist of trade and other payables (including short terms loans) and long term
secured borrowings. These are initially recognised at fair value and subsequently carried at amortised cost, using
the effective interest method. Where any liability carries a right to convertibility into shares in the Group, the
fair value of the equity and liability portions of the liability is determined at the date that the convertible
instrument is issued, by use of appropriate discount factors.
Foreign currency
The functional currency of the Company and all of its subsidiaries outside Romania is the United States Dollar,
while the functional currency of the Company’s Romanian subsidiaries is the Romanian Lei (RON); these are the
currencies of the primary economic environment in which the Company and its subsidiaries operate.
Transactions entered into by the Group entities in a currency other than the currency of the primary economic
environment in which it operates (the “functional currency”) are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the date
of the statement of financial position. Exchange differences arising on the retranslation of unsettled monetary
assets and liabilities are similarly recognised immediately in profit or loss, except for foreign currency borrowings
qualifying as a hedge of a net investment in a foreign operation.
VAST RESOURCES 27
Statement of Accounting Policies
continued
The exchange rates applied at each reporting date were as follows:
•
•
•
31 March 2017
$1.2253: £1 and $1: RON 4.2615
31 March 2016
$1.4367: £1 and $1: RON 3.9349
31 March 2015
$1.4836: £1 and $1: RON 4.1115
Goodwill
Goodwill represents the excess of the cost of a business combination over the total acquisition date fair value
of the identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair value of assets
given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the
acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in
the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of
contingent consideration classified as a financial liability, re-measured subsequently through profit or loss. Any
direct costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the
consolidated statement of comprehensive income.
Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of
consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on
the acquisition date.
Intangible assets
Mining rights
Mineral rights are recorded at cost less amortisation and provision for diminution in value. Amortisation will be
over the estimated life of the commercial ore reserves on a unit of production basis.
Licences for the exploration of natural resources will be amortised over the lower of the life of the licence and
the estimated life of the commercial ore reserves on a unit of production basis.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their
present location and condition. Weighted average cost is used to determine the cost of ordinarily
inter-changeable items.
Mining inventory includes run of mine stockpiles, minerals in circuit, finished goods and consumables. Stockpiles,
minerals in circuit and finished goods are valued at their cost of production to their point in process using a
weighted average cost of production, or net realisable value, whichever is the lower. Low grade stockpiles are
only recognised as an asset when there is evidence to support the fact that some economic benefit will flow to
the Company on the sale of such inventory. Consumables are valued at their cost of acquisition, or net realisable
value, whichever is the lower.
Investment in subsidiaries
The Company’s investment in its subsidiaries is recorded at cost less any impairment.
Leased assets
Where assets are financed by leasing agreements that do not give rights approximating ownership, these are
treated as operating leases. The annual rentals are charged to profit or loss on a straight-line basis over the
term of the lease.
28 VAST RESOURCES
Non-controlling interests
For business combinations completed on or after 1 January 2010 the Group has the choice, on a transaction by
transaction basis, to initially recognise any non-controlling interest in the acquiree which is a present ownership
interest and entitles its holders to a proportionate share of the entity’s net assets in the event of liquidation at
either acquisition date fair value or, at the present ownership instruments’ proportionate share in the recognised
amounts of the acquiree’s identifiable net assets. Other components of non-controlling interest such as
outstanding share options are generally measured at fair value.
The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to
the non-controlling interests in proportion to their relative ownership interests.
Pension costs
Contributions to defined contribution pension schemes are charged to profit or loss in the year to which they
relate.
Production expenses
Production expenses include all direct costs of production, including depreciation of property plant and
equipment involved in the mining process, but excluding mine and Company overhead.
Property, plant and equipment
Land is not depreciated. Items of property, plant and equipment are initially recognised at cost and are
subsequently carried at depreciated cost. As well as the purchase price, cost includes directly attributable costs
and the estimated present value of any future costs of dismantling and removing items. The corresponding
liability is recognised within provisions.
Depreciation is provided on all other items of property and equipment so as to write off the carrying value of
items over their expected useful economic lives. It is applied at the following rates:
Buildings
Plant and machinery
Fixtures, fittings & equipment
Computer assets
Motor vehicles
–
–
–
–
–
2.5% per annum, straight line
15% per annum, reducing balance
20% per annum, reducing balance
33.33% per annum, straight line
15% per annum, reducing balance
Proved mining properties
Depletion and amortisation of the full-cost pools is computed using the units-of-production method based on
proved reserves as determined annually by management.
Capital works in progress
Property, plant and equipment under construction are carried at its accumulated cost of construction and not
depreciated until such time as construction is completed or the asset put into use, whichever is the earlier.
Provision for rehabilitation of mining assets
Provision for the rehabilitation of a mining property on the cessation of mining is recognised from the
commencement of mining activities. This provision accounts for the full cost to rehabilitate the mine according
to good practice guidelines in the country where the mine is located, which may involve more than the stipulated
minimum legal commitment.
VAST RESOURCES 29
Statement of Accounting Policies
continued
When accounting for the provision the Company recognises a provision for the full cost to rehabilitate the mine
and a matching asset accounted for within the non-current mining asset. The rehabilitation provision is
discounted using a risk-free rate, which is linked to the currency in which the costs are expected to be incurred,
and the applicable inflation rate applied to the cash flows. The unwinding of the discounting effect is recognised
within finance expenses in the income statement.
Revenue
Revenue from the sales of goods is recognised when the Group has transferred the significant risks and rewards
of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment.
These criteria are considered to be met when the goods are delivered to the buyer. Where the buyer has a right
of return, the Group defers recognition of revenue until the right to return has lapsed. However, where high
volumes of sales are made to established wholesale customers, revenue is recognised in the period where the
goods are delivered less an appropriate provision for returns based on past experience. The same policy applies
to warranties.
Provided the amount of revenue can be measured reliably and it is probable that the Group will receive any
consideration, revenue for services is recognised in the period in which they are rendered.
Share based payments
Equity-settled share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to
profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the
number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of options that eventually vest. Market
vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions
are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to profit or loss over the
remaining vesting period.
Where equity instruments are granted to persons other than employees, the fair value of goods and services
received is charged to profit or loss, except where it is in respect to costs associated with the issue of shares, in
which case, it is charged to the share premium account.
Cash-settled share based payments
The Company also has cash-settled share based payments arising in respect of the EBT (see below and Note
22). A liability is recognised in respect of the fair-value of the benefit received under the EBT and charged to
profit or loss over the vesting period. The fair-value is re-measured at each reporting date with any changes
taken to profit or loss.
Remuneration shares
Where remuneration shares are issued to settle liabilities to employees and consultants, any difference between
the fair value of the shares on the date of issue and the carrying amount of the liability is charged to profit or
loss.
Stripping costs
Costs incurred in stripping the overburden to gain access to mineral ore deposits are accounted for as follows:
Stripping costs incurred during the development phase of the mine (before production begins) are capitalised
as part of the depreciable cost of building, developing and constructing the mine. Capitalised costs are amortised
using the units of production method, once production begins.
30 VAST RESOURCES
Stripping costs incurred during the production phase of the mine which give rise to the production of usable
inventory are accounted for in accordance with the principles contained in the group’s policy on Inventories.
Stripping costs incurred in the production phase of the mine which result in improved access to ore are
capitalized and recognized as additions to non-current assets provided that it is probable that the future
economic benefit from improved access to the ore body associated with the stripping activity will flow to the
Company, that it is possible to identify the component of the ore body to which access has been improved and
that the costs relating to the stripping activity associated with that component of the ore body can be measured
reliably.
Tax
The major components of income tax on the profit or loss include current and deferred tax.
Current tax
Current tax is based on the profit or loss adjusted for items that are non-assessable or disallowed and is
calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Tax is charged or credited to the statement of comprehensive income, except when the tax relates to items
credited or charged directly to equity, in which case the tax is also dealt with in equity.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
statement of financial position differs to its tax base, except for differences arising on:
•
•
•
The initial recognition of goodwill;
The initial recognition of an asset or liability in a transaction which is not a business combination and at
the time of the transaction affects neither accounting or taxable profit; and
Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of
the reversal of the difference and it is probable that the differences will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will
be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively
enacted by the reporting date and are expected to apply when deferred tax liabilities/(assets) are
settled/(recovered). Deferred tax balances are not discounted.
VAST RESOURCES 31
Notes to Financial Statements
1. Segmental analysis
The Group operates in one business segment, the development and mining of mineral assets. The Group has
interests in two geographical segments being Southern Africa (primarily Zimbabwe) and Europe (primarily
Romania).
The Group’s operations are reviewed by the Board (which is considered to be the Chief Operating Decision
Maker (‘CODM’)) and split between mining exploration and development and administration and corporate
costs.
Exploration and development is reported to the CODM only on the basis of those costs incurred directly on
projects. All costs incurred on the projects are capitalised in accordance with IFRS 6, including depreciation
charges in respect of tangible assets used on the projects.
Administration and corporate costs are further reviewed on the basis of spend across the Group.
Decisions are made about where to allocate cash resources based on the status of each project and according
to the Group’s strategy to develop the projects. Each project, if taken into commercial development, has the
potential to be a separate operating segment. Operating segments are disclosed below on the basis of the split
between exploration and development and administration and corporate.
Mining, exploration
and development
Europe
$’000
Africa
$’000
Administration
and corporate
$’000
2017
Revenue
Production costs
Gross profit (loss)
Depreciation & impairment
Profit (loss) on sale of property plant & equipment
Share option & warrant charge
Other administrative and overhead expenses
Finance income
Finance expense
Taxation (charge)
Profit (loss) for the year from continuing operations
Loss for the year from discontinued operations
Total assets
Total non-current assets
Additions to non-current assets
Total current assets
Total liabilities
2,629
(3,746)
(1,117)
(1,338)
81
–
(769)
1
–
–
(3,141)
–
10,878
9,001
2,681
1,876
7,362
21,138
(13,635)
7,503
(1,251)
–
–
(457)
104
(89)
(1,193)
4,617
–
34,860
29,720
6,386
5,141
6,213
–
–
–
(4)
–
(1,648)
(2,661)
–
(724)
–
(5,037)
–
3,397
307
–
3,090
2,052
Total
$’000
23,767
(17,381)
6,386
(2,593)
81
(1,648)
(3,887)
105
(812)
(1,193)
(3,561)
–
49,135
39,028
9,067
10,107
15,627
32 VAST RESOURCES
Mining, exploration
and development
Europe
$’000
Africa
$’000
Administration
and corporate
$’000
2016
Revenue
Production costs
Gross profit (loss)
Depreciation
Profit (loss) on sale of property plant & equipment
Share option & warrant charge
Other administrative and overhead expenses
Finance income
Finance expense
Taxation credit
Profit (loss) for the year from continuing operations
Loss for the year from discontinued operations
Total assets
Total non-current assets
Additions to non-current assets
Total current assets
Total liabilities
1,812
(1,436)
376
(1,554)
–
–
(197)
–
–
–
(1,375)
–
10,922
8,394
4,801
2,529
6,086
5,388
(4,172)
1,216
(582)
–
–
(1,213)
–
(130)
1,658
949
(8,739)
29,198
26,495
4,796
2,703
4,449
–
–
–
(15)
(56)
(3,368)
(2,269)
1
(340)
–
(6,447)
–
724
(692)
8
1,415
2,329
Revenue analysis by geographical location, product and customer
Total
$’000
7,200
(5,608)
1,592
(2,151)
(56)
(3,368)
(4,079)
1
(470)
1,658
(6,873)
(8,739)
40,844
34,197
9,605
6,647
12,864
Gold bullion
Mineral concentrates
2017
2016
Romania
Zimbabwe
Romania
Zimbabwe
–
2,629
2,629
21,138
–
21,138
–
1,812
1,812
5,388
–
5,388
100% of sales (2016: 100%) in both Romania and Zimbabwe were made to a single customer in each respective
country.
There are no non-current assets held in the Company’s country of domicile, being the United Kingdom
(2016: $nil).
VAST RESOURCES 33
Notes to Financial Statements
continued
2. Group loss from operations
Operating loss is stated after charging/(crediting):
Auditors’ remuneration (note 3)
Depreciation and impairment
Employee pension costs
Share option and warrant expense
Foreign exchange (gain)
Loss on disposal of property, plant and equipment
3. Auditor’s remuneration
Fees payable to the Company’s auditor for the audit of the Company’s
annual accounts
Fees payable to the Company’s auditor for other services:
– Audit of the accounts of subsidiaries
– Other services
4. Finance income and expense
Finance income
Interest received on bank deposits
Other interest received
Finance expense
Interest paid on secured borrowings
Interest paid on unsecured borrowings
Convertible loan raising costs
Bank overdraft interest
5. Taxation
Income tax on profits
Deferred tax charge (credit)
Tax charge (credit)
34 VAST RESOURCES
2017
Group
$’000
114
2,550
139
1,648
(285)
103
2017
Group
$’000
40
73
1
114
2017
Group
$’000
1
104
105
246
58
473
35
812
2017
Group
$’000
–
1,193
1,193
2016
Group
$’000
110
2,151
16
3,368
(53)
56
2016
Group
$’000
40
70
–
110
2016
Group
$’000
1
–
1
223
160
0
126
509
2016
Group
$’000
–
(1,658)
(1,658)
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The differences are
explained as follows:
Loss before taxation
Loss before taxation at the standard rate of corporation tax in the UK of
20% (2016: 20%)
Expenses disallowed for tax
Difference in tax rates in local jurisdiction
Loss carried forward
Tax charge on losses
2017
Group
$’000
2,368
474
(102)
(525)
(153)
–
2016
Group
$’000
8,531
3,139
(1,902)
(1,900)
663
–
Deferred tax assets are only recognised in the Group where the company concerned has a reasonable
expectation of future profits against which the deferred tax asset may be recovered.
The asset arises in a subsidiary company which has allowable tax losses of $1.8 million (2016: $6.4 million), which
are expected to be utilised in the immediate forthcoming periods.
Factors that may affect future tax charges:
Tax losses
Accumulated tax losses
2017
Group
$’000
22,158
2016
Group
$’000
22,005
2017
Company
$’000
13,833
2016
Company
$’000
13,038
However, of this total, only $1.8 million is anticipated to be offsettable against profits in the immediate future.
The balance will only be recoverable against future profits, the timing of which is uncertain, and a deferred tax
asset has not been recognised in respect of these losses. A deferred tax asset has not been recognised in respect
of accumulated tax losses for the Company.
6. Employees
Staff costs (including directors) consist of:
Wages and salaries – management
Wages and salaries – other
Consultancy fees
Social Security costs
Healthcare costs
Pension costs
The average number of employees (including directors) during the year was as follows:
Management
Other operations
2017
Group
$’000
1,129
3,905
5,034
1,456
489
108
139
7,226
17
365
382
2016
Group
$’000
1,531
746
2,277
1,056
160
131
67
3,691
13
312
325
VAST RESOURCES 35
Notes to Financial Statements
continued
7. Directors’ remuneration
Directors’ emoluments
Company contributions to pension schemes
Healthcare costs
Termination payments
Directors and key management remuneration
Gain on share options exercised by directors (not charged to profit or loss as
explained below)
The Directors are considered to be the key management of the Group and Company.
2017
Group
$’000
458
12
–
–
470
–
2016
Group
$’000
540
–
–
–
540
–
Four of the Directors at the end of the period have share options receivable under long term incentive schemes.
The highest paid Director received an amount of $210,000 (2016: $210,000).
Included within the above remuneration are amounts accrued at 31 March 2017; please refer to the Directors’
Report for full detail.
8. Loss per share
Loss per ordinary share has been calculated using the weighted average number of ordinary shares in issue
during the relevant financial year.
The weighted average number of ordinary shares in issue for the period is:
Losses for the period: ($’000)
Loss per share basic and diluted (cents)
Loss per share from continuing operations – basic and diluted
The effect of all potentially dilutive share options is anti-dilutive.
31 Mar 2017
Group
31 Mar 2016
Group
3,457,555,538
(4,437)
(0.13)
(0.13)
1,579,576,275
(16,100)
(1.02)
(0.44)
9. Loss for the financial year
The Company has adopted the exemption allowed under Section 408(1b) of the Companies Act 2006 and has
not presented its own income statement in these financial statements.
36 VAST RESOURCES
10. Property, plant and equipment
Group
Fixtures,
Plant and fittings and
equipment
machinery
$’000
$’000
Computer
assets
$’000
Motor
vehicles
$’000
2,493
3,908
1,442
392
105
77
6
–
214
62
–
–
(257)
(23)
(102)
18
–
–
174
–
58
–
–
–
165
(6)
46
1
–
–
202
101
13
227
200
17
269
188
47
–
(30)
13
487
72
240
2
(159)
–
253
72
Cost at
31 March 2015
Additions during
the year
Acquired through
business
combination
Reclassification
Disposals during
the year
Foreign exchange
movements
Cost at
31 March 2016
Revaluation
Additions during
the year
Reclassification
Disposals during
the year
Impairment
Foreign exchange
movements
Cost at
31 March 2017
Depreciation
at 31 March 2015
Charge for the
year
Disposals during
the year
Foreign exchange
movements
Charge for the
year
Disposals during
the year
Foreign exchange
movements
Depreciation at
31 March 2017
7,996
23
559
946
(97)
(962)
(65)
8,401
1,295
1,069
7
902
(55)
(41)
Depreciation
at 31 March 2016 2,157
(214)
(22)
(101)
(30)
–
92
29
–
(2)
–
116
23
–
–
1
296
76
(61)
(28)
Buildings
and
Improve-
ments
$’000
Mining
assets
$’000
Capital
Work in
progress
$’000
Total
$’000
2,193
18,807
393
24,474
376
3,372
1,622
9,605
936
–
(17)
71
3,559
318
47
(470)
(17)
–
–
–
–
5
–
(392)
2,432
–
–
–
(429)
107
22,184
1,623
36,189
–
–
407
1,281
1,520
6,836
(1,999)
–
–
–
–
9,067
–
(273)
(962)
4
225
(1)
6
234
154
(3)
(40)
–
–
1,853
151
604
2,151
–
–
151
833
–
(6)
–
–
(368)
14
604
3,650
–
–
–
2,017
(119)
(117)
(4)
(5)
(37)
(206)
(39)
(78)
(434)
605
3,231
24,946
6,382
43,994
2,963
119
139
283
345
978
604
5,432
Net book value
at 31 March 2016 5,840
Net book value
at 31 March 2017 5,438
73
83
58
88
191
3,325
22,033
1,019
32,539
322
2,886
23,968
5,778
38,563
VAST RESOURCES 37
Notes to Financial Statements
continued
10. Property, plant and equipment continued
Company
Plant and
machinery
$’000
Fixtures,
fittings and
equipment
$’000
Computer
assets
$’000
Motor
vehicles
$’000
Buildings
and
Improve-
ments
$’000
19
–
(14)
5
–
–
5
19
–
(14)
5
–
–
5
–
–
89
–
(66)
23
–
–
23
79
10
(66)
23
–
–
23
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$’000
305
–
(247)
58
–
–
58
230
10
(182)
58
–
–
58
–
–
2017
Company
$’000
218
–
218
2016
Company
$’000
218
–
218
Cost at 31 March 2015
Additions during the year
Disposals during the year
Cost at 31 March 2016
Additions during the year
Disposals during the year
Cost at 31 March 2017
Depreciation at 31 March 2015
Charge for the year
Disposals during the year
Depreciation at 31 March 2016
Charge for the year
Disposals during the year
Depreciation at 31 March 2017
Net book value at 31 March 2016
Net book value at 31 March 2017
197
–
(167)
30
–
–
30
132
(102)
30
–
–
30
–
–
11. Investments in subsidiaries
Cost at the beginning of the year
Additions during the year
Cost at the end of the year
38 VAST RESOURCES
The principal subsidiaries of Vast Resources plc, all of which are included in these consolidated Annual Financial
Statements, are as follows:
Company
African Consolidated Resources
PTC Limited (note i)
African Consolidated Resources
SRL
Canape Investments (Private)
Limited
Dallaglio Investments (Private)
Limited (note ii)
Millwall International
Investments Limited
Moorestown Limited
Sinarom Mining Group
SRL (note ii)
Vast Resources Romania Ltd
Country of
registration
BVI
Class
Romania
Proportion
held
by group
2017
Proportion
held by
group
2016
Nature of
business
–%
–%
Nominee company
Ordinary
80%
80%
Zimbabwe
Ordinary
100%
100%
Zimbabwe
Ordinary
50%
50%
BVI
BVI
Ordinary
100%
100%
Ordinary
100%
100%
Romania
Ordinary
50.1%
50.1%
United
Kingdom
Ordinary
100%
100%
Mining exploration and
development
Mining exploration and
development
Mining exploration and
development
Holding company
Mining exploration and
development
Mining exploration and
development
Holding company
The table above shows the principal subsidiaries of the Company. A full list of all group subsidiaries is given in
Note 29, at the end of this report.
Notes
i. The Company has effective control of this entity.
ii. The Company has effective control of this entity by virtue of its casting vote.
iii. See note 28 for details of post reporting date events concerning the Company’s holding in this subsidiary.
12. Loans to Group companies
Loans to Group companies are repayable on demand, subject to relevant exchange control approvals being
obtained. The treatment of this balance as non-current reflects the Company’s expectation of the timing of
receipt.
13. Business combinations during the year
Sinarom Mining Group
On 22 July 2015 the Group acquired 50.1% of the voting equity instruments of Sinarom Mining Group SA (SMG),
a Romanian company whose principal activity is ownership and operation of the Manaila mine in Romania. The
principal reason for this acquisition was to expand the Group’s mining operations.
This acquisition was reported in the year to 31 March 2016 and included a restatement of the value of the
underlying property, plant and equipment in accordance with the best estimates of management at the time.
In the current year a professional valuation of the Company’s assets has been undertaken which results in this
previous re-statement being reduced. The resultant impairment of $575,254 has been treated as an impairment
of value in the current year.
VAST RESOURCES 39
Notes to Financial Statements
continued
13. Business combinations during the year continued
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and gain arising,
as reported in the year to 31 March 2016, are as follows:
Property, plant and equipment
Mining asset
Inventories
Receivables
Cash and cash equivalents
Less: Payables
Net assets
Non-Controlling interest therein (49.9%)
Fair value of consideration paid - Cash
Gain on business combination
14. Inventory
Minerals held for sale
Production stockpiles
Consumable stores
Year to 31 March 2016
Book value
$’000
Adjustment
$’000
Fair value
$’000
1,448
943
68
432
1
2,892
(2,892)
–
985
(943)
–
–
–
–
2,433
–
68
432
1
2,934
(2,892)
42
21
–
21
Mar 2017
Group
$’000
1,369
606
836
2,811
Mar 2016
Group
$’000
595
510
807
1,912
Mar 2017
Company
$’000
Mar 2016
Company
$’000
–
–
–
–
–
–
–
–
There is no material difference between the replacement cost of stocks and the amount stated above.
Mar 2017
Group
$’000
Mar 2016
Group
$’000
Mar 2017
Company
$’000
Mar 2016
Company
$’000
101
694
457
1,677
3,031
5,960
14
998
–
659
2,225
3,896
–
181
–
1,425
–
1,606
–
412
–
–
–
412
15. Receivables
Trade receivables
Other receivables
Short term loans
Prepayments
VAT
40 VAST RESOURCES
At 31 March 2017:
Trade receivables
Other receivables
At 31 March 2016:
Trade receivables
Other receivables
Carrying
amount
before
deducting
any
impairment
loss
110
694
804
Carrying
amount
before
deducting
any
impairment
loss
1,151
1,198
2,349
Of which: not impaired as at
31 March 2017 and past due
in the following periods:
Of which:
Neither
impaired
Net nor past due
on 31 March
2017
carrying
amount
Related
impairment
loss
9
–
9
101
694
795
–
198
198
More than
three
months
and not
more than
six months
–
210
210
Not
more than
three
months
101
3
104
More than
six months
–
283
283
Of which: not impaired as at
31 March 2016 and past due
in the following periods:
Of which:
Neither
impaired
Net nor past due
on 31 March
2016
carrying
amount
14
998
14
998
1,012
1,012
More than
three
months
and not
more than
six months
–
–
–
Not
more than
three
months
–
–
–
More than
six months
–
–
–
Related
impairment
loss
1,137
200
1,337
At the reporting date, of the total amount carried as VAT receivable, $2,374,058 relates to subsidiary companies
in Zimbabwe where the ongoing fiscal crisis experienced by the State manifests itself in long delays in recovering
input tax from the Zimbabwe Revenue Authority (ZIMRA). Of this $2,374,058, $247,582 is due to Canape
Investments (Private) Limited (Canape) where it is part of an ongoing dispute with ZIMRA as to the allowability
of the input tax. This dispute dates back to 2011 and has thus far resulted in the recovery of over $500,000 of
allowable input tax, of which the balance due is subject to gaining final approval from ZIMRA.
While ZIMRA did issue assessments for VAT totalling $2,998,363 in January 2017, Canape did lodge objections
to these assessments and Canape and its professional advisors in Zimbabwe are of the opinion that this objection
has de facto been allowed, and that the likelihood of eventually recovering this amount is good, although there
does remain some uncertainty as to the date by which the amount will ultimately be refunded.
Of the amount of $2,126,476 due to Breckridge Investments (Private) Limited, $1,430,483 is past due for
repayment, with $324,481 being overdue for more than 12 months. The overdue amount was received in full
in July 2017.
At the reporting date, of the total amount carried as VAT receivable, $484,101 relates to the Romanian
subsidiary, African Consolidated Resources SRL (‘AFCR’), which company expects to receive the association
mining licence at Baita Plai. The Romanian Revenue Authority has confirmed that this will be repaid subject to
their normal audit procedures, when the association mining licence is in hand. Legal advice received by AFCR is
that the VAT is repayable in any event.
16. Available for sale investments
Available for sale investments comprise shares in quoted companies
VAST RESOURCES 41
Notes to Financial Statements
continued
17. Loans and borrowings
Non-current
Secured borrowings
Unsecured borrowings
less amounts payable in less than 12 months
Current
Bank overdrafts
Unsecured borrowings
Current portion of long term borrowings
Total loans and borrowings
Non-current secured borrowings consist of:
Mar 2017
Group
$’000
Mar 2016
Group
$’000
Mar 2017
Company
$’000
Mar 2016
Company
$’000
4,839
–
(1,673)
3,166
859
1,403
1,673
3,935
7,101
1,978
127
(1,194)
911
1,766
1,310
1,194
4,270
5,181
–
–
–
–
–
–
–
–
-
–
–
–
–
–
–
–
–
-
(i)
(ii)
$1,656,042 loan from a third party secured by a pledge of the Group’s shareholding in its subsidiary
company, Canape Investments (Private) Limited. The loan bears interest at a rate of 12% per annum. The
loan is repayable in four equal six-monthly amounts commencing in April 2016. The loan was repaid in full
on 6 July 2017.
$3,106,182 loan from a third party secured by a pledge over the Company’s shareholding in all its operating
subsidiaries in Zimbabwe and Romania. The loan bears interest at 12% per annum and is repayable by
March 2021. A further $1,000,000 of this facility was drawn down after the reporting date.
(iii) $76,642 asset financing loans secured on the underlying movable assets belonging to ACR SRL.
Current unsecured borrowing consists of:
(i)
(ii)
$1,150,000 loan from the non-controlling interest in Dallaglio Investments (Private) Limited, the operating
company for the Pickstone Peerless Gold Mine.
$172,557 loans from the non-controlling interests in African Consolidated Resources SRL, the holder of
the rights to the Baita Plai Mine.
(iii) $79,772 short term bank loan to Sinarom Mining Group SRL, which is under dispute.
The loans from the non-controlling interests are interest free and have no fixed terms of repayment.
The overdraft is held in Breckridge Investments (Private) Limited. It bears interest at 12% per annum and is
secured by a Special Notarial General Covering Bond over the plant and equipment of the Company, and
guarantees given by the shareholders, which includes Canape Investments (Private) Limited.
18. Trade and other payables
Trade payables
Other payables
Other taxes and social security taxes
Accrued expenses
42 VAST RESOURCES
Mar 2017
Group
$’000
Mar 2016
Group
$’000
Mar 2017
Company
$’000
Mar 2016
Company
$’000
5,784
1,325
237
85
7,431
3,491
2,259
681
298
6,729
–
447
–
–
447
–
351
–
–
351
At 31 March 2017:
Trade payables
Other payables
At 31 March 2016:
Trade payables
Other payables
19. Provisions
Ageing of amounts payable: amounts due for:
Amount
30 days
60 days
90 days
120 days
5,784
1,325
4,145
1,010
217
14
44
18
17
14
Ageing of amounts payable: amounts due for:
Amount
30 days
60 days
90 days
120 days
3,491
2,259
1,988
548
237
11
30
11
146
34
150 days
or more
1,361
269
150 days
or more
1,090
1,655
Provision for rehabilitation of mining properties
– Provision brought forward from previous years
– Liability recognised during year
Mar 2017
Group
$’000
Mar 2016
Group
$’000
Mar 2017
Company
$’000
Mar 2016
Company
$’000
954
141
1,095
–
954
954
–
–
–
–
–
–
As more fully set out in the Statement of Accounting Policies on page 29, the Group provides for the cost of
the rehabilitation of a mining property on the cessation of mining. Provision for this cost is recognised from the
commencement of mining activities.
This provision accounts for the estimated full cost to rehabilitate the mines at both Manaila and Pickstone
Peerless according to good practice guidelines in the country where the mine is located, which may involve
more than the stipulated minimum legal commitment. When accounting for the provision the Group recognises
a provision for the full cost to rehabilitate the mine and a matching asset accounted for within the non-current
mining asset.
20. Financial instruments – risk management
Significant accounting policies
Details of the significant accounting policies in respect of financial instruments are disclosed on pages 24-29.
The Group’s financial instruments comprise available for sale investments (note 16), cash and items arising
directly from its operations such as other receivables, trade payables and loans.
Financial risk management
The Board seeks to minimise its exposure to financial risk by reviewing and agreeing policies for managing each
financial risk and monitoring them on a regular basis. No formal policies have been put in place in order to hedge
the Group and Company’s activities to the exposure to currency risk or interest risk; however the Board will
consider this periodically. No derivatives or hedges were entered into during the year.
The Group and Company is exposed through its operations to the following financial risks:
•
•
•
Credit risk
Market risk (includes cash flow interest rate risk and foreign currency risk)
Liquidity risk
VAST RESOURCES 43
Notes to Financial Statements
continued
20. Financial instruments – risk management continued
The policy for each of the above risks is described in more detail below.
The principal financial instruments used by the Group, from which financial instruments risk arises are as follow:
•
•
•
•
Receivables
Cash and cash equivalents
Trade and other payables (excluding other taxes and social security) and loans
Available for sale investments
The table below sets out the carrying value of all financial instruments by category and where applicable shows
the valuation level used to determine the fair value at each reporting date. The fair value of all financial assets
and financial liabilities is not materially different to the book value.
Loans and receivables
Cash and cash equivalents
Receivables
Loans to Group Companies
Available for sale financial assets
Available for sale investments (valuation level 1)
Other liabilities
Trade and other payables (excl short term loans)
Loans and borrowings
2017
Group
$’000
1,326
5,960
–
10
7,431
7,101
2016
Group
$’000
831
3,896
–
8
6,728
5,181
2017
Company
$’000
1,239
1,606
35,962
5
447
–
2016
Company
$’000
615
412
33,963
5
351
–
Credit risk
Financial assets, which potentially subject the Group and the Company to concentrations of credit risk, consist
principally of cash, short-term deposits and other receivables. Cash balances are all held at recognised financial
institutions. Other receivables are presented net of allowances for doubtful receivables. Other receivables
currently form an insignificant part of the Group’s and the Company’s business and therefore the credit risks
associated with them are also insignificant to the Group and the Company as a whole.
The Company has a credit risk in respect of inter-company loans to subsidiaries. The recoverability of these
balances is dependent on the commercial viability of the exploration activities undertaken by the respective
subsidiary companies. The credit risk of these loans is managed as the directors constantly monitor and assess
the viability and quality of the respective subsidiary’s investments in intangible mining assets.
Inter-company loan amounts between the holding company and its Zimbabwean subsidiary, Canape
Investments, are subject to credit risk in so far as the Zimbabwe’s exchange control regulations, which change
from time to time, may prevent timeous settlement.
Maximum exposure to credit risk
The Group’s maximum exposure to credit risk by category of financial instrument is shown in the table below:
2017
Carrying
value
$’000
1,326
5,960
2017
Maximum
exposure
$’000
1,551
5,477
2016
Carrying
value
$’000
831
3,896
2016
Maximum
exposure
$’000
831
3,896
Cash and cash equivalents
Receivables
44 VAST RESOURCES
The Company’s maximum exposure to credit risk by class of financial instrument is shown in the table below:
Cash and cash equivalents
Receivables
Loans to Group Companies *
2017
Carrying
value
$’000
1,239
1,606
35,962
2017
Maximum
exposure
$’000
1,478
1,606
38,135
2016
Carrying
value
$’000
615
412
33,963
2016
Maximum
exposure
$’000
615
412
33,963
*Net of impairment charges on advances to Group companies of $8.5 million (2016 – $8.5 million)
Market risk
Cash flow interest rate risk
The Group has adopted a non-speculative policy on managing interest rate risk. Only approved financial
institutions with sound capital bases are used to borrow funds and for the investments of surplus funds.
The Group and the Company seeks to obtain a favourable interest rate on its cash balances through the use of
bank deposits. At the reporting date, the Group had a cash balance of $1.326 million (2016: $0.831 million)
which was made up as follows:
Sterling
United States Dollar
Euro
Lei (Romania)
2017
Group
$’000
692
612
2
20
1,326
2016
Group
$’000
437
351
1
42
831
At the reporting date, the Company had a cash balance of $1.239 million (2016: $0.615 million) which was made
up as follows:
Sterling
United States Dollar
Euro
Lei (Romania)
2017
Company
$’000
2016
Company
$’000
691
547
1
–
1,239
437
177
1
–
615
The Group had interest bearing debts at the current year end of $5.698 million (2016: $3.744 million). These
are made up as follows:
Secured long term loans
Bank overdraft
Interest
rate
12%
12%
These loans are repayable as follows:
– Within 1 year
– Between 1 and 2 years
– In more than 2 years
2017
Group
$’000
4,839
859
5,698
2,532
16
3,150
2016
Group
$’000
1,978
1,766
3,744
2,651
1,093
–
2017
Company
$’000
2016
Company
$’000
–
–
–
–
–
–
–
–
–
–
–
–
VAST RESOURCES 45
Notes to Financial Statements
continued
20. Financial instruments – risk management continued
Foreign currency risk
Foreign exchange risk is inherent in the Group’s and the Company’s activities and is accepted as such. The
majority of the Group’s expenses are denominated in United States Dollars and therefore foreign currency
exchange risk arises where any balance is held or costs are incurred, in currencies other than United States
Dollars. At 31 March 2017 and 31 March 2016, the currency exposure of the Group was as follows:
At 31 March 2017
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Available for sale investments
At 31 March 2016
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Available for sale investments
Sterling
$’000
US Dollar
$’000
692
110
(240)
–
437
82
(249)
–
612
4,776
(4,028)
10
351
2,182
(1,108)
8
Euro
$’000
2
–
(54)
–
1
–
–
–
Other
$’000
20
1,074
(3,109)
–
42
1,632
(6,840)
–
Total
$’000
1,326
5,960
(7,431)
10
831
3,896
(8,197)
8
The effect of a 10% strengthening of Sterling against the US dollar at the reporting date, all other variables
held constant, would have resulted in decreasing post tax losses by $56,690 (2016: $27,159 increase). Conversely
the effect of a 10% weakening of Sterling against the US dollar at the reporting date, all other variables held
constant, would have resulted in increasing post tax losses by $56,690 (2016: $27,159 decrease).
At 31 March 2017 and 31 March 2016, the currency exposure of the Company was as follows:
At 31 March 2017
Cash and cash equivalents
Trade and other receivables
Loans to Group companies
Trade and other payables
Available for sale investments
At 31 March 2016
Cash and cash equivalents
Other receivables
Loans to Group companies
Trade and other payables
Available for sale investments
Sterling
$’000
US Dollar
$’000
692
85
201
(240)
5
437
82
69
(250)
5
546
1,521
34,717
(207)
–
177
330
32,779
(101)
–
Euro
$’000
1
–
1,044
–
–
1
–
1,115
–
–
Other
$’000
–
–
–
–
–
–
–
–
–
–
Total
$’000
1,239
1,606
35,962
(447)
5
615
412
33,963
(351)
5
Liquidity risk
Any borrowing facilities are negotiated with approved financial institutions at acceptable interest rates. All
assets and liabilities are at fixed and floating interest rate. The Group and the Company seeks to manage its
financial risk to ensure that sufficient liquidity is available to meet the foreseeable needs both in the short and
long term. See also references to Going Concern disclosures in the Strategic Report on page 10.
As set out in Note 18, of the consolidated trade and other payables balance of $7.109 million, $5.386 million is
due for payment within 60 days of the reporting date.
46 VAST RESOURCES
Capital
The objective of the directors is to maximise shareholder returns and minimise risks by keeping a reasonable
balance between debt and equity. In previous years the Company and Group has minimised risk by being purely
equity financed. In the current year, the Group has assumed debt risk but has kept the net debt amount as low
as possible.
The Group’s debt to equity ratio is 17.2% (2016: 15.5%), calculated as follows:
Loans and borrowings
Less: cash and cash equivalents
Net debt
Total equity
Debt to capital ratio (%)
21. Share capital
As at 31 March 2015
Issued during the year *
As at 31 March 2016
Issued during the year *
As at 31 March 2017
2017
$000’s
7,101
(1,326)
5,775
33,508
17.2%
Ordinary 0.1p
No of
shares
Nominal
value
Deferred 0.9p
No of
shares
Nominal
value
1,358,647,327
721,261,269
2,079,908,596
2,583,495,863
2,183
1,072
3,255
3,315
863,562,664
-
863,562,664
-
4,663,404,459
6,570
863,562,664
12,852
-
12,852
-
12,852
2016
$’000
5,181
(831)
4,350
27,980
15.5%
Share
premium
66,105
5,547
71,652
3,150
74,802
* Details of the shares issued during the year are as shown in the table below and in the Statement of Changes of Equity on pages 20-21.
There were no shares reserved for issue under share options at 31 March 2017 (2016:13,970,022). The number
of shares held by the EBT at 31 March 2017 was 32,500,000 (2016: 32,500,000), see note 22 for additional details
about the EBT.
The deferred shares carry no rights to dividends or to participate in any way in the income or profits of the
Company. They may receive a return of capital equal to the amount paid up on each deferred share after the
ordinary shares have received a return of capital equal to the amount paid up on each ordinary share plus
£10,000,000 on each ordinary share, but no further right to participate in the assets of the Company. The
Company may, subject to the Statutes, acquire all or any of the deferred shares at any time for no consideration.
The deferred shares carry no votes.
The ordinary shares carry all the rights normally attributed to ordinary shares in a company subject to the rights
of the deferred shares.
See also Note 28 on page 57-58 for details of share issues after the reporting date.
Date of issue
2016
10 Aug 2015
20 Aug 2015
12 Oct 2015
12 Oct 2015
16 Oct 2015
16 Oct 2015
8 Jan 2016
11 Jan 2016
11 Mar 2016
Number
of shares
Issue
price
(pence)
Purpose of issue
107,701,662
7,000,000
3,000,000
4,500,000
154,649,140
23,097,237
156,250,000
62,500,000
50,000,000
1.2
0.5
0.5
0.6
0.5
0.5
0.8
0.8
0.8
Issued for cash – general placing .
Exercise of warrants
Exercise of warrants
Exercise of warrants
Settle loan repayment
Settle liabilities
Issued for cash – Crede Capital.
Issued for cash – Managers’ placing.
Issued for cash – general placing
VAST RESOURCES 47
Notes to Financial Statements
continued
21. Share capital continued
Date of issue
24 Mar 2016
24 Mar 2016
30 Mar 2016
7 Apr 2016
12 Apr 2016
14 Apr 2016
25 Apr 2016
19 May 2016
27 Jun 2016
8 Jul 2016
11 Jul 2016
2 Aug 2016
17 Aug 2016
17 Aug 2016
17 Aug 2016
29 Sep 2016
13 Oct 2016
13 Oct 2016
26 Oct 2016
26 Oct 2016
3 Nov 2016
15 Nov 2016
21 Nov 2016
24 Nov 2016
25 Nov 2016
25 Nov 2016
28 Nov 2016
29 Nov 2016
9 Dec 2016
30 Dec 2016
22 Feb 2017
28 Feb 2017
6 Mar 2017
27 Mar 2017
28 Mar 2017
48 VAST RESOURCES
Issue
price
(pence)
Purpose of issue
0.1
0.1
0.1
Exercise of warrants - Crede Capital
Exercise of warrants - Crede Capital
Exercise of warrants - Crede Capital
Number
of shares
52,509,000
81,535,714
18,518,516
721,261,269
120,000,000
55,555,550
60,140,493
60,000,000
84,284,277
76,111,100
37,037,036
300,000,001
181,992,582
101,719,298
16,153,846
26,315,789
120,691
122,120
47,619,046
31,853,636
428,571,428
0.1
0.24
0.1
0.1
0.1
0.1
0.63
0.285
0.285
0.285
0.26
0.285
0.5
0.5
0.28
0.1
0.21
105,263,158
0.19
58,823,529
0.17
66,666,666
0.15
66,666,666
0.15
77,596
127,548,940
139,000,000
0.5
0.1
0.15
134,040,666
0.15
376,409
129,716,169
12,500,000
37,500,000
25,000,000
52,631,578
87,593
2,583,495,863
0.5
0.1
0.4
0.4
0.4
0.5
0.5
Exercise of warrants - Crede Capital
Issued for cash to investors
Exercise of warrants - Crede Capital
Exercise of warrants - Crede Capital
Exercise of warrants - Crede Capital
Exercise of warrants by investors
Issued for cash to investors
Issued for cash – general placing
Issued for cash - open offer to existing
shareholders
Issued for cash – supplementary placing
Settle liabilities
Placing shares issued to broker
Exercise of open offer warrants
Exercise of open offer warrants
Issued for cash to investors
Exercise of management warrants
Loan Notes converted by
Bracknor Fund Ltd
Loan Notes converted by
Bracknor Fund Ltd
Loan Notes converted by
Bracknor Fund Ltd
Loan Notes converted by
Bracknor Fund Ltd
Loan Notes converted by
Bracknor Fund Ltd
Exercise of open offer warrants
Exercise of warrants by investors
Loan Notes converted by
Bracknor Fund Ltd
Loan Notes converted by
Bracknor Fund Ltd
Exercise of open offer warrants
Exercise of management warrants
Exercise of warrants - Bracknor Fund Ltd
Exercise of warrants - Bracknor Fund Ltd
Exercise of warrants - Bracknor Fund Ltd
Exercise of placing warrants issued
to broker
Exercise of open offer warrants
All issues during the year were for the
purpose of provision of additional funds
for opportunities in Romania and for
general corporate purposes
Crede Capital financing agreement
As reported in the report for the year to 31 March 2016, on 4 January 2016 the entered into a financing
agreement with Crede CG III Limited (Crede) by which Crede would subscribe for new ordinary shares of 0.1p
each in the Company in order to raise up to £5.0 million. In addition to the new ordinary shares Crede would
also receive one warrant for each share issued, which warrant would entitle it either to one share at a price of
130% of the issue price of the shares to which the warrant related or to a number of shares to be determined
by a calculation based on a Black Scholes valuation of the shares at the time of exercise.
In January 2016 the first tranche of funding was executed and the initial 156,250,000 new Ordinary Shares had
been issued together with 156,250,000 warrants. As at 31 March 2016 Crede had exercised 70,745,774 warrants
and held 85,504,226 unexercised warrants. These were all exercised during the current year, as detailed in the
table above.
On 5 April 2016, the Company announced that it was withholding its consent to the issue of the second tranche
of shares and warrants, as this would result in Crede exceeding the 25% shareholding limit contained in the
agreement.
On 1 July 2016, at the General Meeting of the Company held on that date to seek approval from members for
authority to issue further shares to Crede in the course of the third tranche of the agreement, the shareholders
voted not to consent to the increase of capital required. This gave the Company the right to terminate the
agreement which right the Company then exercised.
Directors and Management financing agreement
As previously reported, on 6 January 2016 the Directors of the Company, together with certain senior managers,
subscribed an aggregate amount of £0.5 million on the same terms as agreed with Crede; 62,500,000 new
Ordinary Shares were issued by the Company together with 62,500,000 warrants.
As at 31 March 2016, 11,356,077 of these warrants had been exercised and 18,518,516 new ordinary Shares
issued. At 31 March 2016, the Directors and senior managers held 51,143,923 unexercised warrants; of these,
a total of 36,560,673 were exercised during the current year, as detailed in the table above.
At 31 March 2017, the Directors and senior managers held 5,208,313 unexercised warrants.
Existing shareholders financing agreement
As reported in the report for the year to 31 March 2016, on 4 March 2016 the Company entered into an
agreement with a number of existing shareholders (the “Investors”) for their subscription for up to £0.8 million,
on similar terms as agreed with Crede. The investments was to be in four tranches, on 4 March 2016; 3 April
2016; 4 July 2016 and 3 October 2016 respectively.
The first tranche of £400,000 resulted in 50,000,000 new Ordinary Shares and 50,000,000 warrants being issued
by the Company. At 31 March 2016 the Investors had exercised the 50,000,000 warrants, exchanging them for
81,535,714 new ordinary Shares; at 31 March 2016 the Investors had no unexercised warrants remaining from
the initial subscription.
The second, third and fourth tranches of the arrangement proceeded as agreed. A total of 140,211,632 shares
were subscribed for; in addition 140,211,632 warrants were issued. Of these, 133,597,871 were exercised before
31 March 2017. The total funds raised in the three tranches was £603,661
At 31 March 2017 there remained 6,613,756 warrants unexercised by these investors.
Bracknor Fund financing arrangement
On 11 October 2016, the Company announced it had entered into an agreement with Bracknor Fund Limited
(“Bracknor”) under which Bracknor subscribed for US$2 million convertible Loan Notes in the Company, with a
commitment by Bracknor to provide a further US$3.0 million, in tranches of US$1.0 million, if requested.
VAST RESOURCES 49
Notes to Financial Statements
continued
21. Share capital continued
The Loan Notes were unsecured, interest free and may be capable of conversion into ordinary shares in the
Company at any time during a 12-month conversion period immediately following the Subscription, at a price
equal to 90% of the lowest average price of the Shares in the five business days immediately preceding the
conversion date. In addition, warrants were to be issued to Bracknor exercisable at 130% of the lowest Average
Price of Shares in the five business days immediately preceding the issue of the Loan Notes.
The funds realised from the Subscription were to be applied to the ongoing refinement to the zinc production
line at Manaila, ongoing drilling to expand the maiden JORC resource at Manaila, the drilling, evaluation and
design of the Faneata Tailings Dam reprocessing facility, the initial payments associated with the Baita Plai
Mining sub-licence, once granted, and the general corporate overheads of the Company.
The Loan Notes, together with 80,425,000 warrants, were issued on 10 October 2016.
The Loan Notes were converted between 26 October 2016 and 29 November 2016, as more fully detailed in
the table above. Bracknor exercised a total of 75,000,000 warrants, being issued a total of 300,000,000 shares,
between 22 February 2017 and 6 March 2017. As at 31 March 2017, a total of 5,450,000 warrants are still
unexercised.
The charges arising from the issue of warrants in connection with all of the foregoing four financing
arrangements have been accounted for and the charge in respect of these warrants has been recognised.
22. Share based payments
Equity – settled share based payments
The Company has granted share options and warrants to directors, staff and consultants.
In June 2015, the Company also established a Share Appreciation Scheme to incentivise directors and senior
executives. The basis of the Scheme is to grant a fixed number of ‘share appreciation rights’ (SARs) to
participants. Each SAR is credited rights to receive at the discretion of the Company ordinary shares in the
Company or cash to a value of the difference in the value of a share at the date of exercise of rights and the
value at date of grant. The SARS are subject to various performance conditions.
The tables below reconcile the opening and closing number of SARs in issue at each reporting date:
Exercise
price
Options
0.8p
0.8p
Exercise
price
Options
0.8p
0.8p
In issue
at 31 March
2016
57,000,000
40,000,000
97,000,000
In issue
at 31 March
2015
Issued during Lapsed during
year
year
Exercised
during year
–
–
–
–
–
–
–
–
–
Issued during Lapsed during
year
year
Exercised
during year
–
–
–
57,000,000
40,000,000
97,000,000
–
–
–
–
–
–
In issue
at 31 March
2017
57,000,000
40,000,000
97,000,000
In issue
at 31 March
2016
57,000,000
40,000,000
97,000,000
Final exercise date
March 2019
March 2020
Final exercise date
March 2019
March 2020
50 VAST RESOURCES
The tables below reconcile the opening and closing number of share options and warrants in issue at each
reporting date:
Exercise
price
Options
0.5p
2.0p
Warrants
0.4p
0.5p
0.5p
0.5p
variable
variable
Exercise
price
Options
0.5p
0.5p
0.6p
2.0p
4.0p
5.0p
5.0p
5.0p
5.0p
5.0p
10.0p
Warrants
0.5p
variable
In issue
at 31 March
2016
6,809,709
500,000
–
6,659,903
–
–
136,648,149
Issued during Lapsed during
year
year
Exercised
during year
–
–
6,809,709
500,000
–
–
In issue
at 31 March
2017
–
–
Final exercise date
80,425,000
–
617,834,687
13,340,097
–
140,211,632
–
–
–
–
–
–
75,000,000
–
53,415,987
–
122,064,899
133,597,876
5,425,000
6,659,903
564,418,700
13,340,097
14,583,250
6,613,756
October 2019
December 2017
June 2019
December 2017
January 2021
March 2021
150,617,761
851,811,416
7,309,709
384,078,762
611,040,706
In issue
at 31 March
2015
8,403,709
10,000,000
4,500,000
500,000
2,000,000
15,000,000
5,000,000
2,500,000
3,500,000
1,500,000
5,000,000
Issued during Lapsed during
year
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
15,000,000
5,000,000
2,500,000
3,500,000
1,500,000
5,000,000
Exercised
during year
1,593,590
10,000,000
4,500,000
-
-
-
-
-
-
-
-
In issue
at 31 March
2016
6,809,709
-
-
500,000
-
-
-
-
-
-
-
Final exercise date
December 2016
December 2016
6,659,903
-
-
268,750,000
-
-
132,101,851
6,659,903
136,648,149
December 2017
January 2021
64,563,612
268,750,000
34,500,000
148,195,441
150,617,761
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
2017
Weighted
average
exercise price
(pence)
0.70
0.12
0.55
0.39
0.44
0.44
Number
247,617,761
851,811,416
7,309,709
384,078,762
708,040,706
708,040,706
2016
Weighted
average
exercise price
(pence)
3.28
0.70
5.67
0.67
0.70
0.70
Number
64,563,612
315,750,000
34,500,000
148,195,441
247,617,761
207,618,171
The weighted average remaining lives of the share options or warrants outstanding at the end of the period is
28 months (2016: 50 months). All of the 708,040,706 options and warrants outstanding at 31 March 2017 are fully
vested in the holders and are exercisable at that date; in 2016, of the 247,617,761 options and warrants outstanding,
all were fully vested in the holders while 40,000,000 options were not yet exercisable.
VAST RESOURCES 51
Notes to Financial Statements
continued
22. Share based payments continued
Fair value of share options
The fair values of share options and warrants granted have been calculated using the Black Scholes pricing model
which takes into account factors specific-to-share incentive plans such as the vesting periods of the plan, the expected
dividend yield of the Company’s shares and the estimated volatility of those shares. Based on the above assumptions,
the fair values of the options granted are estimated to be:
Share
Option or
Warrant
Value
variable
variable
0.5p
0.5p
0.5p
variable
0.5p
0.4p
Grant
date
Apr 16
Jul-16
Jul-16
Aug-16
Aug-16
Oct-16
Oct-16
Oct-16
Share
price
at date
of grant
0.240p
0.360p
0.315p
0.265p
0.290p
0.280p
0.300p
0.320p
Vesting
periods
Mar-21
Mar-21
Jun-19
Jun-19
Jun-19
Mar-21
Dec-17
Oct-19
Volatility
Life
(years)
Dividend
yield
135%
135%
76%
76%
76%
135%
76%
76%
5.00
5.00
4.11
4.01
3.97
5.00
3.77
3.97
nil
nil
nil
nil
nil
nil
nil
nil
Risk free
interest
rate
1.5%
1.5%
0.63%
0.34%
0.34%
1.5%
0.18%
0.18%
Fair value
0.2055p
0.3082p
0.5670p
0.0522p
0.0664p
0.2397p
0.0677p
0.1012p
Volatility has been based on historical share price information. A higher rate of volatility is used when
determining the fair value of certain options in order to reflect the special conditions attached thereto
Based on the above fair values the expense arising from equity-settled share options and warrants made was
$1,648,400 (2016: $1,154,347).
Cash-settled share based payments
The directors of the Company have set up an Employee Benefit Trust (EBT) in which a number of employees
and directors are participants. The EBT holds shares on behalf of each participant until such time as the
participant exercises their right to require the EBT to sell the shares. On the sale of the shares the participant
receives the appreciation of the value in the shares above the market price on the date that the shares were
purchased by the EBT, subject to the first 5% in growth in the share price, on an annual compound basis, being
retained by the EBT. The participant pays 0.01p per share to acquire their rights. The table below sets out the
subscription price and the rights exercisable in respect of the EBT.
As set out in the EBT accounting policy note, the EBT has been included as part of the Company financial
statements and consolidated as part of the Group financial statements.
Exercise
price
Outstanding
at 31 March
2016
Exercised
during last
12 months
Lapsed
during Last
12 months
Granted
during last
12 months
Outstanding
at 31 March
2017
Date exercisable from
8.75p
8.75p
9.00p
9.00p
6.00p
6.00p
6,000,000
6,000,000
2,500,000
2,500,000
7,750,000
7,750,000
32,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
6,000,000
2,500,000
2,500,000
7,750,000
7,750,000
32,500,000
July 2010
July 2011
August 2011
August 2012
August 2012
August 2013
As at 31 March 2017 a total of 32,500,000 of the EBT participation rights were exercisable.
52 VAST RESOURCES
Exercise
price
Outstanding
at 31 March
2015
Exercised
during last
12 months
Lapsed
during last
12 months
Granted
during last
12 months
Outstanding
at 31 March
2016
Date exercisable from
8.75p
8.75p
9.00p
9.00p
6.00p
6.00p
6,000,000
6,000,000
2,500,000
2,500,000
7,750,000
7,750,000
32,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
6,000,000
2,500,000
2,500,000
7,750,000
7,750,000
32,500,000
July 2010
July 2011
August 2011
August 2012
August 2012
August 2013
As at 31 March 2016 a total of 32,500,000 of the EBT participation rights were exercisable.
Fair value of EBT participant rights
The fair values of the rights granted to participants under the EBT have been calculated using a Black Scholes
valuation model. Based on the assumptions set out in the table below, as well as the limitation on the growth
in share price attributable to the participants (as set out in the table above) the fair-values are estimated to be:
Rights exercisable from:
Jul 2010
Jul 2011
Aug 2011
Aug 2012
Aug 2012
Aug 2013
Grant date
Validity of grant
Vesting periods
Share price at date of grant
Volatility
Dividend yield
Risk free investment rate
Fair value
Aug 2009
10 years
Aug 2009 –
Jul 2010
8.75p
51%
Nil
0.65%
Nil
Oct 2010
10 years
Aug 2009
10 years
Oct 2010
10 years
Aug 2009 – Oct 2010 – Oct 2010 –
Aug 2012
Aug 2011
9.00p
9.00p
51%
51%
Nil
Nil
0.65%
0.65%
Nil
Nil
Jul 2011
8.75p
51%
Nil
0.65%
Nil
Sep 2011
10 years
Sep 2011–
Aug 2012
6.00p
51%
Nil
0.65%
Nil
Sep 2011
10 years
Sep 2011–
Aug 2013
6.00p
51%
Nil
0.65%
Nil
The group has recorded liabilities in respect of the EBT of $nil and $nil in 2016 and 2017. Fair value of the EBT
is determined by using the Black Scholes model using the assumptions noted in the above table. The group
recorded total expenses of $nil and $nil in 2016 and 2017, respectively. The total intrinsic value at 31 December
2016 and 2017 was $nil and $nil, respectively.
Volatility has been calculated by reference to historical share price information.
Warrant and Share option expense
Warrant and share option expense:
– In respect of remuneration contracts
– In respect of financing arrangements
Total expense / (credit)
2016
Group
$’000
198
1,450
1,648
2015
Group
$’000
723
2,645
3,368
23. Reserves
Details of the nature and purpose of each reserve within owners’ equity are provided below:
•
•
•
•
Share capital represents the nominal value at 0.1p each of the shares in issue.
Share premium represents the balance of consideration received net of fund raising costs in excess of the
par value of the shares.
The share options reserve represents the accumulated balance of share benefit charges recognised in
respect of share options granted by the Company, less transfers to retained losses in respect of options
exercised or lapsed.
The foreign currency translation reserve represents cumulative foreign exchange differences arising from
the translation of the Financial Statements of foreign subsidiaries; this reserve is not distributable by way
of dividends.
VAST RESOURCES 53
Notes to Financial Statements
continued
23. Reserves continued
•
•
•
The available for sale reserve represents the gains/(losses) arising on recognising financial assets classified
as available for sale at fair value.
The EBT reserve has been recognised in respect of the shares in the Company purchased by the EBT; the
reserve serves to offset against the increased share capital and share premium arising from the Company
effectively purchasing its own shares.
The retained deficit reserve represents the cumulative net gains and losses recognised in the Group
statement of comprehensive income.
24. Non-controlling Interests
Breckridge Investments (Private) Limited is a 50% owned subsidiary of the Company that has material non-
controlling interests (NCI). Control is exercised by the Group by virtue of a casting vote held by the Chairman of
the Company, who is the Chief Executive Officer of the Group.
African Consolidated Resources SRL is an 80% owned subsidiary of the Company which also has a NCI. This
follows the merger of this company with Mineral Mining in February 2016
Sinarom Mining Group SA is a 50.1% owned subsidiary of the Company which also has a NCI.
Summarised financial information for these three entities, before intra-group eliminations, is presented below
together with amounts attributable to NCI:
Breckridge
Investments
$’000
African
Consolidated
Resources
SRL
$’000
Sinarom
Mining
Group SA
$’000
21,137
(13,635)
7,502
(1,418)
6,084
61
6,145
(1,193)
4,952
(2,427)
7,231
(6,320)
–
911
–
–
–
(563)
(563)
–
(563)
–
(563)
11
(364)
(1,211)
1,506
(69)
2,630
(3,746)
(1,116)
(1,461)
(2,578)
–
(2,578)
–
(2,578)
1,540
(1,914)
(1,235)
3,175
26
Total NCI
$’000
23,767
(17,381)
6,386
(3,442)
2,943
61
3,004
(1,193)
1,811
(876)
4,953
(8,766)
4,681
868
$’000
$’000
$’000
$’000
10,764
465
2,065
3,054
22
3,044
4,204
14,040
5,399
–
14
640
1
5,894
1,361
250
3,890
–
733
459
31
7,292
2,053
(1,897)
20,053
465
2,811
4,153
54
16,230
7,618
12,393
For the year ended 31 March 2017
Revenue
Cost of sales
Gross profit (loss)
Administrative expenses
Operating profit (loss)
Finance expense
Profit (loss) before tax
Tax expense / credit
Profit (loss) after tax
Total comprehensive profit (loss) allocated to NCI
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash inflows/(outflows)
As at 31 March 2017
Assets:
Property plant and equipment
Deferred tax asset
Inventory
Receivables
Cash and cash equivalents
Liabilities:
Loans and other borrowings
Trade and other payables
Accumulated non-controlling interests
54 VAST RESOURCES
Breckridge
Investments
$’000
African
Consolidated
Resources
SRL
$’000
Sinarom
Mining
Group SA
$’000
5,388
(4,172)
1,216
(1,708)
(492)
(130)
(622)
1,658
1,036
473
(978)
(5,395)
4,571
(1,802)
–
–
–
(630)
(630)
–
(630)
–
(630)
432
(509)
(1,907)
1,575
(841)
1,812
(1,436)
376
(1,122)
(746)
–
(746)
–
(746)
(377)
(1,471)
(1,759)
3,234
4
Total NCI
$’000
7,200
(5,608)
1,592
(3,460)
(1,868)
(130)
(1,998)
1,658
(340)
528
(2,958)
(9,061)
9,380
(2,639)
$’000
$’000
$’000
$’000
–
5,418
1,658
1,091
1,594
18
2,916
1,533
11,614
–
4,463
–
126
825
70
127
2,885
260
–
3,929
–
695
808
5
86
2,985
(356)
–
13,810
1,658
1,912
3,227
93
3,129
7,403
11,518
For the year ended 31 March 2016
Revenue
Cost of sales
Gross Profit (loss)
Administrative expenses
Operating loss
Finance expense
Loss before tax
Tax expense / credit
Profit (loss) after tax
Total comprehensive profit (loss) allocated to NCI
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net cash inflows/(outflows)
As at 31 March 2016
Assets:
Intangible assets
Property plant and equipment
Deferred tax asset
Inventory
Receivables
Cash and cash equivalents
Liabilities:
Loans and other borrowings
Payables
Accumulated non-controlling interests
25. Related party transactions
Company and group
Directors and key management emoluments are disclosed in notes 6 and 7.
Group
The non-controlling interest in African Consolidated Resources SRL, where 20% of the shareholding of the
subsidiary is held by third parties (the “AP Group”), consisting as to a majority of a director and senior executives
of the group, namely:
Roy Tucker
Andrew Prelea
Senior Romanian management
Non-related party
(Director)
(Executive)
2%
8%
2%
8%
At the reporting date, there was an amount owing by African Consolidated Resources SRL to the AP Group of
$117,303 (2016: $127,039)
At the reporting date, there was an amount owing by African Consolidated Resources SRL to the individual
related members of the AP Group, totalling $23,233 (2016: $79,934).
VAST RESOURCES 55
Notes to Financial Statements
continued
25. Related party transactions continued
At the reporting date, there was an amount owing by African Consolidated Resources SRL to Ozone Homes SRL
(Ozone) of $52,448 (2016: $89,428) in respect of transactions undertaken by Ozone in 2014. Ozone is a company
controlled by Andrew Prelea, the senior Group executive in Romania. Since the reporting date US$39,000 of
the amount due to Ozone has been settled.
At the reporting date, there was an amount owing by Breckridge Investments (Private) Limited (Breckridge) to
Hopina Investments (Private) Limited (Hopina) of $1,150,000 (2016: $1,150,000) in respect of plant and
equipment disposed of to Breckridge at the commencement of operations at Pickstone Peerless Gold Mine.
Hopina is a company controlled by the non-controlling interest in Breckridge.
26. Contingent liabilities and capital commitments
Contingent liability – Zimbabwe Indigenisation
Indigenisation regulations extant stipulate that all Zimbabwean registered mining companies, with a net asset
value over a certain threshold transfer not less than 51% of their issued shares to indigenous persons within a
five-year period. These regulations are relevant to both Vast Resources Zimbabwe (Private) Limited and Canape
Investments (Private) Limited and their subsidiaries which are Group companies registered and operating in
Zimbabwe.
Following the profitability achieved from the operation of the Pickstone-Peerless Gold Mine, these regulations
now come into effect in respect of the Group’s subsidiary, Breckridge Investments (Private) Limited
(“Breckridge”). The company’s 50% partner, Grayfox Investments (Pvt) Ltd, has an approved indigenisation plan
in place and, on account of this, Breckridge has obtained a Certificate of Provisional Compliance under the
Indigenisation Regulations, which certificate is effective until 31 May 2018.
All other Zimbabwean companies in the Group were or are in a net liability position at the reporting date, due
to them being financed by loans from the holding or other group companies. As such the Directors believe that
there is currently no compulsion to affect any transfer of shareholding in these subsidiaries to any third party.
Counsel’s opinion supports this view.
A number of announcements have been made in the local media of possible amendments to the current
regulations which are intended to reassure foreign investors in the Mining Sector. These have included
suggestions that local ownership of any mining company listed on the Zimbabwe Stock Exchange would be
included in the calculation of any indigenous shareholding. Further, in April 2016 the President of Zimbabwe
made a public statement that foreign mining companies operating in Zimbabwe would now comply with the
Indigenisation law through retained earnings rather than through the transfer of a controlling 51% shareholding
to locals. Compliance with the Indigenisation and Economic Empowerment Policy would now be the retention
of value, in the form of wages, salaries, taxation, community ownership schemes and other activities such as
procurement and linkage programmes. However, at the date of reporting these changes have not been
incorporated into the relevant regulations and their final effect remains uncertain.
If the company’s Zimbabwean subsidiaries had to transfer equity interests to local indigenised parties this could
result in share based payment charges and/or loss of control of the subsidiaries. The full effect that this
legislation might have on the operations of the Group is yet to be quantified and is subject to some uncertainty.
It is the Group’s stated policy that it will comply with the Indigenisation Regulations once they are clarified and
codified.
Contingent liability – Tax Investigation in Zimbabwe
On 25 January 2017, the Zimbabwe Revenue Authority issued assessments for Value Added Tax, penalties and
interest against Canape Investments (Private) Limited (Canape) for a total of $2,998,363 for the years 2009 to
2015. Canape has entered a formal objection to these assessments. The management of Canape, advised by its
professional advisors, consider that little, if any, of the amounts assessed are due and that any amounts which
may become payable are fully provided for.
56 VAST RESOURCES
27. Litigation
Marange
In 2006 the Group registered several mining claims in Marange under shelf companies. At that time the Group
was not aware that the shelf companies had not actually been registered. In Zimbabwe the registration process
had started but the companies were only registered a short period after the claims were registered in their
names. After the registration of the claims 120,031.87 carats of diamonds were acquired from the claims. The
Zimbabwe Mining Commissioner subsequently cancelled the registration of the claims on the instructions of
the Minister of Mines. The Group instituted proceedings in the Zimbabwe High Court challenging the
cancellations of the registration of the claims. The Zimbabwe High Court handed down a judgement declaring
that the cancellations were invalid and that the Group legally held the claims. The High Court also ordered that
the diamonds, which had been seized from the Group’s offices in Harare, should be returned.
The Minister of Mines instructed the Attorney General to note an appeal to the Supreme Court. The appeal was
noted but the Attorney General renounced agency because he considered that there were no valid grounds of
appeal. The diamonds that were seized from the Group were not returned. They are being held in the vault of
the Reserve Bank of Zimbabwe.
The Minister of Mines subsequently wrote to the High Court judge asking him to rescind his judgement on the
basis that the Group had fraudulently withheld information in order to get a favourable judgement. Although
the Judge had no jurisdiction to deal with the matter because it was on appeal to the Supreme Court, he did
issue a judgement rescinding his earlier judgement. The Group has appealed against that judgement. Legal
opinion is to the effect that the Rescission Judgement is fatally flawed. The Minister withdrew his appeal to the
Supreme Court so if the Supreme Court upholds the appeal against the Rescission Judgement the claims will
revert to the Group.
In 2010, soon after the issue of the Rescission Judgement, the Attorney General laid criminal charges against
the Group the allegations being that registration of the claims in the names of the non- registered companies
was prejudicial to the Ministry of Mines; alternatively, the Group was illegally in possession of the diamonds
above. The Group applied to the High Court for the charges to be quashed. More than 2 years later, in May 2013,
the Judge handed down his judgement. He ruled that he could not quash the charges and that the Group should
have applied for a stay of proceedings until the appeal had been determined. The suggested application has
since been made to the Attorney General. Legal opinion is to the effect that the possibility of conviction on any
of the charges is very remote. However, the Attorney General has now withdrawn the charges because, instead
of the charges being laid against the parent company or any active group subsidiary, they were laid against
African Consolidated Resources (Private) Limited, a company registered in Zimbabwe, which is a shelf company
and not a group company. It could not have been involved because it had no staff.
28. Events after the reporting date
Acquisition of remaining share of Sinarom Mining Group SRL
On 22 March 2017 the Company announced that it had concluded an agreement to acquire the remaining 49.9%
of Sinarom Mining Group SRL (“Sinarom”) through which the Company owns its interest in the Manaila
Polymetallic Mine in Romania, thus increasing the Company’s ownership of the producing mine to 100%.
The consideration for the purchase of the shares and outstanding loan account owned by the former
shareholder was US$1,135,000, with US$400,000 payable by 31 March 2017 and the balance of US$735,000 on
30 April 2017. Transfer of the shares was to take place on the making of the final payment. These payments
were made in due course and the shares transferred on 19 July 2017. From this date Sinarom has operated as
a wholly owned subsidiary of the Company.
Strategic investment in the Group
On 24 July 2017 the Company announced that it had entered into a conditional heads of terms relating to a
proposed two stage investment of up to US$10 million in Vast (‘the Proposed Investment’) by a corporate
finance and investment firm with significant experience and investments in Romania (the ‘Investor’).
VAST RESOURCES 57
Notes to Financial Statements
continued
28. Events after the reporting date continued
The Proposed Investment was subject to the rights of Sub-Sahara Goldia Investments (‘Sub-Sahara’) pursuant
to its loan agreement with the Company which gives Sub-Sahara a right to provide equivalent finance to the
Proposed Investment if the terms and conditions are the same. Sub-Sahara has exercised that right but has
indicated it wishes to work with the Investor to deliver a mutually investment and corporate strategy.
On 13 September 2017 it was announced that Sub-Sahara had provided an additional $1.68 million on a 180 day
loan for payments in connection with the BPPM association licence.
Disposal of non-controlling interest in subsidiary
On 30 May 2017 the Company announced that the Reserve Bank of Zimbabwe had approved the assignment
of 49.99% of the Company’s interest in its loan from its principal Zimbabwean subsidiary, Canape Investments
(Private) Limited. As a result, in accordance with the announcement of the made by the Company on 30 January
2017, all conditions precedent relating to the agreement to dispose of a non-controlling portion of its
investment in the Pickstone-Peerless and Giant Gold mines had now been met and the disposal will therefore
be completed. The Group retains effective voting control over both the Pickstone-Peerless and Giant Gold asset
holding companies.
Exercise of warrants
Warrants were exercised, and shares issued, as follows:
Date
5 April 2017
1 June 2017
14 June 2017
26 July 2017
Warrants exercised
Shares issued
6,116
20,000,000
51,386
225,017
6,116
20,000,000
51,386
225,017
Appointment of non-executive director
On 30 June 2017 Brian Basham was appointed to the board as a non-executive director
Change in Company Secretary and Registered Office
On 8 May 2017 Roy Tucker retired from the position of Company Secretary and Ben Harber, of Shakespeare
Martineau LLP, was appointed in his place. In addition, the Company’s registered office was changed to
60 Gracechurch Street, London, EC3V 0HR.
29. Group subsidiaries
A full list of all subsidiary companies and their registered offices is given below:
Company
Country of
registration
Reg.
office
Group Interest
2016
2017
African Consolidated Resources SRL
African Consolidated Resources PTC Ltd *
Vast Resources Nominees Limited **
Breckridge Investments (Private) Limited
Cadex Investments (Private) Limited
Canape Investments (Private) Limited
Conneire Mining (Private) Limited
Dallaglio Investments (Private) Limited
Romania
BVI
UK
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Dashaloo Investments (Private) Limited
Zimbabwe
Exchequer Mining Services (Private) Limited Zimbabwe
Fisherman Mining Limited
Zambia
Heavystuff Investment Company
(Private) Limited
Kleton Investments (Private) Limited
Zimbabwe
Zimbabwe
58 VAST RESOURCES
1
3
4
5
5
6
6
5
6
6
7
6
5
nil
80% 80%
nil
100% 100%
50% 50%
100% 100%
100% 100%
100% 100%
50% 50%
100% 100%
100% 100%
49.6% 100%
Nature of business
Mining development
Nominee company
Nominee company
Mining Production
Claim holding
Mining investment
Claim holding
Holding Company for
Breckridge Investments
(Private) Limited
Claim holding
Claim holding
Mining exploration and
development
100% 100%
50% 50%
Claim holding
Claim holding
Company
Country of
registration
Reg.
office
Group Interest
2016
2017
Lafton Investments (Private) Limited
Lescaut Investments (Private) Limited
Lomite Investments (Private) Limited
Lotaven Investments (Private) Limited
Mayback Investments (Private) Limited
Millwall International Investments Limited
Moorestown Limited
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
BVI
BVI
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Romania
UK
Mystical Mining (Private) Limited
Naxten Investments (Private) Limited
Nivola Mining (Private) Limited
Olebile Investments (Private) Limited
Perkinson Investments (Private) Limited
Possession Investment Services
(Private) Limited
Rabame Investments (Private) Limited
Sackler Investments (Private) Limited
Schont Mining Services (Private) Limited
Sinarom Mining Group SRL
Vast Resources Romania Limited
Vast Resources Zimbabwe (Private) Limited Zimbabwe
Zimbabwe
Accufin Investments (Private) Limited
Zimbabwe
Aeromags (Private) Limited
Campstar Mining (Private) Limited
Zimbabwe
Zimbabwe
Chaperon Manufacturing (Private) Limited
Charmed Technical Mining (Private) Limited Zimbabwe
Chianty Mining Services (Private) Limited
Zimbabwe
Corampian Technical Mining (Private) Limited Zimbabwe
Deep Burg Mining Services (Private) Limited Zimbabwe
Deft Mining Services (Private) Limited
Zimbabwe
Elfman Investment Services (Private) Limited Zimbabwe
Febrim Investments (Private) Limited
Zimbabwe
Filkins Investment Services (Private) Limited Zimbabwe
Gerry Investment Company (Private) Limited Zimbabwe
Zimbabwe
Gigli Investment Services (Private) Limited
Zimbabwe
Hemihelp Investments (Private) Limited
Zimbabwe
Isiyala Mining (Private) Limited
Zimbabwe
Katanga Mining (Private) Limited
Zimbabwe
Kengen Trading (Private) Limited
Kielty Investments (Private) Limited
Zimbabwe
Lucciola Investment Services
(Private) Limited
Lyndock Investment Company
(Private) Limited
Maglev Investment Services
(Private) Limited
Malaghan Investments (Private) Limited
Methven Investment Company
(Private) Limited
Mimic Mining (Private) Limited
Monteiro Investments (Private) Limited
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
5
5
5
5
5
3
3
6
6
6
6
6
6
6
6
6
2
8
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
100% 100%
560% 50%
100% 100%
50% 50%
50% 50%
100% 100%
100% 100%
100% 100%
100% 100%
50% 50%
100% 100%
100% 100%
Nature of business
Claim holding
Claim holding
Claim holding
Claim holding
Claim holding
Holding company
Mining exploration and
development
Claim holding
Asset holding
Claim holding
Claim holding
Claim holding
Claim holding
Claim holding
Claim holding
Claim holding
100% 100%
50% 50%
100% 100%
100% 100%
50.1% 50.1% Mining production
Mining investment
100% 100%
Mining investment
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
Dormant
100% 100%
100% 100%
Dormant
100% 100%
Dormant
100% 100%
100% 100%
Dormant
Dormant
100% 100%
100% 100%
100% 100%
Dormant
Dormant
Dormant
VAST RESOURCES 59
Notes to Financial Statements
continued
29. Group subsidiaries continued
Company
Nedziwe Mining (Private) Limited
Nemies Investment Services
(Private) Limited
Notebridge Investments (Private) Limited
Pickstone-Peerless Mining (Private) Limited
Prudent Mining (Private) Limited
Rania Haulage (Private) Limited
Re-Energised Investments (Private) Limited
Regsite Mining Services (Private) Limited
Riberio Mining Services (Private) Limited
Swadini Miners (Private) Limited
Tamahine Investments (Private) Limited
The Salon Investments (Private) Limited
Vono Trading (Private) Limited
Warkworth Investment Services
(Private) Limited
Wynton Investment Company
(Private) Limited
Zimchew Investments (Private) Limited
Country of
registration
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
*
**
The company has effective control of this entity
Formerly ACR Nominees Ltd
Reg.
office
Group Interest
2016
2017
Nature of business
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
100% 100%
Dormant
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
100% 100%
Dormant
100% 100%
100% 100%
Dormant
Dormant
Notes -
1
2
3
4
5
6
7
8
Addresses of Registered offices:
Sat Iacobeni,Str.Minelor Nr.20, Jud. Suceava, Romania
Str.9 Mai, Nr.20, Baia Mare, Jud.Maramures, 430274 Romania
Nerine Chambers, PO Box 906, Road Town, Tortola, British Virgin Islands
Nettlestead Place, Nettlestead, Maidstone, Kent ME18 6HE, United Kingdom
121 Borrowdale Road, Gun Hill, Harare, Zimbabwe
6, John Plagis Avenue, Alexandra Park, Harare, Zimbabwe
Suite 2, Diplomatic Centre, Mass Media, Off Alick Nkhata Road, Lusaka, Zambia
60 Gracechurch Street, London, United Kingdom, EC3V
60 VAST RESOURCES
Company information
Directors
Secretary and registered office
Non-Executive Chairman
Chief Executive Officer
Finance Director
Non-Executive Director
Non-Executive Director
Brian Moritz
Roy Aubrey Pitchford
Roy Clifford Tucker
Brian Arthur Basham
Eric Kevin Diack
Ben Harber
60 Gracechurch Street,
London EC3V 0HR
Country of incorporation
United Kingdom
Legal form
Website
Auditors
Nominated & Financial Adviser
Joint Corporate Brokers
Bankers
Registrars
Public Limited Company
www.vastresourcesplc.com
Crowe Clark Whitehill LLP
St Bride’s House
10 Salisbury Square
London EC4Y 8EH
Beaumont Cornish Limited
2nd Floor, Bowman House
292 Wilson Street
London EC2M 2SJ
Brandon Hill Capital Limited
1 Tudor Street
London EC4Y 0AH
Peterhouse Corporate Finance Limited
Eldon Street
London EC2M 7LD
Standard Bank Isle of Man Limited
Standard Bank House
1 Circular Road
Douglas
Isle of Man 1M1 1SB
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Registered number
05414325
VAST RESOURCES 61
Notes
62 VAST RESOURCES
VAST RESOURCES 63
64 VAST RESOURCES
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