Last checked at 30 May 2018 07:00
30 May 2018
Bezant Resources Plc
("Bezant", the "Company" or, together with its subsidiaries, the "Group")
Final Results for the Year Ended 31 December 2017
Bezant (AIM: BZT), the copper-gold exploration and development company, announces its audited final results for the year ended 31 December 2017.
As announced on 26 April 2018, the Company sold its wholly owned subsidiary Ulloa Recursos Naturales SAS through which it held the Group's wholly owned alluvial platinum and gold licences (FKJ-083 and HCA-082), located in the Choco region of Colombia, and the associated processing plant, mobile test plant and other mining equipment located in the licence area (the "Choco Project"), to Auvert Mining Group Limited ("Auvert") (the "Disposal"). Accordingly, the Company's financial results report its Colombian activites as discontinued operations, with its UK, Argentina and Philippines based activities being reported as continuing operations.
Highlights:
Financial:
· £4.6m loss after tax - £1.0m loss from continuing operations and £3.6m from discontinued operations (2016 (unauditied): £10.0m).
· Impairment charge of £80k (2016 (unaudited): £8.4m) relating to the Company's Mankayan Copper-Gold Project, Philippines.
· Approximately £0.2m cash at bank at the period end (2016: £0.2m).
Operational:
As explained further in the Chairman's Statement below, the predominant operational focus during 2017 was on the recently disposed of Choco Project due to the uncertainty surrounding the Company's Mankayan Copper-Gold Project in the Philippines (the "Mankayan Project" or "Mankayan"). Such uncertainty related principally to the validity of the Mineral Production Sharing Agreement ("MPSA") (No. 057-96-CAR) in respect of Mankayan, held by Bezant's associate, Crescent Mining and Development Corporation ("CMDC"). As announced on 29 May 2018, CMDC has now been granted a two year extension of the exploration period under its MPSA to April 2020 subject to customary conditions for inclusive shareholder engagement and certain work programme commitments.
Alluvial platinum & gold, Choco District Colombia (the "Choco Project"):
Acheivements during the year included:
· initial production at the FKJ-83 licence area;
· the granting of a Registro Unico de Comercializadores de Minerales ("RUCOM") from the Colombian National Mining Agency (ANM - Agencia Nacional de Mineria), allowing the Company to sell precious metals; and
· the recovery and sale of the first kilogramme of gold-platinum metals.
Mankayan Project, Philippines:
The Mankayan Project was fully impaired in 2016 due to the then significant lingering uncertainty with respect to achieving any potential sale or joint venture ("JV") for the project in light of the prevailing political and tax environment in the Philippines.
As announced on 20 February 2017, formal notice was received from the Department of Environment and Natural Resources ("DENR") regarding the MPSA (No. 057-96-CAR), held by Bezant's associate CMDC, questioning the validity of CMDC's MPSA. In light of this uncertainty the Mankayan Project was operated on a "care & maintenance" basis during the year.
Corporate:
During the year the Company raised a total of approximately £2.8m (gross), comprising:
· £1,000,000 (gross) on 21 March 2017 and £585,000 (gross) on 5 July 2017 to fund initial production at the Choco Project and general working capital;
· £700,000 on 5 October 2017 to finance production into higher grade gravels and general working capital; and
· £550,000 on 5 December 2017 in order to provide the group with general working capital whilst it sought to procure the requisite funding to complete the full-scale ramp-up process at the Choco Project via an alternative route such as project/asset level financing or an appropriate farm-in partner.
Post Period End:
On 5 February 2018, the Company announced a conditional fundraising of, in aggregate, £600,000 (gross) which was completed following shareholder approval obtained at the Company's General Meeting held on 1 March 2018.
On 2 March 2018, the Company announced the appointment of Colin Bird as Executive Chairman and the intention to conduct a strategic review.
On 26 April 2018, the Company announced the sale for US$500,000 of its wholly owned subsidiary Ulloa Recursos Naturales SAS through which it held the Group's wholly owned alluvial platinum and gold licences (FKJ-083 and HCA-082), located in the Choco region of Colombia, and assets related to the Choco Project to Auvert Mining Group Limited.
On 10 May 2018, the Company announced the results of its strategic review, the highlights of which included:
· Major potential to generate further value from the existing data set held on the Mankayan Project
· Eureka project in Argentina has little existing 3D definition and represents a significant copper-gold target with sizeable potential and hosted gold content not yet fully understood
· Disposal of Choco Project in Colombia as, by comparison, was deemed to have less potential to contribute positively to the Group's performance and its disposal has removed exposure to all costs and liabilities associated with the project
On 29 May 2018, the Company announced a two-year extension to the exploration period of the MPSA (No. 057-96-CAR), held by its associate, CMDC, which governs the 534 hectare contract area comprising the Company's Mankayan Project, Benguet Province, Philippines. This has served to remove much of the legal uncertainty and provided the opportunity to add value through further work to enhance the existing resource base and seek to optimise the engineering of the mine plan so as to further improve the project's financials and the fundamentals of this important asset.
Laurence Read, CEO of Bezant, today commented:
"Bezant is now fully focussed on the progression of its copper-gold portfolio. Our Mankayan asset in the Philippines is deemed to be a world-class project and the remainder of 2018 shall see the Company seek to derive value from this significant asset whilst also continuing to assess the Eureka project in Argentina. I would like to thank shareholders and my colleagues on the Bezant board for their considerable support during the period under review and year to date."
Colin Bird, Executive Chairman of Bezant, today commented:
"Prior to joining the Company, I had views on the clear potential of the two copper related projects in its portfolio and this has been endorsed by my subsequent close scrutiny of the available technical data. Likewise, I had views on the Company's management being a team I could work with to seek to release such potential future value, and this too has been borne out by our close interaction since my appointment.
"The Board firmly believes that the Mankayan Project is well positioned to be potentially developed into one of the world's next significant copper mining projects, and we will now endeavour to add to the existing resource base and seek to optimise the engineering of the mine plan so as to further improve and demonstrate the project's undoubted attractiveness."
For further information, please contact:
Bezant Resources plc Laurence Read Chief Executive Officer
Colin Bird Executive Chairman
Strand Hanson Limited (Nomad) James Harris / Matthew Chandler / James Dance
Novum Securities Limited (Broker) Jon Belliss
or visit http://www.bezantresources.com
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Tel: +44 (0)20 3289 9923
Tel: +44 (0)20 7409 3494
Tel: +44 (0)20 7399 9400
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The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Chairman's Statement
I am pleased to present the Group's final results for the 12 months ended 31 December 2017. This is my first statement to Bezant's shareholders since my appointment as Chairman and I would like to take this opportunity to not only report on the key events of 2017 for the Company, but also to provide an overview on the Board's ongoing strategy developed during the early part of 2018.
As the incoming Chairman, appointed post the reporting period end in March 2018, I joined the Company's management team and have the benefit of hindsight. At the year end, the Company's short-term cash flow constraints were dwarfed by the sheer magnitude and potential of its Mankayan copper-gold project in the Philippines (the "Mankayan Project") and its lesser explored Eureka project in Argentina. On joining the Board, I formed the view that action needed to be taken to address the potential short-term cash flow and funding risks that would have remained if the Company were to have continued to focus on developing the Choco alluvial gold-platinum project in Colombia (the "Choco Alluvial Project") which was disposed of in late April 2018. A primary factor in our assessment was that any Company transformation would best be achieved through the progression and development of the Company's copper-gold assets rather than pursuing short-term income from our Colombian alluvial project to cover the Company's overheads. The Board collectively agreed that the fortunes and prospects for quality copper-gold projects in transparent regimes were very good and that the Mankayan Project was amongst the global forerunners in this arena.
Prior to joining the Company, I had views on the clear potential of the two copper related projects in its portfolio and this has been endorsed by my subsequent close scrutiny of the available technical data. Likewise, I had views on the Company's management being a team I could work with to seek to release such potential future value, and this too has been borne out by our close interaction since my appointment.
Once the strategic decision had been made to exit from the Choco Alluvial Project, the executive team implemented the disposal in a very professional and commercial manner securing and completing a transaction for proceeds of US$500,000 in a very short time period. In my experience, frequently when disposal decisions are taken, the process can become protracted and the time and overhead cost involved can ultimately be greater than the disposal value achieved; pleasingly this was not the case with the disposal of the Choco Alluvial Project, details of which were announced on 26 April 2018, and I applaud the team's tenacity.
The Company spent much of 2017 assessing the metrics for its Choco Alluvial Project and progressing it into initial production. The development of the Choco Alluvial Project was accelerated following the loss of traction on the Mankayan Project in the Philippines after the receipt of formal notice from the Department of Environment and Natural Resources ("DENR") on 20 February 2017 regarding the Mineral Production Sharing Agreement ("MPSA") (No. 057-96-CAR), held by Bezant's associate, Crescent Mining and Development Corporation ("CMDC"), questioning the validity of CMDC's MPSA. As announced on 21 February 2017, the Company understands that the notification it received from the DENR formed part of the potential cancellation of a total of approximately 75 MPSAs. Since then, there has been a change in leadership of the DENR and I am pleased to be able to confirm that CMDC has now received confirmation of a two year renewal of the exploration period set out under its MPSA.
In light of the above uncertainty surrounding the Mankayan Project, it made sense, at that time, for Bezant to seek to create low capital-intensive mining operations that could be flexibly deployed across the Choco Alluvial Project's licence areas, representing a well-established region for historic gold and platinum production, and Bezant took all the necessary steps to move towards achieving a sustained commercial production scenario.
A £1,000,000 (gross) fundraising, announced on 21 March 2017, and a £585,000 (gross) fundraising secured on 5 July 2017 funded initial production at the FKJ-083 licence area in the Choco region of Western Colombia and, as announced on 31 July 2017, the Registro Unico de Comercializadores de Minerales ("RUCOM") was granted from the Colombian National Mining Agency (ANM - Agencia Nacional de Mineria), allowing the Company to sell precious metals.
The first kilogramme of gold-platinum metals was then recovered and sold, as announced on 19 September 2017, and a further £700,000 (gross) in equity was raised on 5 October 2017 in order to finance production into higher grade gravels. However, regrettably by December 2017, when the next development fundraising was scheduled to occur, the Company's prevailing share price had dropped significantly such that it was the then Board's view that the level of funds needed to achieve and sustain proprietary mining on a commercial scale would have led to excessive dilution for the Company's existing shareholders. Accordingly, a more limited fundraise of approximately £550,000 (gross) was instead undertaken in December 2017 in order to provide the group with general working capital whilst it sought to procure the requisite funding to complete the full-scale ramp-up process via an alternative route such as project/asset level financing or an appropriate farm-in partner.
The rapid development of the Choco Alluvial Project during 2017 has served to demonstrate that Bezant has the benefit of an accomplished and experienced management team who were prepared and willing to make difficult decisions and take the necessary short-term action to protect the Company's long-term future. The Company's achievements at the Choco Alluvial Project assisted with the recent disposal process, and I am sure that AuVert Mining Group Limited, which acquired the project, will have the opportunity to achieve future economic returns as an alluvial focussed operator in the more suitable private domain.
Global stock markets generally appear to be strengthening but with an euphoria not necessarily consistent with reality. It is my personal expectation that inflationary pressure is now building and that interest rates will need to rise as a consequence, which I believe could then lead to a market correction with markets becoming somewhat depressed. The aforementioned climate is always good for commodities and, apart from economic conditions, the fundamentals for base metals are very encouraging, particularly for copper.
The forecast global demand for copper in 2030 is frequently stated to be twice that of today. If one considers the typical gestation period for a large new copper mine of approximately 8 years from exploration activities commencing, then the forecast demand in 2030 is key to the sanctioning of new mining operations. History indicates that we are currently at that stage of the commodity cycle where large mining company executives have received the benefit of excessive cost cutting, in the form of increased profits, and now have their shareholders enquiring as to whether this is sustainable. Historically, this has led large mining companies to seek to acquire new projects which have a high geological confidence, but which have only been modestly evaluated from a financial and economic perspective. Two decades ago, the major mining companies generally abandoned their own exploration efforts, preferring instead to buy into the success derived from more junior company's activities risk funded by the capital markets. The Board firmly believes that the Mankayan Project is well positioned to be potentially developed into one of the world's next significant copper mining projects, and we will now aggressively work to add to the existing resource base and seek to optimise the engineering of the mine plan so as to further improve the project's financials and the fundamentals of this important asset.
Post the year end, on 5 February 2018, the Company announced a conditional fundraising of, in aggregate, £600,000 (gross) which was completed following shareholder approval obtained at the Company's General Meeting held on 1 March 2018. Accordingly, the Company is now well placed to pursue its new strategic focus as outlined in its announcement of 10 May 2018 and seek to generate long term shareholder value.
Mr Colin Bird
Executive Chairman
29 May 2018
Consolidated Statement of Profit and Loss
For the year ended 31 December 2017
Notes | Audited 12 months ended 31 December 2017 £'000 | Unaudited 12 months ended 31 December 2016 £'000 | Audited Six months ended 31 December 2016 £'000 | ||||
CONTINUING OPERATIONS | |||||||
Group revenue | - | - | - | ||||
Cost of sales | - | - | - | ||||
Gross profit/(loss) | - | - | - | ||||
Operating expenses | (968) | (941) | (581) | ||||
Group operating loss | (968) | (941) | (581) | ||||
Other income | 3 | 2 | 2 | ||||
Impairment of assets | 2 | (80) | (8,433) | - | |||
Share of Associates' loss | - | (62) | (155) | ||||
Loss before taxation | (1,045) | (9,434) | (734) | ||||
Taxation | - | - | - | ||||
Loss for the period from continuing operations | (1,045) | (9,434) | (734) | ||||
DISCONTINUED OPERATIONS | |||||||
Loss for the period from discontinued operations | 6 | (3,587) | (611) | (446) | |||
Loss for the period | (4,632) | (10,045) | (1,180) | ||||
Attributable to: Owners of the Company | (4,633) | (10,021) | (1,172) | ||||
- Continuing operations | (1,045) | (9,434) | (734) | ||||
- Discontinued operations | (3,588) | (587) | (438) | ||||
Non-controlling interest - discontinued operations | 1 | (24) | (8) | ||||
| (4,632) | (10,045) | (1,180) | ||||
Loss per share (pence) | |||||||
Basic and diluted from continuing operations | 3 | (0.29) | (6.15) | (0.42) | |||
Basic and diluted from discontinued operations | 3 | (1.00) | (0.38) | (0.25) | |||
Basic and diluted from all operations | 3 | (1.29) | (6.53) | (0.67) | |||
Consolidated Statement of Other Comprehensive Income
For the year ended 31 December 2017
Audited 12 months ended 31 December 2017 £'000 | Unaudited 12 months ended 31 December 2016 £'000 | Audited Six months ended 31 December 2016 £'000 | |||||
Other comprehensive income: | |||||||
Loss for the year | (4,632) | (10,045) | (1,180) | ||||
Items that may be reclassified to profit or loss: | |||||||
Foreign currency reserve movement | 61 | 273 | (66) | ||||
Total comprehensive loss for the period | (4,571) | (9,772) | (1,246) | ||||
Attributable to: Owners of the Company | (4,575) | (9,739) | (1,235) | ||||
- Continuing operations | (1,068) | (9,164) | (765) | ||||
- Discontinued operations | (3,507) | (575) | (470) | ||||
Non-controlling interest - discontinued operations | 4 | (33) | (11) | ||||
| (4,571) | (9,772) | (1,246) | ||||
Consolidated Statement of Changes in Equity
For the year ended 31 December 2017
Share Capital £'000 | Share Premium £'000 | Other Reserves £'000 | Retained Losses £'000 | Non-Controlling interest £'000 | Total Equity £'000 | |
Audited - 12 months ended 31 December 2017 | ||||||
Balance at 1 January 2017 | 410 | 33,227 | 991 | (27,756) | (54) | 6,818 |
Current year loss | - | - | - | (4,633) | 1 | (4,632) |
Foreign currency reserve | - | - | 58 | - | 3 | 61 |
Total comprehensive loss for the year | - | - | 58 | (4,633) | 4 | (4,571) |
Proceeds from shares issued | 765 | 1,985 | - | - | - | 2,750 |
Issue of ordinary shares related to business combination | 50 | 221 | - | - | - | 271 |
Warrants issued | - | - | 18 | - | - | 18 |
Lapsed share options | - | - | (265) | 265 | - | - |
Balance at 31 December 2017 | 1,225 | 35,433 | 802 | (32,124) | (50) | 5,286 |
Unaudited - 12 months ended 31 December 2016 |
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Balance at 1 January 2016 | 199 | 31,421 | 709 | (17,735) | - | 14,594 | |||||||
Current year loss | - | - | - | (10,021) | (24) | (10,045) | |||||||
Foreign currency reserve | - | - | 282 | - | (9) | 273 | |||||||
Total comprehensive loss for the year | - | - | 282 | (10,021) | (33) | (9,772) | |||||||
Proceeds from shares issued | 122 | 1,031 | - | - | - | 1,153 | |||||||
Issue of ordinary shares related to business combination | 89 | 775 | - | - | - | 864 | |||||||
Subsidiary acquired | - | - | - | - | (21) | (21) | |||||||
Balance at 31 December 2016 | 410 | 33,227 | 991 | (27,756) | (54) | 6,818 | |||||||
Consolidated Statement of Changes in Equity (continued)
For the year ended 31 December 2017
Share Capital £'000 | Share Premium £'000 | Other Reserves £'000 | Retained Losses £'000 | Non-Controlling interest £'000 | Total Equity £'000 | |
Audited - six months ended 31 December 2016 | ||||||
Balance at 1 July 2016 | 274 | 32,048 | 1,054 | (26,584) | (43) | 6,749 |
Current period loss | - | - | - | (1,172) | (8) | (1,180) |
Foreign currency reserve | - | - | (63) | - | (3) | (66) |
Total comprehensive loss for the period | - | - | (63) | (1,172) | (11) | (1,246) |
Proceeds from shares issued | 122 | 1,031 | - | - | - | 1,153 |
Issue of ordinary shares related to business combination | 14 | 148 | - | - | - | 162 |
Balance at 31 December 2016 | 410 | 33,227 | 991 | (27,756) | (54) | 6,818 |
Consolidated Balance Sheet
As at 31 December 2017
Audited | Audited | |||
2017 | 2016 | |||
Notes | £'000 | £'000 | ||
ASSETS
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Non-current assets | ||||
Plant and equipment | 4 | 10 | 20 | |
Intangible assets | 5 | - | 1,834 | |
Exploration and evaluation assets | 4,786 | 4,790 | ||
Total non-current assets | 4,796 | 6,644 | ||
Current assets | ||||
Trade and other receivables | 99 | 73 | ||
Cash and cash equivalents | 231 | 229 | ||
330 | 302 | |||
Non-current assets classified as held for sale | 6 | 467 | - | |
Total current assets | 797 | 302 | ||
TOTAL ASSETS | 5,593 | 6,946 | ||
LIABILITIES | ||||
Current liabilities | ||||
Trade and other payables | 212 | 128 | ||
Liabilities directly associated with non-current assets classified as held for sale | 6 | 95 | - | |
Total current liabilities | 307 | 128 | ||
NET ASSETS | 5,286 | 6,818 | ||
EQUITY | ||||
Share capital | 7 | 1,225 | 410 | |
Share premium | 7 | 35,433 | 33,227 | |
Share-based payment reserve | 18 | 265 | ||
Foreign exchange reserve | 784 | 726 | ||
Retained losses | (32,124) | (27,756) | ||
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT | 5,336 | 6,872 | ||
NON-CONTROLLING INTEREST | (50) | (54) | ||
TOTAL EQUITY | 5,286 | 6,818 |
Consolidated Statement of Cash Flows
For the year ended 31 December 2017
Audited | Unaudited | Audited | ||
12 months ended 31 December 2017 | 12 months ended 31 December 2016 | Six months ended 31 December 2016 | ||
Notes | £'000 | £'000 | £'000 | |
Net cash outflow from operating activities | 8 | (2,068) | (1,475) | (950) |
Cash flows from investing activities | ||||
Other income | 53 | 39 | 24 | |
Acquisition of plant and equipment | (13) | (3) | (3) | |
Deferred exploration expenditure | - | (2) | - | |
Option payments | (233) | (58) | (91) | |
Acquisition of subsidiary, net of cash acquired | (155) | (669) | - | |
Loans to associates and subsidiaries | (102) | (360) | (155) | |
(450) | (1,053) | (225) | ||
Cash flows from financing activities | ||||
Proceeds from issuance of ordinary shares | 2,593 | 1,118 | 1,118 | |
Increase/(decrease) in cash | 75 | (1,410) | (57) | |
Cash and cash equivalents at beginning of year | 229 | 1,550 | 261 | |
Foreign exchange movement | (53) | 89 | 25 | |
Cash and cash equivalents at end of year | 251 | 229 | 229 | |
Cash and cash equivalents - continuing operations | 231 | 217 | 217 | |
Cash and cash equivalents included in assets classified as held for sale | 20 | 12 | 12 | |
Notes to the financial information
For the year ended 31 December 2017
1. | Basis of Preparation The audited financial information set out above, which incorporates the financial information of the Company and its subsidiary undertakings (the "Group"), has been prepared using the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") including IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the European Union ("EU") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The audited financial information contained in this announcement does not constitute the Company's full financial statements for the year ended 31 December 2017 or six months ended 31 December 2016, but is derived from those financial statements, approved by the board of directors. The auditors' report on the 2017 financial statements was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006 but did contain an 'emphasis of matter' paragraph relating to going concern. The full audited financial statements for the year ended 31 December 2017 will be delivered to the Registrar of Companies and filed at Companies House following the Company's forthcoming annual general meeting.
Going concern basis of accounting The Group made a loss from all operations for the year ended 31 December 2017 after tax of £4.6 million (2016: £10.0 million), had negative cash flows from operations and is currently not generating revenues. Cash and cash equivalents were £231,000 as at 31 December 2017. An operating loss is expected in the 12 months subsequent to the date of the accounts and as a result the Company will probably need to raise funding to provide additional working capital to finance its ongoing activities. Management has successfully raised money in the past, but there is no guarantee that adequate funds will be available when needed in the future.
There is a material uncertainty related to the conditions above that may cast significant doubt on the Group's ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.
Based on the Board's assessment that the Company will be able to raise additional funds, if required, to meet its working capital and capital expenditure requirements, the Board have concluded that they have a reasonable expectation that the Group can continue in operational existence for the foreseeable future. For these reasons the Group continues to adopt the going concern basis in preparing the annual report and financial statements. |
2. | Impairment | Audited | Unaudited | Audited |
12 months ended 31 December 2017 | 12 months ended 31 December 2016 | Six months ended 31 December 2016 | ||
£'000 | £'000 | £'000 | ||
Impairment loss on loan to associate | 80 | 3,465 | 155 | |
Impairment loss on investment in associate | - | 4,968 | - | |
| 80 | 8,433 | 155 | |
The Mankayan Project owned by Crescent Mining and Development Corporation is part of the continuing operations and was fully impaired in 2016 due to then significant lingering uncertainty concerning the political and tax environment in the Philippines. Although the political and tax environment has subsequently improved the Company has not yet written back any of the provision made in 2016 and the provision made in 2017 in relation to additional funds lent in 2017. | ||||
3. | Loss per share |
The basic and diluted loss per share have been calculated using the loss attributable to equity holders of the Company for the 12 months ended 31 December 2017 of £4,633,000 (12 months ended 2016: £10,021,000; six months ended 31 December 2016 (unaudited): £1,172,000). The basic loss per share was calculated using a weighted average number of shares in issue of 359,330,994 (12 months ended 2016: 153,342,797; six months ended 31 December 2016: 175,167,279).
The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 406,576,983 (12 months ended 31 December 2016: 155,740,597; six months ended 31 December 2016: 177,565,079).
The diluted loss per share and the basic loss per share are recorded as the same amount, as conversion of share options decreases the basic loss per share, thus being anti-dilutive. |
4. | Plant and equipment | ||
Audited | Audited | ||
2017 | 2016 | ||
£'000 | £'000 | ||
Plant and equipment | |||
Cost | |||
At beginning of year | 95 | 137 | |
Acquisitions through business combinations - Plant | 545 | - | |
Transfer - Mine development from options (note 5) | 1,668 | - | |
Additions | 13 | 3 | |
Classified as held for sale (note 6) | (2,252) | - | |
Exchange differences | 15 | (45) | |
At end of year | 84 | 95 | |
Depreciation | |||
At beginning of year | 75 | 78 | |
Charge for the year | 14 | 6 | |
Classified as held for sale | (9) | - | |
Exchange differences | (6) | (9) | |
At end of year | 74 | 75 | |
Net book value at end of year | 10 | 20 |
5. | Intangible assets | ||
Audited | Audited | ||
2017 | 2016 | ||
£'000 | £'000 | ||
5.1 | Option to acquire exploration licence | ||
Balance at beginning of year | 1,672 | - | |
Acquisitions through business combinations - Colombian projects' rights over platinum and gold licence areas | - | 1,620 | |
Additions | 288 | 91 | |
Contribution to options costs | (275) | - | |
Transferred to Mine Development (note 4) | (1,668)1 | - | |
Exchange differences | (17) | (39) | |
Carried forward at end of year | - | 1,672 | |
1 The option costs were transferred to mine development upon the exercise of the option to acquire mining titles FKJ-083 and HCA-082 in the Choco Region of Colombia.
Audited | Audited | ||
2017 | 2016 | ||
£'000 | £'000 | ||
5.2 | Intellectual property rights over proprietary geological data | ||
Balance at beginning of year | 162 | - | |
Acquisitions through business combinations - Rights over geological information and other data | - | 162 | |
Classified as held for sale (note 6) | (162) | - | |
Carried forward at end of year | - | 162 | |
Total intangibles | - | 1,834 |
6. | Non-current assets and disposal groups classified as held for sale | ||
Following a comprehensive review of the strategic options available for its operations in Colombia, Bezant entered into a legally binding agreement on 25 April 2018 ("Sale Agreement") with Auvert Mining Group Limited ("Auvert") for the sale of its wholly owned subsidiary Ulloa Recursos Naturales S.A.S. ("Ulloa"), which holds the Group's wholly owned alluvial platinum and gold licences, located in the Choco region of Colombia, and the associated processing plant, mobile test plant and other mining equipment located in the licence area (the "Choco Project").
As a result of the transaction, this group of assets ("disposal group") are disclosed as a disposal group held for sale. The assets and liabilities to be disposed of are set out below and are stated at the lower of carrying amount and fair value less cost to sell which resulted in an impairment charge of £2.1m based on the sale proceeds. The total consideration payable by Auvert to the Company in respect of the Disposal is, in aggregate, US$500,000 payable in cash, of which US$450,000 had already been paid and the balance of US$50,000 was held in escrow with the Company's solicitors to be released subject to delivery of satisfactory receipt by Auvert of certain post-completion deliverables. | |||
2017 | |||
£'000 | |||
Assets of disposal groups classified as held for sale | |||
Plant and equipment | 158 | ||
Intangible assets | 162 | ||
Trade and other receivables | 127 | ||
Cash and cash equivalents | 20 | ||
Total assets | 467 | ||
Liabilities of disposal groups classified as held for sale | |||
Trade and other payables | 95 | ||
Total liabilities | 95 |
Analysis of the results of discontinued operations and the results recognised on the measurement of assets of disposal groups is as follows: | |||
2017 | 2016 | ||
Comparative information has been restated to ensure comparability. | £'000 | £'000 | |
Revenue | 88 | - | |
Cost of sales | (831) | - | |
Operating expenses | (769) | (611) | |
Other income | 19 | - | |
Loss before tax of discontinued operations | (1,493) | (611) | |
Tax (charge)/credit | - | - | |
Loss after tax of discontinued operations | (1,493) | (611) | |
Impairment loss on disposal group | (2,094) | - | |
Loss for the year from discontinued operations | (3,587) | (611) | |
Cash flow information | |||
Operating cash flows | (1,314) | (10) | |
Investing cash flows | (465) | (147) | |
Financing cash flows | 1,771 | 120 | |
Total cash flows | (8) | (37) | |
7. | Share capital |
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Audited | Audited |
| ||||||
| 31 December 2017 | 31 December 2016 |
| |||||
Number | £'000 | £'000 |
| |||||
Authorised |
| |||||||
5,000,000,000 ordinary shares of 0.2p each | 10,000 | 10,000 |
| |||||
10,000 |
10,000 |
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Allotted, called up and fully paid |
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As at beginning of the year | 410 | 199 |
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Share subscription | 765 | 122 |
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Acquisition of subsidiary | 50 | 89 |
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As at end of year | 1,225 | 410 |
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Number of shares 31 December 2017 | Number of shares 31 December 2016 | |||||||
Ordinary share capital is summarised below: |
| |||||||
As at beginning of the year | 204,953,507 | 99,527,025 |
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Share subscription | 369,959,889 | 59,450,000 |
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Shares issued to directors and management* | 12,359,642 1 | 1,468,600 2 |
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Acquisition of subsidiary | 25,000,000 | 44,507,882 |
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As at end of year | 612,273,038 | 204,953,507 |
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1 In satisfaction of certain accrued directors' fees, salaries and certain fees outstanding to senior management and consultants which had been unpaid for the period from 1 October 2016 to 31 July 2017, Bezant issued 12,359,642 new ordinary shares of 0.2 pence each in the Company on 14 August 2017. The conversion was made at the volume weighted average price ("VWAP") of the Company's shares over the period the fees were outstanding. The VWAP over the period of approximately 1.2976 pence per share represented a premium of approximately 1.7 per cent. to the closing mid-market share price of 1.32 pence on 4 August 2017. In total, unpaid fees of, in aggregate, £160,379 were converted into new ordinary shares. | |
2 In satisfaction of certain accrued directors' fees and salaries which had been unpaid since 1 June 2016, Bezant issued 1,468,600 new ordinary shares of 0.2 pence each in the Company on 27 September 2016. The conversion was made at the VWAP of the Company's shares over the year the fees were outstanding. The VWAP over the year of approximately 2.5 pence per share represented a premium of approximately 5 per cent. to the closing mid-market share price of 2.38 pence on 27 September 2016. In total, unpaid fees of, in aggregate, £36,715 were converted into new ordinary shares. |
Audited | Audited | ||
2017 | 2016 | ||
£'000 | £'000 | ||
The share premium was as follows: | |||
As at beginning of year | 33,227 | 31,421 | |
Share subscription | 2,229 | 1,102 | |
Share issue costs | (244) | (71) | |
Acquisition of subsidiary | 221 | 775 | |
As at end of year | 35,433 | 33,227 |
Each fully paid ordinary share carries the right to one vote at a meeting of the Company. Holders of shares also have the right to receive dividends and to participate in the proceeds from sale of all surplus assets in proportion to the total shares issued in the event of the Company winding up. |
8. | Reconciliation of operating loss to net cash outflow from operating activities
| |||
Audited | Unaudited | Audited | ||
12 months ended 31 December 2017 | 12 months ended 31 December 2016 | Six months ended 31 December 2016 | ||
£'000 | £'000 | £'000 | ||
Operating loss from all operations | (2,480) | (1,552) | (1,027) | |
Depreciation and amortisation | 14 | 6 | 3 | |
VAT refunds received | (33) | (39) | (24) | |
Share warrant expense | 18 | - | - | |
Foreign exchange gain | 167 | (76) | (14) | |
Decrease in receivables | (145) | 122 | 45 | |
Increase in payables | 391 | 64 | 67 | |
Net cash outflow from operating activities | (2,068) | (1,475) | (950) | |
9. | Availability of Annual Report and Financial Statements |
Copies of the Company's full Annual Report and Financial Statements were posted yesterday to those shareholders who have elected to receive hardcopy shareholder communications from the Company and are also available to download from the Company's website at www.bezantresources.com.
The Annual Report and Financial Statements will also be made available for inspection at the Company's registered office during normal business hours on any weekday. Bezant Resources Plc is registered in England and Wales with registered number 02918391. The registered office is at Floor 6, Quadrant House, 4 Thomas More Square, London E1W 1YW. |
10. | Annual General Meeting |
The Company's next Annual General Meeting ("AGM") will be held at 10.00 a.m. on Friday, 22 June 2018 and a formal Notice of AGM and proxy form was also posted yesterday to those shareholders who have elected to receive hard copy shareholder communications from the Company and can also be downloaded from the Company's website at www.bezantresources.com.
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