Last checked at 1 May 2019 07:30
1 May 2019
Bezant Resources Plc
("Bezant", the "Company" or, together with its subsidiaries, the "Group")
Final Results for the Year Ended 31 December 2018
and
Notice of Annual General Meeting
Bezant (AIM: BZT), the copper-gold exploration and development company, announces its audited final results for the year ended 31 December 2018.
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:
· £1.2m loss after tax - £0.8m loss from continuing operations and £0.4m from discontinued operations (2017: £4.6m - £1.0m loss from continuing operations and £3.6m from discontinued operations).
· Impairment charge of £199,000 (2017: £80,000) relating to the Company's Mankayan Copper-Gold Project, Philippines.
· Approximately £0.5m cash at bank at the period end (2017: £0.2m).
Operational:
As further explained in the Chairman's statement below, the Board's main focus during the year was:
a) enhancing our financial and technical understanding of the Mankayan copper-gold project in the Philippines, and making our copper-gold asset portfolio more attractive to and promoting it to potential partners;
b) exiting from our Colombian alluvial gold-platinum operations during April 2018 without any local repercussions or ongoing liability; and
c) progressing the regulatory process in Argentina towards finalisation of the requisite environmental impact assessment ("EIA") approvals for the Eureka project, which we anticipate being completed in the second quarter of 2019.
Mankayan Project, Philippines:
On 29 May 2018, the Company announced a two-year extension to the exploration period of the Mineral Production Sharing Agreement (No. 057-96-CAR) ("MPSA"), held by its associate, Crescent Mining and Development Corporation, 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 to the project through further work to enhance the existing resource base and optimise the engineering of the mine plan so as to further improve the economics and fundamentals of this important asset.
Significant internal analysis and interpretation was undertaken on the Mankayan Project by the Board, in conjunction with Addison Mining Services Limited ("AMS"), and an updated block cave model for the project was produced on 1 October 2018. A new independent mining study from Mining Plus Pty Ltd ("Mining Plus") was commissioned in late November 2018, the results of which, as set out in more detail below, were announced post period end on 12 February 2019.
Alluvial platinum & gold, Choco District Colombia (the "Choco Project"):
On 26 April 2018, the Company announced the sale of its wholly owned subsidiary Ulloa Recursos Naturales SAS which held the Group's wholly owned alluvial platinum and gold licences (FKJ-083 and HCA-082) located in the Choco region of Colombia (and associated assets) to Auvert Mining Group Limited for US$500,000. The sale was concluded without any local repercussions or ongoing liability.
Eureka Project, Argentina
In Argentina, we have been progressing the regulatory process towards finalisation of the requisite environmental impact assessment ("EIA") approvals for the Eureka copper-gold project, which we anticipate being completed in the second quarter of 2019. The EIA approvals will provide for a two-year exploration period to enable, amongst other things, work on topography, geophysics, soil geochemistry, geological mapping and up to 2,000 metres of diamond drilling. Once the EIA approvals are received, this milestone will add further value to the project and make it a more attractive opportunity to both the Company and prospective joint venture partners.
Corporate:
During the year the Company raised a total of approximately £1.4m (gross) via the issue of equity, comprising:
· £600,000 (gross) on 5 February 2018, to fund the ongoing search for partnerships or financial backing for the Choco Project; ii) re-assessing geological data and potential corporate activity in relation to the Mankayan Project; and iii) general working capital purposes; and
· £800,000 (gross) on 31 May 2018, to i) progress the Mankayan Project, including commissioning a further update / optimisation of the historical third-party scoping study and onsite community development work; ii) advancing the Eureka project through a small-scale geophysics programme and iii) general working capital purposes.
On 15 January 2018, Laurence Read was appointed as Chief Executive Officer and, on 1 March 2018, Colin Bird was appointed an Executive Chairman. My Bird was a significant investor in the fundraising completed on 5 February 2019.
On 22 March 2018, the Company announced a strategic review, a waiver of £37,558 of directors' fees and the conversion of £139,250 due to certain current and former directors and contractors to new ordinary shares in the Company at 0.45 pence per share.
On 10 May 2018, the Board announced the result of its strategic review, setting out a clear focus on copper-gold and the Company's copper-gold assets, and identified that we would also be evaluating other projects.
Post Period End:
On 12 February 2019, the Company announced the results of Mining Plus' new mining study on the Mankayan project which involved a wide ranging examination of the various alternatives for bringing the project into potential future production with the objective of determining key project parameters. The study demonstrated that it is possible to reduce the capital cost involved to approximately US$630 million whilst still maintaining an internal rate of return ("IRR") of 21%. The medium production rate scenario with lower start-up costs has an estimated capital expenditure requirement of US$896m and an IRR of 27%. The pleasing result from such workstreams was that the planned potential future mining operation appears robust over a number of alternative development scenarios, which the Board believes should be attractive for investment from a mid-tier or major copper producer.
On 23 April 2019, the Company announced an important step into copper/gold exploration in Zambia with the signing of an option agreement to potentially acquire a 50% interest in the Buffalo exploration project located in north central Zambia (the "Buffalo Project"). The Buffalo Project has good copper/gold showings and local artisanal miners have discovered what the Board believes to be significant mineralised outcrops. The occurrences are known as IOCG (iron oxide copper-gold) and academia has expressed similarities between such Zambian style of mineralisation and the Olympic Dam mineralisation in Australia. The Central Zambian IOCG belt concept has not yet been fully assessed as this style of mineralisation is not in the well-established main trend Zambian Copper Belt system (which has led to numerous mines with lives in excess of 70 years regularly being replaced with new mines on their depletion or economics deteriorating through depth or other practical, technical considerations). We are very excited about this option, as the project has the potential for early development and large system discovery. The Company's upfront expenditure in assessing the licence area and determining whether to exercise its option is capped at US$200,000, with such funds to be spent on the ground in assessing the project rather than being paid to the project's sponsors.
Notice of Annual General Meeting
The Company's next Annual General Meeting ("AGM") will be held at 10.00 a.m. on Friday, 24 May 2019 and a formal Notice of AGM and proxy form are being posted today 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.
Included as Special Business at the AGM is a resolution to re-designate and sub-divide the share capital of the Company (the "Share Reorganisation"). The Share Reorganisation will not affect the number of shares that each shareholder owns, nor will it increase the number of shares that are in issue. Further information on the Share Reorganisation is set out in Note 12 below and a detailed explanation of the Share Reorganisation and the other resolutions being proposed at the AGM are included in the Directors' Report in the Company's full 2019 Annual Report available of the Company's website.
The reason for the Share Reorganisation, is that the Companies Act prohibits the Company from issuing ordinary shares at a price below their nominal value. As the Company's prevailing market share price is less than the current nominal value of the Company's existing ordinary shares of £0.002 each, it is necessary for the Company to undertake a share capital reorganisation to enable it to issue new ordinary shares at a price per share below £0.002 in the event that the Directors seek to raise additional equity finance at such a price to provide, inter alia, additional working capital for the Group.
Laurence Read, CEO of Bezant, today commented:
"Bezant has completed important work on the Mankayan project over the reporting period and during the year to date, resulting in a new, optimised economic study, by an internationally recognised consulting group. This study demonstrates the potential for a major block caving development or an alternate 'stepping stone' route to production, with reduced capex, utilising sub level caving. The taxation situation to normalise the mining regime in the Philippines is still ongoing and we continue to monitor the situation as we look at development pathways going forward. In Argentina, we are actively pursuing JV opportunities with groups active in South America which have a particular focus on gold, which Bezant believes represents the most likely way for the Company to obtain value from the Eureka project. The recently agreed Buffalo Project option provides an exciting addition to the Bezant portfolio and fits our objective to secure projects with pre-existing data that can be meaningfully progressed in value by a company such as Bezant. "
Colin Bird, Executive Chairman of Bezant, today commented:
"Whilst the year has been one of consolidation, there has been substantial effort invested in improving our understanding of the Mankayan project and marketing its potential in a very systematic manner involving, amongst other things, attendance at major global mining industry events and developing and renewing industry relationships which is typically a time consuming one-on-one process. Marketing mining projects to potential partners or acquirers, however, takes time, and whilst the project is clearly very high on our agenda, major mining companies have their own competing priorities and this process has taken longer than hoped, which is frustrating both for the Company's management team and shareholders. I am, however, confident that the Mankayan project has been well disseminated into the trade and investment arena and that its potential will be recognised as copper prices improve and mid-tier/major industry players renew their search for sizeable emerging copper projects."
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
|
Tel: +44 (0)20 3289 9923
Tel: +44 (0)20 7409 3494
Tel: +44 (0)20 7399 9400
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Chairman's Statement
I am pleased to present the Group's results for the 12 months ended 31 December 2018. I was appointed as Chairman on 1 March 2018 and the year under review has been one of consolidation with our main focus being on enhancing our financial and technical understanding of the Mankayan copper-gold project in the Philippines and making our copper-gold asset portfolio more attractive to potential partners. The result is that we now have a stronger handle on the Mankayan project and have been able to update the market and mining industry players on the project which we consider to be well placed in the global league table of emerging copper projects.
We conducted significant internal analysis and interpretation before releasing an updated block cave model for the project in October 2018 and commissioning a new independent mining study from Mining Plus in late November 2018. The results of Mining Plus' new study were announced on 12 February 2019 which involved a wide ranging examination of the various alternatives for bringing the Mankayan project into potential future production with the objective of determining key parameter susceptibility. The study demonstrated that it is possible to reduce the capital cost involved to approximately US$630 million whilst still maintaining an IRR of 21%. The medium production rate scenario with lower start-up costs has an estimated capital expenditure requirement of US$896m and an IRR of 27%. The pleasing result from such workstreams was that the planned potential future mining operation appears robust over a number of alternative development scenarios and could be attractive for investment from a mid-tier or major copper producer.
The industry has noted the results of our studies and the Mankayan project is now on the radar screen of a number of companies and I remain positive that we will ultimately be able to secure a major investment into/partner for the project notwithstanding the difficulties presented by current modest copper prices and regional perception.
We exited from our Colombian alluvial gold-platinum operations during April 2018 and I am pleased to report that the disposal was completed both professionally and effectively without any local repercussions or ongoing liability.
In Argentina, we have been progressing the regulatory process towards finalisation of the requisite environmental impact assessment ("EIA") approvals which we anticipate being completed in the second quarter of 2019. Such approvals will provide for a two year exploration period to enable, amongst other things, work on topography, geophysics, soil geochemistry, geological mapping and up to 2,000 metres of diamond drilling and, once in place, the project will be eminently more attractive to both the Company and prospective joint venture partners.
Most recently, on 23 April 2019, the Company announced an important step into copper/gold exploration in Zambia following the signing of an option agreement to potentially acquire a 50% interest in the Buffalo exploration project located in north central Zambia. This project has good copper/gold showings and local artisanal miners have discovered significant mineralised outcrops. The occurrences are known as IOCG (iron oxide copper-gold) and academia has expressed similarities between such Zambian style of mineralisation and the Olympic Dam mineralisation in Australia. The Central Zambian IOCG belt concept has not been pursued progressively since this style of mineralisation is off the well-established main trend Zambian Copper Belt system which has led to numerous mines with lives in excess of 70 years regularly being replaced with new mines on their depletion or economics deteriorating through depth or other practical, technical considerations. We are very excited about this option since the project has the potential for early development and large system discovery, whilst the Company's upfront expenditure in assessing the licence area and determining whether to exercise its option is capped at US$200,000 with such funds to be spent on the ground in assessing the project rather than being paid to the project's sponsors.
Whilst the year has been one of consolidation, there has been substantial effort invested in improving our understanding of the Mankayan project and marketing its potential in a very systematic manner involving, amongst other things, attendance at major global mining industry events and developing and renewing industry relationships which is typically a time consuming one-on-one process. Marketing mining projects to potential partners or acquirers is an activity that does not lend itself to be measured on a daily or even monthly basis, since feedback is often guarded and whilst the project is clearly very high on our agenda, major mining companies have their own competing priorities as frustrating as that can be for the Company's management team and shareholders. RNS announcements regarding transactions are made when legally binding agreements are signed not as regular updates on ongoing discussions and negotiations therefore shareholders should not read into the absence of RNS announcements in relation to Mankayan that management is not actively seeking to promote the project to best advantage. I am however confident that the Mankayan project has been well disseminated into the trade and investment arena and that its potential will be recognised as copper prices improve and mid-tier/major industry players renew their search for sizeable emerging copper projects.
I, like my fellow shareholders, am most disappointed in the Company's recent share price performance but having been involved in the mining industry for 50 years know that it has its cycles, that each mining project is unique and that it is an imperfect market. Accordingly, I believe the best way to drive value creation is to improve both the Company's and the market's understanding of the positive characteristics of our project portfolio which is why I applaud the team's untiring efforts in marketing the Mankayan project which has to be relentless and determined without recognition or reward until the job is done.
The general climate for small resource companies is very difficult and the sector remains very much out of favour. This is quite surprising given major global stockmarkets are generally showing resilience and advancement. Our sector typically tracks such markets and often outperforms when shares suddenly correct as they did towards the end of last year. The small cap sector did not appear to respond to any trends in the main market which we think is a result of trade tensions, investor concerns over China and Brexit and a generally uncertain geopolitical world. As always, we remain optimistic not just for the sake of it but with the knowledge that the correction for our sector is often just around corner with the key driver being growth in metals prices.
I would like to thank my colleagues on the board and management for their consistent and dedicated work against an inopportune and challenging backdrop and look forward to better times ahead to enable us to generate long term value for our shareholders which they most certainly deserve.
Mr Colin Bird
Executive Chairman
30 April 2019
Consolidated Statement of Profit and Loss
For the year ended 31 December 2018
Notes | Year ended 31 December 2018 £'000 | Year ended 31 December 2017 £'000 | ||||
CONTINUING OPERATIONS | ||||||
Group revenue | - | - | ||||
Cost of sales | - | - | ||||
Gross profit/(loss) | - | - | ||||
Operating expenses | (656) | (968) | ||||
Group operating loss | (656) | (968) | ||||
Other income | 9 | 3 | ||||
Impairment of assets | 2 | (199) | (80) | |||
Loss before taxation | (846) | (1,045) | ||||
Taxation | - | - | ||||
Loss for the financial year from continuing operations | (846) | (1,045) | ||||
DISCONTINUED OPERATIONS | ||||||
Loss for the financial year from discontinued operations | 8 | (341) | (3,587) | |||
Loss for the financial year | (1,187) | (4,632) | ||||
Attributable to: Owners of the Company | (1,242) | (4,633) | ||||
- Continuing operations | (846) | (1,045) | ||||
- Discontinued operations | (396) | (3,588) | ||||
Non-controlling interest - discontinued operations | 55 | 1 | ||||
| (1,187) | (4,632) | ||||
Loss per share (pence) | ||||||
Basic and diluted from continuing operations | 3 | (0.10) | (0.29) | |||
Basic and diluted from discontinued operations | 3 | (0.05) | (1.00) | |||
Basic and diluted from all operations | 3 | (0.15) | (1.29) |
Consolidated Statement of Other Comprehensive Income
For the year ended 31 December 2018
Year ended 31 December 2018 £'000 | Year ended 31 December 2017 £'000 | |||||
Other comprehensive income: | ||||||
Loss for the financial year | (1,187) | (4,632) | ||||
Items that may be reclassified to profit or loss: | ||||||
Foreign currency reserve movement | (102) | 61 | ||||
Total comprehensive loss for the financial year | (1,289) | (4,571) | ||||
Attributable to: Owners of the Company | (1,343) | (4,575) | ||||
- Continuing operations | (863) | (1,068) | ||||
- Discontinued operations | (480) | (3,507) | ||||
Non-controlling interest - discontinued operations | 54 | 4 | ||||
| (1,289) | (4,571) |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Share Capital £'000 | Share Premium £'000 | Other Reserves £'000 | Retained Losses £'000 | Non-Controlling interest £'000 | Total Equity £'000 | |
Year ended 31 December 2018 | ||||||
Balance at 1 January 2018 | 1,225 | 35,433 | 802 | (32,124) | (50) | 5,286 |
Current year loss | - | - | - | (1,242) | 55 | (1,187) |
Foreign currency reserve | - | - | (101) | - | (1) | (102) |
Total comprehensive loss for the year | - | - | (101) | (1,242) | 54 | (1,289) |
Proceeds from shares issued | 773 | 659 | - | - | - | 1,432 |
Warrants issued | - | (27) | 27 | - | - | - |
Lapsed warrants | - | 9 | (9) | - | - | - |
Share options granted | - | - | 121 | - | - | 121 |
Disposal of operations | - | - | - | 4 | (4) | - |
Balance at 31 December 2018 | 1,998 | 36,074 | 840 | (33,362) | - | 5,550 |
Share Capital £'000 | Share Premium £'000 | Other Reserves £'000 | Retained Losses £'000 | Non-Controlling interest £'000 | Total Equity £'000 | |
Year 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 |
Consolidated Balance Sheet
As at 31 December 2018
2018 | 2017 | |||
Notes | £'000 | £'000 | ||
ASSETS | ||||
Non-current assets | ||||
Plant and equipment | 4 | 6 | 10 | |
Investments | 5 | 279 | - | |
Intangible assets | 6 | - | - | |
Exploration and evaluation assets | 7 | 4,781 | 4,786 | |
Total non-current assets | 5,066 | 4,796 | ||
Current assets | ||||
Trade and other receivables | 65 | 99 | ||
Cash and cash equivalents | 492 | 231 | ||
557 | 330 | |||
Non-current assets classified as held for sale | 8 | - | 467 | |
Total current assets | 557 | 797 | ||
TOTAL ASSETS | 5,623 | 5,593 | ||
LIABILITIES | ||||
Current liabilities | ||||
Trade and other payables | 73 | 212 | ||
Liabilities directly associated with non-current assets classified as held for sale | 8 | - | 95 | |
Total current liabilities | 73 | 307 | ||
NET ASSETS | 5,550 | 5,286 | ||
EQUITY | ||||
Share capital | 9 | 1,998 | 1,225 | |
Share premium | 9 | 36,074 | 35,433 | |
Share-based payment reserve | 157 | 18 | ||
Foreign exchange reserve | 683 | 784 | ||
Retained losses | (33,362) | (32,124) | ||
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT | 5,550 | 5,336 | ||
NON-CONTROLLING INTEREST | - | (50) | ||
TOTAL EQUITY | 5,550 | 5,286 |
In accordance with the provisions of Section 408 of the Companies Act 2006, the Parent Company has not presented a separate income statement. A loss for the year ended 31 December 2018 of £728,000 (2017: £5,639,000) has been included in the consolidated income statement.
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Year ended 31 December 2018 | Year ended 31 December 2017 | ||
Notes | £'000 | £'000 | |
Net cash outflow from operating activities | 10 | (1,105) | (2,068) |
Cash flows from investing activities | |||
Other income | 63 | 53 | |
Acquisition of plant and equipment | - | (13) | |
Option payments | - | (233) | |
Acquisition of subsidiary, net of cash acquired | - | (155) | |
Proceeds from Disposal Group, net of cash disposed | 11 | 281 | - |
Loans to associates | (265) | (102) | |
79 | (450) | ||
Cash flows from financing activities | |||
Proceeds from issuance of ordinary shares | 1,302 | 2,593 | |
Increase in cash | 276 | 75 | |
Cash and cash equivalents at beginning of year | 251 | 229 | |
Foreign exchange movement | (35) | (53) | |
Cash and cash equivalents at end of year | 492 | 251 | |
Cash and cash equivalents - continuing operations | 492 | 231 | |
Cash and cash equivalents included in assets classified as held for sale | - | 20 |
Notes to the financial information
For the year ended 31 December 2018
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 2018, but is derived from those financial statements, approved by the board of directors. The auditors' report on the 2018 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 'material uncertainty' paragraph relating to going concern. The full audited financial statements for the year ended 31 December 2018 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 2018 after tax of £1.1 million (2017: £4.6 million), had negative cash flows from operations and is currently not generating revenues. Cash and cash equivalents were £492,000 as at 31 December 2018. An operating loss is expected in the year subsequent to the date of these accounts and as a result the Company will 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, as and when 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 | ||
Year ended 31 December 2018 | Year ended 31 December 2017 | ||
£'000 | £'000 | ||
Impairment loss on loan to associate | 199 | 80 | |
| 199 | 80 | |
The Mankayan project owned by Crescent Mining and Development Corporation is part of the continuing operations and was fully impaired in 2016 (see note 5) due to then significant lingering uncertainty concerning the political and tax environment in the Philippines. Although the political and tax environment has subsequently improved, it would not be prudent to write back any of the provision made in 2016 and the provision made in 2017 and first half of 2018 in relation to additional funds lent in 2017 and H1 2018. However, the funds advanced in the second half of 2018 have not been impaired given that the Exploration Period under the MPSA was in April 2018 extended for 2 years and based on the improved economics in the recent Mining Plus study announced on 12 February 2019. | |||
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 year ended 31 December 2018 of £1,242,000 (2017: £4,633,000) of which £846,000 (2017: £1,045,000) was from Continuing Operations and £396,000 (2017: £3,588,000) was from Discontinued Operations. The basic loss per share was calculated using a weighted average number of shares in issue of 871,214,591 (2017: 359,330,994).
The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 1,005,960,580 (2017: 406,576,983).
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 | ||
2018 | 2017 | ||
£'000 | £'000 | ||
Plant and equipment | |||
Cost | |||
At beginning of year | 84 | 95 | |
Acquisitions through business combinations - Plant | - | 545 | |
Transfer - Mine development from options (note 6) | - | 1,668 | |
Additions | - | 13 | |
Classified as held for sale (note 8) | - | (2,252) | |
Exchange differences | (11) | 15 | |
At end of year | 73 | 84 | |
Depreciation | |||
At beginning of year | 74 | 75 | |
Charge for the year | 1 | 14 | |
Classified as held for sale | - | (9) | |
Exchange differences | (8) | (6) | |
At end of year | 67 | 74 | |
Net book value at end of year | 6 | 10 |
5. | Investments | ||
2018 | 2017 | ||
£'000 | £'000 | ||
Loan to associate | 478 | 80 | |
Impairment provision (note 2) | (199) | (80) | |
| 279 | - |
6. | Intangible assets | ||
2018 | 2017 | ||
£'000 | £'000 | ||
6.1 | 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 | - | - | |
Additions | - | 288 | |
Contribution to options costs | - | (275) | |
Transferred to Mine Development (note 4) | - | (1,668)1 | |
Exchange differences | - | (17) | |
Carried forward at end of year | - | - | |
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.
2018 | 2017 | ||
£'000 | £'000 | ||
6.2 | Intellectual property rights over proprietary geological data | ||
Balance at beginning of year | - | 162 | |
Acquisitions through business combinations - Rights over geological information and other data | - | - | |
Classified as held for sale (note 8) | - | (162) | |
Carried forward at end of year | - | - | |
Total intangibles | - | 1,834 |
7. | Exploration and evaluation assets | ||
2018 | 2017 | ||
£'000 | £'000 | ||
Balance at beginning of year | 4,790 | 4,790 | |
Exchange differences | (9) | (4) | |
Carried forward at end of year | 4,781 | 4,786 | |
The amount of capitalised exploration and evaluation expenditure relates to 12 licences comprising the Eureka project and are located in north-west Jujuy near to the Argentine border with Bolivia and are formally known as Mina Eureka, Mina Eureka II, Mina Gino I, Mina Gino II, Mina Mason I, Mina Mason II, Mina Julio I, Mina Julio II, Mina Paul I, Mina Paul II, Mina Sur Eureke and Mina Cabereria Sur, covering, in aggregate, an area in excess of approximately 5,500 hectares and accessible via a series of gravel roads. All licences remain valid and the Company is in the process of renewing its Environmental Impact Assessment (EIA) approvals in respect of its Mina Eureka, Mina Eureka II, Mina Gino I, Mina Gino II, Mina Mason I, Mina Mason II, Mina Julio I, Mina Julio II, Mina Paul I, Mina Paul II, being the 10 north most licences which are the intended focus of an exploration programme once the EIA approvals are granted.
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The directors have assessed the value of the intangible assets having considered any indicators of impairment, and in their opinion, based on a review of the expiry dates of licences, expected available funds and the intention to continue exploration and evaluation, no impairment is necessary. | |||
8. | 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 (the "disposal group") were disclosed as a disposal group held for sale as at 31 December 2017. 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 was, 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: | |||
2018 | 2017 | ||
Comparative information has been restated to ensure comparability. | £'000 | £'000 | |
Revenue | - | 88 | |
Cost of sales | (130) | (831) | |
Operating expenses | (405) | (769) | |
Other income | 266 | 19 | |
Loss before tax of discontinued operations | (269) | (1,493) | |
Tax charge | - | - | |
Loss after tax of discontinued operations | (269) | (1,493) | |
Impairment loss on disposal group | (72) | (2,094) | |
Loss for the year from discontinued operations | (341) | (3,587) | |
Cash flow information | |||
Operating cash flows | (159) | (1,314) | |
Investing cash flows | 179 | (465) | |
Financing cash flows | - | 1,771 | |
Total cash flows | 20 | (8) | |
9. | Share capital | ||
2018 | 2017 | ||
Number | £'000 | £'000 | |
Authorised | |||
5,000,000,000 ordinary shares of 0.2p each | 10,000 | 10,000 | |
10,000 |
10,000 | ||
Allotted, called up and fully paid | |||
As at beginning of the year | 1,225 | 410 | |
Share subscription | 711 | 740 | |
Shares issued to directors and management | 37 | 25 | |
Shares issued to settle third party fees | 25 | - | |
Acquisition of subsidiary | - | 50 | |
As at end of year | 1,998 | 1,225 | |
Number of shares 2018 | Number of shares 2017 | ||
Ordinary share capital is summarised below: | |||
As at beginning of the year | 612,273,038 | 204,953,507 | |
Share subscription | 355,555,555 | 369,959,889 | |
Shares issued to directors and management | 18,544,445(1) | 12,359,642(2) | |
Shares issued to settle third party fees | 12,400,000(3) | - | |
Acquisition of subsidiary | - | 25,000,000 | |
As at end of year | 998,773,038 | 612,273,038 | |
(1) Certain of the Company's directors agreed to convert outstanding fees of £31,233, due in respect of the period from 1 July 2017 to 31 December 2017, into 6,940,667 new Ordinary Shares and the Company's management agreed to convert outstanding fees and salaries of £22,217, due in respect of the same period, into 4,937,111 new Ordinary Shares. In addition, £30,000 of fees due to Dr. Bernard Olivier, the Company's former CEO who resigned as a director on 15 January 2018, were converted into 6,666,667 new Ordinary Shares. The Director Shares, Management Shares and Fee Conversion Shares were all issued on 22 March 2018 at a price of 0.45 pence per share, being the price at which the Company had completed its then most recent fundraise announced on 5 February 2018 which represented a premium of approximately 7.14 per cent. to the Company's closing mid-market share price of 0.42 pence on 21 March 2018. | |
(2) 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 discount 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.
3 Certain fees and expenses amounting to £55,800 owed by the Company to Verona Investment Group Inc. ("Verona") were settled by the issue of 12,400,000 new Ordinary Shares at a price of 0.45 pence per share on 22 March 2018. |
2018 | 2017 | ||
£'000 | £'000 | ||
The share premium was as follows: | |||
As at beginning of year | 35,433 | 33,227 | |
Share subscription | 689 | 2,096 | |
Shares issued to directors and management | 41 | 133 | |
Shares issued to settle third party fees | 27 | - | |
Share issue costs | (98) | (244) | |
Warrants lapsed | 9 | - | |
Warrants issued | (27) | - | |
Acquisition of subsidiary | - | 221 | |
As at end of year | 36,074 | 35,433 |
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. |
10. | Reconciliation of operating loss to net cash outflow from operating activities | ||
Year ended 31 December 2018 | Year ended 31 December 2017 | ||
£'000 | £'000 | ||
Operating loss from all operations | (1,191) | (2,480) | |
Depreciation and amortisation | 1 | 14 | |
VAT refunds received | (63) | (33) | |
Share options | 121 | 18 | |
Foreign exchange gain | (293) | 167 | |
Decrease in receivables | 141 | (145) | |
Increase in payables | 179 | 391 | |
Net cash outflow from operating activities | (1,105) | (2,068) | |
11. | Proceeds from Disposal Group, net of cash disposed | ||
Year ended 31 December 2018 | Year ended 31 December 2017 | ||
£'000 | £'000 | ||
Proceeds from sale* | 329 | - | |
Cash of disposal group | (48) | - | |
| 281 | - | |
* The gross consideration was US$500,000 of which US$450,000 was received by the Company in the year and US$50,000 was paid to the Company's lawyers in escrow and was released to the Company on 14 January 2019. | |||
12. | Availability of Annual Report and Financial Statements |
Copies of the Company's full Annual Report and Financial Statements are being posted today 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. |
13. | Annual General Meeting |
The Company's next Annual General Meeting ("AGM") will be held at 10.00 a.m. on Friday, 24 May 2019 and a formal Notice of AGM and proxy form have are being posted today 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.
|
Included as Special Business at the AGM is a resolution to re-designate and sub-divide the share capital of the Company (the "Share Reorganisation") . The Share Reorganisation will not affect the number of shares that each shareholder owns nor will it increase the number of shares that are in issue. A detailed explanation of the Share Reorganisation and the other resolutions being proposed at the AGM are included in the Directors' Report in the Company 2019 Annual Report.
The reason for the Share Reorganisation is that the Companies Act prohibits the Company from issuing ordinary shares at a price below their nominal value. As the Company's prevailing market share price is less than the current nominal value of the Company's existing ordinary shares of £0.002 each ("Existing Ordinary Shares"), it is necessary for the Company to undertake a share capital reorganisation to enable it to issue new ordinary shares at a price per share below £0.002 in the event that the Directors seek to raise additional equity finance at such a price to provide, inter alia, additional working capital for the Group.
The Company currently has 998,773,038 Existing Ordinary Shares which are admitted for trading on AIM. if the Share Reorganisation is approved at the AGM there will be 998,773,038 new ordinary shares of the Company with a par value of £0.00002 ("New Ordinary Share") which will be admitted for trading on AIM in place of the Existing Ordinary Shares. The New Ordinary Shares will continue to carry the same rights as attached to the Existing Ordinary Shares (save for the reduction in their nominal value). In addition, each shareholder will own one deferred share of £0.00198 ("Deferred Share"), for each Existing Ordinary Share they own. The Deferred Shares will have very limited rights and will effectively be valueless as they will have no voting rights and will have no rights as to dividends and only very limited rights on a return of capital. They will not be admitted to trading or listed on any stock exchange and will not be freely transferable.
The record date for the Share Capital Reorganisation will be at the close of business on 24 May 2019. Subject to the passing of the relevant resolutions at the AGM, it is expected that the Share Capital Reorganisation will become effective on 28 May 2019 and the New Ordinary Shares arising upon completion of the Share Capital Reorganisation will be admitted to trading on AIM at 8.00 a.m. on 28 May 2019.
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.