Last checked at 7 Jun 2011 07:00
Noricum Gold Limited / EPIC: NMG / Sector: Natural Resources
7 June 2011
Noricum Gold Limited (`Noricum Gold' or `the Company') Final Results and Notice of AGM
Noricum Gold Limited, the Austrian focussed gold exploration and development company, is pleased to announce its final results for the year ended 31 December 2010 and gives notice of its Annual General Meeting to be held at the Washington Mayfair Hotel, 5 Curzon Street, London W1J 5HE on 30th June 2011 at 12:00pm.
Overview
- Successful acquisition of five highly prospective gold and precious metals exploration and development assets in south-central Austria - Listed on AIM raising £2,120,000 - healthy cash position at 31 December 2010 of £1,556,072 - Operating in a historic high-grade gold region within a supportive jurisdiction - Active development programme underway to advance the primary projects towards the delineation of maiden JORC resources - 51 sq km Rotg¼lden gold project which includes the previously operating gold/copper/silver Rotgulden mine - 49 sq km Kliening gold project - two targets for further exploration currently identified - Continued evaluation of synergistic assets in the region to expand resource base
Noricum Gold CEO Greg Kuenzel said, "Since our initial listing on PLUS in June 2010, Noricum Gold has made exciting progress. Having acquired a prospective portfolio of assets spanning 165 sq km in Austria, which led to our concurrent listing on AIM, I believe that we are now well positioned to create significant value in Noricum Gold in the near term. In line with this, we are now focussed on delineating a resource at both the previously producing Rotg¼lden gold project and the Kliening gold project and I look forward to regularly updating shareholders on the results of our active work programme over the coming months."
Chairman's Statement
This has been a year of significant progress for Noricum Gold, as we successfully implemented our strategy to invest in or acquire projects to gain exposure to the buoyant gold and precious metals sector.
Having listed on PLUS in June 2010, we acquired the entire issued share capital of Kibe Investments No2 Limited (`Kibe') in December 2010, which controls five highly prospective gold and precious metal exploration and development assets in the historic, high-grade gold production region of south-central Austria. Concurrent with the acquisition of Kibe, we transferred our listing to AIM on 17 December 2010 and raised £2,120,000 to fund our aggressive growth strategy.
Our portfolio now includes the following licence areas: Rotg¼lden (51 sq km), Kliening (49 sq km), Schonberg (24 sq km), Goldeck (29 sq km) and Goldzeche (12 sq km). These are located in an area of significant and known mineralisation in Austria, which, as a country, offers a mining friendly and stable environment with excellent infrastructure and an active and well legislated mining industry.
All the assets have undergone substantial historical exploration. Having re-interpreted and analysed existing data, we have developed defined work programmes to rapidly advance these assets, with an initial focus on Rotg¼lden and Kliening, where we hope to delineate maiden JORC resources. Both sites have excellent access and infrastructure and the potential for significant mineralisation to be confirmed and additional structures located.
The Rotg¼lden licence comprises 15 historic underground mines including the Rotg¼lden gold/copper/silver mine. Previous explorers intersected massive sulphide ore (chalcopyrite/pyrrhotite), the highlight being drill hole C2, which identified 2.7 metres at 44g/t gold from 24.3 metres. With this in mind, we are conducting additional geophysical and geochemical work to define further targets and following analysis of these results, we plan to apply to the regional authorities to undertake a drilling programme of up to 3,000 metres. In tandem with this, we intend to conduct additional geophysical magnetic and electro-magnetic survey lines and develop a work programme of surface drilling in the Altenberg valley.
Kliening, comprising 108 licences, is ideal for exploration due to the clearly defined mineralised structures. Historical trenching and grab sampling conducted on the project highlight two targets for further exploration. At Buchbauer-Bischofeck, up to 5,000 metres of drilling will commence in mid-2011 to confirm lode style mineralisation identified by historic work. The prospectivity of the area has already been highlighted following the previous identification of several groups of parallel vein swarms up to 100 metres apart. The veins, which are up to 2.5 metre wide, have historically shown gold mineralisation as high as 23.6g/t gold, appear 25 metres apart within the individual swarms.
Our second target at Kliening is the tailings dumps, which are located around historical workings and have the potential to provide us with early cash flow. These tailings dumps are being systematically sampled and surveyed and auger sampling will be conducted where necessary. The samples will then be assayed for gold, silver and copper and tested to ascertain the leaching characteristics of the gold.
We also continue to evaluate additional assets as we believe that there may be the potential for similar sized ore bodies located nearby to our existing licences that could be combined for a larger economic target.
On a general level, we have implemented an active social and community policy and all our projects are being developed in close consultation with the local communities. We have received strong support from regional mayors and in order to ensure full visibility is maintained we intend to establish consultation sessions and community forums. We also aim to introduce local employment initiatives where possible and already use Austrian geologists and consultants.
Financial Review
The loss of the Group for the period ended 31 December 2010 amounted to £1,891,550 (31 December 2009: £nil). The Group's cash position at 31 December 2010 was £1,556,072.
Outlook
Looking ahead, Noricum Gold is well placed as a high growth exploration and development company operating in the Austrian precious metals sector. Over the next couple of months, we look forward to receiving results from our exploration programmes as we work towards defining a Mineral Resource at our most prospective initial targets, Rotg¼lden and Kliening, and advancing all our assets along the development curve.
Finally I would like to take this opportunity to thank both our team and our shareholders for their support over the past year.
Marcus Edwards-JonesChairman7 June 2011 **ENDS**For further information please visit www.noricumgold.com orcontact:Greg Kuenzel Noricum Gold Limited Tel: 020 3326 1726
Roland Cornish Beaumont Cornish Limited Tel: 020 7628 3396 James Biddle Beaumont Cornish Limited Tel: 020 7628 3396 Michael Parnes Old Park Lane Capital plc Tel: 020 7493 8188 Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7236 1177 Elisabeth Cowell St Brides Media & Finance Ltd Tel: 020 7236 1177
BALANCE SHEETSAs at 31 December 2010 Group Company Note 2010 2009 2010 £ £ £Non-Current AssetsProperty, plant and equipment 7 1,999 - 1,999Intangible assets 8 814,534 - -Investment in subsidiaries 9 - - 20,904,649 816,533 - 20,906,648Current AssetsTrade and other receivables 11 33,535 - 28,509Cash and cash equivalents 12 1,556,072 7 1,555,892 1,589,607 7 1,584,401Total Assets 2,406,140 7 22,491,049Current LiabilitiesTrade and other payables 13 110,373 - 110,373Total Liabilities 110,373 - 110,373Net Assets 2,295,767 7 22,380,676
Capital and Reserves Attributable to
Equity Holders of the CompanyCalled up share capital 14 - 7 -Share premium account 14 20,860,819 - 22,481,062Reverse acquisition reserve (18,845,147) - -Share option reserve 551,401 - 551,401Retained losses (271,306) - (651,787)Total Equity 2,295,767 7 22,380,676
STATEMENTS OF COMPREHENSIVE INCOME
For the year ended 31 December 2010
Group Company Note Year ended Year Period 10 31 December ended 31 February 2010 December to 31 2009 December £ 2010 £ £Revenue - - -Administration expenses (259,121) - (439,091)Acquisition costs expensed - - (204,467)Impairment of goodwill 8 (1,620,244) - -Other net (losses) / gains 16 (12,290) - (8,511)Operating Loss 6 (1,891,655) - (652,069)Finance income 19 105 - 282Loss Before Taxation 6 (1,891,550) - (651,787)Corporate tax expense 20 - - -
Loss for the year attributable to (1,891,550) - (651,787) Equity Owners of the Parent Total Comprehensive Income
(1,891,550) - (651,787)attributable to Equity Owners of theParent
Basic and diluted loss per share 21 0.98 - 1.32 (pence)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2010
Attributable to Owners of the ParentGroup (£) Share Share Share Reverse Retained Total capital Premium option acquisition losses equity reserve reserveAs at 1 January 2009 and 7 - - - - 731 December 2009Comprehensive incomeLoss for the year - - - - (1,891,550) (1,891,550)Total comprehensive - - - - (1,891,550) (1,891,550)incomeTransactions with ownersCapital contribution - 788,550 - - - 788,550Reverse acquisition (7) 20,126,048 35,840 (18,845,147) - 1,316,741Issue of ordinary shares - 2,155,979 - - - 2,155,979Issue costs - (589,514) 340,615 - - (248,899)Transfer of impairment - (1,620,244) - - 1,620,244 -chargesShare based payments 174,946 174,946Total transactions withowners (7) 20,860,819 551,401 (18,845,147) 1,620,244 4,187,310As at 31 December 2010 - 20,860,818 551,401 (18,845,147) (271,306) 2,295,767 Attributable to Owners of the ParentCompany (£) Share Share Share Retained Total equity capital Premium option losses reserveAs at 10 February 2010 1 - - - 1Comprehensive incomeLoss for the year - - - (651,787) (651,787)Total comprehensive - - - (651,787) (651,787)incomeTransactions with ownersIssue of ordinary shares 216,672 22,960,675 - - 23,177,347Issue costs - (696,286) 372,965 - (323,321)Amendment to par value (216,673) 216,673 - - -of sharesShare based payments - - 178,436 - 178,436Total transactions with - 22,481,062 551,401 - 23,032,462ownersAs at 31 December 2010 - 22,481,062 551,401 (651,787) 22,380,676
During the period the Company amended the par value of its shares from 0.5 pence per share to nil par value (refer note 14). The amendment was approved by shareholders at an EGM of the Company and the balance included within ordinary share capital at that date was transferred into share premium.
CASH FLOW STATEMENTS
For the year ended 31 December 2010
Group Company Note 2010 2009 2010 £ £ £Cash flows from operating activitiesOperating loss (1,891,655) - (652,069)Adjustments for:Depreciation 299 - 299Share option expense 174,945 - 178,436Impairment of goodwill 1,620,244Exclusivity fee paid in shares - - 177,440Decrease / (increase) in trade and other 59,233 - (28,509)
receivables
(Decrease) / increase in trade and other (42,698) - 48,657
payables
Net cash used in operations (79,632) - (275,746)Cash flows from investing activitiesInterest received 105 - 282Purchase of property, plant & equipment - - (2,298)Loans granted to subsidiary undertakings - - (295,288)
Acquisition of subsidiary, net of cash 10 (353,195) - (609,361) acquired Exploration and evaluation activities
(814,534) - -Net cash used in investing activities (1,167,624) - (906,665)Cash flows from financing activitiesProceeds from issue of shares 2,115,979 - 2,959,910Cost of share issue (147,184) - (221,607)Proceeds from borrowings 834,526 - -Net cash from financing activities 2,803,321 - 2,738,303
Net increase in cash and cash equivalents 1,556,065 - 1,555,892 Cash and cash equivalents at beginning of
7 7 -
period
Cash and cash equivalents at end of period 12 1,556,072 7 1,555,892
Major non-cash transactions
On 26 March 2010 the Company issued 31,677,200 ordinary shares at a subscription price of 5 pence per share via a placing. £3,000 in relation to this share placing remained outstanding and unpaid at 31 December 2010. As part of the placing, the Company issued warrants to share subscribers representing one warrant for every two shares outstanding at that date. The cost of these warrants has been offset against the premium raised on this share issue.
On 19 August 2010 the Company issued 5,257,477 ordinary shares in part settlement of a fee for an exclusivity period for the acquisition of Kibe Investments No. 2 Limited, the Company's wholly owned subsidiary.
On 17 December 2010 the Company issued 1,000,000 ordinary shares and 5,381,745 warrants to professional advisors in consideration for services relating to the raising of capital for the Company. The cost of these share based payments has been offset against the premium raised from the share issue of the same date.
On 17 December 2010 the Company issued 400,000,000 ordinary shares in part consideration for the purchase of the entire share capital of Kibe No.2 Investments Limited (refer note 10). The remaining consideration of £850,000 was settled via the equity conversion of a loan previously made to Kibe of £240,639 and a cash payment of £609,361.
On acquisition borrowings of £788,549 were converted into equity in Kibe No.2 Investments Limited. Proceeds from borrowings of £45,977 relates to funds transferred by Noricum Gold Limited to Gold Mining Company GmbH prior to acquisition. All loans made after the date of acquisition have been eliminated in the Group cash flow statement.
Issue costs of £61,715 are accrued and unpaid at 31 December 2010.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2010
1. General Information
The principal activity of Noricum Gold Limited (`the Company') and its subsidiaries (together `the Group') is the exploration and development of precious and base metals. The Company's shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange. The Company is incorporated in the British Virgin Islands and domiciled in the United Kingdom. The Company was incorporated on 10 February 2010 under the name Gold Mining Company Limited. On 22 November 2010 the Company changed its name to Noricum Gold Limited.
The address of its registered office is Trident Chambers, PO Box 146, Road Town, Tortola BVI.
2. Summary of Significant Accounting Policies
The principal Accounting Policies applied in the preparation of these Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with EU-endorsed International Financial Reporting Standards (IFRSs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations. The Consolidated Financial Statements have been prepared under the historical cost convention other than financial assets and financial liabilities at fair value through profit or loss.
The Financial Statements are presented in Pounds Sterling rounded to the nearest pound.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010.
IFRS 3 (revised), `Business Combinations', and consequential amendments to IAS 27, `Consolidated and separate financial statements', IAS 28 `Investments in associates', and IAS 31 `Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.
The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared to IFRS 3. For example, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. Acquisition-related costs have been recognised in the statement of comprehensive income, which previously would have been included as part of the consideration for the business combination.
(b) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2010 but not currently relevant to the Group
The following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2010, but are not relevant to the Group.
Amendments to IFRS 1 "First-time Adoption of International Financial Reporting Standards" and IAS 27 "Consolidated and Separate Financial Statements" addressed concerns that retrospectively determining the cost of an investment in separate financial statements and applying the cost method in accordance with IAS 27 on first-time adoption of IFRSs cannot, in some circumstances, be achieved without undue cost or effort. These amendments were effective for periods beginning on or after 1 July 2009.
Further amendments to IFRS 1 addressed the retrospective application of IFRSs to particular situations (oil and gas assets and leasing contracts), and are aimed at ensuring that entities applying IFRSs will not face undue cost or effort in the transition process. These amendments were effective for periods beginning on or after 1 January 2010.
Amendments to IFRS 2 "Share-based Payment" clarified the accounting for group cash-settled share-based payment transactions. These amendments were effective for periods beginning on or after 1 January 2010.
Amendments to IAS 39 "Financial Instruments: Recognition and Measurement" provided additional guidance on what can be designated as a hedged item. These amendments were effective for periods beginning on or after 1 July 2009.
IFRIC 17 "Distributions of Non-cash Assets to Owners" standardised practice in the measurement of distributions of non cash assets to owners. This interpretation was effective for periods beginning on or after 1 July 2009.
IFRIC 18 "Transfers of Assets from Customers" clarified the requirements of IFRSs for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with on-going access to a supply of goods or services (such as a supply of electricity, gas or water). This interpretation was effective for periods beginning on or after 1 July 2009.
(c) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2010 and not early adopted
The Group and parent entity's assessment of the impact of these new standards and interpretations is set out below.
IFRS 9 "Financial Instruments" specifies how an entity should classify and measure financial instruments, including some hybrid contracts, with the aim of improving and simplifying the approach to classification and measurement compared with IAS 39. This standard is effective for periods beginning on or after 1 January 2013, subject to EU endorsement. The Directors are assessing the possible impact of this standard on the Group's financial statements.
A revised version of IAS 24 "Related Party Disclosures" simplifies the disclosure requirements for government-related entities and clarifies the definition of a related party. This revision is effective for periods beginning on or after 1 January 2011 and is not expected to have an impact on the Group's financial statements.
An amendment to IFRS 1 "First-time Adoption of International Financial Reporting Standards" relieves first-time adopters of IFRSs from providing the additional disclosures introduced in March 2009 by "Improving Disclosures about Financial Instruments" (Amendments to IFRS 7). This amendment is effective for periods beginning on or after 1 July 2010 and is not expected to have an impact on the Group's financial statements.
Further amendments to IFRS 1 replace references to a fixed date of 1 January 2004 with "the date of transition to IFRSs", thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs, and provide guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. This amendment is effective for periods beginning on or after 1 July 2011, subject to EU endorsement, and is not expected to have an impact on the Group's financial statements.
Amendments to IFRS 7 "Financial Instruments: Disclosures" are designed to help users of financial statements evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity's financial position. These amendments are effective for periods beginning on or after 1 January 2011, subject to EU endorsement. The Directors are assessing the possible impact of these amendments on the Group's financial statements.
Amendments to IAS 12 "Income Taxes" introduce a presumption that recovery of the carrying amount of an asset measured using the fair value model in IAS 40 "Investment Property" will normally be through sale. These amendments are effective for periods beginning on or after 1 January 2012, subject to EU endorsement, and are not expected to have an impact on the Group's financial statements.
Amendments to IAS 32 "Financial Instruments: Presentation" address the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. These amendments are effective for periods beginning on or after 1 February 2010, and are not expected to have an impact on the Group's financial statements.
"Improvements to IFRSs" are collections of amendments to IFRSs resulting from the annual improvements project, a method of making necessary, but non-urgent, amendments to IFRSs that will not be included as part of another major project. These improvements have various implementation dates; for May 2010 improvements, the earliest is effective for periods beginning on or after 1 July 2010 subject to EU endorsement. The Directors are assessing the possible impact of these improvements on the Group's financial statements.
IFRIC 19 "Extinguishing Financial Liabilities with Equity Instruments" clarifies the treatment required when an entity renegotiates the terms of a financial liability with its creditor, and the creditor agrees to accept the entity's shares or other equity instruments to settle the financial liability fully or partially. This interpretation is effective for periods beginning on or after 1 July 2010. The Directors are assessing the possible impact of this interpretation on the Group's financial statements.
(c) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2010 and not early adopted (continued)
An amendment to IFRIC 14 "IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction", on prepayments of a minimum funding requirement, applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. This amendment is effective for periods beginning on or after 1 January 2011, and is not expected to have an impact on the Group's financial statements.
2.3 Basis of Consolidation
The Group Financial Statements consolidate the Financial Statements of Noricum Gold Limited and the management accounts of all of its subsidiary undertakings made up to 31 December 2010.
Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The acquisition by Noricum Gold Limited of Kibe Investments No. 2 Limited has been accounted for under reverse acquisition accounting. Although the consolidated financial statements have been prepared in the name of the legal parent, Noricum Gold Limited, they are in substance a continuation of the financial statements of the legal subsidiary, Kibe Investments No. 2 Limited. The results of Noricum Gold Limited are included in the Group Statement of Comprehensive Income from the effective date of acquisition of Kibe Investments No. 2 Limited. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.
The following accounting treatment has been applied in respect of the reverse acquisition:
- The assets and liabilities of the legal subsidiary, Kibe Investments No. 2 Limited, are recognised and measured in the consolidated financial statements at their pre-combination carrying amounts, without restatement to fair value; - The equity structure appearing in the consolidated financial statements reflects the equity structure of the legal parent, Noricum Gold Limited, including the equity instruments issued to effect the business combination; - Comparative numbers presented in the consolidated financial statements are those reported in the financial statements of the legal subsidiary, Kibe Investments No. 2 Limited; and - The cost of acquisition is measured as the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the date of exchange.
2.4 Going Concern
The Group's business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman's report on page 3. In addition, Notes 3 and 4 to the Financial Statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit and liquidity risk.
The Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating revenues and an operating loss has been reported, the Directors believe that the Group has sufficient funds to undertake its operating activities over the next 12 months from the date of approval of these Financial Statements. The Group has financial resources which, the Directors believe, will be sufficient to fund the Group's committed expenditure both operationally and on various exploration projects for this time period. However, in order to complete other exploration work over the life of existing projects and as additional projects are identified additional funding will be required. The amount of funding is unforeseen at the point of approval of these Financial Statements and the Group will be required to raise additional funds either via an issue of equity or through the issuance of debt. The Directors are confident that funds will be forthcoming if and when they are required. Should additional funding not be forthcoming the Directors have agreed, if circumstances require, to defer payment of their fees until such time as adequate funding is received.
The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
2.5 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
2.6 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the `functional currency'). The functional currency of the parent entity is Sterling and the functional currency of the BVI subsidiary is US Dollars and the functional currency of the Austrian subsidiary is Euros. The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Company's functional and Group's presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; - income and expenses for each statement of comprehensive income presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and - all resulting exchange differences are recognised in other comprehensive income where material.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the statement of comprehensive income as part of the gain or loss on sale.
2.7 Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill arising on the acquisition of subsidiaries is included in `intangible assets'. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Under the reverse acquisition, goodwill represents the excess of the cost of the combination over the acquirer's interest in the net fair values of the legal parent. The fair value of the equity instruments of the legal subsidiary issued to effect the combination was not available and therefore the fair value of all the issued equity instruments of the legal parent prior to the business combination was used as the basis for determining the cost of the combination.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment.
(b) Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost.
Exploration and evaluation assets are assessed for impairment annually or when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas.
Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities of that unit, the associated expenditures are written off to profit or loss.
2.8 Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all tangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:
Computer equipment - 50% straight line
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within `Other (losses)/gains' in the statement of comprehensive income.
2.9 Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
Non-financial assets that suffered impairment (except goodwill) are reviewed for possible reversal of the impairment at each reporting date.
2.10 Financial Assets
Classification
The Group has classified all of its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.
Recognition and measurement
Financial assets are initially recognised at fair value plus transaction costs. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
- significant financial difficulty of the issuer or obligor;
- a breach of contract, such as a default or delinquency in interest
or principal repayments.
The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.
2.11 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.12 Taxation
Current tax is the tax currently payable based on the taxable profit for the year. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax is calculated at the tax rates that have been substantively enacted and are expected to apply to the period when the asset is realised or the liability is settled.
Deferred tax assets and liabilities are not discounted.
2.13 Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.14 Share Based Payments
The Group operates a number of equity-settled, share-based schemes, under which the entity receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The Group may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-settled share based payments is recognised as an expense in profit or loss or charged to equity depending on the nature of the service provided or instrument issued. The total amount to be expensed or charged is determined by reference to the fair value of the options granted:
- including any market performance conditions; - excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and - including the impact of any non-vesting conditions (for example, the requirement for employees to save).
In the case of warrants the amount charged to the share premium account is determined by reference to the fair value of the services received if available. If the fair value of the services received is not determinable the warrants are valued by reference to the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.
2.15 Trade Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
The Group and Company has no other financial liabilities.
2.16 Operating leases
Leases of assets under which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to profit or loss on a straight-line basis over the period of the respective leases.
2.17 Finance Income
Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group's activities expose it to a variety of financial risks: market risk (including currency risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Market Risk
(a) Foreign currency risks
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro against the UK pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group negotiates all material contracts for activities in relation to its subsidiary in Euros. The Group has not sensitised the figures for fluctuations in foreign exchange rates as the Directors are of the opinion that these fluctuations would not have a significant impact on the financial statements of the Group at the present time. The Directors will continue to assess the effect of movements in exchange rates on the Groups financial operations and initiate suitable risk management measures where necessary.
(b) Price risk
The Group is exposed to commodity price risk as a result of its operations. However, given the size of the Group's operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.
The Group has no exposure to equity securities price risk, as it has no listed equity investments.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest rate risk on financial liabilities. The Group's interest rate risk arises from its cash held on short-term deposit, which is not significant.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables.
The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
3.2 Capital Risk Management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, in order to provide returns for shareholders and to enable the Group to continue its exploration and evaluation activities. The Group has no debt at 31 December 2010 and defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time.
4. Critical Accounting Estimates and Judgements
The preparation of the combined financial statements in conformity with IFRSs requires management to make 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 amount of expenses during the year. Actual results may vary from the estimates used to produce these Financial Statements.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are not limited to:
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2010 of £814,534 (2009: £Nil). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only depreciated once extraction of the resource commences. Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in note 2.7. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the year warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration. The Directors have reviewed the estimated value of each project prepared by management and have concluded that no impairment charge is necessary (see note 8).
Share based payment transactions
The Group has made awards of options and warrants over its unissued share capital to certain Directors and employees as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and to suppliers for various services received.
The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in note 15.
5. Segmental Information
The Group operates in two geographical areas, the UK and Austria. The Company operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Austria relate to exploration and evaluation work. The reports used by the chief operating decision maker are based on these geographical segments.
In the year ended 31 December 2009 the Subsidary operated in one geographical area, the British Virgin Islands and had no trading activity.
The Group had no turnover during the year ended 31 December 2010 or2009. 2010 Austria UK Total £ £ £ Administrative expenses (19,702) (239,419) (259,121)Goodwill impairment - (1,620,244) (1,620,244)Other net (losses)/gains 267 (12,557) (12,290)
Loss from operations per reportable (19,435) (1,872,220) (1,891,655) segment Depreciation
- 299 299
Additions to non-current assets 814,534 2,298 816,832 Reportable segment assets
819,731 1,586,409 2,406,140Reportable segment liabilities - 110,373 110,373
A reconciliation of adjusted loss from operations per reportable segment to profit/ (loss) before tax is provided as follows:
2010 £Loss from operation per (1,891,655)reportable segment- Finance Income 105Loss for the year before (1,891,550)taxation6. Operating Loss
The operating loss is stated after charging: Group Company
2010 2009 2010 £ £ £Fees payable to the Company's auditors forthe audit of the Parent Company andconsolidated accounts 11,000 - 11,000Fees payable to the Company's auditors fortax and other services 1,000 - 6,750Net foreign exchange losses 12,290 - 8,511Operating lease rentals 3,051 - 24,000Depreciation 299 - 299
Auditors remuneration of £35,550 charged during the year in respect of the PLUS listing and subsequent acquisition and AIM listing has been included within issue costs and offset against share premium.
7) Property, Plant and Equipment
Group Computer equipment £CostAs at 1 January and 31 December 2009 -Acquired on reverse acquisition 2,298As at 31 December 2010 2,298
Depreciation
As at 1 January and 31 December 2009 -Charge for the year 299As at 31 December 2010 299Net book value as at 1 January and 31 December 2009 -Net book value as at 31 December 2010 1,999 Company Computer equipment £CostAs at 10 February 2010 -Additions 2,298As at 31 December 2010 2,298 DepreciationAs at 10 February 2010 -Charge for the period 299As at 31 December 2010 299Net book value as at 10 February -
2010
Net book value as at 31 December 1,9992010 8) Intangible Fixed Assets Group 2010 2009 Goodwill at Cost and Net Book Value £ £At 1 January - -Goodwill arising on acquisition 1,620,244 -Impairment losses (1,620,244) -As at 31 December - -
Goodwill arose on the reverse acquisition of Noricum Gold Limited (refer note 10). The balance has been impaired in full as the Directors do not consider this reflects any increase in the value of the group's assets.
Group 2010 2009
Exploration & Evaluation at Cost and Net Book Value £ £ Balance as at 1 January
- -Additions 814,534 -As at 31 December 814,534 -
Exploration and evaluation assets are acquired.
Exploration projects in Austria are at an early stage of development and no JORC or non-JORC compliant resource estimates are available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances which could indicate the existence of impairment:
- The Group's right to explore in an area has expired, or will expire in the near future without renewal. - No further exploration or evaluation is planned or budgeted for. - A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves. - Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.
Following their assessment the Directors concluded that no impairment of exploration and evaluation assets was necessary during the year ended 31 December 2010.
9) Investments in Subsidiary Undertakings
Company 2010 2009 £ £Shares in Group UndertakingsAt 1 January - -Additions 20,850,000 -Disposals - -At 31 December 20,850,000 -Loans to Group undertakings 54,649 -Total 20,904,649 -
On 17 December 2010 the Company issued 400,000,000 ordinary shares and £850,000 cash as consideration for the acquisition of Kibe Investments No.2 Limited. The ordinary shares were valued at their acquisition date fair value of £0.05 per share.
Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less impairment provision.
Details of Subsidiary Undertakings
Parent ShareName of Place of company Registered capital Principalsubsidiary establishment capital held activities
Kibe Investments British Noricum Gold Ordinary 100% Dormant No.2 Limited Virgin Limited shares US$12
Islands
Gold Mining Austria Kibe Ordinary 100% Exploration Company GmbH (1)
Investments shares No.2 Limited €35,000
(1) on 25 February 2011 Gold Mining Company GmbH changed its name to Noricum Gold AT GmbH
10. Business Combination
On 17 December 2010 the Group acquired 100% of the share capital of Kibe Investments No.2 Limited for £20,850,000. Through this acquisition the Group acquired the wholly owned subsidiary of Kibe Investments No.2 Limited, Gold Mining Company GmbH, an Austrian based company with licences for the exploration and evaluation of precious and base metals. As a result of the acquisition the Group will be able to conduct exploration and evaluation work on the various exploration project sites.
The acquisition has been treated as a reverse acquisition and hence accounted for in accordance with IFRS 3, as set out in the accounting policies. The following table summarises the consideration paid for Noricum Gold Limited through the reverse acquisition and the amounts of the assets acquired and liabilities assumed at the acquisition date.
In accordance with IFRS 3, goodwill under a reverse acquisition is calculated on the net assets of the legal parent. The goodwill of £1,620,244 arising from the acquisition is attributable to the value of the parent company being an AIM listed entity to Kibe Investments No.2 Limited. The Directors do not consider goodwill reflects an increase in the Group's assets and therefore have impaired the goodwill in full.
Consideration at 17 December 2010 £
Equity instruments in issue (43,334,667 ordinary shares at 5p 2,166,734 each) Less cash consideration
(850,000)Total consideration 1,316,734 Recognised amounts of identifiable assets acquired andliabilities assumedCash and cash equivalents 256,166Property, plant & equipment 2,298Trade and other receivables 379,382Trade and other payables (941,356)Total identified net liabilities (303,510)Goodwill 1,620,244
In a reverse acquisition the acquisition date fair value of the consideration transferred by Kibe No.2 Investments Limited ("Kibe") is based on the number of equity instruments that Kibe would have had to issue to the owners of Noricum Gold Limited to give the owners of Noricum Gold Limited the same percentage of equity interests that results from the reverse acquisition. However, in the absence of a reliable valuation of Kibe, the cost of the combination was calculated using the fair value of all the pre-acquisition issued equity instruments of Noricum Gold Limited at the date of acquisition less the cash consideration. The fair value was based on the published price of the Noricum Gold Limited shares on 17 December 2010 immediately prior to the acquisition.
Acquisition related costs of £204,467 were recognised in the parent entity's profit or loss. These costs were incurred prior to the date of acquisition and have therefore been eliminated on consolidation along with other pre-acquisition losses in the parent in accordance with the requirements of IFRS 3 as outlined in the accounting policies.
Noricum Gold Limited did not contribute any revenue to the Group since the acquisition on 17 December 2010. The Group statement of comprehensive income includes an operating loss of £247,839 in the period since acquisition, which is attributable to Noricum Gold Limited. Had Noricum Gold Limited been consolidated from 1 January 2010, the consolidated statement of comprehensive income would show revenue of £nil and a loss of £2,295,496.
11. Trade and Other Receivables
Group Company 2010 2009 2010 £ £ £VAT receivable 27,033 - 22,007Other receivables 6,502 - 6,502 33,535 - 28,509
Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values stated above.
The carrying amounts of the Group and Company's trade and other receivables are denominated in the following currencies:
Group Company 2010 2009 2010 £ £ £ UK Pounds 28,509 - 28,509Euros 5,026 - - 33,535 - 28,509
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.
12. Cash and Cash Equivalents Group Company 2010 2009 2010 £ £ £Cash at bank and on hand 1,556,072 - 1,555,892All of the Group's cash at bank is held with institutions with anAA credit rating.13. Trade and Other Payables Group Company 2010 2009 2010 2009 £ £ £ £Trade payables 74,422 - 74,422 -Accrued expenses 35,801 - 35,801 -Other payables 150 150 - 110,373 - 110,373 -14. Share CapitalOn 15 December 2010 the shareholders approved the removal of theCompany's authorised share capital and so there is no limit on the number ofshares the Company is authorised to issue. On that date the shareholders alsoapproved the removal of the nominal value of the shares, as permitted underlocal company legislation.Issued share capitalGroup Number of Ordinary Share Total shares shares premium £ £ £At 1 January 2010 12 7 - 7Capital contributions - - 788,550 788,550Reverse acquisition 444,334,665 (7) 20,126,048 20,126,041Issue of new shares - 17 December 52,899,478 - 1,566,465 1,566,465
2010
Transfer of impairment of goodwill - - (1,620,244) (1,620,244)At 31 December 2010 497,234,155 - 20,860,819 20,860,819Company Number of Ordinary Share shares shares premium Total £ £ £On incorporation 10 February 2010 1 - - -Founder shareholders - 27 April 2010 5,400,000 27,000 - 27,000
Issue of new shares - 26 May 2010(1) 31,677,200 158,386 526,772 685,158 Issue of new shares - 16 June 2010 1,000,000 5,000 20,000 25,000 Issue of new shares - 19 August 2010 5,257,476 26,287 151,152 177,439 Amendment to share par value
(216,673) 216,673 -Issue of new shares - 17 December 453,899,478 - 21,566,465 21,566,465
2010(2)
At 31 December 2010 497,234,155 - 22,481,062 22,481,062
(1) Includes issue costs of £106,772
(2) Includes issue costs of £589,514
On 19 August 2010 the Company issued 5,257,477 ordinary shares fully paid at 3.375 pence per share in settlement of exclusivity fees relating to the acquisition of Kibe No.2 Investments Limited. The value of these shares was calculated with reference to the fair value of the services rendered.
On 17 December 2010 the Company issued 1,000,000 ordinary shares fully paid at 4 pence per share in settlement of certain professional fees in relation to the share placing on the same date. The value of these shares was calculated with reference to the fair value of the services rendered.
15. Share Options and Warrants
Share options outstanding and exercisable at the end of the year have the following expiry dates and exercise prices:
Shares Exercise price in £Expiry date per share 2010 200916 December 2012 0.03 20,538,600 -16 December 2012 0.04 15,000,000 -16 December 2013 0.04 5,381,745 - 40,920,345 -
The options are exercisable starting immediately from the date of grant and lapse on the second or third anniversary of the date of grant. The weighted average life of the options and warrants as at 31 December 2010 is 2.1 years. The Company or Group has no legal or constructive obligation to settle or repurchase the options in cash.
The fair value of the share options was determined using the Black Scholes valuation model. The parameters used are detailed below:
2010 2010 2010 Options Warrants 2010 Options WarrantsOption granted on: 26/05/2010 26/05/2010 17/12/2010 17/12/2010Option life (years) 2.5 years 2.5 years 2 years 3 yearsRisk free rate 2.31% 2.31% 2.31% 2.31%Expected volatility 13% 13% 13% 13%Expected dividend yield - - - -Marketability discount 20% 20% 20% 20%Total fair value of options 34 317 144 56
granted (£000)
Options and warrants issued on 26 May 2010 were modified as part of the AIM listing, with the option and warrant life being extended to 2 years from the date of admission to AIM (17 December 2010). In accordance with IFRS 2, these options and warrants have therefore been revalued as at the modification date.
The expected volatility for the options and warrants granted on 17 December 2010 is based on the historical share price volatility of similar AIM listed entities from their date of admission to AIM (first day of dealings) up to the completion of the first six months of trading. This is considered to be the most reasonable measure of expected volatility, given the relatively brief trading history of the Company available.
The risk free rate of return is based on zero yield government bonds for a term consistent with the option life.
A reconciliation of options granted over the year to 31 December2010 is shown below: 2010 2009 Weighted Weighted average average exercise exercise Number price (£) Number price (£)Outstanding as at 1 January - - - -Granted 40,920,345 0.035 - -
Outstanding as at 31 December 40,920,345 0.035 - - Exercisable at 31 December 40,920,345 0.035 - -
2010 2009 Weighted Weighted Weighted Weighted Weighted average average Weighted average averageRange of average remaining remaining average remaining remainingexercise exercise life life exercise Number life life
prices price Number of expected contracted price of expected contracted(£) (£) shares (years) (years) (£) shares (years) (years) 0.03 0.03 20,538,600 1.95 1.95 - - - - 0.04 0.04 20,381,745 2.2 2.2 - - - -
No options were exercised during the period. The total fair value charged to the statement of comprehensive income for the year ended 31 December 2010 was £178,435 (2009: £nil).
Group Company 2010 2009 2010 £ £ £Net foreign exchange (losses) (12,290) - (8,511)17. Employees
The Group had no full time employees during the year. The Directors and Company Secretary provided professional services as required on a part-time basis. Details of Directors' fees are disclosed in Note 18.
18. Directors' Remuneration
Directors' Fees Options Issued Total 2010 2009 2010 2009 2010 2009 £ £ £ £ £ £Executive DirectorsGregory Kuenzel (1) 33,000 - 56,631 - 89,631 -Non-executiveDirectorsMarcus Edward-Jones 14,000 - 65,173 - 79,173 -(2)Edward McDermott (3) 14,000 - 8,542 - 22,542 -Jeremy Whybrow (4) 1,000 - 48,089 - 49,089 - 62,000 - 178,435 - 240,435 -
(1) Appointed on 10 February 2010
(2) Appointed on 9 April 2010
(3) Appointed on 9 April 2010 and resigned on 17 December 20101
(4) Appointed on 17 December 2010
No pension benefits are provided for any Director.
19. Finance Income Group Company 2010 2009 2010 £ £ £Interest received from Bank 105 - 282Net Finance Income 105 - 28220. Taxation
The tax on the Group's loss before taxation differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows:
Group Company 2010 2009 2010 £ £ £Loss before tax (1,891,550) - (651,787)
Tax at the applicable rate of 28% (2009: (529,634) - (182,500) 28%) Expenditure not deductible for tax
503,870 - 107,524
purposes
Net tax effect of losses carried forward 25,764 - 74,976 Tax charge
- - -
No charge to taxation arises due to the losses incurred.
The Group has tax losses of approximately £287,429 (2009: £nil) available to carry forward against future taxable profits. The Company has tax losses of approximately £267,775 available to carry forward against future taxable profits. A deferred tax asset has not been recognised because of uncertainty over future taxable profits against which the losses may be utilised.
21. Loss per ShareGroup
The calculation of the total basic loss per share of 0.98 pence (2009: £nil) is based on the loss attributable to equity owners of the parent company of £1,891,550 (2009: £nil) and on the weighted average number of ordinary shares of 193,037,020 (2009: 180,000,000) in issue during the period.
In accordance with IAS 33 the weighted average number of shares used for the comparative period and the period prior to acquisition has been restated for the effect of the reverse acquisition.
Company
The calculation of the total basic loss per share of 1.32 pence is based on the loss attributable to equity owners of the Company of £651,787 and on the weighted average number of ordinary shares of 49,292,418 in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share areidentical as the effect of the exercise of share options or warrants would beto decrease the loss per share. Details of share options that couldpotentially dilute earnings per share in future periods are set out in Note15.22. Expenses by Nature Group Company 2010 2009 2010 £ £ £ Directors' fees 15,334 - 62,000Establishment expenses 3,054 - 24,000Loss on foreign exchange 12,290 - 8,511Goodwill impairment 1,620,244 - -Acquisition related costs - - 204,467expensedShare option expenses 174,945 - 178,435Other expenses 65,788 - 174,656Total operating expenses 1,891,655 - 652,06923. Commitments(a) Royalty agreements
As part of the contractual arrangement with Kibe No.1 Investments Limited, and in connection with the business combination detailed in note 10, the Group has agreed to pay a royalty on revenue from gold sales arising from gold mines developed by Gold Mining Company GmbH and covered by licenses acquired by Kibe No.1 Investments Limited. Under the terms of the Royalty Agreement between Kibe No.1 Investments Limited and Gold Mining Company GmbH, the Group shall pay royalties, based on total ounces of gold sold, equal to US$1 for every US$250 of the sale price per ounce.
As part of a contractual arrangement with Ord Resources GmbH, the Group has agreed to pay a royalty on revenue from gold sales arising from gold mines developed by Gold Mining Company GmbH and covered by the licenses acquired from Ord Resources GmbH. Under the terms of the Royalty Agreement with Ord Resources GmbH, the Group shall pay royalties based on the total ounces of gold sold, at a rate equal to US$2 for each ounce sold.
(b) Operating lease commitments
The Group leases office premises under a non-cancellable operating lease agreement. The lease is on an annual contract renewable at the end of the lease period at market rate. The lease is cancellable by either party at 6 months notice. The lease expenditure charged to profit or loss during the year is disclosed in note 6.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Group 2010 2009 £ £ Not later than one year 18,000 -
24. Related Party Transactions
Loan from Noricum Gold Limited to Gold Mining Company GmbH
As at 31 December 2010 there were amounts receivable of £54,649 from Gold Mining Company GmbH. No interest was charged on the loan.
All Group transactions are eliminated on consolidation.
Other Transactions
Freeside Limited, a company of which Gregory Kuenzel is a Director and beneficial owner, was paid a fee of £22,325 for company secretarial, accounting services and the provision of administrative and receptionist services to Noricum Gold Limited. No balance was outstanding at the year-end.
25. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
26. Posting of Reports and Accounts
The Company's Report and Accounts and Notice of Annual General Meeting has been posted to shareholders today and is also available on the Company's website at www.noricumgold.com.
vendor