11 May 2007 08:06
MARIANA RESOURCES LTDAIM and PLUS code: MARL11 May 2007This Report should be read in conjunction with the published Annual Financial Statementswhich have been sent to all shareholders today. A copy of the Annual Financial Statements has been posted on the Mariana website (www.marianaresources.com).
DIRECTOR'S REPORT
The directors present their report for the year ended 31 December 2006. The company was incorporated on 31 January 2006; consequently the report covers less than a full year and there is no comparative information for the previous year.
PRINCIPAL ACTIVITIES
The principal activities of the company are investment and the exploration for minerals, principally gold, silver and copper in Argentina, Chile and Ecuador.
BUSINESS REVIEW
The results for the Group are set out in Financial Statements accompanying this report. The directors do not recommend the payment of a dividend. Reviews of the company's activities are set out in the Chairman's Review and Exploration Review.
RISK
Exploration risks
Exploration for minerals involves significant degrees of risk. Until such time as it has or acquires a tenement which contains an economically exploitable mineral deposit, the company is likely to operate at a loss.
Foreign Exchange risk
The Group operates internationally and therefore is exposed to the effects of changes in currency exchange rates. The company has cash resources principally denominated in Pounds but the majority of its expenditure is denominated in other currencies. The Group does not currently hedge these risks.
Environmental risks
The group's projects are subject to relevant environmental legislation and will themselves have varying levels and types of potential environmental impacts. Like most countries, Argentina, Chile and Ecuador have laws and regulations regarding environmental matters, including disturbance and rehabilitation issues and the discharge of hazardous waste and materials. These are dealt with in the normal course of operations. In general terms the minerals industry has become subject to increasing environmental responsibility and liability. The potential for liability is an ever- present risk, which the company mitigates through sound operational practices and appropriate insurance where available at reasonable cost. Political risks
Political climate, changes in government, monetary policies, taxation and other laws and regulations can have a significant influence on the outlook for projects and companies.
DIRECTORS AND DIRECTORS' INTERESTS
The directors who held office during the year are:
John Robert Horsburgh (Age 61) ARSM, MSc, DIC, FAIMM, Chairman
John Horsburgh, a graduate of the Royal School of Mines, is a geologist with more than 30 years experience in exploration, project development and company management. He was a co-founder of Solomon Pacific Resources NL which achieved success with the discovery and development of the Brocks Creek gold mine in the Northern Territory in Australia. As Executive Chairman he was involved in the acquisition, exploration and financing if the project. Prior to this he was Exploration Manager for SE Australia with Getty Oil Development (minerals division). Before Getty, John gained extensive exploration experience with Billiton and the RTZ Group in Australia, South America and Europe. He is a director and co-founder of Cullen Resources Ltd.
John Sutcliffe (Age 62) BSC, ARSM, FGS, MIMM, C. Eng., Managing Director
John Sutcliffe graduated from the Royal School of Mines and has 38 years experience in Latin America, Spain and the Middle East. John, South America specialist, has managed successful exploration for Anglo American, Shell- Billiton, International Minerals Corp, Antofagasta Holdings and Greenwich Resources. He led teams which discovered the Rio Narcea gold belt, now in production, the Rio Blanco bonanza gold- silver deposit in Ecuador, (feasibility stage), the Pallancata bonanza silver-gold deposit in Peru (feasibility study) and the Dos Amigo porphyry copper deposit in Chile (producing mine). He has been involved in significant copper and gold discoveries in the Middle East and Central America. As initiator and manager of the Billiton office in Chile, he was responsible for identifying the potential of the Collahuasi copper district. He speaks Spanish fluently and is based in Quito, Ecuador.
Grahame Hamilton (Age 57) BSc, MSc, MAIG, Executive Director
Grahame Hamilton, a graduate of University of New South Wales and James Cook University, has over 30 years experience in exploration, corporate and project management. He has wide- ranging expertise in project evaluation. Between 1994 and 1996, he managed the Brocks Creek exploration, environmental impact statement, feasibility study, mine development and construction for Solomon Pacific Resources NL, of which he was co-founder. Before Solomon, Grahame managed the minerals division of Getty Oil Development in Queensland, Australia.
Roger Thomson (Age 61) BSc, ARSM, MAIMM, MAIG, Non-executive Director
Roger Thomson, a graduate of the Royal School of Mines, is a geologist with more than 30 years experience in mineral exploration, mining geology and management in Australia, South America and South East Asia. He has held the positions of General Manager Exploration with Delta Gold Ltd and Sons of Gwalia Ltd and has been responsible for, or closely associated with, making economic discoveries of gold and tantalum in Australia. Roger successfully managed the programme that led to the discovery of the multi-million ounce Sunrise gold deposit near Laverton in Western Australia. He is a director of Image Resources NL and Meteoric Resources NL.
The directors who held office during the year had the following interests in ordinary shares in the company.
ORDINARY SHARES OF ‚£ 0.001 Held at 31 Dec 2006 Held at 31 Jan 2006 J R Horsburgh 1,520,002 2 J Sutcliffe 925,000 Nil G Hamilton 1,449,002 Nil R Thomson 198,500 Nil
John Horsburgh's interest in ordinary shares includes 1,285,000 shares held by Dunslair Pty Ltd and 235,000 shares held by Innerleithen Pty Ltd.
Grahame Hamilton's interest in ordinary shares includes 1,302,502 shares held by Kitchsmith Pty Ltd, 106,500 held by Weeroona Investments Pty Ltd and 40,000 shares held jointly with his wife Janet Hamilton.
John Sutcliffe's interest in ordinary shares includes 75,000 shares held by his son and 50,000 shares held by his wife.
All of the shares issued to directors and related parties during the period were issued either as a result of the acquisition by the parent company of all of the issued securities of Mariana Exploration Pty Limited (formerly Mariana Resources Limited, incorporated in Australia), or through their participation in the company's initial public offering prior to listing on AIM. Each share held in Mariana Exploration Pty Ltd was exchanged for one share in Mariana Resources Ltd. All of the interests in ordinary shares held by directors or related parties are subject to lock-in agreements dated 15 May 2006 whereby directors may not dispose of the interests in ordinary shares held by them until 19 May 2007.The directors who held office during the year had the following interests in options over ordinary shares in the company. Director No. held on During the period No. held at Exercise Expiry date 31 Jan. 2006 Granted Expired end of year price (pence) J R Horsburgh Nil 500,000 - 500,000 4 25/08/2008 14/10/2008 200,000 - 200,000 4 16/11/2008 100,000 - 100,000 4 11/05/2009 150,000 - 150,000 6 11/05/2009 150,000 - 150,000 8 J Sutcliffe Nil 250,000 - 250,000 4 14/10/2008 11/05/2009 300,000 - 300,000 6 15/06/2010 400,000 - 400,000 8 G Hamilton Nil 200,000 - 200,000 4 25/08/2008 14/10/2008 200,000 - 200,000 4 11/05/2009 150,000 - 150,000 6 11/05/2009 150,000 - 150,000 8 R Thomson Nil 200,000 - 200,000 4 25/08/2008 14/10/2008 200,000 - 200,000 4 16/11/2008 100,000 - 100,000 4 11/05/2009 150,000 - 150,000 6 11/05/2009 150,000 - 150,000 8 All of the options granted to directors during the period were granted as a result of the acquisition by the parent company of all of the issued securities of Mariana Exploration Pty Limited (formerly Mariana Resources Limited, incorporated in Australia). Each option held in Mariana Exploration Pty Ltd was exchanged for one option in Mariana Resources Ltd having the same terms as the Mariana Exploration Pty Ltd option.
SIGNIFICANT SHAREHOLDERS
At 31 December 2006, in addition to holdings of directors the following held more than a 3% interest in the issued shares of the company.
No. held % of share capital Roy Nominees Limited 3,700,000 10.45 Securities Services Nominees Limited 3,477,500 9.82 Chase Nominees Limited 3,400,000 9.60 Apex Silver Mines Limited 3,117,500 8.81 Goldman Sachs Securities (Nominees) Limited 2,575,000 7.27 Morstan Nominees Limited 1,500,000 4.24 RMB Australia Holdings Limited 1,250,000 3.53 Alexander Mining PLC 1,165,000 3.29 26,395,500 74.55 CORPORATE GOVERNANCEThe directors acknowledge the importance of the guidelines set out in the Combined Code on Corporate Governance. They therefore intend to comply with the Combined Code so far as is appropriate having regard to the size and nature of the company.
BOARD STRUCTURE AND COMMITTEES
The Board comprises three executive directors and one non-executive director. The roles of Chairman and Managing Director are separate, ensuring a division of responsibilities at the head of the company. The Chairman conducts Board and shareholder meetings and ensures all directors are properly briefed. The Board is responsible for formulating, reviewing and approving the company's strategy, budgets and major items of capital expenditure. The directors have access to independent advice at the Company's expense.
Each of the directors must retire by rotation at least every three years when they can offer themselves for re-election if eligible.
The Board has established three committees;
* Audit Committee, consisting of Grahame Hamilton and Roger Thomson; * Remuneration Committee consisting of John Horsburgh and Roger Thomson; and * Nomination Committee, consisting of John Horsburgh and Roger Thomson.
INTERNAL CONTROLS
The Board is responsible for maintaining a sound system of internal controls to safeguard shareholders' investment and the Group's assets. The directors monitor the operation of internal controls. The objective of the system is to safeguard Group assets, ensure proper accounting records are maintained and that financial information used within the business and for publication is reliable. Any such system of control can only provide reasonable but not absolute assurances against material loss or misstatement. The Board has reviewed the operation and effectiveness of the company's system of internal controls for the financial period and for the period up to the approval of the financial statements. DIRECTORS' REMUNERATION
All matters concerning the remuneration of executive directors are considered by the Remuneration Committee.
REMUNERATION POLICY The Remuneration Committee's policy is that director's remuneration be commensurate with services provided by them to the company. The remuneration of all directors is considered by the Committee and comprises basic salary only. There are no formal bonus arrangements in place or other long-term incentive schemes; however all directors hold share options issued prior to the company's listing on AIM.
SHAREHOLDER RELATIONS
Communications with shareholders are considered important by directors. The executive directors speak regularly with investors and analysts. Company press releases and circulars have been issued regularly issued during the reporting period and subsequent to balance date to keep investors informed about the company's progress.
The company maintains a web site, www.marianaresources.com which is regularly updated and contains a wide range of information about the company.
FINANCIAL REPORTS AND ACCOUNTING STANDARDS
The company was incorporated on 31st. January 2006. Consequently the financial statements to 31st. December 2006 are not in respect of a full year and do not contain comparative statements for the previous year. The company has adopted International Financial Reporting Standards from incorporation.
EVENTS AFTER BALANCE DATE
Other than matters referred to in the financial statements and business review, there are no significant events affecting the company since 31 December 2006.
AUDITORS
A resolution proposing the reappointment of RSM Robson Rhodes (Guernsey) Limited will be put to the annual general meeting of the company.
Date 8th May 2007 By order of the Board J. R Horsburgh Chairman MARIANA RESOURCES LIMITED
Statement of directors' responsibilities in respect of the financial statements
Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the Group for that year. In preparing those financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently; * make judgements and estimates that are reasonable and prudent; * state whether applicable accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and * prepare the financial statements on the going concern basis unless it is inappropriate
to presume that the Group will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and the company and to enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 1994. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.-----------------------------====================------------------------------
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF MARIANA RESOURCES LIMITED
We have audited the consolidated financial statements of Mariana Resources Limited and controlled entities for the period ended 31 December 2006 on pages 25 to 39. These financial statements have been prepared under the accounting policies set out therein.This report is made solely to the company's shareholders, as a body, in accordance with section 64 of the Companies (Guernsey) Law, 1994. Our audit work has been undertaken so that we might state to the company's shareholders those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable Guernsey law and International Financial Reporting Standards (IFRSs) are set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and have been properly prepared in accordance with the Companies (Guernsey) Law, 1994.
In addition we report to you if, in our opinion, the Directors' Report is inconsistent with the financial statements, if the company or group has not kept proper accounting records, or if we failed to obtain all access, information and explanations we require for our audit.We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The other information comprises the Directors' Report, the Exploration Review and the Chairman's Review. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
OPINION
In our opinion:
* the consolidated financial statements give a true and fair view, in accordance with IFRSs,
of the state of the company's affairs as at 31 December 2006 and of its loss and cash flows
for the eleven months then ended; and
* the consolidated financial statements have been properly prepared in accordance with the
Companies (Guernsey) Law, 1994.
RSM Robson Rhodes (Guernsey) Limited Chartered Accountants Guernsey, Channel Islands 8th May 2007-----------------------------====================------------------------------ CONSOLIDATED PROFIT AND LOSS ACCOUNT for the financial period ended 31 December 2006 Notes 2006 ‚£ TURNOVER - OPERATING EXPENSES Administrative expenses 474,886 Net operating expenses 474,886 OPERATING LOSS 474,886 Interest receivable 1 63,614 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 2 (411,272) Taxation on loss on ordinary activities 6 - LOSS FOR THE FINANCIAL PERIOD (411,272)
LOSS PER SHARE - BASIC AND DILUTED 7 (1.5)
(Pence)
The operating loss for the financial period arises from the group's continuing operations.
There is no difference between results reported above and their historical cost equivalents.
The accompanying notes are an integral part of these consolidated financial statements.
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIESCONSOLIDATED BALANCE SHEET at 31 December 2006 Notes 2006 ‚£ FIXED ASSETS Intangible assets 8 966,508 Tangible assets 9 97,314 1,063,822 CURRENT ASSETS Debtors 24,302 Cash at bank and in hand and on deposit 16 2,491,258 2,515,560 CREDITORS Amounts falling due within one year 11 126,637 NET CURRENT ASSETS 2,388,923 NET ASSETS 3,452,745 CAPITAL AND RESERVES Called up share capital 12 3,539 Share premium 13 3,896,333 Other reserves (35,855) Profit and loss account (411,272) EQUITY SHAREHOLDERS' FUNDS 15 3,452,745
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the board on 8th May 2007 J.R. Horsburgh - ChairmanG. Hamilton - DirectorMARIANA RESOURCES LIMITEDCOMPANY BALANCE SHEET at 31 December 2006 Notes 2006 ‚£ FIXED ASSETS Investments 10 1,452,317 1,452,317 CURRENT ASSETS Cash at bank and in hand and on deposit 2,065,118 CREDITORS Amounts falling due within one year 11 95,417 NET CURRENT ASSETS 1,969,701 NET ASSETS 3,422,018 CAPITAL AND RESERVES Called up share capital 12 3,539 Share premium 13 3,896,333 Profit and loss account (477,854) EQUITY SHAREHOLDERS' FUNDS 15 3,422,018Approved by the board on 8th May 2007 J.R. Horsburgh - ChairmanG. Hamilton - Director
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the financial period ended 31 December 2006
Called up Share Capital Share Premium Other Profit and (Note 12) (Note 13) Reserves Loss Account Total ‚£ ‚£ ‚£ ‚£ ‚£ Balance at beginning of period - - - - - Issue of share capital 3,539 3,896,333 - - 3,899,872 Foreign Exchange Losses - - (35,855) - (35,855) Net loss for the period - - - (411,272) (411,272) Balance at end of period 3,539 3,896,333 (35,855) (411,272) 3,452,745
The accompanying notes are an integral part of these consolidated financial statements.
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED CASHFLOW STATEMENT for the financial period ended 31 December 2006
Notes 2006 ‚£ CASH OUTFLOW FROM OPERATING ACTIVITIES (435,831) Returns on investments 63,614 Capital expenditure and financial investment (319,797) CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (692,014) Management of liquid resources 1,750,000 Financing 3,183,272 INCREASE IN CASH IN THE PERIOD 4,241,258
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET CASH FUNDS
Increase in cash in the period 4,241,258 Cash inflow from increase in liquid resources (1,750,000) NET FUNDS AT BEGINNING OF FINANCIAL PERIOD - NET FUNDS AT END OF FINANCIAL PERIOD 2,491,258
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the financial period ended 31 December 2006
Notes 2006 ‚£ Loss for the financial period 411,272 Foreign currency translation adjustments relating to subsidiary undertakings 35,855 TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE PERIOD 447,127
The accompanying notes are an integral part of these consolidated financial statements.
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
ACCOUNTING POLICIES for the financial period ended 31 December 2006
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with the International Financial Reporting Standards.
In common with many exploration companies, the company raises finance for its exploration and appraisal activities. Further funding is raised as and when required. When any of the group's projects move to the development stage, specific funding will be required. The directors are of the opinion that the current cash balances will be adequate to enable the group to undertake its planned activities for the next 12 months and accordingly have prepared the accounts on a going concern basis.
BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to 31 December 2006. The acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired or disposed of in the period are included in the Consolidated Profit and Loss Account from the date of acquisition or up to the date of disposal.
INTANGIBLE FIXED ASSETS
All costs directly relating to the acquisition, exploration and development incurred by the company or its subsidiary undertakings on its mineral properties are carried as intangible assets until such time as it is determined that there are commercially exploitable reserves at which time such costs will be transferred to tangible fixed assets to be amortised over the expected productive life of the asset. Such costs include appropriate technical and administrative expenses but not general overheads. The directors periodically review the intangible assets for impairment and where a project is abandoned or is considered not to be economically viable, the related costs are written off. TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at historical cost less provisions for depreciation or impairment.
Depreciation is provided on all tangible fixed assets at rates calculated to write each asset down to is estimated residual value evenly over its expected useful life as follows:
* Office furniture and equipment ........10% to 33.36% straight line * Vehicles ..............................20% straight line
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains or losses on translation are included in the Profit and Loss Account. The assets and liabilities of overseas subsidiary undertakings are translated at the closing exchangerates. Profit and Loss Accounts of such undertakings are consolidated at the average rates of exchange during the year. Gains and losses arising on these translations are taken to reserves.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those which they are recognised in the financial statements. Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary or associate. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.
REVENUE
Revenue comprises interest on deposits. It is recognized as it is earned.
IMPAIRMENT
The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is the higher of its net selling price and its value in use. In assessing value in use, the expected future cashflows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. Impairment losses are recognised in the Profit and Loss Account. A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior years.
INVESTMENTS
Long term investments representing interests in subsidiary undertakings are stated at cost in the company's book less any provision for impairment in the value of the fixed asset investment.
Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are readily convertible into known amounts of cash at their carrying values. Liquid resources comprise term deposits of less than one year.
COMPARATIVE INFORMATION
The Company was incorporated on 31 January 2006. Accordingly, comparative information is not presented.
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS for the financial period ended 31 December 2006 1. INTEREST RECEIVABLE 2006 ‚£ Bank interest receivable 63,614 63,614
2. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
2006 ‚£ Loss on ordinary activities before taxation is stated after charging/(crediting): Auditors' Remuneration - audit 27,134 Depreciation and amounts written off tangible fixed assets 9,752 Exchange losses 17,864
3. REMUNERATION OF DIRECTORS
Salary Superannuation Fees Total Contributions ‚£ ‚£ ‚£ ‚£ John Sutcliffe - - 73,503 73,503 John Horsburgh 25,496 2,295 - 27,791 Grahame Hamilton 17,233 1,551 - 18,784 Roger Thomson 3,266 838 6,047 10,151 45,995 4,684 79,550 130,229
The Company does not have a pension scheme. Superannuation Contributions paid are defined contributions to the relevant director's personal pension scheme.
4. EMPLOYEES
The average number of employees during the period, including directors was 27.
The aggregate payroll costs of these persons were as follows:
2006 ‚£ STAFF COSTS Wages and salaries 89,654
Social Security cost 19,124
108,778 5. SEGMENTAL ANALYSIS
The group has one business segment, that of mineral exploration. An analysis of loss on ordinary activities before taxation and net assets by geographical area is given below:
2006 ‚£
A) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
Ecuador (79,300) Chile (24,535) Argentina (6,874) Australia (88,060) Guernsey (477,854) Reclassification of capitalised exploration costs* 265,351 (411,272) B) NET ASSETS Ecuador (78,789) Chile 24,535 Argentina (4,879) Australia 447,724 Guernsey 3,422,018 Reclassification of capitalised exploration costs and consolidation adjustments* (357,864) 3,452,745* Reclassification of expenses represent exploration costs incurred and expensed by various entities, but capitalised in the consolidated balance sheet, so as to properly reflect the consolidated position.6. TAXATION 2006 ‚£ CURRENT TAX - Total current tax - FACTORS AFFECTING TAX CHARGE FOR THE PERIOD Loss on ordinary activities (411,272)
Tax on loss of ordinary activities at 0% -
Effects of: Higher rates of tax on overseas income 29,326 Unrelieved tax losses carried forward (29,326) The Group's unrelieved tax losses of ‚£29,326 have not been recognised as a deferred tax asset, as there is currently insufficient evidence that the asset will be recoverable in the foreseeable future. 7. LOSS PER SHARE The calculation of basic and diluted loss per ordinary share is based on the following losses and number of shares: 2006 ‚£ Loss for the financial period 411,272 Weighted average number of shares 27,912,122Due to the loss incurred in the period, there is no dilutive effect from the issue of share options. 8. INTANGIBLE FIXED ASSETS 2006 ‚£ EXPLORATION COSTS, GROUP Cost At beginning of financial period - Additions 966,508 AT END OF PERIOD 966,5089. TANGIBLE FIXED ASSETS 2006 ‚£ VEHICLES, FURNITURE, COMPUTERS AND OFFICE EQUIPMENT COSTS, GROUP Cost At beginning of financial period - Additions 107,065 AT END OF PERIOD 107,065 DEPRECIATION At beginning of financial period - Charge for period (9,751) AT END OF PERIOD (9,751)
NET BOOK VALUE AT 31 DECEMBER 2006 97,314
10. INVESTMENTS Shares in Loans to subsidiary subsidiary undertakings undertakings Total ‚£ ‚£ ‚£ COMPANY Cost At beginning of financial period - - - Additions 716,600 735,717 1,452,317 AT END OF PERIOD 716,600 735,717 1,452,317
The undertakings in which the Company's interest at 31st December 2006 is more than 20%, all of which are engaged in mineral exploration, are as follows:
Class of Percentage Country of holding held Incorporation
Mariana Exploration Pty Limited Ordinary 100% Australia
Compania Minera Mariana S.A. Ordinary 100% Ecuador Minera Mariana Argentina S.A. Ordinary 100% Argentina Minera Mariana de Chile Ltda. Ordinary 100% Chile
The Company acquired 100% of Mariana Exploration Pty Limited on 13th March 2006 for total consideration of ‚£716,600.
The assets of Mariana Exploration Pty Limited have been consolidated at their fair values to the group as set out below: 2006 ‚£ NET ASSETS ACQUIRED: Intangible fixed assets 616,133 Tangible fixed assets 4,437 Cash at bank 133,206 Debtors 3,822 Creditors (40,998) 716,600 DISCHARGED BY: Issue of shares 716,600
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company 2006 2006 ‚£ ‚£ Trade creditors 5,014 - Other creditors 12,330 - Accruals 109,293 95,417 126,637 95,417 12. SHARE CAPITAL Group & Company 2006 ‚£ AUTHORISED 100,000,000 ordinary shares of ‚£0.0001 each 10,000 ALLOTTED, ISSUED AND FULLY PAID 35,404,838 Ordinary shares of ‚£0.0001 each 3,539
MOVEMENT IN ISSUED SHARE CAPITAL DURING THE FINANCIAL PERIOD Number Formation of the Company on 31st January 2006.
10,000
Issue of shares for acquisition of Mariana Exploration Pty Limited on 13th March 2006.
17,194,838 Placement of shares at a price of 20 pence each in May 2006. 18,150,000 Exercise of 4 pence options 10,000 Exercise of 8 pence options 40,000 35,404,83813. SHARE PREMIUM Group & Company 2006 ‚£ Premium on shares issued during the period 4,346,661 Share issue costs (450,328) 3,896,333 14. SHARE OPTIONS
At 31 December 2006, the following share options over ordinary shares each of the Company had been granted and not exercised:
Expiry date Number of Exercise price options UK pence 25 August 2008 (a) 1,050,000 4 pence 14 October 2008 (a) 950,000 4 pence 16 November 2008 (a) 200,000 4 pence 17 February 2009 (a) 50,000 4 pence 11 May 2009 (a) 750,000 6 pence 11 May 2009 (a) 450,000 8 pence 14 October 2009 (a) 140,000 8 pence 28 October 2009 (a) 200,000 8 pence 15 June 2010 (a) 400,000 8 pence 6 February 2010 (a) 340,000 8 pence 18 May 2008 (b) 1,452,000 20 pence 18 May 2010 (c) 343,548 25 pence (a) Issued to shareholders and option holders of Mariana Exploration Pty Limited on acquisition of all shares and options of Mariana Exploration Pty Limited by the Company in March 2006. (b) Issued to broker in relation to share placement in May 2006. (c) Issued to Nominated Advisor in relation to share placement in May 2006.
15. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Group Company ‚£ ‚£
Loss for the financial period (411,272) (477,854) Issue of shares
4,350,200 4,350,200 Issue costs (450,328) (450,328) Exchange rate adjustment (35,855) -
Net additions to shareholder funds 3,452,745 3,422,018 Opening shareholders' funds/(deficit) -
- CLOSING SHAREHOLDERS' FUNDS 3,452,745 3,422,018 16. CASH FLOWS A) RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES. 2006 ‚£ Operating loss (474,886) Depreciation 9,752 Foreign exchange losses (35,855) Increase in debtors (20,481) Increase in creditors 85,638
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (435,831)
B) ANALYSIS OF CASHFLOWS FOR HEADINGS NETTED IN THE CASH FLOW
2006 ‚£ RETURNS ON INVESTMENT Interest received 63,614 NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICE OF FINANCE 63,614 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (102,629)
Purchase of subsidiary, net of cash acquired 133,206 Purchase of intangible fixed assets
(350,374) NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (319,797) MANAGEMENT OF LIQUID RESOURCES Increase in cash deposited on fixed term deposit 1,750,000 NET CASH INFLOW/OUTFLOW FROM MANAGEMENT OF LIQUID RESOURCES 1,750,000 FINANCING Proceeds from issue of share capital 3,633,600 Share issue costs (450,328) NET CASH INFLOW FROM FINANCING 3,183,272 NET ASSETS ACQUIRED IN ACQUISITION Intangible fixed assets 616,133 Tangible fixed assets 4,437 Cash assets 133,206 Debtors 3,822 Creditors (40,998) 716,600 Satisfied by: Issue of shares 716,600 716,600 C) ANALYSIS OF NET FUNDS 2006 ‚£ Cash at bank and in hand 741,258
Cash on deposit 1,750,000 2,491,258
17. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
The disclosures set out below exclude short term debtors and creditors.
i) Currency exposure
The Group had the following cash and liquid resources in currencies other than its functional currency.
The amounts are stated as sterling equivalents.
2006 ‚£ CASH AND LIQUID RESOURCES US dollars 100,619 Australian dollars 294,850 Argentina pesos 17,568 Chile pesos 38,798 ii) Financial assets
The Group's funds are held as instant access and term deposits none of which were for a period of more than six months.
Interest earned was at normal market rates.
iii) Fair values
The Group has no significant financial assets and liabilities other than those mentioned above and the fair values are therefore not materially different to the book values, as disclosed in these financial statements.
18. RELATED PARTY DISCLOSURES
Related party disclosures are shown below:
a) Balances with Related Party Transactions
Related Party Relationship Nature of 2006 Transaction ‚£
Mariana Exploration Pty Ltd Subsidiary Intercompany loan 168,812 Compania Minera Mariana S.A. Subsidiary Intercompany loan 415,981 Minera Mariana Argentina S.A. Subsidiary Intercompany loan 76,389 Minera Mariana de Chile Ltda. Subsidiary Intercompany loan 74,535
All of the above loans are interest free. The balances at the beginning of the period were nil;
consequently the movements for the year were equal to the balances at end of period.
b) Transactions with Related Parties
Management fees of ‚£216,515 were payable by Mariana Resources Limited to Mariana Exploration Pty Limited for the year ended 31 December 2006. The amount remained owing at period end and is included in the intercompany loan shown above. 19. CAPITAL COMMITMENTS 2006 ‚£ Capital expenditure contracted for but not provided in the financial statements - -
20. POST BALANCE SHEET EVENTS
There has not been any matter or circumstances occurring subsequent to the end of the financial period that has significantly affected, or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial years.
MARIANA RESOURCES LTD