Audited results for the year ended 31 December 2017
The accompanying accounting policies and notes are an integral part of these financial statements
31 May 2017
Metal Tiger Plc
("Metal Tiger" or the "Company")
Audited results for the year ended 31 December 2017
Metal Tiger (LON: MTR), the natural resources investing company is pleased to announce its audited results for the year ended 31 December 2017.
- Investment gains, both realised and unrealised total £5,457,399 for 2017
- Reinvestment focused on Botswana and Thai IPO
- Increase in net cash in year of £1,455,224 (after net proceeds from share issues of £7,642,604, proceeds of investment sales of £5,402,007, reinvestment in Joint Ventures and Associates of £1,750,325 and further Direct Equity investments of £5,939,179)
- Net Asset Value up 107% and Net Assets per fully diluted share up 39%
- Net Current Assets of £12,616,117 up from £5,675,276 in the Group in prior year
- Overheads before share based payments, Thai IPO costs and increased activity in subsidiaries remained flat year on year at £1,272,000.
Michael McNeilly CEO of Metal Tiger stated: "2017 was a year of great progress for Metal Tiger, with the value of the Company’s interests in Botswana growing substantially and our investments in Direct Equities yielded strong results.
We closed the year concentrating on advancing our core projects with a stronger working capital position.
Progress in the first half of 2018 has been encouraging with the publication by the Botswanan Joint Venture of a PFS that supports the decision to progress towards a Definitive Feasibility Study which is expected to be completed in early 2019. Several drill results have also been published and these will be fundamental to the generation of a robust DFS. Furthermore, environmental permissions have recently been obtained to drill at the T3 Dome and a Phase 1 drill campaign of circa 60 planned diamond drill holes is already underway on several key AEM targets. There is real industry interest in the potential of the Kalahari Copper Belt following MOD/MTR’s success with T3 and the recommencement of exploration. We also await with much anticipation the environmental approvals to drill at T20.
There is significant industry interest that the Kalahari Copper Belt could develop into a copper district which could support significant amounts of economic copper production in the future. It is of course still very early days in terms of exploration.
Metal Tiger continues to actively assess new opportunities which are in line with its investing policy and will continue to actively assess opportunities to crystallise value from its existing investments.
The Board believes that Metal Tiger is in a strong position to take advantage of continued recovery in the natural resource sector.”
The Annual Report and Accounts for the year ended 31 December 2017, along with an explanatory note for shareholders, will be available shortly to view and download from Metal Tiger's website (www.metaltigerplc.com) in accordance with rule 26 of the AIM Rules for Companies along with a notice of Annual General Meeting and form of Proxy. The AGM is scheduled to take place at 10am on 28 June 2018 at the Oriental Club, Stratford House, Stratford Place, London, W1C 1ES.
For further information on the Company, visit: www.metaltigerplc.com:
|Michael McNeilly||(Chief Executive Officer)||Tel: +44(0)20 7099 0738|
|Keith Springall||(Finance Director & Company Secretary)||Tel: +44 (0)20 7099 0738|
|Stephen Allen or Bhavesh Patel|| RFC Ambrian Ltd
|Tel +44 (0)20 3440 6800|
|Charlie Cryer|| RFC Ambrian Ltd
|Tel +44 (0)20 3440 6800|
|Nick Emerson|| SI Capital
|Tel: +44 (0)1483 413 500|
|Rita Adiani||NRG||Tel: +44 (0)20 3709 4504|
| Gordon Poole
|Tel: +44 (0)20 3757 4980|
Notes to Editors:
Metal Tiger plc is listed on the London Stock Exchange AIM Market (“AIM”) with the trading code MTR and invests in high potential mineral projects with a precious and strategic metals focus.
The Company’s target is to deliver a very high return for shareholders by investing in significantly undervalued and/or high potential opportunities in the mineral exploration and development sector timed to coincide, where possible, with a cyclical recovery in the exploration and mining markets. The Company’s key strategic objective is to ensure the distribution to shareholders of major returns achieved from disposals.
Metal Tiger’s Metal Projects Division is focused on the development of its key project interests in Botswana, Spain and Thailand. In Botswana, Metal Tiger has a growing interest in the large and highly prospective Kalahari copper/silver belt. In Spain, the Company has tungsten and gold interests in the highly-mineralised Extremadura region. In Thailand, Metal Tiger has interests in two potentially near-production stage silver/lead/zinc mines as well as licences, applications and critical historical data covering antimony, copper, gold, silver, lead and zinc opportunities.
The Company has access to a diverse pipeline of new opportunities focused on the natural resource sector including physical resource projects, new natural resource centred technologies and resource sector related fintech opportunities. Pipeline projects deemed commercially viable may be undertaken by Metal Tiger or by an AIM or NEX Exchange (formerly ISDX) partner with whom the Company is engaged.
LEI number 213800K1IN6M1VCVPA93
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).
FOR THE YEAR ENDED 31 December 2017
I am pleased to report on the Company’s audited results for the year ended 31 December 2017 which proved to be another major period of growth and development for Metal Tiger plc (“Metal Tiger”).
Metal Tiger closed 2017 with equity investments in a number of publicly listed mining companies (“Direct Equities”), cash at bank, no significant debt and a range of investments directly in mining projects (“Direct Projects”) interests.
The share price of Metal Tiger started 2017 at 1.45p per share and ended 2017 at 2.33p per share, a 61 per cent increase. Metal Tiger’s share price performance was strong and ahead of the mid-tier mining market. The Company’s share price improvement in the year can be compared with the FTSE 350 Mining Index (FTNMX 1770) which started 2017 at 14,799 but closed the year at 18,253 representing a 23 per cent increase. The net assets of Metal Tiger increased from £7.46million to £15.44million during the financial year 2017.
During the year, Metal Tiger continued to invest in undervalued AIM and ASX listed companies holding shares and warrants in eleven listed companies. Metal Tiger’s investments crystallised gains on disposals of investments of £3.92million over cost and a further £1.54million increase in fair value as marked to market as at 31 December 2017.
Another notable event in the year was the “Sprott Private Placement” investment where £4.85million was raised by Exploration Capital Partners and others, and which was the largest capital raise by Metal Tiger to date positioning the Company to advance its share of the exploration programme at its core joint venture in Botswana. The support from this institutional investor and at a placing price of 3p per share and warrants exercisable at 6p, a 9% premium to the closing price on the previous day before issue, was a testament to their conviction in Metal Tiger’s prospects.
The Company worked hard during the year to complete the IPO of its JV in Thailand, the work for which has largely been completed. The IPO has been delayed pending the Minerals Management Master Plan (the “Master Plan”) which has not yet been ratified by the Thailand Government. The Master Plan would designate the Boh Yai and Song Toh mines as Mineral Deposit Areas for mining (“MDAs”), and the Company believed it prudent to postpone the timing of the proposed IPO until further clarity is gained.
The Company continued to invest in ASX-listed MOD Resources Limited, its Joint Venture partner in the Botswana Copper project, such that at the time of writing it owns 138,800,415 shares or 5.996% of MOD Resources Limited’s issued share capital. Meanwhile at the project level the Joint Venture continues to make good progress with the T3 Open Pit Feasibility Study. The preliminary results from the T3 Phase 2 Infill and Expansion Case drilling programme show potential that the overall Mineral Resource at T3 can be increased. This gives confidence to the Open Pit Expansion Case financial model, which shows the T3 project having a pre-tax NPV of US$402million with an IRR or 37% and a 3.3 year payback from production start requiring US$192million capital expenditure. The Company is looking forward to the results of the next resource upgrade and finalisation of the definitive feasibility study, and further exploration work in licence areas where Metal Tiger has a 30% interest.
I would like to take this opportunity to thank all our shareholders, business partners and staff for their help in creating the Company’s success. We are working hard to continually improve the Company’s net worth and maximise the opportunities which are taken on.
30 May 2018
CHIEF EXECUTIVE OFFICER COMMENTARY
FOR THE YEAR ENDED 31 December 2017
I am pleased to present the audited results for the year ended 31 December 2017.
Alongside the financial statements and supporting notes, a full review of business activities during the year is provided within the Strategic Report.
Given that the results are for the period ended 31 December 2017, they reflect a historical position in terms of the Company’s progress and indeed its financial position. To assist therefore we have included within the Strategic Report further information which details key events after the Financial Statement date of 31 December 2017.
The information supplied highlights the substantial progress achieved with the T3 copper project in Botswana and the lead-zinc-silver project in Thailand during 2017 and the date of this report.
Metal Tiger has been actively investing in mining projects and companies since it first came to AIM in mid-2014. We have grown very rapidly during the last three years and expect this rate of growth to continue for the foreseeable future.
When we started in mid-2014 we had a small portfolio of interests and limited working capital. Now we have a robust and diverse portfolio across our two divisions with the strongest working capital position in the Company’s history, and in particular have favourable exposure with respect to copper where the fundamental supply and demand outlook remains strong.
The Metal Tiger board believes we are now emerging from the major resource sector cyclical bottoming and so, with projects and material financial resources, we are well placed to deliver on our key objectives, namely, to generate substantial value for shareholders through Direct Projects.
I would like to place on record my thanks to all the team at Metal Tiger and its advisors who have worked incredibly hard to bring the Company to its strong present position.
And finally, but most importantly, my thanks to the shareholders who have continued to support the Company and to those investors who helped finance the Company. We continue to deliver our strategic objectives of generating value in the resource sector for the benefit of Metal Tiger shareholders.
Chief Executive Officer
30 May 2018
FOR THE YEAR ENDED 31 December 2017
The results of the Group for the year ended 31 December 2017 are set out the Consolidated Statement of Comprehensive Income and show a profit before taxation for the year ended 31 December 2017 of £347,041 (2016 – loss £720,300).
The net asset value of the Company rose to £15.44million from £7.46million being 1.328p per share from 0.958p per share in 2016 on a fully diluted basis.
REVIEW OF THE BUSINESS DURING THE YEAR
The proposed investments to be made by the Company may be: either quoted or unquoted; made by direct acquisition or through farm-ins; may be in companies, partnerships, joint ventures; or direct interests in mining projects. Target investments will generally be involved in projects in the exploration and/or development stage and/or producing mines. The Company's equity interest in a proposed investment may range from a minority position to 100 per cent ownership.
The Company will initially focus on projects located in South East Asia, Australia, Africa and Europe but will also consider investments in other geographical regions. The Directors will identify and assess potential investment targets and, where they believe further investigation is required, intend to appoint appropriately qualified advisers to assist. They believe they have a broad range of sources of potential opportunities.
The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of any potential investment will be subject to appropriate due diligence. It is likely that the Company's financial resources will be invested in a small number of projects or potentially in just one investment, which may be deemed to be a reverse takeover under the AIM Rules.
Where this is the case, the Board intends to mitigate risk by undertaking an appropriate due diligence process. Any transaction constituting a reverse takeover under the AIM Rules will require Shareholder approval and the publication by the Company of an admission document meeting the requirements of the AIM Rules. The Board has not, however, excluded the possibility of building a broader portfolio of investment assets.
The Company intends to deliver Shareholder returns principally through capital growth rather than income distribution via dividends and actively manages its investment portfolio to achieve this aim. Given the nature of the Investing Policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value. The Board considers that, in due course, the Company may require additional funding as investments are made and new investment opportunities arise.
Finance and Working Capital
During 2017, Metal Tiger raised a net £7,642,604 through placings undertaken with third-party investors and the exercise of warrants and options by Directors (2016 total raised: £5,700,293).
In the case of the placing to Exploration Capital Partners the issue price (3p plus warrants exercisable at 6p) was at a 9% premium to the closing price on the day prior to issue, as noted in the Chairman’s Statement.
Metal Tiger generated £5,402,007 of cash proceeds from the sale of investments in Direct Equities during 2017 (2016: £1,153,399).
Metal Tiger has continually demonstrated its ability to raise additional working capital during 2017 to increase existing cash resources.
The division has two parts: Strategic Investments, and an On-Market Portfolio.
Strategic Investments are larger scale investments made through board level negotiations between Metal Tiger and mining companies.
Strategic Investments include:
MOD Resources Limited – the Company’s holding in MOD Resources increased to 104,200,000 shares as at 31 December 2017 (and has since increased to 138,800,415 shares).
Thor Mining plc an AIM listed mining company with tungsten and copper projects in Australia and the USA. Metal Tiger had an investment of 51,350,000 ordinary shares at 31 December 2017 representing 8% of the issued ordinary share capital of Thor Mining.
The On-Market Portfolio is the direct purchase of listed resource equities, and warrants. Whilst the specific investments are kept confidential for trading purposes Metal Tiger made significant realised gains in investments in 2017, in particular with respect to Greatland Gold plc.
The final results for the year ended 31 December 2017 crystallised gains on disposal of trading investments of £3,916,351 (2016: £296,280). In addition, on marking the investments at the year end to their market values on 31 December 2017, there was an additional gain of £1,541,048, (2016: £2,346,830) reported for the division in this year’s figures, making the overall gain for the year £5,457,399 (2016: £2,643,110). This gain was achieved by the timing in the sale of investments. Of this gain, £829,836 resulted from the rise in Kingsgate Consolidated Limited’s share price and £314,904 from the rise in MOD’s share price. The gains achieved were mainly reinvested into the Direct Projects Division with a portion utilised to continue building the Company’s Direct Equities portfolio of listed resource company shares.
Metal Tiger‘s Direct Projects are operated by the Group’s in-country partners who have the requisite knowledge and expertise to invest Metal Tiger’s capital in project advancement.
In 2017, Metal Tiger and joint venture partner and operator, ASX listed MOD Resources Ltd (“MOD”) (70%), through the in-country operating company Tshukudu Metals Botswana (Pty) Ltd (“Tshukudu”), continued to advance the planned T3 open pit mine (“T3 Pit Project”) and T3 Underground Project as well as several regional projects across Tshukudu’s vast landholdings in the Kalahari Copper Belt in Botswana.
The Pre-Feasibility Study (“PFS”) for the T3 Pit Project was completed at the end of January 2018 and will be followed by an upgraded Mineral Resource statement, after the T3 infill and extension drilling programme is completed and results are received and interpreted. Geological confidence has grown in the potential of the T3 Underground Project prompting a systematic drilling programme with the objective to drill-out an underground resource in 2018.
Results are pending from the AEM extension survey at the ~1,000km2 T3 Dome and from initial drilling at the newly identified T-Rex target, an 11km long, conductive domal structure, centred around T3. Substantial copper and zinc soil anomalies have been identified at the district scale T20 Dome target area located ~100km west of the T3 Dome and a substantial AEM survey is planned in early 2018.
The exploration and project development work has been very successful and a number of milestones have been achieved which will be covered in more detail below:
- T3 Updated Resource
- T3 Open Pit Maiden Reserve and PFS
- T3 Underground
- Regional Exploration
- Sample Preparation Facility
- Accommodation Village
- T3 Project (Metal Tiger 30%)
The T3 deposit was discovered in March 2016, when an RC drill hole intersected 52m @ 2.0% Cu and 32g/t Ag from shallow depth, immediately below a low order copper soil anomaly (28ppm Cu). In September 2016, six months after the discovery of T3, Metal Tiger announced a maiden resource at T3 comprising 28.36Mt grading 1.24% copper and 15.7g/t silver, containing approximately 350Kt copper (~772Mlbs copper) and >14Moz silver.
The maiden resource included 18Mt grading 1.35% Cu and 16.7g/t Ag in the Indicated Resource category which represented 64% of the total resource, announced on 26 September 2016. This resource formed the basis of a Scoping Study, announced on 6 December 2016, for an open pit mine. The Scoping Study indicated potential for strong financial outcomes.
On 24 August 2017, Metal Tiger announced a revised Mineral Resource estimate comprising 36Mt grading 1.14% copper and 12.8g/t silver, containing approximately 409Kt of Cu and 14.8Moz silver. The revised resource model highlighted exceptional horizontal widths of >1% Cu mineralisation, up to 180m across the planned pit. Details of the revised Mineral Resource estimates at different cut-off grades, including an additional largely Inferred low grade resource containing approximately 47.6Kt copper using a cut-off grade of 0.25% Cu, are summarised in Tables 1 and 2 below.
The T3 resource remains open along strike and at depth. The programme of resource infill and extension drilling is still in progress at T3 and is generating additional positive results. Once drilling is completed this will probably require a revised resource estimate.
A local school competition re-named the planned T3 Pit Project “Motheo” which means “foundation” in Setswana.
T3 Pit Project – Pre-Feasibility Study (PFS)
In January 2017, Tshukudu commenced a PFS for an open pit mine at T3 Pit Project based on the favourable results of the December 2016 Scoping Study. The basis of the Scoping Study was a 2Mtpa processing plant, a mine life of 9.25 years and an average production rate of 21,800tpa of copper and 665,000oz/pa of silver.
In August 2017, an upgraded resource resulted in Total Mineral Resource tonnes increasing approximately 27% from the maiden resource announced on 26 September 2016. In response to the upgraded Mineral Resource estimate, the expected increase in the mineable inventory and the strengthening copper price since the scoping study was announced, the PFS plant throughput capacity was increased by 25% to process 2.5Mtpa, with potential for further plant expansion to 4.0Mtpa.
This expansion capacity gives optionality in the event of further upgrades to the T3 resource and possible supplementary ore supply from the nearby projects. Further excellent resource drilling results were announced on 5 January 2018, with significant widths of high grade vein hosted copper and silver. Results included hole MO-G-94D which returned a record intersection of 18m @ 4.3% Cu and 94g/t Ag from 146m downhole depth within a wide zone of 53.9m @ 2.0% Cu and 40g/t Ag from 128.5m downhole depth. This intersection occurred in the middle of the T3 Pit Project, approximately 100m above an intersection of 72.6m @ 1.5% Cu and 27g/t Ag from 250m downhole depth in MO-G-65D, below the planned pit design. These recent results will be included in an update to the Mineral Resource expected once the infill and extensional drilling programme is completed, and after the PFS is completed.
As announced on 3 October 2017, detailed metallurgical testwork results, including locked cycle flotation, have confirmed excellent copper and silver recoveries into low mass, high grade concentrates for each of the chalcopyrite, bornite and chalcocite ore domains.
Existing infrastructure in the region includes a sealed two-lane highway only 12km from site and the town of Ghanzi approximately 80km from T3. The Botswana Government has awarded contracts for the extension of grid power transmission along the highway near T3, scheduled to be available during Q1 2020. Tshukudu has lodged an expression of interest to access this power, which should result in a significant reduction in processing costs at T3. The scoping study and PFS include an allowance for a backup diesel generator power station to be installed on site.
Tshukudu has submitted a preliminary Project Brief to the regulatory authorities as part of the formal commencement of permitting activities for the T3 Pit Project. As expected, Tshukudu has been directed to prepare an Environmental Impact Assessment (“EIA”) prior to any mining licence application.
Key baseline studies to support the EIA have been underway during 2017 in order to optimise the permitting timeline. Initial stakeholder meetings were held as part of the EIA process in December 2017.
The PFS for the T3 Pit Project was completed at the end of January 2018.
T3 Updated Resource
An updated JORC Resource was announced on 24 August 2017 incorporating all the existing results with the latest results from the Q1 2017 drilling programme.
Revised, JORC (2012) compliant, Mineral Resource Estimate completed for T3 Project following inclusion of all drilling results from holes completed in Q1 2017. Revised Resource updates and also supersedes the previous, maiden, Mineral Resource Estimate (announced on 26 September 2016).
Total (Measured, Indicated & Inferred) Mineral Resource Estimate comprises 36.0Mt @ 1.14% Cu & 12.8g/t Ag containing approximately 409kt copper and 14.8Moz silver on a 100% basis (10.8Mt containing approximately 123kt copper and 4.4Moz silver on a 30% attributable basis).
Constitutes a 27% increase in Total Resource tonnes, and a 16% increase in contained copper compared with the maiden resource (at 0.5% Cu cut-off grade).
25% of Total Resource tonnes now in Measured Resource category (8.9Mt on a 100% basis and 2.7Mt on a 30% attributable basis @ 1.27% Cu & 12.5g/t Ag), denoting a higher degree of Resource confidence (at 0.5% Cu cut-off grade).
At a higher cut-off grade (1.0% Cu), the revised total Mineral Resource Estimate comprises 20.6Mt on a 100% basis (6.2Mt on a 30% attributable basis) at average grades of 1.43% Cu and 14.7g/t Ag.
An additional low grade Resource contains approximately 47.6kt copper on a 100% basis (14.3kt on a 30% attributable basis) at 0.25% Cu cut-off grade.
The revised Resource model shows good grade continuity with horizontal widths of >1% Cu mineralisation up to 180m across the planned open-pit design.
T3 (Phase 2) 2017 drilling programme currently ongoing with four rigs to test further Resource extensions, underground potential and geophysical targets around T3. All six new holes completed to date have intersected significant visible copper mineralisation and results will be announced when assays are received and interpreted.
T3 Revised Mineral Resource Estimate
The JORC compliant Mineral Resource Estimate outlined constitutes the first revision to a maiden Mineral Resource Estimate for the T3 Deposit which was announced on 26 September 2016. This revised Mineral Resource Estimate may require further revision and resource modelling before it progresses towards an Ore Reserve which is a key outcome of the planned Prefeasibility Study.
Table 1 below includes the revised Mineral Resource Estimates at Cu cut-off grades of 0.5%, 1% & 1.5% Cu.
Table 1: T3 Revised Mineral Resource Estimate
|Gross (100% basis)||Net Attributable (Metal Tiger 30%)||Operator|
|Cu%||(million)||Cu%||Ag g/t||Cu (Kt)||Ag (Moz)||(million)||Cu%||Ag g/t||Cu (Kt)||Ag (Moz)|
Source: Mr A.I. Pretorius, MSc. Pri.Sci.Nat (Competent Person)
Note: rounding errors may be present
In addition to the revised Mineral Resource Estimate in Table 1, an additional, largely Inferred, low grade Resource has been estimated using a cut-off of 0.25% Cu – see Table 2. Depending on the outcome of a future Ore Reserve Estimate (to be undertaken as part of the PFS), some of this low grade Resource may be economic to process in which case it would be stockpiled separately for use as low grade feedstock during or at the end of any future mining of T3.
Table 2: T3 Revised Mineral Resource Estimate – Low Grade (0.25% Cu Cut-off)
|Gross||Net Attributable (Metal Tiger 30%)||Operator|
|Cu%||(million)||Cu%||Ag g/t||Cu (Kt)||Ag (Moz)||(million)||Cu%||Ag g/t||Cu (Kt)||Ag (Moz)|
Source: Mr A.I. Pretorius, MSc. Pri.Sci.Nat (Competent Person)
Note: rounding errors may be present
T3 - MINERAL RESOURCE STATEMENT
Geology and Geological Interpretation
The copper and silver mineralisation which is the basis for the T3 Phase One Mineral Resource is interpreted to be a Proterozoic or early Palaeozoic age, vein related sediment hosted deposit which is different to other known deposits and mines in the central Kalahari Copper Belt in Botswana.
The Mineral Resource has been defined along >1km long strike length and the copper and silver sulphide mineralisation occurs in veins and disseminations within host rocks that include mudstone, siltstone, sandstone and marl units considered part of the D’Kar Formation. Footwall to the copper/silver Resource is generally defined by low grade disseminated lead and zinc mineralisation within sediments also considered part of the D’Kar Formation.
Mineralisation is very continuous and is dominated by mainly chalcopyrite with chalcocite and bornite copper sulphides occurring in lesser amounts. Mineralisation extends from shallow depth (~35m depth) to the limit of drilling to date at ~480m vertical depth. Minor malachite and chrysocolla oxide mineralisation occurs near surface between approximately 25-50m depth.
The T3 mineralisation type can be described as a sheeted vein deposit dipping at 20-30 degrees to the north with varying widths of disseminated mineralisation around the veins. The deposit may represent multiple stacked, mineralised veins and units, thrusted one upon the other.
This interpretation opens up potential for resource extensions along strike east and west, as well as at depth and down dip. This potential is being tested in the current drilling programme.
T3 Open Pit Pre-Feasibility Study
In January 2017, Tshukudu commenced a PFS for an open pit mine at the T3 Pit Project based on the favourable results of the December 2016 Scoping Study. The bulk of the feasibility work was undertaken in 2017 and toward the end of 2017 the PFS was close to completion. In January 2018 the PFS was finalised and on 31 January 2018 the results were released.
PFS completed for the T3 Open-Pit Project in Botswana. PFS prepared to overall level of accuracy of ±25%.
PFS considers two cases: Base Case with production from Proven and Probable Ore Reserve; and Expansion Case with additional production from Measured, Indicated and Inferred Mineral Resources from Year 4.
PFS Base Case with plant throughput of 2.5Mtpa indicates circa US$730million EBITDA over 9 years.
Where Expansion Case proceeds, PFS indicates potential for circa US$1.1billion EBITDA over 12 years.
PFS concludes that T3 offers a low-risk, low capital pathway to copper production supported by improving confidence in the long term consensus copper price.
JV partners agreed to proceed with a Feasibility Study (“FS”) which commenced in Q1 2018.
PFS Base Case Model assumes open pit mining and conventional flotation ore processing with a plant throughput of 2.5Mtpa and ore supply from Measured and Indicated category resources only i.e. the Proved and Probable Ore Reserve.
- NPV (8%) US$281million (pre-tax), using long term US3.00/lb Cu, IRR 39%
- Net cashflow US$530million (pre-tax), inclusive of development capital
- Annual free cash flow US$77million (pre-tax), from production start
- Payback 2.7 years from production start
- Estimated average C1 costs of US$1.22/lb Cu including silver credits
- All-in sustaining costs (“AISC”) of US$1.36/lb Cu including silver credits
- Life of Mine (“LOM”) cash break-even copper price of US$1.78/lb Cu on an undiscounted basis
Capital Costs and Infrastructure
- Pre-production capital expenditure of US$155million including US$17million contingency
- LOM sustaining capital expenditure of US$31million
- Assumes grid power expected January 2022 adding approximately US$10million EBITDA pa
- Maiden Ore Reserve containing 218kt Cu and 7.1Moz Ag
- Base Case 8.8-year LOM from production start
- Average production of 23kt pa Cu and 690koz pa Ag in concentrate
- Waste to Ore ratio 4.76
PFS Expansion Case Model assumes open pit mining and conventional flotation processing with a plant throughput of 2.5Mtpa for the first three years from production start. Assuming the Expansion Case proceeds, the plant will be upgraded to enable it to treat 4Mtpa from the start of Year 4.
- NPV (8%) US$402million (pre-tax), using long term US3.00/lb Cu, IRR 37%
- Net cashflow US$840million (pre-tax), inclusive of development capital
- Annual free cash flow of US$85million (pre-tax), from production start
- Payback of 3.3 years from production start
- Estimated average C1 costs of US$1.30/lb Cu including silver credits
- All-in sustaining costs (“AISC”) of US$1.46/lb Cu including silver credits
- Life of Mine (“LOM”) cash break-even copper price of US$1.77/lb Cu on an undiscounted basis
Capital Costs and Infrastructure
- Low expansion capital of US$37m for plant upgrade from 2.5Mtpa to 4.0Mtpa
- LOM sustaining capital expenditure of US$54million
- LOM Production Target containing 353kt Cu and 12.3Moz Ag
- Expansion Case 11.7-year LOM from production start
- Average LOM production of 28kt pa Cu and 903koz pa Ag
- Waste to Ore ratio 4.28
T3 Open Pit Pre-Feasibility Study Key Metrics:
|PFS Base Case Mineral Reserves|
|Ore Reserve||Tonnes (Mt)||Grade % Cu||Ag g/t||Contained||Contained|
|Cu (kt)||Ag (Moz)|
|PFS Expansion Case Mineral Resources|
|Mineral Resources||Tonnes (Mt)||Grade % Cu||Ag g/t||Contained Cu (kt)||Contained Ag (Moz)|
|(0.25% Cu cut-off)|
|Life of Mine Financial Economics||Base Case (US$)||Expansion Case (US$)|
|Base Case Copper Price (consensus long term average) 1||3.00/lb 1||3.00/lb 1|
|C1 Cash Costs2||1.22/lb||1.30/lb|
|All in Sustaining Costs3 (US$/lb Cu)||1.36/lb||1.46/lb|
|Net Cash Flow (pre-tax)||530m||840|
|Undiscounted Cash Breakeven Copper Price||1.78/lb||1.77/lb|
|Pre-tax NPV (8% real)||281m||402m|
|Capital Payback Period (from first production)||2.7yrs||3.3yrs|
1 Copper prices in year 1 and 2 of production averages 3.20 US$/Ib Cu and 3.00 US$/Ib after that.
2 C1 cash costs means operating cash costs including mining, processing, geology, OHSE, site G&A, concentrate transport, TC and RC costs less by-product credits, divided by copper in concentrate produced (100% payable basis).
3 All-in sustaining cash costs are cash operating costs (C1 cash cost including royalties) plus sustaining capital.
Unless otherwise stated, all financial numbers are in US$ and based on 100% of the project and not subject to inflation or escalation factors. All years are calendar years. All cash costs are calculated on 100% payability basis. NPV and cashflow numbers quoted in this section include a US$21million capital contingency allowance.
|Production Target Parameters||Base Case||Expansion Case|
|Life of Mine (“LOM”)||9.6yrs||12.4yrs|
|Ore Tonnes Mined||21.4Mt||-|
|Production target – Expansion Case||-||41Mt|
|Inferred Mineral Resource in Mine Schedule||0%||34%|
|Waste: Ore ratio||4.76||4.28|
|Copper cut-off grade (excluding silver credit)||0.34%||0.27%|
|Processing Plant Capacity (July 2020 to Sept 2023)||2.5Mt||2.5Mt|
|Processing Plant Capacity (Oct 2023 onwards)||2.5Mt||4.0Mt|
|Copper in concentrate – LOM||203kt||325kt|
|Copper in concentrate – LOM||447Mlb||718Mlb|
|Copper in concentrate – Annual average||23kt||28kt|
|Copper in concentrate – Annual average||51Mlb||62Mlb|
|Silver in concentrate – LOM||6,097koz||10,530koz|
|Silver in concentrate – Annual average||690koz||903koz|
Pre-Feasibility Study Summary
The T3 Open-Pit Mine PFS comprises open pit mining and conventional flotation processing with two production scenarios, the PFS Base Case and the PFS Expanded Case.
The PFS Base Case is based on a Proven and Probable Ore Reserve derived from Measured and Indicated Mineral Resources respectively. No Inferred Mineral Resource has been included in the estimation of Ore Reserves. The PFS has been prepared to an overall level of accuracy of ±25%.
The PFS Expansion Case assumes open pit mining and conventional flotation processing with a plant throughput of 2.5Mtpa for the first three years. The plant will then be upgraded to 4Mtpa throughput rate during Year 4. The first three years of production are based upon the processing of Measured and Indicated Mineral Resources only. Thereafter the Expansion Case allows for processing of Inferred Mineral Resources in addition to the Measured and Indicated Mineral Resources.
The PFS Expansion Case includes material that is in the Inferred Mineral Resource category. Inferred Mineral Resources represent approximately 34% of the Expansion Case Production Target by tonnage. There is a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that infill drilling of the T3 deposit will result in confirmation of additional Measured and Indicated Mineral Resources or that the Expansion Case Production Target will be realised. A substantial infill drilling programme is in progress with the objective to upgrade Inferred Mineral Resources to Measured and Indicated Mineral Resource category. The Expansion Case is based on a production target and material assumptions outlined above.
PFS concludes that T3 offers a low-risk, low capital pathway to copper production supported by improving confidence in the long term consensus copper price. Due to the robust financial outcomes indicated by the PFS, the Boards of the JV have agreed to proceed with a Feasibility Study which commenced in Q1 2018.
T3 Underground Project
The T3 infill and extension drilling programme commenced in August 2017 to test the potential for additional resource extensions both within, and outside the planned 10-year open pit mine.
Many of the holes announced in Q4 2017 intersected between two to four shallow dipping high grade veins (V1-V4) identified below, down dip and along strike from the planned pit (announced on 24 October 2017 and 7 December 2017). The same high grade veins are commonly associated with wide zones of disseminated copper mineralisation within the T3 Pit resource.
South African mining consultants have conducted a preliminary evaluation of the high grade veins to explore the potential for underground mine development concurrent with the planned pit. Conceptual work to date assumes good continuity between the mineralised veins, relatively low cost in-ore development, and room and pillar mining. There could be substantial benefits in developing T3 underground simultaneously with the open pit mine and using shared infrastructure, including the planned T3 processing plant.
The underground potential at T3 has prompted a systematic ~30-hole diamond drilling programme to test this potential initially along ~1.5km strike length. Drilling commenced in Q4 2017 and is continuing. If results are positive it is expected the T3 Underground Project will move towards a resource estimate and scoping level study in Q2 2018.
In addition to the T3 Pit resource drilling and holes targeting high grade veins outside the pit, several widely spaced holes were deepened to intersect the deeper Ngwako Pan Formation contact mineralisation (Zone 3). This mineralisation comprises generally lower grade disseminated copper sulphides, including chalcocite, within a flat dipping shear zone (potentially a major regional thrust) approximately 300m below the top of the T3 resource.
Zone 3 is interpreted to occur on the same contact that hosts high grade vein related deposits in the eastern part of the Kalahari Copper Belt including Cupric Canyon’s Zone 5 deposit (~2% Cu), and MOD’s T1 deposit (~2% Cu and 50g/t Ag) 20km northeast of T3. For this reason, Zone 3 is considered a valid target in areas of regional structural complexity.
Regional Exploration (Metal Tiger 30%)
Tshukudu’s extensive landholding in the Kalahari Copper Belt includes several regional soil and Airborne Electromagnetic (“AEM”) anomalies that occur scattered within a zone extending over >140km along the Central Structural Corridor. This includes the 50km long T3 Dome hosting the T3 deposit and the interpreted ~60km long anomalous soil zone within the T20 Dome.
Tshukudu’s highest priority is to extend drilling to test numerous prospective AEM targets and several larger formational conductors along the district scale >50km long T3 Dome, as soon as the Environmental Management Permit (“EMP”) is approved. The EMP, which includes access agreements with most of the farmers along the T3 Dome, has been submitted to the Department of Environmental Affairs (“DEA”). Tshukudu has been advised that the DEA is reviewing the application and that following approval it will be the subject of a four-week public review process before drilling can commence.
The AEM technique has proved a very effective tool to identify numerous drilling targets along the T3 Dome. During Q4 2017, AEM coverage along the T3 Dome was extended at the eastern and southern parts of the T3 Dome, including areas with well-defined copper-soil anomalies.
Re-interpretation of the original T3 Dome AEM data during Q4 2017 defined in some detail, the 3D geometry of the T3 host sequence to approximately 500m below surface. The 3D re-interpretation is viewed as a possible break-through in understanding the structure of the T3 Dome which may be key to finding more high grade vein deposits. It also confirmed the potential of many of the individual AEM targets planned for drill testing.
To verify the 3D model, drilling commenced late 2017, on T-Rex extending 4km to 5km either side of T3. Drilling is continuing at T-Rex and if results are positive, this is likely to result in drilling several other large conductive anomalies, similar to T-Rex, located within the wider T3 Dome. This is in addition to drilling planned to test the many discrete AEM anomalies (eg A1-A9) identified in the original survey announced 21 July 2017.
The T20 Dome, located approximately 100km west of the T3 Dome and interpreted to occur within the same structural corridor, is also a high priority for the 2018 drilling programme. T20 Dome includes multiple copper and zinc soil anomalies, several with similar or higher values to those associated with the original T3 discovery. Copper and zinc anomalies from soil sampling completed to date occur in a ~60km long zone extending from the T20 Dome to the T4 copper prospect. These results were announced on 20 June 2017 and on 25 January 2018.
T20 Dome is interpreted to be underlain by shallow dipping sediments including the prospective D’Kar Formation and Ngwako Pan Formation contact. This contact hosts high grade structurally related copper deposits in the eastern part of the Kalahari Copper Belt. The combined strike length of the zone that hosts the T20 Dome soil anomalies and the T3 Dome EM anomalies is interpreted to extend >140km.
A surface calcrete layer covers large areas of the T20 Dome and there is no known previous exploration drilling apart from at the adjacent T4 prospect. From experience gained at T3, it appears that zinc is more mobile than copper in the weathering profile and may be detected above the calcrete layer more readily than copper. The peak soil value that led to the discovery of T3 at shallow depth below calcrete was 28ppm Cu, with 27ppm Zn.
In March 2017, a soil sampling programme at T20 Dome identified five surface copper anomalies. Peak copper values in the anomalies ranged from 16ppm Cu to 23ppm Cu with associated zinc values up to 45ppm Zn. At least two anomalies coincided with regional ENE trending structures interpreted from magnetics. During the December quarter, infill soil sampling was stepped up along the T20 Dome and the size of the zone which includes anomalous copper and zinc values was extended to approximately 60km east-west and up to 20km north-south (announced on 25 January 2018).
Following the success using AEM along the T3 Dome, a substantial AEM survey commenced in early February 2018 on the T20 Dome to identify possible conductors, which may potentially be associated with surface copper anomalies discovered from the ongoing soil sampling programme. The AEM survey also covers the adjacent prospective T4 area.
Sample Preparation Facility
The sample preparation facility was completed at the end of December 2017 and is awaiting installation of telecommunications, prior to commissioning in early 2018.The sample preparation facility will improve logistics, reduce assay turnaround times, simplify export procedures, and enable increased options for analysing pulps in the future. It will be managed by certified analytical laboratory, ALS. To comply with Tshukudu’s guiding principles and employment policy, ALS will manage a training programme to build skilled local employment to benefit Tshukudu’s exploration and future planned mining operations.
During the last quarter in 2017, Tshukudu received environmental and Ghanzi District Council approval for Tshukudu's accommodation village located on the highway, 5km east of Ghanzi. Construction is now progressing with concrete footings and flooring for the main accommodation, office and kitchen units already complete. Target completion of the first stage of the village is Q2 2018. Additionally, considerable progress was also made on improving facilities at Tshukudu's office and core yard complex in preparation for a further expansion of activities in 2018.
Metal Tiger set out in January 2017 to prepare Metal Tiger Thailand (“MTT”) for an IPO on AIM. On 2 March 2017, a new Minerals Act was signed into law, with its implementation on 29 August 2018, replacing the previous Minerals Act of 1967. It is worth noting here the key changes contained in the new Minerals Act:
- A new committee, the National Minerals Management Policy Committee (“NMC”), has been established. The NMC is obligated to prepare a 20-year Mineral Management Strategy and 5-year Master Plans to the Cabinet for approval. Master Plans will designate Mineral Deposit Areas for mining (“MDAs”).
- Mining Leases can only be granted within MDAs but new MDAs can be established in each Master Plan. The NMC is empowered to specify the granting of any mining leases, or stipulations or conditions on them, for any MDAs, or any type of minerals requiring prior approval from the NMC.
- The NMC will have authority to oversee all relevant government agencies to ensure that they act in accordance with the prescribed strategies, policies and minerals management master plans.
- With the approval of the NMC, the Minister of Industry is authorised to initiate bidding for Mining Leases in MDAs where deemed appropriate based on economic potential.
- Issuance of Mining Leases for surface mines that do not encroach on privately owned or possessed land under the Land Code (Federally owned land) or underground mines whose surface operations do not similarly encroach no longer require a process of stakeholders meetings for approval, although a less onerous local community vote will still be required.
- The maximum term of a Mining Lease, including renewals, is extended from 25 years to 30 years from the date of issue.
The new Act extensively focuses on environmental and social concerns.
Representatives of local communities will be members of provincial minerals committees, which will be involved with granting permission for certain mining leases.
New obligations will be imposed on operators, including requirements to provide guarantees for the rehabilitation of mining areas, provisions for people affected by mining operations according to specified rules, and the procurement of third-party liability insurance.
Subsequent to the approval of the Minerals Act, a further Mineral Management Strategy (2017-2036) and the First Mineral Management Master Plan (2017-2021) have been drafted, which further delayed progress of the IPO of the Company’s Thai assets.
- Once the new Mineral Act B.E. 2560 became effective on 29 August 2017, the permitting process for all Mining Lease and Prospecting Licence applications was suspended awaiting approval of the 20-year Mineral Management Strategy and first Master Plan.
- On 7 December 2017 the National Minerals Management Policy Committee approved a draft of the 20-year Minerals Management Strategy and the 5-year Mineral Management Master Plan.
- By 7 March 2018, as instructed by the Cabinet, the National Economic and Social Development Board (“NESDB”) had reviewed the drafts. On 10 April 2018 the NESDB agreed in principal with the draft Minerals Management Strategy but submitted comments related to the designation of MDAs as stipulated in the first Mineral Management Master Plan, as follows: “Areas under existing Mining Leases, Mining Lease renewal applications, and Mining Lease applications that were granted or lodged before the new Mineral Act was ratified should be deemed as MDAs. Gold applications are excluded.”
At the time of writing, the National Mineral Policy Committee is preparing the final drafts of the Mineral Management Strategy and the Mineral Management Master Plan for Cabinet approval and implementation.
Impact of Passage of Minerals Act and the New Regulatory Environment on the Progress of Metal Tiger’s Thai Assets
Although the suspension of all Mining Lease and Prospecting Licence application processing was officially announced upon enforcement of the new Minerals Act in August 2017, in practice, the process ceased immediately upon ratification of the Act in March 2018. At that time, several of Metal Tiger’s Special Prospecting Licence Applications (“SPLAs”), both around the KEMCO mine assets and elsewhere in Thailand, were in the final or next to final stage of being granted. Metal Tiger was also at that time planning for local public hearings that would lead to public votes and contribute to hearing requirements for the HEIA. Since certain interpretations of the public hearing process were still unclear at that time and that the whole process would be moot unless the Mining Lease areas are declared as MDAs, it was decided that Metal Tiger would suspend the public hearing process until final approval of the Master Plan.
Despite the delay imposed by the implementation process of the new Minerals Act and its provisions, Metal Tiger’s opinion of the new legislation is generally positive. Stricter environmental requirements bring the jurisdiction more into line with international standards and some ambiguities in pathways for the granting of Mining Leases and Prospecting Licences have been removed.
In July 2017, Metal Tiger received a final draft Competent Persons Report (CPR) and Resource Estimation from SRK Consulting. The resource at Boh Yai and Song Toh had previously been estimated by an NI 43-101 Technical Report conducted by ACA Howe in October 2012. The SRK CPR delivered a resource statement as follows:
|Class||Mt||Ag (g/t)||Pb (%)||Zn (%)||Fe (%)||Hg (g/t)|
The Preliminary Economic Assessment (“PEA”) results are shown below:
|Net Project cashflow||US$'000||121,372|
SRK also provided a list of recommendations in terms of work that should be completed as part of a Pre-Feasibility Study (“PFS”), much of which has since been completed. Based to some degree on the upside potential of increasing the resource with additional infill drilling and historical sampling data confirmation, their conclusion is that the asset justifies additional work.
An Economic Contribution Assessment (“ECA”) was completed by 5 Corners Consulting in January 2017. This report estimated the life of mine (“LOM”) economic value of the project to the Thai economy at both national and provincial levels via taxes and royalties, salaries and wages paid to employees, payments to Thai suppliers and contractors, other benefits such as community programmes and training, and indirect multiplier effects. This study initially used revenue generation data from the ACA Howe PEA of 2013 but in July it was updated using the SRK CPR figures. The updated total quantified direct benefits were found to be US$287.4 million with US$115.0million of indirect/multiplier benefits for a total of US$402.4million.
With the process of granting Metal Tiger’s SPLAs halted, pending ratification of the Master Plan and the designation of Mineral Deposit Areas (MDAs), the Company was not able to advance exploration plans at the KEMCO site and at its other SPLAs elsewhere in Thailand in 2017. The focus of technical activities therefore shifted to environmental management.
As part of the broader Health and Environmental Impact Assessment (“HEIA”), contracted to International Environmental Management, Co., Ltd, wet and dry season baseline data reports were generated based on field samples collected in November 2016 (end of wet season) and March 2017 (end of dry season). Air quality, noise levels, sediment, surface water, and groundwater were all analysed for a broad spectrum of parameters at selected locations throughout the Boh Yai and Song Toh sites. Additionally, blood samples from 30 volunteers, aged 18 to 70, all residing within 3km of the two mine sites, were analysed for Pb, Zn, and Hg without any results exceeding standards.
Furthermore, a study commissioned to the Groundwater Research Institute (“GWRI”), based at Khon Kaen University, was conducted from March 2017, with the initial collection of field data, through to the generation of a final report in October 2017. Entitled “Hydrogeology Near the Planned Underground Lead-Zinc Mining at Boh Yai and Song Toh areas in Kanchanaburi Province”, the purpose of the study was to characterise, define, and model surface and subsurface water flow at both the Boh Yai and Song Toh sites. The host rock at both sites is highly karstified limestone, which has been extensively folded and faulted in multiple orientations, and the topography is severe with sharp cliff faces and numerous sinkholes. While water maintains a consistently alkaline pH resulting in very low lead solubility in such environments, water flow dynamics are complex and difficult to characterise, especially considering the dramatic rainfall swings between wet and dry seasons. A thorough understanding of water dynamics throughout the year will be required for processing and potable water management as well as environmental monitoring.
In parallel with the progress of this study, which was based on historical data provided to GWRI at the onset and their own field samples and measurements, the MTT technical team conducted a programme of detailed surface and underground feature mapping, precipitation measuring at meteorological stations, and water flow data collection in order to facilitate the production of a more detailed and time variant follow-up report by GWRI. This programme, bolstered by results from the GWRI study, has allowed MTT to produce detailed 3D models of surface and subsurface water flow at both locations.
All of this environmental work has culminated in the establishment of a high-density water and environmental monitoring programme, to be conducted jointly by GWRI and MTT technical staff, involving 30 water and sediment sampling locations, monitoring wells, and a dozen flow channels. Data from the programme along with more detailed mapped features will allow GWRI to rerun their groundwater models and simulations with embedded levels of detail and will generate time variant assessments of aqueous geochemistry via pH-Eh diagram analysis. A team from the Geosciences Department of Mahidol University, just a 90-minute drive from the mine sites, has been engaged to conduct tracer dye tests on selected lines of suspected subsurface water flow in order to resolve and quantify ambiguities.
When Metal Tiger Thailand was put on a care and maintenance basis, this programme was suspended after one round of sampling, but it can be re-established immediately at any time. Results of this ongoing programme, when resumed, will be appended to the HEIA and presented to stakeholders in service of regulatory approvals and community relations and will provide the basis for determining water management design parameters and environmental monitoring procedures during production.
The majority of the work for the Thai IPO has been largely completed and any resumption of work on the IPO would require relatively modest updates.
Logrosán Minerals Limited (“LM” or “Logrosán Minerals”) is the joint venture operating company for the Logrosán Exploration Project (“Logrosán Project”) and Maria Gold & Antimony Project (“Maria Project”). It is held 50/50 by Metal Tiger and joint venture partners, Mineral Exploration Network (Finland) Ltd (“MEN”), and has four exploration concessions and two exploration licence applications held through the wholly-owned Spanish subsidiary Logrosán Minera S.L. as set out in the table below. The licences cover all Group C Minerals including Au, Ag, Pb, Zn, Sn, W, Pt and Cu.
|Asset||Status||Licence Expiry Date||Licence Area (km2)||Comments|
|Antonio Caño Exploration Licence (#10C 10314-00)||Exploration||6 December 2019||37.22||Renewable three times to maximum of nine years from 02/12/2013.|
|Zorita Exploration Licence (#10C 10332-00)||Exploration||18 June 2018||85.08||Renewable to maximum nine years from 18/06/2015|
| San Cristóbal
|Exploration||16 June 2019||43.81||Renewable to maximum nine years from 10/06/2016|
| “Maria Project”
Mari Hernández Permit (#10313-00)
|Exploration||14 November 2019||40.09||Renewable to maximum nine years from 31/10/2013|
| San Cristóbal Sur
|Exploration Licence Application||n/a||28.11||Exploration Licence Application stamped 17/08/2016|
|Logrosán Norte (#10C10367-00)||Exploration Licence Application||n/a||30.72||Exploration Licence Application stamped 11/09/2017|
Logrosán Minerals was incorporated in the United Kingdom on 13 March 2015. Metal Tiger announced that it had completed the proposed €500,000 of exploration funding into the Logrosán Project on 15 March 2016, to earn the 50% holding in LM. On 31 May 2016 Metal Tiger announced it had concluded negotiations to include the Maria Gold (Au) and Antimony (Sb) Project ("Maria" or "Maria Project") licence (40.09km2) into the Logrosán Minerals JV. Maria is located approximately 15km north of the Logrosán Project.
During the 2017 spring season, work focused on the delineation of gold anomalies at the Logrosán licence group. With the earlier shallow RAB drilling on hold the field programme concentrated on soil sample gold analysis, with infill soil sampling and mapping to laterally delineate the existing gold anomalies as part of target generation for a potential deep drill programme planning and costing. A total of 7,345 samples were assayed for gold comprising the infill soil samples and analysis of XRF sample pulps from samples not previously analysed for gold.
This infill sampling helped to delineate a new regional scale gold anomaly and a new tungsten anomaly at Logrosán East. The infill soil sampling and gold analysis effectively joined El Seranillo North and El Seranillo East into a single 5km long gold anomaly. The new Tungsten (“W”) anomaly has been named W Target 3, it measures 2.3km long and 0.9km wide, with up to 466ppm W in the soil, and is located 3km NE and along strike for the W Target 2 deposit which was RAB drilled during 2015.
It is noteworthy that a large scale, 19km long, arsenic (“As”) anomaly coincides with a regional magnetic structure linking Logrosán South in the southwest of the Project area to the north of Logrosán East, in the northeast of the Project area passing through both the existing W Target 2 and the new W Target 3.
Field operations during the autumn of 2017 consisted of infill soil sampling in the north of Logrosán East (3,117 samples) and systematic sampling from road cuttings across this anomaly (total of 780m sampled at 5m intervals).
Tungsten: Logrosán Project: Major 2015-2017 Q1 Programme Findings
The exploration for tungsten in the Logrosán Project centres on three distinct target areas. The initial two areas, Target 1 and Target 2, were identified on the basis of previous soil geochemistry and ground magnetic surveys. These targets are separated by a distance of 12km: Target 1 is near the centre of the Zorita Licence (in the west of the Logrosán Project area); and Target 2 is located in the southwest of the Antonio Caño Licence (in the central Logrosán project area). Target 3 was delineated during 2017 and is located 3km NE of Target 2.
Target 3 was delineated by the 2017 sampling and reanalysis work and is located 3km due NE of Target 2. It is located at the southern end of the Logrosán East gold anomaly and currently measures 2.3km NE-SW and 0.9km across, with soil assays up to 466ppm W. It is coincident with a regional scale, 19km long, magnetic structure which links together: the Logrosán South gold anomaly; Tungsten Target 2; Logrosán East gold anomaly; and Tungsten Target 3.
Gold: Logrosán Project & Maria Project: 2016-2017 Programme Findings
With the tungsten targets delineated for future deeper drilling, the exploration focus switched to targeting gold in 2016 and 2017. On 5 April 2016 it was announced that alteration mapping peripheral to the central Logrosán granitic intrusion had highlighted an initial two new areas for more detailed investigation. The assay results from infill soil sampling and outcrop sampling from one of the new target areas, El Seranillo North, confirmed the area as prospective for gold.
Logrosán South was the second gold target to be delineated in the Logrosán licence group. This structurally controlled gold in soil anomaly, consisting of two parallel structures trending NE-SW through the San Cristóbal licence and into the San Cristóbal Sur application area, currently comprises a total area 6km long and up to 950m wide. Its discovery resulted from regional mapping and the subsequent application for the San Cristóbal Sur licence (reported 19 July 2016).
The Logrosán South gold anomaly is derived from the MEN Finland laboratory (“MEFFA”) soil sample assay data. As MEFFA is not an accredited facility, 627 samples selected from five sample profile lines were also submitted to ALS Minerals laboratory in Seville for analysis. There is a good correlation between the sets of results, verifying the anomaly, with ALS showing gold in soil trends up to 0.18g/t Au, with one outlier at 0.89g/t Au. Whilst these values are strongly anomalous for soil samples, only deep drilling can properly test the strength of the underlying mineralisation.
A total of 20 inclined RAB drill holes, with an average depth of 23m (total 459m drilled), on four profiles (P1, P2 etc) were completed at Logrosán South in November 2016, with eight holes on P1, 6 on P2, 4 on P3 and four on P4. The drill profiles were placed across the most southerly of the two parallel structures at a separation of: P1 to P2 240m; P2 to P3 440m; and P3 to P4 900m. A total of 123 samples from eight holes were submitted to ALS for gold analysis, representing the most mineralised intervals from all four profiles. The most significant intersection was on P2 where hole LS009 intersected 12.6m @ 0.34g/t Au from surface, including 6m @ 0.41g/t from 5.62m depth. Whilst the RAB drilling results confirm the presence of subsurface gold which is coincident with surface anomalies, they will require follow-up with deeper drilling methods before a judgement can be made regarding gold grade. The northern parallel structure has not yet been intersected by any drilling.
At Logrosán East infill sampling and reanalysis of samples for gold, during the first half of 2017 resulted in a total of 7,345 new assay results, which were effective in joining together the El Seranillo North gold target (announced on 5 April 2016) and the El Seranillo East (announced 12 December 2017) to form a regional scale gold anomaly which is now being termed the Logrosán East anomaly. El Seranillo East was located to the east of the San Cristobal intrusion and approximately 2km southeast of the El Seranillo North gold target, with El Seranillo the locality of historical tin mining.
The combined Logrosán East target area is a linear elongated boot shaped gold anomaly, which is coincident with magnetic, copper and arsenic anomalies along the same trend. The combined target’s total length is circa 5km varying in width from 50m – 80m. The majority of samples were analysed by the MEN’s internal laboratory in Finland (“MEFFA”). 58 soil samples were also submitted to ALS for check analysis which ranged up to 0.04g/t Au, supporting the MEFFA findings. The two highest rock chip samples collected from a road cutting in the El Seranillo North area graded 1.88g/t Au and 7.16g/t Au.
In late April 2017, a 65m long channel sample located within a road cutting located on the northerly extension of the Logrosán East gold anomaly, to the north of what was the El Seranillo North target, returned ALS assay results of 12m @ 0.2g/t Au from 2m composites. Whilst within the northern end of the Logrosán East target, a total of 22 chip samples confirmed anomalous gold background over an area of 0.3km2, ranging to a maximum of 4.45g/t Au.
On a regional scale the Logrosán East structure marks the eastern most edge of a strontium (Sr) depletion front emanating from the San Cristobal intrusion.
The Logrosán West gold target is located to the west of the San Cristobal intrusion, it trends NE-SW, parallel to the Logrosán South gold trend, approximately 5km to the northwest. Soil geochemical sampling results show the Logrosán West anomaly to be approaching 2.5km long, and associated with a 4km long, circa 180m wide, arsenic in soil anomaly.
The first renewal of the Maria Project concession was granted on 31 October 2017, but no further work was undertaken at Maria during the year. RAB drilling in late 2016 had produced downhole intersections of up to 4.0m @ 1.47 g/t Au and 7.0m @ 1.0% Sb (announced 12 December 2016). There are also historical lead-zinc mines in the Maria licence area, these have not yet been investigated in any detail.
Location and Region
The Logrosán Project and Maria Project areas are located approximately three hours’ drive west of Madrid, in a geologically prospective, under-explored and mining-friendly jurisdiction in west-central Spain within the province of Cáceres in the Extremadura autonomous region. The projects are served by a well-developed and maintained road network, with good power, water and telecommunications infrastructure and enjoys the full support of the regional and local government and administration.
There are three public listed exploration and pre-production development companies located within the surrounding region: the W Resources Plc La Parrilla tungsten mine is 43km southwest of the LM project areas; the Emerita Resources Corporation / Copper One Inc held Las Morras Gold Project is 6km to the south; and the Berkeley Energia PLC Gambuta uranium deposit is 30km north.
The exploration work undertaken to date in the Logrosán and Maria project areas has delineated at least five specific targets which warrant investigation by Reverse Circulation (“RC”) or diamond core drilling.
The JV is currently reviewing options for a cost effective first-pass diamond and RC drilling programme at Logrosán and Maria with a view to testing the laterally extensive surface gold anomalies at depth and following up on the two tungsten deposits outlined by the 2015 RAB drilling programme.
With broad targets qualified to near surface depths by geochemistry, geophysics, trenching and RAB drilling, the priority is now to determine the extent and tenor of mineralisation to shallow open-pitable depths.
The addition of deep-drill intersections will add significantly to the potential value of the licence holdings. Additional exploration potential is provided by the existence of historical lead-zinc mines in the Maria licence area, and the historical phosphate mine and tin workings in the Logrosán licence group.
Investing Policy Implementation 2017
During late 2017 Metal Tiger strategically invested circa £7.69million in resource company strategic investment and on-market purchases of resource company shares of companies listed on AIM.
All Direct Projects interests have received Metal Tiger funding in 2017, and Metal Tiger has been active in three countries.
Administrative expenses in 2017 amounted to £4,927,086. This compares with an expense of £3,238,114 in 2016. The increase of £1,688,972 relates to the increase of activity in the Thai subsidiaries by £388,513 and write off of the costs associated with the suspended IPO of the Thai assets of £711,964 pre-VAT. There was an increase in Directors’ and employees’ emoluments in the year as set out in note 6 to the financial statements due to an increase in the number of Directors, including a full provision of £730,631 for share based payments. Otherwise, after an assessment of recoverable VAT, overheads remained flat year on year at £1,272,000.
Given the nature of our investments, the tendency is for investors to look at the Company’s net assets and compare this to market capitalisation. For Metal Tiger this simplistic valuation metric does not work as the Company is focused on investment in major resource projects where the value of an interest can increase very rapidly with successful ground exploration or corporate developments.
Where a project or investment has been made to acquire commercially valuable interests, or where the Company has acquired valuable project data and strategic positioning in exploration licences, mining licences and licence applications, then the costs of investment will be capitalised on the Company’s Statement of Financial Position at the period end.
Shareholders should note therefore that at present the published net asset position of the Company will largely comprise the working capital representing predominantly cash, investments in joint ventures and associates and liquid tradeable resource shares. Metal Tiger carries no debt and no material trade creditors.
BUSINESS MODEL AT THE YEAR END
Metal Tiger closed 2017 with Direct Equity investments in a number of UK AIM resource companies, cash at bank, no debt and a range of Direct Project interests.
The share price of Metal Tiger started 2017 at 1.45p per share and ended 2017 at 2.33p per share, a 61 per cent increase. Metal Tiger’s share price performance was strong and ahead of the mid-tier mining market. The Company’s share price improvement in the year can be compared with the FTSE 350 Mining Index (FTNMX 1770) which started 2017 at 14,799 but closed the year at 18,253 representing a 23 per cent increase.
At the year’s close, Metal Tiger has valuable core Direct Project interests in Botswana, Thailand and Spain.
Metal Tiger continued to receive and review new opportunities in the resource sector throughout 2017. The main focus will continue to be investment into the Direct Projects of Botswana and Thailand, whilst seeking corporate targets which will create excellent value to Metal Tiger’s shareholders.
POST YEAR END DEVELOPMENTS
The Company has seen an acceleration in Direct Projects investing activities and accomplishments in 2017. In summary these include:
Botswanan Joint Venture
The T3 Open Pit Feasibility Study commenced in Q1 2018 following the robust financial outcomes indicated by the PFS (announced 31 January 2018). Emphasis has been placed on additional infill and extension drilling of the planned T3 open pit. The objectives of this drilling programme, which is now effectively complete (announced 26 March 2018), were three-fold:
- Convert additional Inferred Mineral Resources into Indicated and Measured categories;
- Increase confidence in the Expansion Case model which assumes an ore processing rate of 2.5Mtpa for ~3 years, followed by a processing rate of 4Mtpa for ~8 years;
- Increase reliability in the resources and the mineralisation types in the first open pit pushback which will provide ore for the first two to three years of production.
A revised resource estimate is targeted for completion in early June 2018, once the remaining assays from 34 additional holes at the T3 Pit drilling programme are received.
While a revised resource estimate and completion of the current T3 Open Pit Feasibility Study is required to confirm the above objectives, results to date are very encouraging, providing further confidence that the Expansion Case model is achievable.
Following completion of the T3 Pit infill and extension drilling, the focus has moved to defining a potential high grade vein hosted underground resource at T3.
Approval of the Environmental Management Plan (“EMP”) for a substantial drilling campaign to test high priority AEM and soil anomalies along the T3 Dome has been delayed due to staffing issues at the Department of Environmental Affairs (“DEA”). Progress is being made by Tshukudu with the objective to receive EMP approval for the T3 Dome drilling to commence as soon as possible. Drilling is testing structural targets within the T-Rex Dome. Three widely spaced holes in the eastern part of the T-Rex Dome, centred around T3, all intersected wide zones (>20m) of lower grade (0.4-0.5% Cu) copper mineralisation directly above the prospective Ngwako Pan Formation (“NPF”) contact. The NPF contact is an important target across the T3 Dome, in areas of structural complexity and doming.
On 2 February 2018, the Company announced that it had taken the decision to postpone the IPO of its Thai Joint Venture over the two lead/zinc/silver mines in Boh Yai and Song Toh until further notice.
New opportunity pipeline
Opportunities continue to grow and Metal Tiger is considering ways to capture value from pipeline opportunities within Metal Tiger plc and also third parties.
The Direct Equities Division had been investing actively during 2017 and material financial gains were secured. A programme of selective divestment has been underway since the change of Board in December 2016. Divestments have included Connemara Mining, Conroy Gold and Greatland Gold, where the opportunity to maximise value for Metal Tiger shareholders was apparent.
The Board believes that the divestment programme now underway in its asset trading division will yield greater returns when invested in its direct project division.
During the second half of 2017, Metal Tiger built a stake in ASX listed Kingsgate Consolidated Limited (“KCN”) of 8.7% per cent, making it the largest shareholder in KCN. On 15 November 2017 Metal Tiger requested KCN to hold a general meeting of KCN shareholders to consider changes to the board of KCN proposing Metal Tiger nominees, in order to preserve and enhance the value of its shareholding. On 9 January 2018, the general meeting was held and all the resolutions which Metal Tiger proposed were defeated. However, the outcome did demonstrate strong support for change amongst both institutional and retail investors and in the financial Press, who shared Metal Tiger’s vision to restore value based on the reopening of the Chatree gold mine in Thailand. The Government of Thailand stated in a media release that a properly managed reactivation of the Chatree mine would be mutually beneficial to the owner of the mine and to Thailand. The Government went on to say that more can be achieved through amicable negotiations than through arbitration. By 31January 2018, Metal Tiger had sold down its entire stake in KCN to zero at a net trading cost of circa £50,000 before exchange gains and losses and transaction costs.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
|The key performance indicators are set out below:|
|31 December2017||31 December
|Net asset value||£15,443,690||£7,457,894||+107%|
|Net asset value – fully diluted per share 1||1.328p||0.958p||+39%|
|Closing share price||2.330p||1.450p||+61%|
|Share price premium/(discount) to net asset value – fully diluted||75%||51%||+48%|
1 Fully diluted net asset value is calculated on the number of shares in issue at the year end, the number of warrants in the money at the year end 32,198,999 (2016: Nil) and the number of options in the money at the year end (2017: 43,780,000; 2016: 4,170,000.
PRINCIPAL RISKS AND UNCERTAINTIES
The main business risk is considered to be investment risk. The Directors intend to mitigate this risk by carrying out a comprehensive and thorough project review of any potential investment in which all material aspects will be subject to rigorous due diligence. The Directors believe that the Company has sufficient cash resources to pursue its investment strategy.
As disclosed in note 2, after making enquiries, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
By order of the Board
Chief Executive Officer
30 May 2018
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 December 2017
The Directors present their report together with the audited financial statements for the year ended 31 December 2017.
A review of the business and principal risks and uncertainties has been included in the Strategic Report.
No interim dividend was paid (2016: £none) and the Directors do not propose a final dividend (2016: £none) for the 12 months ended 31 December 2017.
The Directors of the Company who held office during the year and to the date of this report were as follows:
Charles Patrick Stewart Hal l (Chairman)
|Terrence Ronald Grammer|
|David Michael McNeilly|
|Keith John Springall|
|Geoffrey Stephen McIntyre||appointed 5 January 2017|
|resigned 1 March 2018|
|Alastair James Middleton||appointed 5 January 2017|
|Mark Roderick Potter||appointed 16 January 2017|
|Paul Johnson||resigned 16 January 2017|
|Neville Keith Bergin||appointed 1 March 2018|
Further details of the Directors’ remuneration are given in note 6, details of Directors’ share options are given in note 24 and the Directors' interests in transactions of the Group and the Company are given in note 26.
The future developments of the business are set out in the Strategic Report under the headings “Opportunity Pipeline” and “Post Year End Developments” and are incorporated into this report by reference.
Details of the Group’s financial instruments are given in note 25.
As at 30 May 2018 the following were, as far as the Directors are aware, interested in three per cent or more of the issued share capital of the Company:
|Name||Number of Ordinary Shares||% of Issued Ordinary Share Capital|
|Exploration Capital Partners||100,000,000||9.02%|
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Group's financial risk management objectives and policies are set out in note 25 to these financial statements.
POST YEAR END EVENTS
Since 31 December 2017, the following post year end events have taken place:
- On 2 February 2018, the Company announced that it had taken the decision to postpone the Initial Public Offering (“IPO”) of its Thai Joint Venture at Boh Yai and Song Toh until further notice. The 199,500 outstanding warrants in KEMCO Mining plc at 31 December 2017 automatically converted into 12,259,617 new ordinary shares in the Company on 22 February 2018.
- Warrant conversions exercised since the year end and up to 30 May 2018, have been as follows:
| Warrants exercised
| New shares
|KEMCO Mining plc warrants||100.00||1.67p||204,500||204,500||12,259,617|
The Group is not required to comply with the principles of corporate governance. This report sets out how the Group incorporates good corporate governance practice where appropriate to its business.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading and controlling the Group. The Board is responsible for approving Group policy and strategy. It meets regularly and has a schedule of matters specifically reserved to it for decision. Management supply the Board with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company Secretary and independent professionals at the Company's expense. Training is available for new Directors and other Directors as necessary. Given the size of the Board, there is no separate Nomination Committee. All Director appointments are approved by the Board as a whole. Mark Potter is the senior independent Director.
The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The Company has well established procedures which are considered adequate given the size of the business.
The Audit Committee, which comprises two Non-Executive Directors, Charles Hall and Mark Potter, is responsible for ensuring that the financial performance of the Group is properly monitored and reported upon and that any such reports are understood by the Board. The Committee meets at least twice each year.
The remuneration of the Executive Directors is fixed by the Remuneration Committee which comprises two Non-Executive Directors, Charles Hall and Mark Potter. The Remuneration Committee is responsible for reviewing and determining Company policy on executive remuneration and the allocation of long term incentives to executives and employees. The remuneration of Non-Executive Directors is determined by the Board as a whole. In setting remuneration levels, the Company seeks to provide appropriate reward for the skill and time commitment required so as to retain the right calibre of director at a cost to the Company which reflects current market rates.
Details of Directors’ fees and of payments made for professional services rendered are set out in note 6 to the financial statements.
DIRECTORS INDEMNITY INSURANCE
As permitted by Section 233 of the Companies Act 2006, the Company has purchased insurance cover on behalf of the Directors indemnifying them against certain liabilities which may be incurred by them in relation to the Group.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Strategic Report, Report of the Directors and the Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare Group and Company financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRS as adopted by the European Union, 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 and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In the case of each person who was a Director at the time this report was approved:
- so far as that Director is aware there is no relevant audit information of which the Company’s auditor is unaware; and
- that Director has taken all steps that the Director ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
The Directors are responsible for ensuring that the annual report and the financial statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
A resolution to re-appoint Crowe Clark Whitehill LLP as auditors of the Company for the year ended 31 December 2018 will be proposed at the forthcoming annual general meeting.
By order of the Board
30 May 2018
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF METAL TIGER PLC
FOR THE YEAR ENDED 31 December 2017
We have audited the financial statements of Metal Tiger plc (the “Parent Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2017, which comprise:
- the Group statement of comprehensive income for the year ended 31 December 2017;
- the Group and Parent Company statements of financial position as at 31 December 2017;
- the Group and Parent Company statements of cash flows and statements of changes in equity for the year then ended; and
- the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
The financial reporting framework that has been applied in the preparation of the Group and Parent Company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
- the financial statements give a true and fair view of the state of the Group’s and of the Parent Company's affairs as at 31 December 2017 and of the Group’s profit for the period then ended;
- the Group’s financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
- the Parent Company’s financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union as applied in accordance with the requirements of the Companies Act 2006; and
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:
- The Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
- The Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s and the Parent Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
OVERVIEW OF OUR AUDIT APPROACH
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. Based on our professional judgement, we determined overall materiality for the Group financial statements as a whole to be £150,000, which represents 1% of the Group’s net assets.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration. We agreed with the Audit Committee to report to it all identified errors in excess of £4,500. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
The Parent Company is accounted for from one central operating location, the group’s registered office. Our audit was conducted from this main operating location.
The Group also has significant components account for in Thailand where the audit was undertaken by a local audit firm. Audit instructions were issued to the component auditor, the instructions detailed the significant risks to be addressed through the audit procedures and indicated the information we required to be reported back to the Group audit team. A part of our audit we reviewed component auditor working papers. Telephone conference meetings were then held with the component auditors. At these meetings, the findings reported by the Group team were then performed by the component auditor.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
|Key audit matter||How the scope of our audit addressed the key audit matter|
There is a presumption that there is always a risk of
Given the nature of the business the key group
Our procedures included:
Movements in fair value were also considered and are discussed
|Key audit matter||How the scope of our audit addressed the key audit matter|
Measurement and valuation of investments
The group holds a number of different types of
In addition certain investments cannot be
Our procedures included:
We have considered the adequacy of the disclosures made
Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion.
The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion based on the work undertaken in the course of our audit
- the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Directors’ Report and Strategic Report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION:
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
- the parent company financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group’s and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Stephen Bullock (Senior Statutory Auditor)
for and on behalf of
Crowe Clark Whitehill LLP
30 May 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 December 2017
|Gain on disposal of investments||17||3,916,351||296,280|
|Movement in fair value of Direct Equities Division investments||17||1,541,048||2,346,830|
|Share of post-tax profits/(losses) of equity accounted associates||15||79,606||(21,077)|
|Share of post-tax losses of equity accounted joint ventures||16||(100,228)||(233,724)|
|Provision against cost of joint venture investments||16||-||(156,981)|
|Net gain on investments||5,437,328||2,231,649|
|Bargain purchase on acquisition of subsidiary||-||155,628|
|PROFIT/(LOSS) FOR THE YEAR BEFORE TAXATION||347,041||(720,300)|
|Tax on profit/(loss) on ordinary activities||9||(545,000)||-|
|LOSS ON ORDINARY ACTIVITIES AFTER TAXATION||5||(197,959)||(720,300)|
|OTHER COMPREHENSIVE INCOME|
|ITEMS WHICH MAY BE SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS:|
|Exchange differences on translation of foreign operations||(8,481)||(207,376)|
|TOTAL COMPREHENSIVE INCOME FOR THE PERIOD||(206,440)||(927,676)|
| LOSS ON ORDINARY ACTIVITIES AFTER TAXATION
IS ATTRIBUTABLE TO:
|Owners of the Company||(180,413)||(651,447)|
|LOSS ON ORDINARY ACTIVITIES AFTER TAXATION||(197,959)||(720,300)|
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
IS ATTRIBUTABLE TO:
|Owners of the Company||(188,348)||(719,039)|
|TOTAL COMPREHENSIVE INCOME FOR THE PERIOD||(206,440)||(927,676)|
|EARNINGS PER SHARE|
|Basic loss per share||11||(0.02p)||(0.12p)|
|Fully loss per share||11||(0.02p)||(0.12p)|
All amounts relate to continuing activities.
The accompanying accounting policies and notes are an integral part of these financial statements
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
AT 31 December 2017
|Property, plant and equipment||13||30,627||-||46,271||-|
|Deferred tax asset||9||96,569||96,569||-||-|
|Investment in subsidiaries||14||-||535,578||-||338,788|
|Investment in associates||15||2,203,009||2,203,009||743,418||743,418|
|Investment in joint ventures||16||1,223,721||1,223,721||1,097,602||1,097,602|
|Direct Equities Division investments||17||10,061,942||10,061,942||4,067,371||4,067,371|
|Trade and other receivables||18||482,426||242,424||705,508||509,887|
|Amounts due from related parties||26||-||2,110,545||-||1,002,322|
|Cash and cash equivalents||19||2,845,069||2,834,995||1,389,784||1,382,115|
|Trade and other payables||20||724,515||665,645||439,012||329,557|
|Amounts due to related parties||26||-||60||-||59|
|Loans and borrowings||21||48,805||-||48,375||-|
|NET CURRENT ASSETS||12,616,117||14,584,201||5,675,276||6,632,079|
|Deferred tax liability||9||641,569||641,569||-||-|
|Share premium account||23||6,124,869||6,124,869||1,274,650||1,274,650|
|Share based payment reserve||928,487||928,487||532,509||532,509|
|TOTAL SHAREHOLDERS’ FUNDS||15,435,591||17,882,933||7,431,703||8,680,521|
|Equity non-controlling interests||8,099||-||26,191||-|
*Retained profits include the Company ’s profit for the year after taxation of £1,010,176 (2016: loss £456,050).
These Financial Statements were approved by the Board of Directors on 30 May 2018
and were signed on its behalf by:
Keith Springall, Director
Company number: 04196004
CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2017
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Profit/(Loss) before taxation||347,041||1,555,176||(720,300)||(456,050)|
|Profit on disposal of Direct Equities Division investments||(3,916,351)||(3,916,351)||(296,280)||(296,280)|
|Movement in fair value of investments||(1,541,048)||(1,541,048)||(2,346,830)||(2,346,830)|
|Share of post-tax profits of equity accounted associates||(79,606)||(79,606)||21,077||21,077|
|Share of post-tax losses of equity accounted joint ventures||100,228||100,228||233,724||233,724|
|Movement in provision against joint venture investments||-||-||156,981||156,981|
|Share based payment charge for year||467,538||444,863||475,740||457,428|
|Cost of warrant extension||263,093||263,093||-||-|
|Equity settled trading liabilities||62,445||62,445||331,544||331,544|
|Issue of KEMCO Mining plc warrants||59,890||59,890||-||-|
|Depreciation and amortisation||19,214||-||6,528||-|
|Write off of assets||1,964||-||-||-|
|Bargain purchase on acquisition||-||-||(155,628)||-|
|Net acquired non-controlling interests on change of control||-||-||111,476||-|
|Operating cash flow before working capital changes||(4,052,942)||(2,890,599)||(2,312,826)||(2,029,071)|
|Increase in trade and other receivables||(76,100)||(35,870)||(188,602)||(60,752)|
|Increase in trade and other payables||284,648||336,088||298,685||236,925|
|Increase in amounts due from subsidiaries||-||(1,098,629)||-||(493,237)|
|Unrealised foreign exchange gains and losses||(44,376)||(39,653)||(31,897)||93,491|
|Net cash outflow from operating activities||(3,888,770)||(3,728,663)||(2,234,640)||(2,252,644)|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Proceeds from investment disposals||5,402,007||5,402,007||1,153,399||1,153,399|
|Purchase of intangible assets||(10,573)||-||(25,668)||-|
|Purchase of fixed assets||(1,387)||-||(47,395)||-|
|Purchase of investment in subsidiary||-||(174,115)||(164,207)||(220,704)|
|Purchase of investment in, and loans to, associates||(1,522,286)||(1,522,286)||(669,228)||(669,228)|
|Purchase of investment in, and loans to, joint ventures||(228,039)||(228,039)||(948,452)||(948,452)|
|Purchase of investments||(5,939,179)||(5,939,179)||(1,734,711)||(1,734,711)|
|Cash acquired with subsidiary undertakings||-||-||5,154||-|
|Net cash outflow from investing activities||(2,298,490)||(2,461,061)||(2,430,580)||(2,419,375)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Proceeds from issue of shares||8,028,456||8,028,456||5,848,456||5,848,456|
|Share issue costs||(385,852)||(385,852)||(148,163)||(148,163)|
|Net cash inflow from financing activities||7,642,484||7,642,604||5,700,239||5,700,253|
|NET INCREASE IN CASH AND CASH EQUIVALENTS||1,455,224||1,452,880||1,035,019||1,028,234|
|Cash and cash equivalents brought forward||1,389,784||1,382,115||353,881||353,881|
|Effect of exchange rate changes||61||-||884||-|
|CASH AND CASH EQUIVALENTS CARRIED FORWARD||2,845,069||2,834,995||1,389,784||1,382,115|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2017
| Share based payment
| Retained profits/
| Total equity
|Non-controlling interests|| Total
|BALANCE AT 1 JANUARY 2016||650,330||4,283,196||155,260||414,997||-||(3,992,050)||1,511,733||-||1,511,733|
|Loss for the year ended 31 December 2016||-||-||-||-||-||(651,447)||(651,447)||(68,853)||(720,300)|
|Other comprehensive income||-||-||-||-||(67,592)||-||(67,592)||(139,784)||(207,376)|
|TOTAL COMPREHENSIVE INCOME||-||-||-||-||(67,592)||(651,447)||(719,039)||(208,637)||(927,676)|
|Acquisition of subsidiary||-||-||-||91,197||-||-||91,197||(848,964)||(757,767)|
|Change in non-controlling interests without change in control||-||-||-||-||-||(972,316)||(972,316)||1,083,792||111,476|
|Share issue expenses||-||(148,163)||-||-||-||-||(148,163)||-||(148,163)|
|Cost of share based payments||-||-||475,740||-||-||-||475,740||-||475,740|
|Transfer of reserves relating to exercise and expiry of options and warrants||-||373,019||(98,491)||(373,019)||-||98,491||-||-||-|
|TOTAL CHANGES DIRECTLY TO EQUITY||(572,864)||(3,008,546)||377,249||672,519||-||9,170,651||6,639,009||234,828||6,873,837|
|BALANCE AT 31 DECEMBER 2016||77,466||1,274,650||532,509||1,087,516||(67,592)||4,527,154||7,431,703||26,191||7,457,894|
|Loss for the year ended 31 December 2017||-||-||-||-||-||(180,413)||(180,413)||(17,546)||(197,959)|
|Other comprehensive income||-||-||-||-||80,683||(88,618)||(7,935)||(546)||(8,481)|
|TOTAL COMPREHENSIVE INCOME||-||-||-||-||80,683||(269,031)||(188,348)||(18,092)||(206,440)|
|Share issue expenses||-||(385,852)||-||-||-||-||(385,852)||-||(385,852)|
|Cost of share based payments||-||-||467,538||-||-||-||467,538||-||467,538|
|Transfer of reserves relating to exercise and expiry of options and warrants||-||643,672||(71,560)||(1,226,453)||-||654,341||-||-||-|
|TOTAL CHANGES DIRECTLY TO EQUITY||31,227||4,850,219||395,978||2,260,471||-||654,341||8,192,236||-||8,192,236|
|BALANCE AT 31 DECEMBER 2017||108,693||6,124,869||928,487||3,347,987||13,091||4,912,464||15,435,591||8,099||15,443,690|
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2017
|Share premium account|| Share based
| Retained profits/
|BALANCE AT 1 JANUARY 2016||650,330||4,283,196||155,260||414,997||(3,978,537)||1,525,246|
| Loss for the year and total comprehensive income
for the year ended 31 December 2016
|Acquisition of subsidiary||-||-||-||91,197||-||91,197|
|Share issue expenses||-||(148,163)||-||-||-||(148,163)|
|Cost of share based payments||-||-||475,740||-||-||475,740|
|Transfer of reserves relating to exercise and expiry of options and warrants||373,019||(98,491)||(373,019)||98,491||-|
|TOTAL CHANGES DIRECTLY TO EQUITY||(572,864)||(3,008,546)||377,249||672,519||10,142,967||7,611,325|
|BALANCE AT 31 DECEMBER 2016||77,466||1,274,650||532,509||1,087,516||5,708,380||8,680,521|
| Profit for the year and total comprehensive income
for the year ended 31 December 2017
|Share issue expenses||-||(385,852)||-||-||-||(385,852)|
|Cost of share based payments||-||-||467,538||-||-||467,538|
|Transfer of reserves relating to exercise and expiry of options and warrants||-||643,672||(71,560)||(1,226,453)||654,341||-|
|TOTAL CHANGES DIRECTLY TO EQUITY||31,227||4,850,219||395,978||2,260,471||654,341||8,192,236|
|BALANCE AT 31 DECEMBER 2017||108,693||6,124,869||928,487||3,347,987||7,372,897||17,882,933|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2017
1 GENERAL INFORMATION
Metal Tiger plc is a public limited company incorporated in the United Kingdom. The shares of the Company are listed on the AIM stock exchange. The Group’s principal activities are described in the Report of the Directors.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and IFRIC interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have also been prepared under the historical cost basis, except for investments in the Direct Equities Division, share options and warrants which are recognised at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’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 later in these accounting policies.
The financial statements are presented in UK pounds, which is also the Company’s functional currency.
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.
An overview of standards, amendments and interpretations to IFRS issued but not yet effective, and which have not been adopted early by the Company, is presented below under ‘Statement of Compliance’.
The financial statements are required to be prepared on the going concern basis unless it is inappropriate to do so. At the year end the Group had net current assets of £12,616,117 including cash balances of £2,845,069 and quoted investments of £9,341,645 compared with borrowings of £48,805. Since the year end the Company has raised a further £372,500 from the exercise of warrants. The Directors have prepared cash flow forecasts through to 31 December 2019 which demonstrate that the Group is able to meet its commitments as they fall due. On this basis, the Directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group’s financial statements.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management’s knowledge and experience of the amounts, events or actions. Actual results may differ from such estimates.
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.
In certain circumstances, where fair value cannot be readily established, the Directors are required to make judgements over carrying value impairment, and evaluate the size of any impairment required.
Contingent consideration on acquisitions is recognised at fair value.
SHARE BASED PAYMENTS AND SHARE WARRANTS
The calculation of the fair value of equity-settled share based awards and warrants issued in connection with share issues and the resulting charge to the Statement of Comprehensive Income or reserves requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company’s share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards at the date of grant.
FAIR VALUE OF INVESTMENT
The Group’s investments in the Direct Equities Division require measurement at fair value. For the quoted entities traded in an active market the fair value is based on their quoted price. The unquoted share warrants (level 3) are shown at Directors’ valuation based on a value derived from either Black-Scholes or Monte Carlo pricing models depending on the suitability of the method to the specific warrant taking into account the terms of the warrant and discounting for the non-tradability of the warrants where appropriate. Both pricing models use inputs relating to expected volatility that require estimations. No value is ascribed to warrants which include terms which cause the exercise price to be dependent on events outside the control of the Group and outcomes which are unable to be predicted with any certainty.
CLASSIFICATION OF JOINT ARRANGEMENTS
For all joint arrangements structured in separate vehicles the Group must assess the substance of the joint arrangement in determining whether it is classified as a joint venture or joint operation. This assessment requires the Group to consider whether it has rights to the joint arrangement’s net assets (in which case it is classified as a joint venture), or rights to and obligations for specific assets, liabilities, expenses, and revenues (in which case it is classified as a joint operation). Factors the Group must consider include:
- legal form;
- contractual agreement; and
- other facts and circumstances.
Upon consideration of these factors, the Group has determined that all of its joint arrangements structured through separate vehicles give it rights to the net assets and are therefore classified as joint ventures.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE INVESTMENTS
In arriving at the carrying value of investments in subsidiaries, associates and joint ventures, the Group determines the need for impairment based on the level of geological knowledge and confidence of the mineral resources (as further described in its accounting policy). Such decisions are taken on the basis of the exploration and research work carried out in the period utilising expert reports.
STATEMENT OF COMPLIANCE
The Financial Statements comply with IFRS as adopted by the European Union.
New standards, interpretations and amendments to IFRS which are effective as of 1 January 2017 and adopted by the Group are as follows:
- Annual Improvements to IFRSs 2014–2016 Cycle – Various Standards;
- IFRS 2 (amendments) – Share based Payment
None of these standards affected the amounts reported in the financial statements. Other standards, interpretations and amendments not shown above are either not relevant or not material to the Group.
At the date of authorisation of these financial statements, a number of Standards and Interpretations were in issue but not yet effective. The adoption of these standards and interpretations, or any of the amendments made to existing standards as a result of the annual improvements cycle, will not have a material effect on the financial statements in the year of initial application.
BASIS OF CONSOLIDATION
The Consolidated Statement of Comprehensive Income and Statement of Financial Position include the financial statements of the Company and its subsidiary undertakings made up to 31 December 2017.
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to non-controlling interests, even if this results in non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in ownership interest of a subsidiary without a loss of control is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
- derecognises the assets (including goodwill) and liabilities of the subsidiary;
- derecognises the carrying amount of any non-controlling interests;
- derecognises the cumulative translation differences recorded in equity;
- recognises the fair value of the consideration received;
- recognises the fair value of any investment retained;
- recognises any surplus or deficit in the Statement of Comprehensive Income; and
- reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may require that the amounts previously recognised in other comprehensive income be reclassified to profit or loss.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value at the date of acquisition and the amount of any non-controlling interest in the acquired entity. Non-controlling interests (‘NCI’) may be initially measured either at fair value or at the NCI’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Acquisition costs incurred are expensed and included in administrative expenses except where they relate to the issue of debt or equity instruments in connection with the acquisition, in which case they are included in finance costs.
When the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in determination of goodwill.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Any subsequent changes to the fair value of the contingent consideration are adjusted against the cost of the acquisition if they occur within the measurement period of twelve months following the date of acquisition. Any subsequent changes to the fair value of the contingent consideration after the measurement period are recognised in the Income Statement. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.
The accounting policy for identifying segments is based on internal management reporting information that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors. In identifying its operating segments, management generally follows the Company's service lines which represent the main products and services provided by the Company.
Exploration costs incurred by Group companies, associates and joint ventures are expensed in arriving at profit or loss for the period.
Investments made are capitalised as an asset where the underlying projects have mineral resources which are compliant with internationally recognised mineral resource standards (JORC and NI 43-101) or where the investment is to acquire an interest in an investment or associate that holds commercial information, assets or strategic features against which a current commercial value can be reasonably assessed.
The JORC Code, the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, is a professional code of practice that sets minimum standards for public reporting of mineral exploration results, mineral resources and ore reserves. NI 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada which provides a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada.
Current taxation is the taxation currently payable on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Temporary differences include those associated with shares in subsidiaries and joint ventures and are only not recognised if the Company controls the reversal of the difference and it is not expected for the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the Statement of Financial Position date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Statement of Comprehensive Income, except where they relate to items that are charged or credited to equity in which case the related deferred tax is also charged or credited directly to equity.
FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction.
The results of overseas operations are translated at rates approximating to those ruling when the transactions took place. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the Statement of Financial Position reporting date. All exchange differences are dealt with through the Statement of Comprehensive Income as they arise.
Intangible assets comprise software licences held in connection with exploration operations. Expenditure is stated at cost, less amortisation and provision for any impairment. Amortisation is provided at rates calculated to write off the cost of the software over its expected useful life as follows
Software 10 years straight line
Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the Statement of Comprehensive Income in arriving at profit or loss for the year.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of depreciation and provision for any impairment. Depreciation is calculated to write down the cost of all tangible fixed assets to estimated residual value over their expected useful lives as follows:
Building improvements 5 years straight line (or length of lease if shorter)
Mining equipment 5 years straight line
Vehicles 5 years straight line
Office equipment 3 to 5 years straight line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each year end. An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying value is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the Statement of Comprehensive Income in arriving at profit or loss for the year.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Associates are entities, other than subsidiaries or joint ventures, over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not amount to control or joint control of the investee.
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control such that significant operating and financial decisions require the unanimous consent of the parties sharing control. In some situations, joint control exists even though the Company has an ownership interest of more than 50 per cent because joint venture partners have equal control over management decisions. The Company’s joint venture interests are held through a Jointly Controlled Entity (JCE). A JCE is a joint venture that involves the establishment of a corporation, partnership or other entity in which each venturer has a long term interest.
Exploration costs in respect of investments in associates and joint ventures are capitalised or expensed according to the policy set out above in respect of Group exploration costs. For associates and joint ventures which are equity accounted for, any share of losses are offset against loans advanced.
The Company's financial assets comprise investments held in the Direct Equities Division, trade receivables, loans and cash and cash equivalents.
CURRENT ASSET INVESTMENTS
All investments are determined upon initial recognition as held at fair value through profit or loss and are designated as current asset investments. Investment transactions are accounted for on a trade date basis. Incidental acquisition costs are expensed. Assets are de-recognised at the trade date of the disposal. The fair value of the financial instruments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. Unquoted investments are valued by the Directors using primary valuation techniques such as, where possible, recent transactions, last price and net asset value. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.
Loans and receivables from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
Impairment provisions are recognised where there is objective evidence that the Company will be unable to collect all of the amounts due under the terms receivable, the amount of such provision being the difference between the net carrying amount and the present value of the expected future cash flows.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
IMPAIRMENT OF FINANCIAL ASSETS
The carrying values of the Company’s assets are reviewed annually for any indicators of impairment. Where the carrying value of an asset exceeds the recoverable amount (i.e. the higher of value in use and fair value less cost to sell), the asset is written down accordingly. Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income.
The Company’s financial liabilities comprise trade and other payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company becomes a party to the contractual provisions of the instruments.
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.
SHARE BASED PAYMENTS
All share based payments are accounted for in accordance with IFRS 2 – “Share based payments”. The Company issues equity-settled share based payments in the form of share options and warrants to certain Directors, employees and advisors. Equity-settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. At each balance sheet date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.
Equity-settled share based payments are made in settlement of professional and other costs. These payments are measured at the fair value of the services provided which will normally equate to the invoiced fees and charged to the Statement of Comprehensive Income, share premium account or are capitalised according to the nature of the fees incurred.
Fair value is estimated using the Black-Scholes valuation model. The expected life used in the model has been adjusted on the basis of management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.
Share warrants issued to shareholders in connection with share capital issues are measured at fair value at the date of issue and treated as a separate component of equity. Fair value is determined at the grant date and is estimated using the Black-Scholes valuation model. Share warrants issued separately to Directors, employees and advisers are accounted for in accordance with the policy on share based payments above.
Equity comprises the following:
“Share capital” representing the nominal value of equity shares;
“Share premium” representing the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;
“Share based payment reserve” representing the cumulative cost of share based payment;
“Warrant reserve” representing the outstanding cost of warrants issued in connection with share capital issues; and
“Retained losses" representing retained losses.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Company (an “operating lease”), the total rentals payable under the lease are charged to the Statement of Comprehensive Income on a straight line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight line basis.
3 SEGMENTAL INFORMATION
| Year ended 31 December 2017
| Direct Equities
| Direct Projects
| Central costs
|Net gain/(loss) on investments||5,457,399||(20,622)||551||-||5,437,328|
|Net finance income/expense||(7,037)||(132,348)||(23,816)||-||(163,201)|
|Gain/(loss) for the year before taxation||4,865,685||(3,017,340)||(1,501,304)||-||347,041|
|Gain/(loss) for the year after taxation||4,224,116||(3,017,340)||(1,404,735)||-||(197,959)|
|Property, plant and equipment||-||30,627||-||-||30,627|
|Deferred tax asset||-||-||96,569||-||96,569|
|Investment in associates||-||2,203,009||-||-||2,203,009|
|Investment in joint ventures||-||1,223,721||-||-||1,223,721|
|Total non-current assets||-||3,491,149||96,569||-||3,587,718|
|Net cash flows||(1,044,942)||(4,453,759)||6,953,925||-||1,455,224|
Direct Equities include strategic investments in fellow AIM quoted resource exploration and development companies including equity and warrant holdings. Direct Projects are mainly by way of joint venture arrangements and include interests in precious, strategic and energy metals, with projects located in Botswana, Thailand and Spain. Central costs comprise those costs which cannot be allocated directly to either operating division and include office rent, audit fees, AIM costs and a proportion of employee and Directors’ remuneration relating to managing the business as a whole.
| Year ended 31 December 2016
| Direct Equities
| Direct Projects
| Central costs
|Net gain/(loss) on investments||2,643,110||(411,782)||321||-||2,231,649|
|Bargain purchase on acquisition of subsidiary||-||155,628||-||-||155,628|
|Net finance income/expense||1,999||127,747||791||-||130,537|
|Gain/(loss) for the year before taxation||2,614,325||(1,566,874)||(1,767,751)||-||(720,300)|
|Gain/(loss) for the year after taxation||2,614,325||(1,566,874)||(1,767,751)||-||(720,300)|
|Property, plant and equipment||-||46,271||-||-||46,271|
|Investment in associates||-||743,418||-||-||743,418|
|Investment in joint ventures||-||1,097,602||-||-||1,097,602|
|Total non-current assets||-||1,913,984||-||-||1,913,984|
|Net cash flows||(610,097)||(1,630,578)||3,275,694||-||1,035,019|
Year ended 31 December 2017
|Net gain/(loss) on investments||4,313,191||(20,622)||-||1,144,759||-||5,437,328|
|Net finance income||(10,804)||(143,992)||12,526||(20,931)||-||(163,201)|
|Gain/(loss) for the year before taxation||1,377,732||(282,678)||(1,650,699)||902,686||-||347,041|
|Gain/(loss) for the year after taxation||832,732||(282,678)||(1,650,699)||902,686||-||(197,959)|
|Property, plant and equipment||-||-||30,627||-||-||30,627|
|Deferred tax asset||96,569||-||-||-||-||96,569|
|Investment in associates||-||2,203,009||-||-||-||2,203,009|
|Investment in joint ventures||-||493,019||730,702||-||-||1,223,721|
|Total non-current assets||96,569||2,696,028||795,121||-||-||3,587,718|
Year ended 31 December 2016
|Net gain/(loss) on investments||1,165,604||(411,588)||(194)||1,477,827||-||2,231,649|
|Bargain purchase of subsidiary||-||-||155,628||-||-||155,628|
|Net finance income||791||-||92,551||37,195||-||150,537|
|Gain/(loss) for the year before taxation||(1,064,459)||(534,014)||(636,849)||1,515,022||-||(700,300)|
|Gain/(loss) for the year after taxation||(1,064,459)||(534,014)||(636,849)||1,515,022||-||(700,300)|
|Property, plant and equipment||-||-||46,271||-||-||46,271|
|Investment in associates||-||743,418||-||-||-||743,418|
|Investment in joint ventures||-||366,900||730,702||-||-||1,097,602|
|Total non-current assets||-||1,110,318||803,666||-||-||1,913,984|
|Loss from operations is arrived at after charging:|
|Wages and salaries (see note 6)||1,120,367||906,595|
|Share based payment expense – options||467,538||475,740|
|Share based payment expense – warrants||263,093||-|
|Amortisation of intangible assets||3,692||372|
|Operating lease expense - property||45,957||91,758|
|During the year the Group obtained the following services from the Company’s auditor:|
|Fees payable to the Company’s auditor for:|
|the audit of the Group’s financial statements||40,270||28,500|
|the audit of the Company’s subsidiaries||-||-|
|other assurance services||139,528||-|
The amount shown for fees payable to the auditor in respect of the Group financial statements includes £14,000 (2016: £14,000) in respect of the Company’s own audit.
6 EMPLOYEE AND DIRECTORS’ REMUNERATION
The expense recognised for employee benefits for continuing operations is analysed below:
|Short term employee benefits (including Directors)||1,022,567||882,558|
|Social security costs||86,860||20,291|
|Share based remuneration||730,631||475,740|
|Short term employee benefits||695,181||460,135|
|Share based remuneration||716,053||217,970|
|Social security costs||73,045||41,322|
Details of Directors’ employment benefits expense are as follows:
|Name of Director||
Details of share options and warrants granted to Directors during the year are given in note 24
Average number of persons employed during the year:
|Direct Projects operations||10||10|
|Office and management||10||5|
Key management are the Directors of the Company.
|Foreign Exchange gains||-||130,384|
|Foreign Exchange losses||163,457||-|
|Current tax on income for the year||-||-|
|Total tax charge for the year||545,000||-|
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to profits of the Group or Company as follows:
|FACTORS AFFECTING THE TAX CHARGE|
|Profit/(loss) before tax||347,041||(720,300)|
| Profit/(loss) before tax multiplied by rate of corporation tax in the UK of 19.25%
|Overseas profits/losses taxed at different rates||53,914||-|
|Changes in rate at which deferred tax is provided||(71,931)||-|
|Income not chargeable to tax||-||(31,124)|
|Expenses not allowable for tax||414,474||21,763|
|Other permanent timing differences||19,820||(2,794)|
|Short term timing differences not recognised||102||(18,031)|
|Unprovided prior year deferred tax||(103,837)||-|
|Tax losses carried forward||165,653||174,246|
Movements in deferred tax assets and liabilities during the year and the amounts outstanding at the year end are as follows:
|Deferred tax asset/(liability) at 1 January 2017||-||-||-|
|Share based payments||17,087||-||17,087|
|Direct Equities Division Investments unrealised gains||-||(641,569)||(641,569)|
|Tax losses carried forward||79,482||-||79,482|
|Charge for the year and deferred tax asset/(liability) at 31 December 2017||96,569||(641,569)||(545,000)|
The deferred tax assets and liabilities and the charge for the year relate to Metal Tiger plc.
No deferred tax asset or liability was provided at 31 December owing to the availability of losses carried forward and the uncertainty of the timing of future profits. As at 31 December 2017 the Group has unprovided tax losses carried forward of approximately £2,400,000 (2016: £3,250,000) of which £2,400,000 relate to subsidiaries in Thailand and expire over the period to 31 December 2023 (2016: £1,280,000 over the period to 31 December 2022). No deferred tax asset has been recognised in respect of the losses incurred in Thailand as the Directors cannot be certain that future profits in Thailand will be sufficient for this asset to be recognised.
10 PROFIT ACCOUNTED FOR IN THE PARENT COMPANY
As permitted under Section 408 of the Companies Act 2006, a Statement of Comprehensive Income for the Company is not presented as part of these financial statements.
11 EARNINGS/(LOSS) PER SHARE
The basic earnings per share is based on the profit or loss for the year divided by the weighted average number of shares in issue during the year. The weighted average number of ordinary shares for the year assumes that all shares have been included in the computation based on the weighted average number of days since issue.
|Loss attributable to equity holders of the Company:|
|Continuing and total operations||(180,413)||(651,447)|
|No of shares||No of shares|
|Weighted average number of ordinary shares in issue for basic earnings||930,169,942||556,449,818|
|Weighted average of exercisable share options and warrants||n/a||n/a|
|Weighted average number of ordinary shares in issue for fully diluted earnings||n/a||n/a|
No share options and warrants outstanding at 31 December 2017 or 31 December 2016 were dilutive in view of the loss for the year and all such potential ordinary shares were excluded from the weighted average number of ordinary shares in calculating diluted earnings per share.
| Pence per
| Pence per
|Loss per ordinary share - basic:||
|Continuing and total operations||(0.019p)||(0.117p)|
|Loss per Ordinary share - fully diluted:|
|Continuing and total operations||(0.019p)||(0.117p)|
Details of conversions of warrants into shares since the year end, which may have a prospective dilutive impact are given in note 28.
12 INTANGIBLE ASSETS
|At 1 January 2016||-|
|Acquisitions in the year||25,668|
|At 31 December 2016||27,085|
|Acquisitions in the year||10,573|
|At 31 December 2017||37,869|
|At 1 January 2016||-|
|Charge for the year||372|
|At 31 December 2016||392|
|Charge for the year||3,692|
|At 31 December 2017||4,077|
|NET BOOK VALUE|
|At 31 December 2015||-|
|At 31 December 2016||26,693|
|At 31 December 2017||33,792|
The Company holds no intangible assets.
13 PROPERTY, PLANT AND EQUIPMENT
|At 1 January 2016||-||-||-||-||-|
|Acquired with subsidiaries||114||422||1,852||-||2,388|
|Acquisitions in the year||19,733||-||27,204||458||47,395|
|At 31 December 2016||20,954||488||30,842||484||52,768|
|Acquisitions in the year||-||-||1,387||-||1,387|
|Written off in the year||(133)||(494)||(1,385)||-||(2,012)|
|At 31 December 2017||21,007||-||31,118||488||52,613|
|At 1 January 2016||-||-||-||-||-|
|Charge for the year||1,484||307||4,333||32||6,156|
|At 31 December 2016||1,566||324||4,573||34||6,497|
|Charge for the year||8,016||-||7,409||97||15,522|
|Written off/written back in the year||(121)||(328)||401||-||(48)|
|At 31 December 2017||9,453||-||12,401||132||21,986|
|NET BOOK VALUE|
|At 31 December 2015||-||-||-||-||-|
|At 31 December 2016||19,388||164||26,269||450||46,271|
|At 31 December 2017||11,554||-||18,717||356||30,627|
The Company holds no property, plant or equipment.
14 SUBSIDIARY UNDERTAKINGS
The following were subsidiary undertakings at the end of the year. All subsidiaries have year ends which are coterminous with that of the parent Company. Except where indicated all companies are engaged in mineral exploration. Metal Tiger plc controls those companies where its proportion of voting rights is less than 50% by virtue of shareholder agreements.
|Name||Registered office||Country of incorporation or registration||
Effective dividend rights held
Type of shares held
|Proportion of voting rights and ordinary share capital held|
| KEMCO Mining plc*
| 107 Cheapside
|England and Wales||100%||Ordinary||100%|
| Metal Horse Limited*
| Metal Tiger Australia Pty Limited*
| Level 2
35 Outram Street
West Perth WA 6005, Australia
|Metal Partners Co. Ltd.|| 75/32 Richmond Office Building
Soi Sukhumvit 26 Sukhumvit Road
Klongton, Klongtoey, Bangkok
|Metal Tiger Exploration and Mining Co. Ltd.||100%|| Ordinary
|Metal Tiger IHQ Co. Ltd.*||100%||Ordinary||100%|
|Metal Tiger Ventures Co. Ltd.*||49%||Ordinary||49%|
|Metal Group Co. Ltd.||99%||Ordinary||49%|
|Metal Holdings Co. Ltd.||74%||Ordinary||49%|
|Metal Tiger Resources Co. Ltd.||100%||Ordinary||88%|
* Directly owned by the Company.