Audited Annual Results for the year to 31 Dec 2015

RNS Number : 7796Z

Equatorial Mining & Exploration PLC

31 May 2016

 

31^st May 2016

GB00B63R0322

Equatorial Mining and Exploration Plc

("EME" or the "Company")

Audited Annual Results for the year ended 31 December 2015

Equatorial Mining and Exploration Plc (ISDX: EM.P) is pleased to report its audited annual results for the twelve months ended 31 December 2015.

Chairman's statement

EME made excellent progress during the year in the face of testing conditions in Nigeria and limited available funding from UK investors. As a result of multiple Nigeria trips to Abuja and Edo State, the directors oversaw the renewal of the exploration licences (ELs) owned by Desert Rock Exploration Limited (Desert Rock), EME's operating company.

The Company also invested considerable time in developing relationships with potential coal customers such as Lafarge Holcim, Dangote Cement and multiple smaller players.  In the production of cement, which is formed from limestone and other materials baked at an extremely high temperature in ovens heated by electricity, the power consumption is enormous and typically, each factory has its own coal or gas fired power station. At present most coal is imported and consequently discussions with EME continue. 

Last August, a limited exploration programme, including the drilling of five core holes across about 5% of a single 25 km² EL (EL7729) close to the town of Auchi was completed. The Directors, faced with an extremely tight budget, believed that with old coal mine workings in this EL, it would be a natural starting point for exploration and could lead to coal production in the short term.  The resulting exploration report was extremely encouraging.

Accordingly, in anticipation that production could start in 2016, the directors placed the role of Contract Miner out to tender and following exhaustive interviews, agreed provisional terms with a local Chinese mining and quarrying company which had its own machinery and strong connections within the expansive Chinese mining community in West Africa. The directors felt that this placed EME in a strong position for the future.

As part of a mining lease (ML) application, it is necessary to complete an environmental impact assessment and a "community development agreement" with the community close to a planned mine site.  Such an exercise requires careful handling and not insubstantial professional consultancy fee payments and land rental charges.  However, the Directors were delighted that through Desert Rock's skilled and committed management team, both agreements were concluded successfully.

Concurrently with the above, early this year, the Chinese contractor was engaged to open an access road into the centre of EL7729 in anticipation of additional exploration and its conversion into an ML.  The ML application should be a routine process requiring the employment of consultants to deliver paperwork against a set list. Despite frustrating delays to the process, the directors were encouraged by the receipt of a letter from the Mining Cadastre Office stating that the application had been successful subject to a final fee payment.  In other words, once this fee is paid, the Minister of Mining would sign and authorise the ML itself.

Under these circumstances, the Directors believe that a prudent course of action is to invest in additional drilling on the basis that the five holes drilled last year could not reasonably define how Desert Rock should move into coal production. Consequently, the Company is presently in discussions with investors with a view to releasing additional funding for this precise purpose.

Following the departure of Alyn Evans last month, the Directors are conscious that a replacement mining engineer is needed and they have identified a number of excellent potential candidates for this purpose.  An appointment will coincide with the continuation of a well funded exploration plan and subject to this, we look forward with confidence to the year ahead.

RESULTS AND DIVIDENDS

The Company incurred an operating loss of £808,997 for the year (2014 - £1,030,404). Interest income was £195 (2014 - £NIL), interest paid was £1,995 (2014 - £1,408), resulting in a loss for the year before and after tax of £810,992 (2014 - £1,031,524).

The directors do not recommend the payment of a dividend for the period.

FUTURE DEVELOPMENTS

In the financial year to 31 December 2015, the company engaged the services of a mining geological contractor to conduct exploration studies on part of the Company's tenement in Nigeria.  These studies will be overseen by the Board and will lead to an expert report into the existence and commercial viability of hydrocarbon minerals.

If this report suggests hydrocarbon minerals do exist in commercial quantities, the Company will endeavour to source additional funding to increase the scale of the exploration leading to the eventual production of a JORC Inferred Resource Estimate.  The Resource Estimate will provide the Company with the means to generate income via an outright sale of the tenement or a move into production.

The directors of Equatorial Mining and Exploration Plc accept responsibility for this announcement.

COMPANY CONTACT DETAILS:

Equatorial Mining & Exploration Plc:                                        

Email: [e-mail]

Nicholas Nelson, Executive Chairman

http://www.equatorialmining.com/

ISDX CORPORATE ADVISER:

Alexander David Securities Limited

David Scott - Corporate Finance

James Dewhurst - Institutional Sales 

Telephone: [phone]

http://www.ad-securities.com

49 Queen Victoria Street, London EC4N 4SA

EQUATORIAL MINING AND EXPLORATION PLC

INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2015

			2015	2014
			£'000	£'000
Administrative expenses			(746)	(351)
Share based payments			(63)	(680)
OPERATING LOSS FROM OPERATIONS			(809)	(1,031)
Investment income				-
Interest paid			(2)	(1)
Loss before taxation			(811)	(1,032)
Taxation			-	-
LOSS FROM CONTINUING OPERATIONS			(811)	(1,032)
Loss per share
-  basic (pence)  -  diluted (pence)			(0.020) (0.020)	(0.047) (0.047)

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2015

			2015	2014
			£'000	£'000
Loss for the period			(811)	(1,032)
Total comprehensive income			(811)	(1,032)

 

EQUATORIAL MINING AND EXPLORATION PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2015

	Share capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January 2014	214	926	161	-	(1,197)	104
Total comprehensive loss for the year	-	-	-	-	(1,032)	(1,032)
Share based compensation	-	-	680	-	-	680
Exercise of share options	-	-	(643)	-	643	-
Issue of new shares	24	244	-	-	-	268
Shares to be paid	35	468	-	-	-	503
Balance as at 31 December 2014	273	1,638	198	-	(1,586)	523
Total comprehensive loss for the year	-	-	-	-	(811)	(811)
Transfer to Retained earnings	-		(153)	-	153	-
Share based compensation	-	-	63	-	-	63
Exercise of share options	3	-	-	-	-	3
Exercise of warrants	155	-	-	-	-	155
Reversal of movements in 2014	-	-	(37)	-	-	(37)
Reversal of shares issued in error in 2014	(35)	(468)	-	-	-	(503)
Issue of new shares	80	34	-	(79)	-	35
Balance as at 31 December 2015	476	1,204	71	(79)	(2,244)	(572)
	══════	══════	══════	══════	══════	════

Reserves

Reserve	Description and purpose
Share capital	Amount of the contributions made by shareholders in return for the issue of shares.
Share premium	Amount subscribed for share capital in excess of nominal value.
Share-based compensation reserve	Cumulative fair value of share options granted and recognised as an expense in the Income Statement.
Interest in shares in Employees Benefit Trust (EBT)	The Company set up an Employees Benefit Trust on 6 March 2015 (the Equatorial EBT) for the benefit of its employees which is intended to constitute an employee's share scheme within the meaning of section 1166 of the Companies Act 2006. Advances made towards the scheme by the company have been subsequently used to subscribe for shares in the Company to be acquired by the Beneficiaries. The shares have been allocated under option agreements to the beneficiaries as detailed in note 14 of the financial statements under the instructions of the Company. Under IFRS own shares held under an Employee Share ownership plan are recorded as a deduction in arriving at shareholders funds rather than as an asset.

EQUATORIAL MINING AND EXPLORATION PLC

STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2015

			2015	2014
			£'000	£'000
ASSETS
CURRENT ASSETS
Trade and other receivables			21	569
Cash and cash equivalents			24	58
TOTAL ASSETS			45	627
EQUITY AND LIABILITIES
Share capital			476	273
Share premium account			1,204	1,638
Interest in shares in EBT			(79)	-
Share-based compensation reserve			71	198
Retained earnings			(2,244)	(1,586)
TOTAL EQUITY			(572)	523
CURRENT LIABILITIES
Trade and other payables			617	104
TOTAL EQUITY AND LIABILITIES			45	627

EQUATORIAL MINING AND EXPLORATION PLC

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2015

			2015		2014
			£'000		£'000
Loss before income tax			(811)		(1,032)
Share-based compensation			(132)		680
Finance cost			2		1
Finance income			-		-
Operating cash flows before movement in working capital and provisions			(941)		(351)
(Increase)/decrease in trade and other receivables			45		(13)
Increase/(decrease) in trade and other payables			513		61
NET CASH USED IN OPERATING ACTIVITIES			(383)		(303)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received					-
Interest paid			(2)		(1)
Investment in own issued share capital			79		-
NET CASH GENERATED FROM INVESTING ACTIVITIES			77		(1)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issue of shares			272		268
NET CASH GENERATED FROM FINANCING ACTIVITIES			272		268
Net (decrease)/increase in cash and cash equivalents			(34)		(36)
Net cash and cash equivalents at beginning of period			58		94
NET CASH AND CASH EQUIVALENTS AT END OF PERIOD			24		58

EQUATORIAL MINING AND EXPLORATION PLC

ABRIDGED NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

1.   General information

      Equatorial Mining and Exploration plc ("the Company") is an investment vehicle, established to invest in or acquire businesses or assets in the mining sector.

      The Company is a public limited company which is quoted on ISDX and is incorporated and domiciled in the UK.  The address of its registered office is Finsgate, 5-7 Cranwood Street, London EC1V 9EE.

      The registered number of the company is 07496976.

2.   Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting standards ("IFRS") as adopted by the European Union, International Financial Reporting Interpretations Committee ("IFRIC") interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The functional and presentational currency for the financial statements is Sterling.

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.

      Accounting for interest in own shares held though an Employees Benefit TrusT

      The funds advanced to acquire the shares have been accounted for under IFRS as a deduction in arriving at shareholders' funds rather than as an asset. 

      Issued International Financial Reporting Standards (IFRS's) and interpretations (IFRICS) relevant to company operations

      There are no IFRS or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the Company.

      Standards, interpretations and amendments to published standards that are not yet effective.

      There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

3.   Accounting Policies

      Basis of accounting

      The financial statements have been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value.

      Going concern

Having reviewed the future plans and projections for the business, the Company is actively seeking to  obtain additional funding from its shareholders and outside lenders in order to continue as a going concern. As at the date of this report the Company has approximately £70,000 of cash in the bank and has outstanding creditors of £330,000 including a loan of £100,000 with Darwin Strategic Limited which matured in April and has been demanded but not called in. The Company has also obtained additional convertible loans of £360,000 since the year end through a placing to investors. The Company has enough to cover the most immediate payments and existing creditors including the Directors continue to show patience as does Darwin who appear to be determined that the Company continues trading. In the absence of further funding there is therefore a material uncertainty over the Company's ability to continue as going concern. The Directors continue to adopt the going concern basis in preparing the financial statements as they are actively pursuing funding from different sources and it reasonable to conclude they will be successful. Given this, the directors believe that preparing the accounts on the going concern basis is appropriate.

       Share options

      When shares, share options and warrants are granted to employees and investors, a charge is made to the profit and loss account and a reserve created in capital and reserves to record the fair value of the awards at the date of grant in accordance with IFRS 2 (share based payments).  This charge is spread over the vesting period.  When shares and share options are granted to employees of subsidiary companies, the fair value of the awards is treated as a capital contribution and spread over the period of performance relating to the grant.  The corresponding entry is made in reserves.

      Segment reporting

      A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.  A geographic segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

      In the opinion of the Directors, in year ended 31 December 2015, the Company does not have any separate business or geographical segments.

      Cash and cash equivalents

      Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

      Trade payables

      Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

      Share options

      When shares, share options and warrants are granted to employees and investors, a charge is made to the profit and loss account and a reserve created in capital and reserves to record the fair value of the awards at the date of grant in accordance with IFRS 2 (share based payments).  This charge is spread over the vesting period.  When shares and share options are granted to employees of subsidiary companies, the fair value of the awards is treated as a capital contribution and spread over the period of performance relating to the grant.  The corresponding entry is made in reserves.

      Segment reporting

      A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.  A geographic segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

      In the opinion of the Directors, in year ended 31 December 2015, the Company does not have any separate business or geographical segments.

      Cash and cash equivalents

      Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

      Trade payables

      Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

      Share capital

      Ordinary shares are classified as equity.  Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

      Income taxes

      Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the balance sheet date.

      Deferred income tax is recognised using the balance sheet liability method, providing for temporary differences between the tax bases and the accounting bases of assets and liabilities.  Deferred income tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

      Income taxes

      Deferred income tax liabilities are recognised for all temporary differences, except where the deferred income tax liability from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

      Deferred income tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.  Deferred income tax assets and liabilities are offset against each other only when the Company has a legally enforceable right to do so.

      Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised.

      Use of assumptions and estimates

      The Company makes judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.  The resulting accounting estimates calculated using these judgements and assumptions will, by definition, seldom equal the related actual results but are based on historical experience and expectations of future events.  The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision effects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

      The estimates and assumptions that had a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below.

      Share based payments

      The fair value of share-based payments recognised in the income statement is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience, future expectations and benchmarked against peer companies in the industry.

 

 

END

 

 

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