First Quarter Results 2011 & Operational Hi...
FOR: RAMBLER METALS & MINING PLC
TSX VENTURE SYMBOL: RAB
AIM SYMBOL: RMM
December 14, 2010
Rambler Metals and Mining PLC: First Quarter Results 2011 & Operational Highlights
LONDON, ENGLAND and BAIE VERTE, NEWFOUNDLAND AND LABRADOR--(Marketwire - Dec. 14, 2010) - Rambler Metals and
Mining PLC (TSX VENTURE:RAB)(AIM:RMM) ("Rambler" or the "Company") today is pleased to report its financial
results and operational highlights for the three months ended 31 October 2010. The principal activity of the
Company is carrying out development and exploration at the Ming Mine, a copper and gold property located on
Newfoundland and Labrador's Baie Verte Peninsula.
/T/
Significant Operational Achievements
-- Generated its first revenue during the quarter from a Toll Processing
Agreement resulting in a gross operating profit of $374,000. This
processing agreement was completed in November 2010.
-- Received permission from the Government of Newfoundland and Labrador to
proceed with retrofit construction at the Nugget Pond Mill and the Mine
Shaft Manway at the Ming mine.
-- Completed the final Feasibility Study for the Ming Mine which envisages
a pre-tax operating cash flow of US$71.0 million, Net Present Value of
US$14.3 million discounted at 6%, payback of 1.5 years and an Internal
Rate of Return of 23.7% over an initial 6 year Life of Mine. The
Feasibility Study was carried out using the commodity prices of copper
at US$3 per lbs, gold at US$1000 per oz and silver at US$14.50 per oz,
all significantly below current price levels and forecasts. Initial
capital costs were projected at US$25.5 million with Sustaining Capital
estimated at US$27.9 million.
-- Submitted the Mine Development Plan to the Department of Natural
Resources for final approval.
-- Received the second payment of US$2.0 million (CAD$2.03 million after
commission) from Sandstorm Resources Ltd. and anticipating the final
US$13.0 million following receipt of the Mine Development permit during
Q2.
Financial Highlights (All expressed in CAD$)
-- During the quarter Rambler generated its first revenue from a toll
milling agreement resulting in a gross profit of $374,000 thereby
reducing the net loss for the quarter ended October 31, 2010 to $268,000
or $0.003 per share. This compares to a net loss of $676,000 for Q4/10
and $515,000 for Q1/10.
-- Cash flows used for operating activities were $366,000 in Q1/11 compared
to $813,000 in Q4/10 and $449,000 in Q1/10. The reduction in the cash
utilized is due to cash generated from toll processing. The major
components of the working capital changes are an increase in inventory
and accounts receivable changes offset by an increase in trade payables.
-- During the quarter Rambler incurred costs of $2,612,000 on Mineral
Properties, $676,000 on property, plant and equipment and $461,000 on
exploration and evaluation of the Ming Mine.
-- At 13 December 2010, the Group has $4.9 million in cash and cash
equivalents.
/T/
George Ogilvie, President and CEO, Rambler Metals & Mining commented;
"Development at the Ming Mine and Nugget Pond Mill is well underway and we are extremely pleased with the
progress made on site and that the authorities have provided Rambler with environmental and the majority of the
regulatory approvals. We will continue to put together an expert team of personnel and ensure all equipment is
in place as we aim to bring the Ming Mine into production during 2011.
We are also pleased to have been able to carry out the toll milling arrangement with Tenacity which
demonstrates Rambler's ability to process additional sources of ore in the Baie Verte Peninsula region."
About Rambler
Rambler Metals and Mining is Junior Mining Company that has 100% ownership of the Ming Copper-Gold Mine in Baie
Verte, Newfoundland and Labrador, Canada. Our objective is to become a mid-tier mining company by bringing the
Ming Mine into production, discovering new deposits and through M&A's. Following the acquisition of the Ming
Mine, Rambler, listed on the London AIM in 2005 and Toronto TSX-V in 2007.
The Ming property had been a former underground copper and gold producing mine that ceased production when the
deposit reached a then third party property boundary. This neighbouring property was subsequently consolidated
before being brought into Rambler's portfolio. Rambler now owns a 100% interest in the property.
The area where the mine is located is a former mining centre and subsequently good infrastructure exists
including roads, fresh water, hydro, access to a working port while the town of Baie Verte, population 1,300 is
located 17km away.
Over the last several years Rambler has been exploring on the property leading to the publication of three NI43-
101 resource statements, a newly published reserve statement, the discovery of new mineralized lenses and the
extension of pre-existing lenses. Today all mineralization remains open in multiple directions while,
importantly, the deposit has not been cut-off at depth. The underground workings have been dewatered and
services including air, water and electrical re-installed.
In October 2009, Rambler purchased an operational gold hydrometallurgical mill, Nugget Pond, which is situated
approximately 40km from the Ming Mine. Rambler intends to expand the mill so that it is capable of handling
massive sulphides from the Ming Mine and produce a copper concentrate with gold and silver as by-products. By
utilizing the hydrometallurgical facility, in conjunction with the concentrator, the company anticipates
increased gold recovery as well as recovering any free gold.
Following the successful publication of a positive Feasibility Study Rambler has now entered the construction
phase of the project and expects to bring the Ming Mine back into production in 2011.
Forward Looking Statement:
Some of the statements contained herein may be forward-looking statement, which involve known and unknown risks
and uncertainties. Without limitation, statements regarding future plans and objectives of the Company are
forward looking statements that involve various degrees of risk. It is important to note that the Company's
actual results could differ materially from those in such forward-looking statements.
/T/
Management's Discussion & Analysis ('MD&A')
For the Quarter Ended October 31, 2010
----------------------------------------------------------------------------
This MD&A, including appendices, is intended to help the reader understand
Rambler Metals and Mining plc ('the parent company') and its subsidiaries
(the 'Group' or 'Rambler'), our operations and our present business
environment. It has been prepared as of December 13, 2010 and covers the
results of operations for the quarter ended October 31, 2010. This
discussion should be read in conjunction with the audited Financial
Statements for the year ended 31 July 2010 and notes thereto. These
consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and their
interpretations adopted by the International Accounting Standards Board
("IASB"), as adopted by the European Union and with IFRS and their
interpretations adopted by the IASB. The presentation currency is Canadian
dollars. This is a change from previous MD&As which were presented in United
Kingdom pounds sterling (GB pounds). Amounts previously reported in GB
pounds have been translated at the closing exchange rate for balance sheet
items and the average rate for income statement and cash flow items. These
statements together with the following MD&A are intended to provide
investors with a reasonable basis for assessing the potential future
performance.
----------------------------------------------------------------------------
Rambler Metals and Mining plc
Muscott House
6a Meadrow
Godalming
Surrey GU7 3HL
U.K.
CONTENTS
GROUP OVERVIEW 2
HIGHLIGHTS OF THE FIRST QUARTER 2
FINANCIAL RESULTS 3
HEALTH AND SAFETY 3
OUTLOOK 4
CAPITAL PROJECTS UPDATE 5
FINANCIAL REVIEW 7
SUMMARY OF QUARTERLY RESULTS 8
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION 9
COMMITMENTS AND LOANS 11
RELATES PARTY TRANSACTIONS 11
APPENDIX 1 12
SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE 12
APPENDIX 2 13
CRITICAL ACCOUNTING POLICIES AND ESTIMATES 13
CHANGES IN ACCOUNTING POLICIES 15
APPENDIX 3 16
OTHER MATTERS 16
Outstanding Share & Option Data 16
Forward Looking Information 16
Further information 17
/T/
GROUP OVERVIEW
The principal activity of the Group is the development and exploration of the Ming Mine copper and gold
property located on Newfoundland and Labrador's Baie Verte Peninsula.
The parent company's Ordinary Shares trade on the London AIM market under the symbol "RMM" and the TSX Venture
Exchange under the symbol "RAB".
The Group has established the following priorities:
/T/
1. Safety and Environmental - including Loss Control, Security, and Closure
activities.
2. Expediting construction and development at both the Nugget Pond Mill and
Ming Mine sites.
3. Driving forward our exploration program.
4. Achieve production in a sustainable way during calendar Q3 2011.
/T/
"The Group's directors and management believe that focussing on these priorities will provide the Group with
the best opportunity to build a successful and long term mining operation."
/T/
HIGHLIGHTS OF THE FIRST QUARTER
-- On 3 August 2010 the Group announced it had entered into a Toll
Processing Agreement with Tenacity Gold Mining Co. Ltd. ("Tenacity").
Tenacity will deliver ore for processing from its Deer Cove and Stog'er
Tight Gold Mines to the Group's Nugget Pond Mill. This processing
arrangement officially commenced on 1 September 2010. Following Q1, the
custom milling of this ore was completed including mill cleanout and
mill operations employee layoffs.
-- On 10 August 2010 the Group received permission from the Government of
Newfoundland and Labrador to proceed with retrofit construction at the
Nugget Pond Mill and the Mine Shaft Manway at the Ming mine.
Subsequently, contractors have mobilized on at both the Nugget Pond Mill
and Ming Mine and construction has commenced. At the end of Q1, the
footings for the mill expansion at Nugget Pond were 50% complete and the
second egress in the Boundary Shaft had been completed to a depth of 160
feet.
-- On 26 August 2010 the Group released its final Feasibility Study for the
Ming Mine indicating pre-tax operating cash flow of US$71.0 million, Net
Present Value of US$14.3 million discounted at 6%, payback of 1.5 years
and an Internal Rate of Return of 23.7% over an initial 6 year Life of
Mine. Initial capital costs were projected at US$25.5 million with
Sustaining Capital estimated at US$27.9 million.
-- On 31 August 2010, following Sandstorm Resources Ltd.'s ("Sandstorm")
review and acceptance of the Feasibility Study, the Group signed an
amended agreement which provides for a higher percentage gold payment to
Sandstorm in the first year and also adds protective measures for
Sandstorm on the throughput rates at the Ming Mine. On 8 September 2010
the second payment of US$2.0 million (CAD$2.03 million after commission)
was received by the Group.
-- Effective 1 September 2010, following acceptance of the Ming Mine
feasibility study by Sandstorm the Ming Mine project moved from pure
Exploration & Evaluation into the Mine Development stage. Subsequently,
all expenditures incurred in bringing the Ming Mine through the
construction and development stage are now being capitalised to Mineral
Properties.
-- On 30 September 2010, the Group submitted the Mine Development Plan to
the Department of Natural Resources.
-- At quarter end a total of 51 employees were employed on with the Ming
Mine project. During the latter part of Q1, twenty three offers were
made and accepted to hire miners, tradesmen, and support staff for the
Ming Mine operation.
-- During Q1, purchase orders were placed for major equipment in both the
mine and mill expansion projects.
FINANCIAL RESULTS
-- During the quarter the Group generated its first revenue from a toll
milling agreement resulting in a gross profit of $374,000 thereby
reducing the net loss for the quarter ended October 31, 2010 to $268,000
or $0.003 per share. This compares to a net loss of $676,000 for Q4/10
and $515,000 for Q1/10.
-- Cash flows utilized for operating activities were $366,000 in Q1/11
compared to $813,000 in Q4/10 and $449,000 in Q1/10. The reduction in
the cash utilized is due to cash generated from toll processing. The
major components of the working capital changes are an increase in
inventory and accounts receivable changes offset by an increase in trade
payables.
-- Cash resources (including short-term investments) as at October 31, 2010
were $7.5 million and as of December 13, 2010 had decreased to $4.9
million.
HEALTH AND SAFETY
-- The Group completed the quarter without any lost time accidents or
medical add injuries.
-- The Health and Safety of the Group's employees continues to be a high
priority.
-- There were no environmental incidents.
OUTLOOK
In the near future management expects to:
-- Continue work on the Nugget Pond Mill expansion, including finishing the
foundation work and beginning steel erection.
-- Continue rehabilitation work in the Ming Mine Shaft, installing a manway
to act as a second means of egress, commence surface construction at the
Mine site, and order underground ancillary equipment.
-- Following receipt of the Ming Mine development permit from the
Department of Natural Resources, anticipated in Q2, drawdown the final
US$13M tranche of financing from Sandstorm.
-- Continue an active recruitment drive for key management positions and
underground personnel for the Ming Mine.
-- Begin underground development in the Ming Mine to expose the 1807 ore
zone and allow for updip and downdip exploration of the zone.
-- Begin a new Scoping Study focusing on the potential of mining the Lower
Footwall Zone resource.
/T/
See 'Forward Looking Information' for a description of the factors that may cause actual results to differ from
forecast.
CAPITAL PROJECTS UPDATE
During the quarter the Group incurred $2,612,000 on Mineral Property, $676,000 on property, plant and equipment
and $461,000 on exploration and evaluation of the Ming Mine.
/T/
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Mineral Property (capital development of Ming Mine) Q1/11 Q4/10 Q1/10
----------------------------------------------------------------------------
$,000 $,000 $,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Labour costs 243 - -
----------------------------------------------------------------------------
Consultancy expenses 744 - -
----------------------------------------------------------------------------
Contractors' costs 22 - -
----------------------------------------------------------------------------
General materials and other costs 144 - -
----------------------------------------------------------------------------
Surface development 48 - -
----------------------------------------------------------------------------
Underground development 293 - -
----------------------------------------------------------------------------
Finance costs 120 - -
----------------------------------------------------------------------------
Depreciation 187 - -
----------------------------------------------------------------------------
Reclamation and closure provision 811 - -
-------------------------------------------------------=====================
Total 2,612 - -
-------------------------------------------------------=====================
/T/
Effective September 1, 2010, following acceptance of the Ming Mine feasibility study by Sandstorm Resources
Ltd., the Ming Mine project moved from pure Exploration & Evaluation into the Mine Development stage.
Subsequently, all expenditures incurred in bringing the Ming Mine through the construction and development
stage are now being capitalised to Mineral Properties.
/T/
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property, plant and equipment Q1/11 Q4/10 Q1/10
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$,000 $,000 $,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Mill purchase and construction 439 4,671 -
----------------------------------------------------------------------------
Plant 166 12 1
----------------------------------------------------------------------------
Other assets 71 51 17
-------------------------------------------------------=====================
Total 676 4,734 18
-------------------------------------------------------=====================
/T/
Property, plant and equipment decreased during Q1/11 compared to Q4/10 as a result of the reclassification of
the Nugget Pond mill from Long-term receivable on June 30, 2010 representing the return of the asset from Crew
Gold Corporation following the end of the leasing arrangement originally entered into during the purchase in
Q1/10.
/T/
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Exploration and evaluation costs Q1/11 Q4/10 Q1/10
----------------------------------------------------------------------------
$,000 $,000 $,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Labour costs 126 411 301
----------------------------------------------------------------------------
Consultancy expenses 112 549 63
----------------------------------------------------------------------------
Operating costs 77 299 208
----------------------------------------------------------------------------
Finance costs 50 (63) -
----------------------------------------------------------------------------
Depreciation 96 403 462
-------------------------------------------------------=====================
Total 461 1,599 1,034
-------------------------------------------------------=====================
/T/
Effective September 1, 2010, following acceptance of the Ming Mine feasibility study by Sandstorm Resources
Ltd., the Ming Mine project moved from pure Exploration & Evaluation into the Mine Development stage. As a
result all construction and development costs associated with the Ming Mine project was subsequently expensed
to Mineral Property asset directly which accounts for the large decrease experienced during Q1.
/T/
FINANCIAL REVIEW
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q1/11
Results Comparatives
($000's) Commentary Q4/10 B/ (W)(i) Q1/10 B/ (W)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
985 Revenue was generated by
the group for the first
time from toll
processing at the Nugget
Pond Mill. The current
processing agreement was
completed in November
2010. - N/a - N/a
----------------------------------------------------------------------------
611 Operating Costs relate to
labour, material,
consultancy and power
costs for operating the
mill for processing the
ore under the toll
processing agreement. - N/a - N/a
----------------------------------------------------------------------------
683 General and
administrative expenses
were higher than the
previous quarter by
$156,000. Employment
costs increased by
$108,000 as a result of
key management
promotions and increases
in employee related
benefit obligations and
share based payment
expense, legal and
professional fees
increased by $30,000 due
to legal fees for the
AGM and travel and
investor relation costs
increased by $37,000.
These increases were
offset by savings in
banking costs of $10,000
and general office
expenses of $9,000.
In comparison to Q1/10
administrative expenses
increased by $193,000.
Employment costs
increased by $146,000
for the reasons outlined
above, legal and
professional fees
increased by $16,000 due
to increased AGM costs
and travel and investor
relations also rose by
$24,000 due to increased
marketing activities. 527 29% 490 (39%)
----------------------------------------------------------------------------
64 Foreign exchange losses
arising on the Gold Loan
reversed in Q1/11 as a
result of the
strengthening of the
Canadian dollar against
the US dollar during the
quarter. (145) 144% - N/a
----------------------------------------------------------------------------
28 Exploration costs
increased compared to
the previous quarters as
a result of the review
of various opportunities
in the Ming Mine area. 13 (115)% 8 (250)%
----------------------------------------------------------------------------
2,612 Mineral Properties. Mine
development commenced
during the quarter
following the
capitalisation of
exploration and
evaluation costs of
$20.9 million on
September 1, 2010. The
group incurred costs of
$2.6 million in the
quarter including labour
costs of $0.2 million,
consultancy costs of
$0.8 million, contractor
and material costs of
$0.5 million,
depreciation of $0.2
million, finance costs
of $0.1 million and
reclamation and closure
costs of $0.8 million - N/a - N/a
----------------------------------------------------------------------------
676 Capital spending on
property, plant and
equipment reduced during
the quarter compared to
the previous quarter
reflecting the lower
spending on equipment
for the mill
refurbishment.
The increased from Q1/10
is due to the continued
spending on equipment
for the mill
refurbishment which
commenced in Q4/10. 4,734 (86)% 18 2,461%
----------------------------------------------------------------------------
461 Capital spending on
exploration and
evaluation costs reduced
during the quarter
following the
commencement of mine
development on September
1, 2010. 1,499 (69)% 1,034 (55)%
----------------------------------------------------------------------------
(i)B / (W) = Better / (Worse)
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the Group for the last eight fiscal quarters are
set out in the following table.
----------------------------------------------------------------------------
Quarterly Results
(All amounts in 000s of Canadian Dollars, 4th 3rd 2nd 1st
except Loss per share figures) Quarter Quarter Quarter Quarter
----------------------------------------------------------------------------
Fiscal 2011
Revenue 985
Net Income/ (Loss) (268)
Loss per Share (Basic & Diluted) (0.003)
----------------------------------------------------------------------------
Fiscal 2010
Revenue - - - -
Net Income/ (Loss) (676) (644) (591) (515)
Loss per Share (Basic & Diluted) (0.008) (0.008) (0.007) (0.006)
----------------------------------------------------------------------------
Fiscal 2009
Revenue - - -
Net Income/ (Loss) (470) (520) (631)
Loss per Share (Basic & Diluted) (0.008) (0.009) (0.010)
----------------------------------------------------------------------------
/T/
Losses for the third and fourth quarters of 2009 started to fall as a result of a cost reduction programme.
Losses for the first quarter of 2010 increased slightly mainly as a result of the weakening of the GB Pound
against the Canadian Dollar. Losses for the second quarter of 2010 further increased as a result of increased
legal and professional charges in connection with financing options and the AGM. The continued weakening of the
GB Pound against the Canadian Dollar resulted in a further increase in losses in the third quarter of 2010.
Losses in the fourth quarter of 2010 increased as a result of an unrealised exchange loss offset by reductions
in legal and professional charges and staff costs. Losses in the first quarter of 2011 reduced as a result of
revenue from toll processing.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
The Group's holding of cash balances is kept under constant review and surplus funds are held on deposit. Given
the current climate, the Group has taken a very risk averse approach to management of cash resources and
Management and Directors monitor events and associated risks on a continuous basis.
Cash and short-term investment resources, (cash, cash equivalents and short-term investments) were as follows:
/T/
----------------------------------------------------------------------------
Resource At October 31,
----------------------------
2010 2009
$'000 $'000
----------------------------------------------------------------------------
Cash $CDN 1,858 760
----------------------------------------------------------------------------
Cash $US 1,948 -
----------------------------------------------------------------------------
Cash GBP 135 5,051
----------------------------------------------------------------------------
Short-term Investments $CDN 3,225 831
----------------------------------------------------------------------------
Short-term Investments GBP 327 -
----------------------------------------------------------------------------
Total 7,493 6,642
----------------------------------------------------------------------------
/T/
Interest received on Canadian dollar deposits ranged from 0.065 - 1.07% during the quarter.
Net proceeds from financing activities during the quarter amounted to $1.9 million from the second advance
received from the Gold loan of $2 million offset by finance lease repayments of $0.1 million.
Cash flows used in investing activities amounted to $1.9 million for the quarter. Investments included $0.5
million in a bearer deposit note, $0.7 million in mine development, $0.4 million on the Nugget Pond Mill, $0.1
million on property, plant and equipment and $0.2 million on continued exploration of the Ming Mine. The group
is required to hold a Letter of Credit in favour of the Government of Newfoundland and Labrador in respect of
the reclamation and closure liability at the existing Nugget Pond Mill facility, mill construction and the
second means of egress at the Ming Mine site. At quarter end the Group holds bearer deposit notes totalling
$1.87 million.
Under the Gold Loan agreement a further amount of US$13 million will be available as soon as the permits to
start production for the Ming Mine have been awarded which are anticipated to be received in Q2. Management
continue to evaluate possible sources of finance to provide sufficient working capital for the forthcoming 12
months and are confident that such funds will be raised. At 13 December 2010 the Group has $4.9 million in cash
and cash equivalents with the proportion invested in short dated term deposits and bankers acceptances
consistent with year end
Financial Instruments
The Group's financial instruments as at October 31, 2010 comprised of financial assets of cash and cash
equivalents and trade and other receivables and financial liabilities comprised of trade payables; other
payables; accrued expenses and interest bearing loans and borrowings.
All of the Group's financial liabilities are measured at amortised cost.
The board of directors determines, as required, the degree to which it is appropriate to use financial
instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign currency risk, liquidity risk, credit risk, interest rate risk and commodity price risk
each of which is discussed in note 10 of the consolidated financial information for the quarter ended October
31, 2010. There were no derivative instruments outstanding at October 31, 2010.
The most significant change in risk during Q1 2011 is the credit risk on trade receivables related to the toll
processing agreement of $268,000. During the quarter the Group invoiced $985,000 to a single customer of which
$717,000 had been received by October 31, 2010 with the balance in early November, 2010.
COMMITMENTS AND LOANS
At October 31, 2010, capital commitments made to third parties included:
/T/
--------------------------------------------------------
Capital Commitments $000
--------------------------------------------------------
Property, Plant and Equipment 5,700
--------------------------------------------------------
Capital Development (2nd means of egress) 812
--------------------------------------------------------
TOTAL 6,512
--------------------------------------------------------
/T/
These commitments together with the ongoing evaluation and development of the mine will be partially financed
from existing cash reserves from earlier equity fund raisings and cash provided under the terms of the Gold
Loan agreement with Sandstorm Resources Ltd.
Purchase orders included mill equipment, groundwork and foundations, as well as steel fabrication and erection.
Details of interest bearing loans and borrowings are provided in note 6 of the unaudited consolidated financial
information for the quarter ended October 31, 2010.
The Group received an advance of US$ 2 million from the Gold Loan during the quarter. Under the Gold Loan
agreement a further amount of US$13 million will be available as soon as the permits to start production for
the Ming Mine have been awarded which are anticipated to be received in Q2.
RELATED PARTY TRANSACTIONS
Details of related party transactions are included in note 8 of the unaudited consolidated financial
information for the quarter ended October 31, 2010 and note 22 of the financial statements for the year ended
July 31, 2010.
APPENDIX 1
SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
/T/
----------------------------------------------------------------------------
Financial Highlights
(All amounts in 000s of Canadian Dollars,
except shares and per share figures) Three months ended,
-----------------------------------
October July 31, October
31, 2010 2010 31, 2009
----------------------------------------------------------------------------
Revenue 985 - -
Operating Expenses (611) - -
Exploration Expenditure (28) (13) (8)
Administrative expenses (619) (672) (490)
Net Income (loss) (268) (676) (515)
Per share (basic and diluted) (0.000) (0.008) (0.008)
Cash Flow used in operating activities (366) (813) (449)
Cash Flow used in investing activities (1,941) (3,479) (4,038)
Cash Flow from (used in) financing
activities 1,924 (93) 8,895
Net increase (decrease) in cash (382) (3,952) 4,407
Cash and cash equivalents at end of
period 7,494 8,000 6,642
----------------------------------------------------------------------------
Total Assets 58,219 54,162 46,425
Total Liabilities (11,555) (7,338) (1,691)
Working Capital 7,115 8,461 5,164
----------------------------------------------------------------------------
Weighted average number of shares
outstanding 95,485 83,581 62,374
Loss per share (0.003) (0.008) (0.008)
----------------------------------------------------------------------------
/T/
APPENDIX 2
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The details of the Group's accounting policies are presented in accordance with International Financial
Reporting Standards as set out in Note 2 to the financial statements. The preparation of financial statements
in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for investors to understand some
of the processes and reasoning that go into the preparation of the Group's financial statements, providing some
insight also to uncertainties that could impact the Group's financial results.
Going Concern
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is
dependent on the copper and gold prices, its ability to fund its development and exploration programs, and to
manage and generate positive cash flows from operations in the future. These financial statements do not
reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance
sheet classifications that would be necessary should the going concern assumption be inappropriate, and these
adjustments could be material.
In common with many exploration companies, the Group raises finance for its exploration and appraisal
activities in discrete tranches. In August 2010, the Group released its final NI43-101 Feasibility Study for
the Ming Mine Copper Gold Project. This enabled the Group to draw down the second instalment of the Gold Loan
(see commitments and loan section above) of US$2 million. Under the Gold Loan agreement a further amount of
US$13 million will be available as soon as the permits to start production for the Ming mine have been awarded.
The Directors and management continue to evaluate possible sources of finance to provide sufficient project
finance and working capital for the forthcoming 12 months. Whilst they and are confident that such funds will
be raised and have therefore concluded that the Group is a going concern, there is no certainty that such funds
will be available when needed.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option life and the volatility are subject to management estimate and any changes to
these estimates may have a significant effect on the cost. The assumptions used in calculating the cost of
share based payments are explained in note 5 of the financial statements for the year ended July 31, 2010.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows
arising from the sale of payable gold (see note 5 to the Unaudited Consolidated Financial Information for the
Quarter ended October 31, 2010).The cash flows will be dependent on the production of gold and its selling
price at the time of delivery which have been estimated in line with the mine plan, future prices of gold and
reserve estimates. Management's estimates of these factors are subject to risk and uncertainties affecting the
amount of the interest charge. Any changes to these estimates may result in a significantly different interest
charge which would affect the carrying value of the exploration and evaluation costs and the corresponding Gold
Loan liability.
The financial statements do not reflect the adjustments to the carrying values of assets and liabilities and
the reported expenses and balance sheet classifications that would be necessary were the going concern
assumption inappropriate, and these adjustments could be material.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property and
exploration and evaluation costs. In making this assessment they have considered the Group's business plan
which includes resource estimates, future processing capacity, the forward market and longer term price outlook
for copper and gold. Resource estimates have been based on the most recently filed NI43-101 report.
Management's estimates of these factors are subject to risk and uncertainties affecting the recoverability of
the Group's mineral property and exploration and evaluation costs. Any changes to these estimates may result in
the recognition of an impairment charge with a corresponding reduction in the carrying value of such assets.
After consideration of the above factors, the directors do not consider that there are any indicators that
mineral property and exploration and evaluation costs are impaired at the year end.
Closure Costs
The Group has an obligation to reclaim its properties after the minerals have been mined from the site, and has
estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a
liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves
to be inaccurate, the Group could be required to increase the provision for site closure and reclamation costs,
which would increase the amount of future reclamation expense, resulting in a reduction in the Group's earnings
and net assets.
CHANGES IN ACCOUNTING POLICIES
In the current quarter, new and revised standards which have been adopted have not affected the disclosures
presented in these financial statements.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or amended but are not yet effective
have not been adopted for the annual reporting period ended July 31, 2011:
/T/
Nature of change Application Application
IFRS to accounting date of date for
/Amendment Title policy standard Group
----------------------------------------------------------------------------
Various Annual No change to Various 1 August
Improvements accounting 2011
to IFRSs policy,
therefore, no
impact
----------------------------------------------------------------------------
IAS 24 Related Party No change to 1 January 1 August
revised Disclosures accounting 2011 2011
policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 9 Financial No change to 1 January 1 August
instruments: accounting 2013 2013
Classification policy,
and therefore, no
Measurement impact
----------------------------------------------------------------------------
/T/
Management have reviewed the impact of the above standards and interpretations and have concluded that they
will not result in any material changes to reported results.
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the
year ended 31 July 2010. Additional accounting policies have been applied in the current quarter are explained
note 2 of the Unaudited Consolidated Financial Information for the Quarter ended October 31, 2010.
APPENDIX 3
OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
/T/
----------------------------------------------------------------------------
Security Shares issued or Issuable Weighted Average Exercise Price
----------------------------------------------------------------------------
Common Shares 95,485,000 --
----------------------------------------------------------------------------
Options 4,232,000(i) $ 0.47
----------------------------------------------------------------------------
(i)if all options have fully vested
/T/
Effective 1 January 2011, Mr. Peter Mercer will assume the role of Corporate Secretary in conjunction with his
other duties as VP Corporate Development. Mr. Leslie Little, the Corporate Secretary, will be retiring at the
end of the calendar year. For future assistance please contact Mr. Mercer directly at 709-532-4990.
Forward Looking Information
This MD&A contains "forward-looking information" which may include, but is not limited to, statements with
respect to the future financial or operating performance of the Group, its subsidiaries and its projects,
exploration expenditures, costs and timing of the development of new deposits, costs and timing of future
exploration, requirements for additional capital, government regulation of mining exploration, environmental
risks, title disputes or claims and limitations of insurance coverage. Often, but not always, forward-looking
statements can be identified by the use of words such as "plans", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including
negative variations) of such words and phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements of the parent company and/or its subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. Such factors include, among
others, general business, economic, competitive, political and social uncertainties; the actual results of
current exploration activities; conclusions of economic evaluations; fluctuations in the relative value of
United States dollars, Canadian dollars and British Pounds; changes in planned parameters as plans continue to
be refined; future prices of metals and commodities; possible variations of ore grade or recovery rates;
failure of equipment; accidents and other risks of the mining exploration industry; political instability,
insurrection or war; delays in obtaining governmental approvals or financing or in the completion of
development or construction activities, as well as those factors discussed in the section entitled "Risk
Factors" in this MD&A. Although the Group has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those described in forward-looking statements, there may
be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date of this MD&A and the Group disclaims any
obligation to update any forward-looking statements, whether as a result of new information, future events or
results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements.
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on the Group's web site at
www.ramblermines.com.
/T/
Unaudited Consolidated Financial Information
For the Quarter Ended 31 October 2010
/T/
The accompanying financial information for the quarter ended 31 October 2010 and 31 October 2009 have not been
reviewed or audited by the Group's auditors and has an effective date of 13 December 2010.
/T/
Rambler Metals and Mining Plc
Unaudited Consolidated income statement
For the Quarter Ended 31 October 2010
(EXPRESSED IN CANADIAN DOLLARS)
Quarter ended Quarter ended
31 October 2010 31 October 2009
$,000 $,000
Revenue 985 -
Cost of sales (611) -
----------------------------------
Gross profit 374 -
Administrative expenses (683) (490)
Exploration expenses (28) (8)
----------------------------------
Operating loss (337) (498)
----------------------------------
Bank interest receivable 18 1
Finance costs (13) (18)
Foreign exchange differences 64 -
----------------------------------
Net financing income/(expense) 69 (17)
----------------------------------
Loss before tax (268) (515)
Income tax credit - -
----------------------------------
Loss for the period and attributable to
owners of the parent (268) (515)
----------------------------------
----------------------------------
Loss per share
Quarter ended Quarter ended
31 October 2010 31 October 2009
$ $
Basic and diluted loss per share (0.003) (0.008)
----------------------------------
Unaudited Consolidated statement of comprehensive income
For the Quarter Ended 31 October 2010
(EXPRESSED IN CANADIAN DOLLARS)
Quarter ended Quarter ended
31 October 2010 31 October 2009
$,000 $,000
Loss for the period (268) (515)
----------------------------------
Exchange differences on translation of
foreign operations (net of tax) 4 146
----------------------------------
Other comprehensive loss for the quarter 4 146
----------------------------------
----------------------------------
Total comprehensive loss for the period
and attributable to the owners of the
parent (264) (369)
----------------------------------
----------------------------------
Rambler Metals and Mining Plc
Consolidated balance sheet
As at 31 October 2010
(EXPRESSED IN CANADIAN DOLLARS)
Note Unaudited Audited
31 October 2010 31 July 2010
$,000 $,000
Assets
Property, plant and equipment 3 7,795 7,461
Mineral Properties 4 23,514 -
Intangible assets 5 16,610 37,051
----------------------------------
Total non-current assets 47,919 44,512
----------------------------------
Inventory 83 -
Trade and other receivables 847 285
Cash and cash equivalents 7,493 8,000
Restricted cash 1,877 1,365
----------------------------------
Total current assets 10,300 9,650
----------------------------------
Total assets 58,219 54,162
----------------------------------
----------------------------------
Equity
Issued capital 1,863 1,863
Share premium 51,532 51,532
Merger reserve 214 214
Translation reserve 29 25
Accumulated losses (6,974) (6,811)
----------------------------------
Total equity 46,664 46,823
----------------------------------
Liabilities
Interest-bearing loans and
borrowings 6 7,560 5,591
Provision 7 810 559
----------------------------------
Total non-current liabilities 8,370 6,150
----------------------------------
Interest-bearing loans and
borrowings 6 393 388
Trade and other payables 2,792 800
----------------------------------
Total current liabilities 3,185 1,188
----------------------------------
Total liabilities 11,555 7,338
----------------------------------
Total equity and liabilities 58,219 54,162
----------------------------------
----------------------------------
Rambler Metals and Mining Plc
Consolidated Statement of Changes in Equity
Share Share Merger Translation Accumulated
capital premium reserve reserve Losses Total
(EXPRESSED IN
CANADIAN
DOLLARS) $,000 $,000 $,000 $,000 $,000 $,000
Group
Audited
Balance at 1
August 2009 1,255 39,296 214 50 (4,638) 36,177
----------------------------------------------------------
Comprehensive
loss
Loss for the year - - - - (2,426) (2,426)
----------------------------------------------------------
Foreign exchange
translation
differences - - - (25) - (25)
----------------------------------------------------------
Total other
comprehensive
loss - - - (25) - (25)
----------------------------------------------------------
Total
comprehensive
loss for the
year - - - (25) (2,426) (2,451)
----------------------------------------------------------
Transactions with
owners
Issue of share
capital 608 13,128 - - - 13,736
Share issue
expenses - (892) - - - (892)
Share-based
payments - - - - 253 253
----------------------------------------------------------
Transactions with
owners 608 12,236 - - 253 13,097
----------------------------------------------------------
Balance at 31
July 2010 1,863 51,532 214 25 (6,811) 46,823
----------------------------------------------------------
----------------------------------------------------------
Unaudited
Balance at 1
August 2010 1,863 51,532 214 25 (6,811) 46,823
----------------------------------------------------------
Comprehensive
loss
Loss for the
period - - - (268) (268)
----------------------------------------------------------
Foreign exchange
translation
differences - - - 4 - 4
----------------------------------------------------------
Total other
comprehensive
income - - - 4 - 4
----------------------------------------------------------
Total
comprehensive
income for the
period - - - 4 (268) (264)
----------------------------------------------------------
Transactions with
owners
Share-based
payments - - - - 105 105
----------------------------------------------------------
Transactions with
owners - - - - 105 105
----------------------------------------------------------
Balance at 31
October 2010 1,863 51,532 214 29 (6,974) 46,664
----------------------------------------------------------
----------------------------------------------------------
Rambler Metals and Mining Plc
Unaudited statements of cash flows
For the Quarter Ended 31 October 2010
(EXPRESSED IN CANADIAN DOLLARS)
Quarter ended Quarter ended
31 October 2010 31 October 2009
$,000 $,000
Cash flows from operating activities
Operating loss (273) (498)
Depreciation 39 39
Share based payments 98 55
Increase in inventory (83) -
Increase in receivables (561) (75)
Increase in payables 427 48
------------------------------------
Cash generated utilised in operations (353) (431)
Interest paid (13) (18)
------------------------------------
Net cash utilised for operating
activities (366) (449)
------------------------------------
Cash flows from investing activities
Interest received 18 1
Purchase of bearer deposit note (512) -
Acquisition of evaluation and
exploration assets (234) (508)
Acquisition of mineral properties (701) -
Acquisition of property, plant and
equipment (512) (32)
Prepayment for acquisition of property,
plant and equipment - (3,500)
------------------------------------
Net cash from investing activities (1,941) (4,039)
------------------------------------
Cash flows from financing activities
Proceeds from issue of share capital - 9,511
Payment of share issue expenses - (590)
Proceeds from issue of share options 6 3
Proceeds from Gold Loan (note 6) 2,012 -
Capital element of finance lease
payments (94) (29)
------------------------------------
Net cash from financing activities 1,924 8,895
------------------------------------
Net (decrease)/increase in cash and
cash equivalents (383) 4,407
Cash and cash equivalents at beginning
of period 8,000 2,089
Effect of exchange rate fluctuations on
cash held (124) 146
------------------------------------
Cash and cash equivalents at end of
period 7,493 6,642
------------------------------------
------------------------------------
/T/
Rambler Metals and Mining Plc
Unaudited Notes to the financial statements
1. Nature of operations and going concern
The principal activity of the Group is the development and exploration programme of the Ming Mine copper and
gold property in Baie Verte, Newfoundland, Canada.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is
dependent on the copper and gold prices, its ability to fund its development and exploration programs, and to
manage and generate positive cash flows from operations in the future. These financial statements do not
reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance
sheet classifications that would be necessary should the going concern assumption be inappropriate, and these
adjustments could be material.
In common with many exploration companies, the Group raises finance for its exploration and appraisal
activities in discrete tranches. In August 2010, the Group released its final NI43-101 Feasibility Study for
the Ming Mine Copper Gold Project. This enabled the Group to draw down the second instalment of the Gold Loan
(see note 6) of US$2 million. Under the Gold Loan agreement a further amount of US$13 million will be available
as soon as the permits to start production for the Ming Mine have been awarded. The Directors and management
continue to evaluate possible sources of finance to provide sufficient project finance and working capital for
the forthcoming 12 months. Whilst they and are confident that such funds will be raised and have therefore
concluded that the Group is a going concern, there is no certainty that such funds will be available when
needed.
2. Accounting policies
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the
year ended 31 July 2010. The following additional accounting policies have been applied in the current quarter:
Inventory
Operating supplies are valued at the lower of cost and net realisable value. Cost is determined on an average
cost basis.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services
in the ordinary course of the Group's activities. Revenue is shown net of sales tax.
The group recognises revenue when the amount of the revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and when specific criteria have been met as described below:
Toll processing
The Group processes ore at its milling facility. Sales of this service are recognised as the ore is processed.
The customer is invoiced based on tonnes processed each month at the price specified in the toll processing
agreement.
Mineral properties
Upon transfer of 'Exploration and evaluation costs' into 'Mineral Properties', all subsequent expenditure on
the construction, installation or completion of infrastructure facilities is capitalised within 'Mineral
Properties'. Development expenditure is net of proceeds from all but the incidental sale of ore extracted
during the development phase.
3. Property, plant and equipment
/T/
Land and Assets under Motor
buildings construction vehicles
$,000 $,000 $,000
Cost
Balance at 1 August 2009 1,025 8 118
Acquisitions 71 5,191 -
Effect of movements in
foreign exchange - - -
----------------------------------------
Balance at 31 July 2010 1,096 5,199 118
----------------------------------------
----------------------------------------
Balance at 1 August 2010 1,096 5,199 118
Acquisitions 1 439 43
Disposals - - (39)
----------------------------------------
Balance at 31 October 2010 1,097 5,638 122
----------------------------------------
----------------------------------------
Depreciation and impairment
losses
Balance at 1 August 2009 524 - 18
Depreciation charge for the
period 251 - 33
Effect of movements in
foreign exchange - - -
----------------------------------------
Balance at 31 July 2010 775 - 51
----------------------------------------
----------------------------------------
Balance at 1 August 2010 775 - 51
Depreciation charge for the
period 36 - 9
On disposals - - (20)
----------------------------------------
Balance at 31 October 2010 811 - 40
----------------------------------------
----------------------------------------
Carrying amounts
At 1 August 2009 501 8 100
----------------------------------------
At 31 July 2010 321 5,199 67
----------------------------------------
----------------------------------------
At 1 August 2010 321 5,199 67
----------------------------------------
----------------------------------------
At 31 October 2010 286 5,638 82
----------------------------------------
----------------------------------------
Fixtures,
Plant and fittings and Computer
equipment equipment equipment Total
$,000 $,000 $,000 $,000
Cost
Balance at 1 August 2009 6,019 54 496 7,720
Acquisitions 19 2 46 5,329
Effect of movements in
foreign exchange - - (1) (1)
-------------------------------------------------
Balance at 31 July 2010 6,038 56 541 13,048
-------------------------------------------------
-------------------------------------------------
Balance at 1 August 2010 6,038 56 541 13,048
Acquisitions 165 4 24 676
Disposals - - - (39)
-------------------------------------------------
Balance at 31 October 2010 6,203 60 565 13,685
-------------------------------------------------
-------------------------------------------------
Depreciation and impairment
losses
Balance at 1 August 2009 2,926 31 191 3,690
Depreciation charge for the
period 1,456 13 145 1,898
Effect of movements in
foreign exchange - - (1) (1)
-------------------------------------------------
Balance at 31 July 2010 4,382 44 335 5,587
-------------------------------------------------
-------------------------------------------------
Balance at 1 August 2010 4,382 44 335 5,587
Depreciation charge for the
period 238 3 37 323
On disposals - - - (20)
-------------------------------------------------
Balance at 31 October 2010 4,620 47 372 5,890
-------------------------------------------------
-------------------------------------------------
Carrying amounts
At 1 August 2009 3,093 23 305 4,030
-------------------------------------------------
At 31 July 2010 1,656 12 206 7,461
-------------------------------------------------
-------------------------------------------------
At 1 August 2010 1,656 12 206 7,461
-------------------------------------------------
-------------------------------------------------
At 31 October 2010 1,583 13 193 7,795
-------------------------------------------------
-------------------------------------------------
/T/
4. Mineral Properties
/T/
Mineral Property
$,000
Cost
Balance at 1 August 2010 -
Transfer from exploration and evaluation costs 20,902
Acquisitions 2,612
------------------
Balance at 31 July 2010 23,514
------------------
------------------
Carrying amounts
At 1 August 2010 -
------------------
At 31 October 2010 23,514
------------------
------------------
/T/
On 31 August 2010 the Group's feasibility study was accepted by Sandstorm (see note 6) thereby resulting in
management's decision to move into mine development. As a result, evaluation and exploration costs of $20.9
million relating to the Massive Sulfide Ore Zones of the Ming Mine were transferred to Mineral Properties
5. Intangible assets
/T/
Exploration and
evaluation Costs
$,000
Cost
Balance at 1 August 2009 31,476
Acquisitions 5,575
------------------
Balance at 31 July 2010 37,051
------------------
------------------
Balance at 1 August 2010 37,051
Acquisitions 461
Transfer to mineral properties (20,902)
------------------
Balance at 31 July 2010 16,610
------------------
------------------
Carrying amounts
At 1 August 2009 31,476
------------------
------------------
At 31 July 2010 37,051
------------------
------------------
At 1 August 2010 37,051
------------------
------------------
At 31 October 2010 16,610
------------------
------------------
/T/
6. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's interest-bearing loans and
borrowings. For more information about the Group's exposure to interest rate and foreign currency risk, see
note 10.
/T/
31 October 2010 31 July 2010
$,000 $,000
Non-current liabilities
Bank loan 29 29
Finance lease liabilities 329 412
Gold Loan 7,202 5,150
-------------------------------
7,560 5,591
-------------------------------
-------------------------------
Current liabilities
Current portion of bank loan 3 3
Current portion of finance lease liabilities 390 385
-------------------------------
393 388
-------------------------------
-------------------------------
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
Payments Interest Principal Payments Interest Principal
31 October 31 October 31 October 31 July 31 July 31 July
2010 2010 2010 2010 2010 2010
$,000 $,000 $,000 $,000 $,000 $,000
Less than one
year 427 37 390 426 41 385
Between one
and five
years 342 13 329 427 16 412
--------------------------------------------------------------
769 50 719 853 57 797
--------------------------------------------------------------
--------------------------------------------------------------
/T/
Under the terms of the lease agreements, no contingent rents are payable.
The bank loan is secured by way of a fixed charge over a property and is repayable in monthly instalments of
$384 over 12 years.
Gold Loan
During the previous year, the Group entered into an agreement ("Gold Loan") with Sandstorm Resources Ltd to
sell a portion of the life-of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm Resources Ltd. will make staged upfront cash payments for the gold
to the Group totalling US$20 million. Payment milestones are as follows:
/T/
-- US$5 million available immediately and received on 10 March 2010;
-- US$2 million on completion of a NI43-101 feasibility study and received
on 8 September 2010;
-- US$13 million when Rambler is awarded all permits required for the Ming
mine to start production (outstanding at the date of these financial
statements).
/T/
For this, the Group has agreed to sell 32% of the payable gold in the first year of production. In each
production year following the first year of production until 175,000oz of payable gold a percentage equal to
25% x (85% divided by the actual percentage of metallurgical recovery of gold realized in the immediately
preceding production year) provided that, if the payable gold production in any production year after the third
production year is less than 15,000 ounces, then in each such production year, Sandstorm payable gold shall not
be less than 25% of the payable gold. In each production year following the first year of production after
175,000oz of payable gold has been produced a percentage equal to 12% x (85% divided by the actual percentage
of metallurgical recovery of gold realized in the immediately preceding production year) provided that, if the
payable gold production in any production year after the third production year is less than 15,000 ounces, then
in each such production year, Sandstorm payable gold shall not be less than 12% of the payable gold for the
remainder of the period ending 40 years after the date of the agreement. After the expiry of the 40 year term,
the agreement is renewable in 10 year terms at the option of Sandstorm Resources Ltd.
A 4.5% cash commission is payable with each payment received under the agreement.
There are certain circumstances in which the Gold Loan may be repaid earlier than by the delivery of payable
gold as follows:
/T/
i. If within 18 months of 4 March 2010 (the date of the agreement) the Ming
Mine has not started producing gold any amounts advanced will become
repayable on demand together with interest at a rate of 8% per annum.
ii. If within 24 months of the date that gold is first produced, the Ming
Mine has not produced and sold a minimum of 24,000oz of payable gold
then a portion of the US$20 million will be repayable based on the
shortfall of payable gold.
iii.Within the first 36 months of Commercial production of gold any
shortfall in the value of payable gold below the following amounts will
be required to be paid in cash:
-- within the first 12 months - US$3.6 million
-- within the second 12 months - US $3.6 million
-- within the third 12 months - US$3.1 million
/T/
The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective
interest rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end
based on management's best estimates of the time of delivery of payable gold, the total amount of gold expected
to be produced over the mine life and the timing of that production.
Total interest of $169,341 was accrued during the quarter. $49,906 was included in exploration and evaluation
expenditure and $119,435 charged to mineral properties.
7. Provisions
/T/
31 October 2010 31 July 2010
$,000 $,000
Reclamation and closure provision
At 1 August 2010 559 -
Provision during the period 240 559
Unwinding of discount 11 -
---------------------------------
At 31 October 2010 810 559
---------------------------------
---------------------------------
/T/
The reclamation and closure provision has been made in respect of costs of land restoration and rehabilitation
expected to be incurred at the end of the Nugget Pond Mill's useful life, mill construction and the second
means of egress at the Ming Mine site. The provision has been calculated based on the present value of the
expected future cash flows associated with reclamation and closure activities as required by the Government of
Newfoundland and Labrador. The provision relates to restoration of the mill and mine sites. The liability is
secured by a letters of credit totalling $1.87 million.
8. Related parties
Transactions with key management personnel
Total key management personnel compensations were as follows:
/T/
3 months to 3 months to
31.10.10 31.10.09
$,000 $,000
Salaries 103 88
Share based payments 25 17
---------------------------------
128 105
---------------------------------
---------------------------------
/T/
Directors' fees of $58,813 remained outstanding at October 31, 2010 (July 31, 2010: $38,738).
9. Share-based payments
The number and weighted average exercise prices of share options are as follows:
/T/
Weighted
average Weighted
exercise Number of average
price options exercise Number of
31 October 31 October price options
2010 2010 31 July 2010 31 July 2010
$ No. 000 $ No. 000
Outstanding at the
beginning of the
period 0.467 3,952 0.416 3,313
Granted during the
period 0.436 380 0.500 704
Cancelled during the
period 0.190 (100) 0.890 (65)
-------------- -------------
Outstanding and
exercisable at the
end of the period 0.471 4,232 0.467 3,952
-------------- -------------
-------------- -------------
/T/
The options outstanding at 31 October 2010 have an exercise price in the range of $0.19 to $1.10 and a weighted
average remaining contractual life of 8 years (31 July 2010: 9 years).
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on
the Black-Scholes model. The contractual life of the option (10 years) is used as an input into this model.
Expectations of early exercise are incorporated into the Black-Scholes model.
/T/
3 months to 3 months to
Fair value of share options and assumptions 31.10.10 31.10.09
$,000 $,000
Fair value at measurement date 100 52
-----------------------------
Share price (weighted average) 0.436 0.444
Exercise price (weighted average) 0.436 0.444
Expected volatility (expressed as weighted
average volatility used in the modelling under
Black-Scholes model) 75.0% 65.3%
Expected option life 5 5
Expected dividends 0 0
Risk-free interest rate (based on national
government bonds) 2.50% 4.30%
-----------------------------
/T/
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining
life of the share options), adjusted for any expected changes to future volatility due to publicly available
information.
There are no performance or market conditions associated with the share option grants.
/T/
3 months to 3 months to
31.10.10 31.10.09
$,000 $,000
Total expense recognised as employee costs 98 55
---------------------------
---------------------------
/T/
10. Financial risk management
The Group's principal financial assets comprise: cash and cash equivalents and other receivables. In addition
the Company's financial assets include amounts due from subsidiaries. The Group and Company's financial
liabilities comprise: trade payables; other payables; and accrued expenses. The Group's financial liabilities
also include interest bearing loans and borrowings.
All of the Group's and Company's financial liabilities are measured at amortised cost and their financial
assets are classified as loans and receivables.
The board of directors determines, as required, the degree to which it is appropriate to use financial
instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign exchange risk, interest rate risk, credit risk and liquidity risk each of which is
discussed below. There were no derivative instruments outstanding at 31 October 2010.
Foreign currency risk
The Group's cash resources are held in GB pounds and Canadian Dollars and the Gold Loan is repayable in US
dollars. The Group has a downside exposure to any strengthening of the GB pound as this would increase expenses
in Canadian dollar terms. This risk is mitigated by reviewing the holding of cash balances in GB pounds. Any
weakening of the GB pound would however result in the reduction of the expenses in Canadian dollar terms and
preserve the Group's cash resources. In addition, any such movements would affect the Consolidated Balance
Sheet when the net assets of the Parent Company are translated into Canadian dollars. The Group has a downside
exposure to any strengthening of the US dollar as this would increase the amount repayable on the Gold Loan in
Canadian dollar terms. This risk, however, is relevant only should the Gold Loan be repaid in cash under terms
set out in note 6. Repayment is envisaged in payable gold which is denominated in US dollars. Once the Mine is
in production, this will mitigate this foreign currency risk.
Previously the Group's results had been presented in GB pounds. Since the Group's main assets are held in
Canada which has a Canadian dollar functional currency, the Directors and management decided to change the
presentational currency to Canadian dollars for Fiscal 2010, This significantly reduces the effect on the
Group's balance sheet of movements in the GB pound to the Canadian Dollar. The Group does not hedge its
exposure of foreign investments held in foreign currencies. There is no significant impact on profit or loss
from foreign currency movements associated with the Parent company's assets and liabilities as the foreign
currency gains or losses are recorded in the translation reserve.
Exchange rate fluctuations may adversely affect the Group's financial position and results. The following table
details the Group's sensitivity to a 10% strengthening and weakening in the GB pound against the Canadian/US
Dollar. 10% represents management's assessment of the reasonable possible exposure.
/T/
Equity
31 October 31 July
2010 2010
$,000 $,000
10% strengthening of GB pound 34 53
10% weakening of GB pound (31) (47)
10% strengthening of US dollar (721) (515)
10% weakening of US dollar 655 468
----------------------------
----------------------------
/T/
Liquidity risk
Prior to Q3 2010 the Group had relied on shareholder funding to finance its operations. During Q3, 2010 the
Group entered into a financing arrangement in US dollars (see note 6). With finite cash resources and no
material income, the liquidity risk is significant. This risk is managed by controls over expenditure and
concentrating on achieving the payment milestones under the financing arrangement. Success will depend largely
upon the outcome of ongoing and future exploration and development programmes. Given the nature of the Group's
current activities the entity will remain dependent on a mixture of debt and equity funding in the short to
medium term until such time as the Group becomes self-financing from the commercial production of mineral
resources. The liabilities of the parent company are due within one year. The parent company has adequate
financial resources to meet the obligations existing at 31 October 2010.
The Group's and Company's trade payables, other payables and accrued expenses are generally due between one and
three months and the Group's financial liabilities are due as follows:
Financial liabilities
At the year end the analysis of finance leases, hire purchase contracts and bank loans which were all due in
Canadian Dollars and are at fixed interest rates was as follows:
/T/
31 October 31 July
Fixed rate liabilities 2010 2010
$,000 $,000
Due within one year 393 388
Due within one to two years 273 374
Due within two to three years 30 22
Due within three to four years 27 24
Due within four to five years 12 5
Due after five years 16 16
--------------------------
751 829
--------------------------
--------------------------
/T/
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at 31 October
2010 was 5.50%.
Credit risk
With effect from July 2007, the Group has held the majority of its cash resources in Canadian Dollars given
that the majority of the Group's outgoings are denominated in this currency. As at 31 October 2010, 71% of the
Group's cash resources were invested in a short dated term deposits and bankers acceptances. Given the current
climate, the Group has taken a very risk averse approach to management of cash resources and management and
Directors monitor events and associated risks on a continuous basis. During the quarter the Group invoiced
$985,000 to a single customer of which $717,000 had been received by October 31, 2010 and the balance in early
November 2010.There is little perceived credit risk in respect of other receivables. The Group's maximum
exposure to credit risk at 31 October 2010 was represented by receivables and cash resources.
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to
twelve month's maximum duration. Details of the Group's borrowings are described in note 6. If the interest
rate on deposits were to fluctuate by 1% there would be no material effect on the Group's reported result.
Commodity price risk
Commodity price risk is the risk that the Group's future earnings will be adversely impacted by changes in the
market prices of commodities. The Group is exposed to commodity price risk as its future revenues will be
derived based on contracts with customers at prices that will be determined by reference to market prices of
copper and gold at the delivery date.
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows
arising from the sale of payable gold. In estimating the cash flows the following table details the Group's
sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent management's
assessment of the reasonable possible exposure.
/T/
Gross assets
31 October 31 July
2010 2010
$,000 $,000
10% increase in the price of gold (68) (37)
25% decrease in the price of gold 184 106
----------------------------
----------------------------
/T/
Financial assets
The floating rate financial assets comprise interest earning bank deposits at rates set by reference to the
prevailing LIBOR or equivalent to the relevant country. Fixed rate financial assets are cash held on fixed term
deposit.
At the period end the cash and short term deposits were as follows:
/T/
Average
Average interest
period for rates for
At 31 October Fixed rate Floating which rates fixed rate
2010 assets rate Assets Total are fixed assets
$,000 $,000 $,000 Months %
Sterling 327 135 462 1 0.25
US $ - 1,948 1,948 - -
Canadian $ 3,225 1,858 5,083 1 0.89
-----------------------------------
3,552 3,941 7,493
-----------------------------------
-----------------------------------
At 31 July 2010
$,000 $,000 $,000 Months %
Sterling 484 67 551 1 0.25
Canadian $ 6,351 1,098 7,449 2 0.35
-----------------------------------
6,835 1,165 8,000
-----------------------------------
-----------------------------------
/T/
Fair values
In the directors' opinion there is no material difference between the book value and fair value of any of the
group's financial instruments.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Rambler Metals and Mining Canada Limited
George Ogilvie, P.Eng.
President and CEO
709-532-4990
OR
Rambler Metals & Mining Plc
Peter Mercer
Company Secretary
+1 (709) 532 4990
www.ramblermines.com
OR
Seymour Pierce Limited
Nandita Sahgal
+44 (0) 20-7107-8000
OR
Pelham Bell Pottinger
Klara Kaczmarek / Philippe Polman
+44 (0) 20-7861-3232
OR
Ocean Equities Limited
Guy Wilkes
+44 (0) 20-7786-4370
Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of
the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
-0-
Rambler Metals & Mining Plc
Latest directors dealings
- 3 hours ago Urban Logistics Reit
- 3 hours ago Ocado Group
- 3 hours ago AJ Bell
- 3 hours ago Foresight Enterprise VCT
- 3 hours ago Mitie Group