Vane Minerals (UK) Limited

Transcription

VANE Minerals Plc
REPORT AND FINANCIAL STATEMENTS
Period ended 31 December 2004
Company Registration No. 04573663
Company Registration No. 0457366
DIRECTORS AND ADVISERS
DIRECTORS
MJ Spriggs
Non-Executive Chairman
SD Van Nort
Chief Executive Officer
LC Arnold
Executive Director
MC Idiens
Executive Director
RP Jeffcock
Non-Executive Director
DRB Ingmire
Non-Executive Director
SECRETARY
MC Idiens
REGISTERED OFFICE
2 Park Lane
Leeds
LS3 1ES
AUDITORS
SOLICITORS
Baker Tilly
Hammonds
Chartered Accountants
2 Park Lane
2 Bloomsbury Street
Leeds
London WC1B 3ST
LS3 1ES
REGISTRARS
NOMINATED ADVISER AND BROKER
Capita Registrars
Seymour Pierce Limited
The Registry
Bucklersbury House
34 Beckenham Road
3 Queen Victoria Street
Beckham
London
Kent BR3 4TU
EC4N 8EL
FINANCIAL PUBLIC RELATIONS
BANKERS
Parkgreen Communications
Barclays Bank Plc
Iceland House
PO Box 44
London
London
W1S 2AQ
EC3V 9EX
150 New Bond Street
54 Lombard Street
:: The Vane Minerals team
at Guadalcazar
REPORT HIGHLIGHTS
z
Listed on AIM in June 2004 raising
£3.283m net of expenses
z
At the end of the financial period, the
Group had cash balances of £2.34m
z
All work programmes are on schedule
and under budget
z
Commenced production on the Diablito
gold-silver prospect in Mexico with full
capacity production expected to be ahead
of schedule during 2005
z
Follow-up exploration work at
prospective Guadalcazar gold prospect in
Mexico significantly progressed
z
Drilling on Guadalcazar commenced in
March 2005
z
Option acquired on the Mina Charay
gold-silver prospect in Mexico. First
drilling results favourable
z
Uranium prospects identified in the North
America. 7 prospects claimed to date
with a further 28 under review
z
Gold and copper targets identified in
Paraguay
CHAIRMAN’S STATEMENT
It gives me pleasure to have this opportunity of reviewing the principal events in the
development of VANE Minerals since the company’s successful listing on AIM in June
2004.
Since that event, I am happy to report that the company’s share price has improved
strongly in a market in which mining increasingly is playing a pre-eminent role. This
encouraging performance continues to be underpinned by the strength of the gold
price on international markets.
We remain on course with our declared strategy of generating early cash flow from our
developing properties. While the thrust of our activities remains our developing goldsilver projects in Mexico, we have additionally made application in recent months for
gold-copper prospects in Paraguay and also for uranium licences in North America.
The £3.283 million (net of expenses) raised by VANE Minerals on listing in 2004 is
being applied to fund the detailed exploration and development of our three main
properties in Mexico: Diablito (gold-silver) in Nayarit; Guadalcazar (gold) in San Luis
Potosi; and Mina Charay (gold-silver) in the State of Sinaloa. My colleague, Steve Van
Nort, has commented further in his report on progress with each of these prospects.
Throughout the past year, the company has strived to apply the funds raised in the
IPO in an efficient and diligent manner. Consequently, VANE Minerals has managed to
accomplish its objectives as set out in the listing prospectus within budget and ahead
of schedule and expects to be able to continue to fund its various exploration
activities from these resources, until the company becomes cash generative with the
development of our Diablito property. Our current cash burn rate is £143,000 per
month, and this is expected to be maintained during the first half of 2005 until
Diablito reaches full production. At the December 2004 year-end, the group held
£2.344 million in cash.
One of the pillars of VANE Minerals’ strategy has been the continuing access to the
extensive database of exploration files of the Freeport-McMoRan Copper and Gold
company. The exclusive agreement which we entered with this company was recently
extended by a further year to June 2006, and we intend to use this unique resource to
identify additional exploration targets in the coming months.
This has been a busy year for your company in which a number of milestones have
been reached. VANE would like to thank its shareholders for their continued support
during this period of build-up towards initial mine production and cash flow
generation. Your board believes that, with its exciting portfolio of exploration and
development projects, the company is placed now to grow the business substantially
and to create sustainable value going forward.
MJ Spriggs
Chairman
7 April 2005
: : Vane Minerals Plc : : 6 : :
CHIEF EXECUTIVE OFFICER’S REPORT
We are very pleased and encouraged by the progress that the VANE team has made
since the company listed in June of 2004. The two existing properties at the time of
the listing are on schedule and below budget as set out in the company’s prospectus
and new additions to the VANE portfolio are progressing well and show promising
potential.
Freeport-McMoran Exploration Files
We have continued our review of the Freeport-McMoRan Copper and Gold Company’s
7000 plus exploration files, in accordance with our exclusive agreement, which was
recently extended to 30 June 2006. Targets of interest have been identified and their
evaluation is expected to be undertaken in the coming months.
Diablito Project
The company’s Diablito project has been and continues to be a success.
The
company’s plan was to rapidly develop this property in order to give VANE a cash flow
and enable the company to be a self-funding exploration company. Up-grading of
indicated resource at Diablito was accomplished through a detailed diamond drilling
programme which has been reported on in two press releases dated 29 September
2004 and 25 October 2004. New resource estimates developed from the drilling
programme are tabulated below:
Tons
Tons
Tons
Grade
Grade
Measured
Indicated
Inferred
Au opt (Gold)
Ag opt (Silver)
23,300
11,700
65,000
0.39
42.4
Further up-grading of and expansion of the resource base is anticipated, especially
down dip and to the west, with the completion of additional infill and step-out
drilling.
A mining plan for recovery of the Diablito resource, as outlined during the above
mentioned drilling campaign, has been formulated, a contract mining company
selected and VANE and the MGA Contratista Minera SA de CV are now in the process
of initiating that development plan. First production of ore is now expected in May
2005 with the design capacity of 50 t/d to be achieved two months ahead of the plan
as outlined in the budget detailed in the listing prospectus.
Guadalcazar
Work at the company’s Guadalcazar epithermal gold prospect has progressed
satisfactorily. VANE has completed a detailed geochemical survey (rock, water and
mesquite), geophysical surveys (gravity, magnetics and VLF) and geologic mapping of
the limestones surrounding the Guadalcazar basin. Compilation of all this data has
identified a number of drill targets which offer the potential of discovering a large
hydrothermal gold deposit. Eight targets have been selected to be drilled. The drill is
scheduled to be mobilized in late February with drilling, 22 holes budgeted, to
commence immediately thereafter.
Mina Charay
In addition to the above accomplishments the VANE team has secured an option to
purchase the Mina Charay gold-silver property located in the State of Sinaloa, Mexico.
The Mina Charay project has both the potential for rapid generation of cash flow and
the discovery of a large bulk mineable deposit. First phase diamond drilling, 7 holes,
has been completed along with a reconnaissance VLF survey, both of which indicate
that one or more well-mineralized vein structures occur within the Mina Charay
property and are open to the West, along strike and down dip.
Paraguay
In Paraguay the company has applied for three large concessions in east central
Paraguay totalling 3,800 sq kilometres, where at least 22 gold and/or gold/copper
geochemical anomalies have been identified. Work has begun to evaluate these
anomalies through more detailed geochemical work, with drilling planned for the
future.
Uranium
Work was initiated in late December 2004, on acquiring potential uranium resources
and/or prospects in North America. As of early 2005, 7 targets have been claimed
and a further 28 prospects have been identified and are being targeted for
acquisition. Some of the prospects are believed to contain indicated resources with
uranium grades of around 1% U3O8 or 20 pounds uranium oxide per ton. At present
uranium oxide prices of approximately $21.00/pound, the value of ore is over
$400/ton.
SD Van Nort
7 April 2004
DIRECTORS' REPORT
The directors submit their report and the group financial statements of VANE Minerals Plc for the period ended 31
December 2004.
Principal Activities
The principal activity of the group during the period was that of evaluation and acquisition of mineral exploration
targets, principally gold and silver targets.
Change of Name
On 13 December 2004 the company passed a special resolution changing its name from VANE Holdings plc to VANE
Minerals Plc.
Review of the Business and Future Developments
This is dealt with in the Chairman’s Statement and Chief Executive Officer’s Report.
Dividends
The directors do not recommend a dividend for the period.
Directors
The following directors have held office since 1 October 2003:
MJ Spriggs
(appointed 10 May 2004)
SD Van Nort
(appointed 21 October 2003)
LC Arnold
(appointed 21 October 2003)
MC Idiens
RP Jeffcock
DRB Ingmire
(appointed 10 May 2004)
Directors' Interests in Shares and Share Options
Directors' interests in the shares of the company, including family interests, were as follows:
Number of ordinary shares of 10p each
MJ Spriggs
SD Van Nort
-
-
6,500,000
1
10,500,000
MC Idiens
2,045,000
DRB Ingmire
1
1 October 2003 (or on appointment)
LC Arnold
RP Jeffcock
Number of ordinary shares of £1 each
31 December 2004
5,800,000
2
3
25,000
1
1
-
Beneficial interest held through the Van Nort Family Trust.
2
Beneficial interest held though L Clark and Ardith P Arnold Family Trust
3
Beneficial interest held by Caithness Limited, a wholly owned entity of the JP Jeffcock Settlement.
Directors' Interests in Shares and Share Options (Continued)
Directors’ interests in share options of the company, including family interests, as at 31 December 2004 were as
follows:
Date of grant
Number of Shares
Exercise Price
Option exercise period
MC Idiens
25 May 2004
3,000,000
11p
02/06/05 to 24/05/14
RP Jeffcock
25 May 2004
1,000,000
11p
02/06/05 to 24/05/14
These options are exercisable in the event that in any continuous period of 90 days expiring on or after 2 June 2005,
the average mid-market share price exceeds 16.5p representing 150% of the share price at the date the company’s
shares were admitted to trading on AIM. No share options were exercised or waived during the year.
There have been no changes in directors’ interests in shares or options between 1 January 2005 and 31 March 2005.
The market price of the shares at 2 June 2004 (date of admission to trading on AIM) and 31 December 2004 was 11p
and 11.75p respectively and the average during this period was 8.87p.
Substantial Shareholdings
Other than the directors’ interests shown above, the company has been notified of the following substantial interests as
at 31 March 2005:
Number of Shares
Percentage of issued share capital
Commerzbank
13,636,364
9.3%
Frank Nelson
12,500,000
8.6%
Alan Francis Edwards
12,500,000
8.6%
Richard Harris
12,500,000
8.6%
Roy Williams
12,500,000
8.6%
5,400,000
3.7%
RAB Capital Plc
Creditor Payment Policy
The company policy is to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its
standard payment practice whereby all outstanding trade accounts are settled within the term agreed with the supplier
at the time of the supply or otherwise 30 days from receipt of the relevant invoice. Trade creditor days based on
creditors at 31 December 2004 were 17 days (2003: Nil days).
Annual General Meeting
Notice of this year's annual general meeting is set out at page 37 of this document. Resolutions are to be proposed as
special business to enable the Directors to allot unissued shares and, subject to the limits therein contained, to allot
shares for cash other than to existing shareholders in proportion to their shareholdings. The resolutions enabling
Directors to allot unissued shares will be limited to the allotment of shares up to a maximum nominal amount of
£4,871,400, which represents less than one third of the total ordinary share capital in issue as at 7 April 2005. The
Directors do not have any present intention of exercising such authority, other that to satisfy obligations under the
Company's share option scheme, and the authority will expire at the conclusion of the next Annual General Meeting
after the passing of the proposed resolution. The resolution enabling the directors to allot shares other than to existing
shareholders in proportion to their shareholdings is limited to the allotment of shares up to a maximum nominal value
of £730,719 which represents 5% of the total ordinary share capital in issue as at 7 April 2005. Both of these
resolutions seek authorities which are in accordance with the current guidelines issued by the Investment Committee of
the Association of British Insurers and the National Association of Pension Funds ("Guidelines").
Auditors
A resolution to reappoint Baker Tilly, Chartered Accountants, as auditors will be put to the members at the annual
general meeting.
By order of the board
MC Idiens
Company Secretary
7 April 2005
CORPORATE GOVERNANCE STATEMENT
Corporate Governance
The policy of the Board is to manage the affairs of the company in accordance with the Principles of Good Governance
and Code of Best Practice as set out in Section 1 of the Revised Combined Code annexed to the Listing Rules of the
Financial Services Authority.
The Board and its Committees
Board meetings are scheduled to take place once every two months and there is contact between meetings as required.
The meetings are held to set and monitor strategy, review exploration and trading performance, examine acquisition
possibilities and approve reports to shareholders. In addition, the Board approves the annual forecasts and any reforecasts. Procedures are established to ensure that appropriate information is communicated to the Board in a timely
manner to enable it to fulfil its duties.
Details of directors who served during the year are set out in the directors’ report. The Board is now comprised of three
Executive and three Non-Executive directors.
The Board has separate roles for Chairman and Chief Executive.
The Board has established an Audit Committee, which comprises the non-executive Chairman Michael Spriggs and nonexecutive director David Ingmire. The Audit committee meets twice a year. It is responsible for meeting the auditors,
reviewing the annual report and accounts before their submission to the Board, ensuring that the financial performance
of the company is properly reported on and monitored, reviewing the recommendations of the auditors on accounting
policies, internal control and other findings of the audit and making recommendations to the Board on the scope of the
audit and the appointment of the auditors.
The Board has established a remuneration committee, which comprises the non-executive Chairman Michael Spriggs
and non-executive director David Ingmire. The remuneration committee meets twice a year and reviews the
performance of the executive directors and the scale and structure of their remuneration having due regard to the
interests of the shareholders. The Committee also approves the granting of share options.
Communication with Shareholders
The Board encourages regular dialogue with shareholders. All shareholders are invited to the AGM at which directors are
available for questioning. The notice of AGM is sent to all shareholders at least 21 working days before the meeting.
The number of proxy votes received for and against each resolution is disclosed at the AGM and a separate resolution is
proposed on each item. Financial and other information about the Company is available on the Company’s website.
Internal Control
The directors are responsible for the group’s systems of internal control and for reviewing its effectiveness. However,
such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can
only provide the directors with reasonable and not absolute assurance against material misstatement or loss. The key
procedures that have been established and which are designed to provide effective internal control are as follows:
Management structure – Each of the group’s subsidiaries are managed by an executive director. The Board meets every
two months. In addition, there are frequent management meetings of the executive members of the Board and other
senior staff.
Financial reporting – An annual forecast is prepared by the executive directors and reviewed by the whole Board.
Performance against forecast is monitored monthly.
Internal audit – The Board has reviewed the need for an internal audit function and has concluded that the group is not
large enough to warrant a full-time internal auditor.
The Board reviews the effectiveness of the systems of internal control and the control environment. No significant
control deficiencies were reported during the year.
No weaknesses in internal controls have resulted in any material losses, contingencies or uncertainty which would
require disclosure as recommended by the guidance for directors on reporting on internal controls.
Health and Safety
It is the objective of the group to ensure the health and safety of its employees and of any other persons who could be
affected by its operations. It is the group’s policy to provide working environments which are safe and without risk to
health and provide information, instruction, training and supervision to ensure the health and safety of its employees.
Investment Appraisal
The Board approves proposals for the acquisition of new businesses and sets guidelines for the development of new
properties. Capital expenditure is regulated by authorisation controls. For expenditure above specified levels, written
proposals must be submitted to the Board and reviews carried out to monitor progress against budget.
Going Concern
Having made appropriate enquiries and having examined the major areas which could affect the group’s financial
position, the directors are satisfied that the group has adequate resources to continue in operation for the foreseeable
future. Accordingly, they consider it appropriate to adopt the going concern basis in preparing the financial statements.
DIRECTORS' RESPONSIBILITIES IN THE PREPARATION OF
FINANCIAL STATEMENTS
Company law requires the directors to prepare financial statements for each financial period which give a true and fair
view of the state of affairs of the company and the group of the profit or loss of the group for that period. In preparing
those financial statements, the directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b.
make judgements and estimates that are reasonable and prudent;
c.
state whether applicable accounting standards have been followed, subject to any material departures
d.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
disclosed and explained in the financial statements;
the group will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the company and the group and to enable them to ensure that the financial statements
comply with the requirements of the Companies Act 1985. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF VANE MINERALS Plc
Overview
We have audited the financial statements on pages 20 to 36.
This report is made solely to the company’s members, as a body. Our audit work has been undertaken so that we
might state to the company’s members those matters we are required to state to them in an auditors’ report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the company and the company’s members as a body, for our audit work, for this report, or for the opinion we have
formed.
Respective Responsibilities of Directors and Auditors
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with
applicable law and United Kingdom Accounting Standards are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and
United Kingdom Auditing Standards.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared
in accordance with the accounting policies as set out on pages 24 and 25 We also report to you if, in our opinion, the
Directors’ Report is not consistent with the financial statements, if the company has not kept proper accounting
records, if we have not received all the information and explanations we require for our audit, or if information specified
by law regarding directors’ remuneration and transactions with the company and other members of the group is not
disclosed.
We read other information contained in the Annual Report, and consider whether it is consistent with the audited
financial statements. This other information comprises only the Chairman’s Statement, Chief Executive Officer’s Report,
the Directors’ Report and the Corporate Governance Statement. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the financial statements.
Our
responsibilities do not extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate to the company's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are
free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state of affairs of the group and company at
31 December 2004 and of the group loss for the period then ended and have been properly prepared in accordance
with the Companies Act 1985.
BAKER TILLY
Registered Auditor
Chartered Accountants
2 Bloomsbury Street
London WC1B 3ST
7 April 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the period ended 31 December 2004
Notes
15 months ended
11 months ended
31 December 2004 30 September 2003
TURNOVER
Net operating expenses
2
OPERATING LOSS
£
£
-
-
(637,663)
-
(637,663)
-
Interest receivable
3
41,041
-
Interest payable and similar charges
4
(2,071)
-
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
5
(598,693)
-
Taxation
7
35,533
-
(563,160)
-
(0.52p)
-
15 months ended
11 months ended
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION
15
LOSS PER SHARE
Basic and diluted
8
The operating loss for the period arises from the group’s continuing operations.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
31 December 2004 30 September 2003
Loss for financial period
Currency translation losses on foreign currency net investments
Total recognised gains and losses for period
£
£
(563,160)
-
(67,404)
-
(630,564)
-
CONSOLIDATED BALANCE SHEET
31 December 2004
Notes 31 December 2004 30 September 2003
£
£
9
11,503,882
-
11
116,093
-
2,344,253
2
2,460,346
2
(66,078)
-
2,394,268
2
13,898,150
2
FIXED ASSETS
Intangible assets
CURRENT ASSETS
Debtors
Cash at bank and in hand
CREDITORS: Amounts falling due within one year
12
NET CURRENT ASSETS
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
13
14,614,382
2
Share premium account
14
-
-
Profit and loss account
15
(716,232)
-
EQUITY SHAREHOLDERS’ FUNDS
16
13,898,150
2
Approved by the board on 7 April 2005
MJ Spriggs
Chairman
SD Van Nort
COMPANY BALANCE SHEET
31 December 2004
Notes
31 December
30 September
2004
2003
£
£
10
12,391,735
-
11
19,905
-
2,021,138
2
2,041,043
2
FIXED ASSETS
Investments
CURRENT ASSETS
Debtors
CREDITORS: Amounts falling due within one year
12
NET CURRENT ASSETS
NET ASSETS
(29,884)
-
2,011,159
2
14,402,894
2
CAPITAL AND RESERVES
Called up share capital
13
14,614,382
2
Share premium account
14
-
-
Profit and loss account
15
EQUITY SHAREHOLDERS’ FUNDS
16
Approved by the board on 7 April 2005
MJ Spriggs
Chairman
SD Van Nort
(211,488)
14,402,894
-
2
CONSOLIDATED CASH FLOW STATEMENT
Notes
Cash flow from operating activities
17a
Returns on investments and servicing of finance
17b
Capital expenditure and financial investment
17b
Acquisitions and disposals
17b
2004
2003
£
£
(584,524)
38,970
(381,899)
56,594
-
CASH OUTFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND
FINANCING
(870,859)
-
Management of liquid resources
17b
(2,285,791)
-
Financing
17b
3,282,514
2
125,864
2
2004
2003
£
£
125,864
2
Cash outflow from increase in liquid resources
2,285,791
-
Change in net funds resulting from cash flows
2,411,655
2
INCREASE IN CASH IN THE PERIOD
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Increase in cash in the period
Translation difference
(67,404)
Movement in net funds in the period
NET FUNDS AT 1 OCTOBER 2003
NET FUNDS AT 31 DECEMBER 2004
-
2,344,251
2
2
-
2,344,253
2
ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention and in accordance with applicable
accounting standards.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate those of VANE Minerals Plc and all its subsidiary undertakings.
Subsidiaries acquired during the period are consolidated using the acquisition method. All financial statements are
made up to 31 December 2004.
FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance
sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All
differences are taken to the profit and loss account.
Assets, liabilities, and results of overseas subsidiaries are translated at the rate ruling at the balance sheet date.
Exchange differences arising are dealt with through reserves.
INTANGIBLE FIXED ASSETS
Expenditure including related overheads on the acquisition, exploration and evaluation of interests in licences not yet
transferred to a cost pool is capitalized under intangible fixed assets. Cost pools are established on the basis of
geographic area. When it is determined that such costs will be recouped through successful development and
exploitation or alternatively by sale of the interest, expenditure will be transferred to tangible fixed assets and
depreciated over the expected productive life of the asset. Whenever a project is considered no longer viable the
associated exploration expenditure is written off to the profit and loss account.
DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in
the future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable
profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax
assessments in periods different from those in which they are recognised in the financial statements.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recoverable
against suitable taxable profits in the future.
Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries only to the extent that, at the
balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in
future has been entered into by the subsidiary or associate.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences
are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance
sheet date. Deferred tax is measured on a non-discounted basis.
INVESTMENTS
Long term investments representing interests in subsidiary undertakings are stated at cost less any provision for
impairment in the value of the fixed asset investment.
LEASING
Rental payments under operating leases are charged to the profit and loss account on a straight line basis over the year
of the lease.
RETIREMENT BENEFITS
The group makes contributions to the personal pension schemes of its employees and directors. The amount charged
to the profit and loss account in respect of pension costs is the contributions payable in the year. There were no unpaid
contributions at the period end.
TURNOVER
Turnover represents the invoiced value, net of Value Added Tax, of goods sold and services provided to customers.
COMPARATIVE FIGURES
The comparative figures cover the period from incorporation on 25 October 2002 to 30 September 2003.
NOTES TO THE FINANCIAL STATEMENTS
1
The group’s loss on ordinary activities before taxation was derived from its principal activity.
2
NET OPERATING EXPENSES
15 months
ended
31 December
30 September
2004
2003
£
£
637,663
-
15 months
11 months
Administration expenses
3
INTEREST RECEIVABLE
ended
ended
31 December
30 September
2004
2003
£
£
41,041
-
15 months
11 months
Bank interest receivable
4
INTEREST PAYABLE AND SIMILAR CHARGES
ended
ended
31 December
30 September
£
£
2,071
-
15 months
11 months
2004
Other interest
5
11 months
ended
ended
2003
ended
31 December
30 September
2004
2003
£
£
25,000
-
Loss on ordinary activities before taxation is stated after charging:
Auditors’ remuneration
Exchange loss
- audit (principal auditor)
- interim review (principal auditor)
3,000
-
- tax compliance/advice (principal auditor)
8,000
-
18,486
-
- overseas network auditor
: : Vane Minerals Plc : : Baker Tilly Report : : Page 26 : :
15,574
-
6
EMPLOYEES
15 months
11 months
ended
ended
31 December
30 September
2004
2003
No
No
6
2
£
£
The average monthly number of persons (including directors)
employed by the company during the period was:
Office and management
Staff costs for the above persons:
137,600
-
Social security costs
Wages and salaries
16,352
-
Other pension costs
7,300
-
161,252
-
DIRECTORS’ EMOLUMENTS
2004
Annual
Salary
Salary
Payable
£
£
Bonus
Total
Pension
£
£
£
Executive directors
SD Van Nort
24,000
-
-
-
-
LC Arnold
24,000
-
-
-
-
MC Idiens
78,000
45,500
7,800
53,300
4,550
Non-executive directors
MJ Spriggs
36,000
21,000
-
21,000
-
RP Jeffcock
24,000
14,000
-
14,000
-
DRB Ingmire
24,000
14,000
-
14,000
-
210,000
94,500
7,800
102,300
4,550
SD Van Nort and LC Arnold waived their annual salary entitlement in the period to aid the cashflow of the
group.
In addition to the above emoluments some directors received payments for consultancy services to the group
as detailed in note 20.
15 months
11 months
ended
ended
31 December
30 September
2004
2003
No
No
1
-
The number of directors to whom retirement benefits are accruing
under money purchase schemes was
7
15 months
TAXATION
11 months
ended
ended
31 December
30 September
2004
2003
£
£
Current tax:
UK corporation tax on losses of the period
-
-
Adjustments in respect of previous periods
-
-
Total current tax
-
-
Deferred tax:
Origination and reversal of timing differences
(35,533)
-
(35,533)
-
(35,533)
-
Loss on ordinary activities before tax
(598,693)
-
Loss on ordinary activities multiplied by the rate of corporation tax for
(179,608)
-
Tax on loss on ordinary activities
Factors affecting tax charge for period:
companies of 30%
Effects of:
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Tax charge for period
10,690
-
168,918
-
-
-
Unrelieved tax losses of £540,000 (2003: £Nil) carried forward have not been recognised as a deferred tax
asset, as there is currently insufficient evidence that the asset will be recoverable in the foreseeable future.
8
LOSS PER ORDINARY SHARE
The calculation of basic and diluted loss per ordinary share is based on the following loss and number of
shares.
15 months
11 months
31 December
30 September
2004
2003
£
£
ended
Loss for the financial period
ended
(563,160)
Weighted average number of shares
-
2004
2003
No. of shares
No. of shares
107,745,590
2
Due to the loss incurred in the period, there is no dilutive effect from the issue of share options.
9
INTANGIBLE FIXED ASSETS
Development
costs
£
GROUP
1 October 2003
-
Additions
10
381,899
Acquired with subsidiaries
11,121,983
31 December 2004
11,503,882
INVESTMENTS
Shares in
Loans to
subsidiary
subsidiary
undertakings
undertakings
Total
£
£
£
COMPANY
1 October 2003
-
-
-
Additions
11,246,200
1,145,535
12,391,735
31 December 2004
11,246,200
1,145,535
12,391,735
10
INVESTMENTS (continued)
The group acquired 100% of the called up ordinary share capital of VANE Minerals (UK) Limited by the issue of
112,461,980 ordinary shares of 10p and 100% of AVEN Associates LLC for cash consideration of £50,000.
The assets and liabilities of the VANE Minerals (UK) Limited group have been consolidated at their fair values
to the group, as set out below:
Book
Net assets acquired:
Mining rights/development costs
Current assets
Fair
value
Adjustment
value
£
£
£
184,000
10,937,983
11,121,983
330,217
Current liabilities
-
(156,000)
358,217
10,937,983
330,217
(156,000)
11,296,200
Discharged by:
Shares
11,246,200
Cash
50,000
11,296,200
The above adjustment represents the inherent value of the mining and exploration rights which the VANE
Minerals (UK) Limited group owns.
At 31 December 2004 the company held more than 20 per cent of the equity of the following undertaking:
Class of
Proportion
Country of
Holding
Held
Incorporation
Nature of business
Ordinary
100%
United Kingdom
Mining and exploration
-
100%
USA
Ordinary
100%
Mexico
Direct:
VANE Minerals (UK) Limited
*AVEN Associates LLC
*Minerales VANE SA de CV
*Indirect shareholding
The summarised profit and loss account of VANE Minerals (UK) Limited and its subsidiaries for the 3 month
period prior to acquisition is as follows:
£
Operating expenses
(44,844)
Operating loss
(44,844)
Taxation
-
(44,844)
Loss after tax for the VANE Minerals (UK) Limited group for the year ended 30 September 2003 was £445,127.
11
DEBTORS
Group
Due within one year:
Company
2004
2003
2004
2003
£
£
£
£
Deferred tax asset
35,533
-
-
-
Other debtors
62,403
-
1,748
-
Prepayments and accrued income
18,157
-
18,157
-
116,093
-
19,905
-
The deferred tax asset is in relation to tax losses available to be carried forward in Minerales VANE SA de CV.
12
CREDITORS: Amounts falling due
within one year:
Trade creditors
Other taxes and social security
Accruals and deferred income
13
Group
Company
2004
2003
2004
2003
£
£
£
£
21,833
-
1,884
-
8,393
-
-
-
35,852
-
28,000
-
66,078
-
29,884
-
SHARE CAPITAL
Group and Company
2004
2003
£
£
20,000,000
100
14,614,382
2
Authorised:
200,000,000 ordinary shares of 10p each (2003: 100 ordinary shares of
£1 each)
Allotted, issued and fully paid:
146,143,823 ordinary shares of 10p each (2003: 2 ordinary shares of
£1 each)
On 21 October 2003, the company’s authorised share capital was increased to £20,000,000 by the creation of
19,999,900 ordinary shares of £1 each ranking pari passu with the existing share capital.
On 21 October 2003, the authorised and issued share capital of the company was subdivided so each ordinary
share of £1 each sub divided into 10 ordinary shares of 10p each.
On 23 December 2003, 112,461,980 ordinary shares of 10p each were issued at par value to acquire the
entire issued share capital of VANE Minerals (UK) Limited.
On 2 June 2004, 33,681,823 ordinary shares of 10p each were issued at 11p per share via a placing and
admission to trading on AIM.
13
SHARE CAPITAL (continued)
Share options
At 31 December 2004, the following share options over ordinary shares of 10p each of the Company had been
granted and not exercised:
Date of grant
Number
Exercise
of shares
Exercise Period
Price
Options:
25 May 2004
5,600,000
11p
02/06/05 to 24/05/14
5,000,000 of these options are exercisable in the event that in any continuous period of 90 days expiring on
or after 2 June 2005, the average mid-market share price exceeds 16.5p representing 150% of the share price
at the date the company’s shares were admitted to trading on AIM.
600,000 of these options vest and are exercisable in 3 equal, annual tranches from 2 June 2005.
14
SHARE PREMIUM ACCOUNT
Group and Company
1 October 2003
Premium on shares issued during the period
Share issue costs
2004
2003
£
£
-
-
336,818
-
(422,486)
Transfer to profit and loss account
31 December 2004
-
85,668
-
-
-
The balance of the share issue costs in excess of the share premium account of £85,668 have been charged
directly to the profit and loss account reserve. Included within share issue costs are fees of £36,150 (2003:
£Nil) charged by the company’s auditors.
15
PROFIT AND LOSS ACCOUNT
1 October 2003
Group
2004
2003
2004
2003
£
£
£
£
-
Exchange rate adjustments
Company
-
(125,820)
-
(563,160)
-
(67,404)
-
(85,668)
-
(85,668)
-
(716,232)
-
(211,488)
-
-
-
Transfer from share premium
account
31 December 2004
In accordance with s230 of the Companies Act 1985, VANE Minerals Plc has not presented its own profit and
loss account.
16
RECONCILIATION OF MOVEMENT
Group
IN EQUITY SHAREHOLDERS’ FUNDS
Issue of shares during the period
2003
2004
2003
£
£
£
£
(563,160)
14,951,198
Share issue costs
Company
2004
2
(125,820)
14,951,198
(422,486)
-
(67,404)
-
-
-
13,898,148
2
14,402,892
2
2
-
2
-
13,898,150
2
14,402,894
2
2004
2003
£
£
Exchange rate adjustments
(422,486)
2
-
Net addition to shareholders’
funds
Opening shareholders’ funds
Closing shareholders’ funds
17
CASH FLOWS
a
Reconciliation of operating loss to net cash outflow from operating
activities
Operating loss
(637,663)
-
143,063
-
Increase in debtors
Increase in creditors
Net cash outflow from operating activities
b
(89,924)
-
(584,524)
-
Analysis of cash flows for headings netted in the cash flow
Returns on investments and servicing of finance
Interest received
2004
2003
£
£
41,041
Other interest paid
(2,071)
-
Net cash inflow from returns on investments and servicing of finance
38,970
-
Capital expenditure and financial investment
Purchase of intangible fixed assets
(381,899)
-
Net cash outflow from capital expenditure and financial investment
(381,899)
-
106,594
-
Acquisitions and disposals
Cash acquired with subsidiary
Acquisition of subsidiary
Net cash inflow from acquisitions and disposals
(50,000)
-
56,594
-
Management of liquid resources
Cash deposited on 7 day deposit
(2,285,791)
-
Net cash outflow from management of liquid resources
(2,285,791)
-
3,705,000
2
Financing
Proceeds from issue of share capital
Share issue costs
(422,486)
Net cash inflow from financing
3,282,514
2
17
CASH FLOWS (continued)
At
Cash-flow
1 October 2003
c
d
Analysis of net funds
£
2
125,864
Cash on deposit
-
2,285,791
2
2,411,655
Cash acquired with subsidiary
Acquisition of subsidiary
Net inflow of cash in respect of the purchase of subsidiary
18
At
31 December 2004
£
£
£
Analysis of the net outflow of cash in respect of the purchase of
subsidiary undertaking:
Exchange
Difference
(67,404)
(67,404)
58,462
2,285,791
2,344,253
2004
2003
106,594
-
£
£
(50,000)
-
56,594
-
FINANCIAL COMMITMENTS
On 28 May 2003, Minerales VANE SA de CV (“VANE Mexico”) signed an agreement with Minera Apolo, SA de CV
(“Minera”) to grant all the rights applicable to all minerals allowed under the Mining Law on the mining lots
“Santa Cruz”, “El Tigre”, “Conejo”, “El As”, “Kat” and “El Tigre 11” located in Guadalcazar, San Luis Potosi for 36
months from the date the agreement was signed. Minera is to carry out samplings to provide the group with a
geological report; for this service the group paid US$50,000 (fifty thousand US dollars) on 1 June 2003;
US$50,000 (fifty thousand US dollars) on 1 July 2003; US$200,000 (two hundred thousand US dollars) on 1
June 2004 and will pay US$300,000 (three hundred thousand US dollars) on 1 June 2005. The two first
payments are mandatory; the remaining payment will also be paid, unless the agreement is ended in advance.
The agreement also includes a royalty payment and a purchase option. A Net Smelter Return Royalty (“NSR”)
will be paid over the life of the mines at a rate of 1%. The purchase option can be executed by the group at
any time during the agreement or at its due date. The agreed selling price for the property is US$10,000,000
(ten million dollars) and will be paid US$5,000,000 (five million dollars) at the date the purchase agreement is
signed and in 10 annual payments of US$500,000 (five hundred thousand dollars) each. If production starts
during the period and the balance of the debt is paid then the royalties paid during such period will be
considered as a part of the payment of the debt. Transfer of the property by the group will require the
immediate payment of the remaining balance of the debt.
The term for the use of concessions follows:
Lot
Status
Due date
Santa Cruz
Exploitation
30 May 2050
El Tigre
Conejo
Exploration
Exploitation
27 July 2050
El As
Exploration
1 October 2007
Kat F1 and F11
Exploitation
12 January 2054
El Tigre 11
Exploitation
6 November 2050
Lina I
Exploration
23 December 2009
Chiyo
Exploration
20 January 2010
Lina FI & FII
Exploration
03 February 2010
17 November 2005
18
FINANCIAL COMMITMENTS (continued)
Any property acquired within 5 kilometres area from the property where lots are located made by Minera or
the group during the term of the agreement will be considered as part of the property in the agreement.
On 17 September 2003 VANE Mexico signed a rights concession agreement with Minera on the mining lot
named “El Diablito” which is divided in four parts and is located in Tecuala, Nayarit. Due date of the
concessions is 1 September 2009 and the amount paid was $100.
This agreement is based on a previous agreement signed on 17 October 2002 between Minera and VANE
Minerals (UK) Limited. In accordance with this agreement, the group should sign a Development Agreement
with Apolo if it decides to commence extraction operations. This agreement, signed on 17 September 2003,
includes a 5% royalty payment to Minera on the net amounts paid to the company by the smelter by way of
smelter returns commonly referred to as Net Smelter Royalty (“NSR”) and a reference on properties acquired in
the zone, similar to that included in the Guadalcazar lots agreement.
In September 2004 VANE Mexico signed a preliminary agreement with PAFEX, S.A. de C.V. to allow them to
carry out geological studies in the three lots of a Mine named Charay located in Sinaloa, Mexico with a sole
payment of US$35,000 (thirty five thousand US dollars). This agreement was extended on 1 February 2005,
which include the possession of the lots and established the following payments: US$20,000 (twenty thousand
US dollars) on 1 February 2005; US$10,000 (ten thousand US dollars) on 1 May 2005; US$10,000 (ten
thousand US dollars) on 1 June 2005; US$75,000
(seventy five thousand US dollars) on 1 July 2005;
US$150,000 (one hundred and fifty thousand US dollars) on 1 January 2006; US$300,000 (three hundred
thousand US dollars) on 1 July 2006; and US$410,000 (four hundred and ten thousand US dollars) on 01
January 2007.
If the group decides to acquire the rights to these lots, it should pay US$2,000,000 (two million US dollars).
Of this amount PAFEX should acquire shares in VANE Minerals Plc to the amount of US$1,000,000 (one million
US dollars) in value.
19
FINANCIAL INSTRUMENTS
The group’s financial instruments comprise cash. The group has various other financial instruments, such as
debtors and creditors, that arise directly from its operations which have not been included in the following
disclosures.
The main risks arising from the group’s financial instruments are interest rate risks and liquidity risk. The
policies for managing these risks are regularly reviewed and agreed by the Board.
It is, and has been throughout the period under review, the group’s policy that no trading in financial
instruments should be undertaken.
Foreign exchange risk
The functional currencies of the Group are Sterling, US dollars and Mexican Pesos. The Group’s foreign
subsidiaries are denominated in foreign currencies.
The Group does not hedge against the effects of
movement in exchange rates. The risks are monitored by the Board on a regular basis.
Interest rate risk
The group’s policy on interest rate management is agreed at Board level and is reviewed on an ongoing basis.
19
FINANCIAL INSTRUMENTS (continued)
Interest rate profile of financial assets
The interest rate risk profile of the Group’s financial assets as at 31 December 2004 was:
Sterling
US Dollars
Mexican Pesos
Fixed
Floating
rate
Rate
Total
£
£
£
2,011,160
43,006
2,054,166
274,631
8,310
282,941
-
7,146
7,146
2,285,791
58,462
2,344,253
2,285,791
58,462
2,344,253
Of which:
The fixed rate sterling and US dollars deposits at 31 December 2004 are short term deposits and earn interest
at 4.75% and 1.96% respectively.
Floating rate instant access deposits in Sterling earn interest at prevailing bank rates.
Liquidity risk
It is the group’s policy to finance its business by means of internally generated funds supported by the
group’s bankers and external share capital. Facilities are regularly reviewed by the Board.
Facility
The group does not currently have an overdraft facility.
Fair value
There is no material difference between the fair value of borrowings and other financial instruments and their
book value at the balance sheet date.
20
RELATED PARTY TRANSACTIONS
Payments made to directors of the group during the period for the provision of consultancy services were as
follows:
2004
Name of director
£
MC Idiens
30,100
RP Jeffcock
35,489
LC Arnold*
48,974
SD Van Nort*
46,945
*Payments made through AVEN Associates LLC, an indirect subsidiary of the company.
No amounts were owed by the group at the period end in relation to these transactions.
The group has taken advantage of the exemption under FRS8 in regard to the disclosure of transactions and
balances with group companies.
VANE MINERALS PLC
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the second Annual General Meeting of the Company will be held at the
offices of Seymour Pierce Limited, Bucklersbury House, 3 Queen Victoria Street, London EC4N 8EL on
12th May 2005 at 11.00 am at which the following matters will be dealt with:
Ordinary Business
1
To receive the Reports of the Directors and Auditors and the Financial Statements for the year
ended 31 December 2004.
2
To re-elect Robert Jeffcock as a Director of the Company.
3
To re-elect Matthew Idiens as a Director of the Company.
4
To re-appoint Baker Tilly as auditors of the Company to hold office from the conclusion of this
meeting until the conclusion of the next Annual General Meeting at which accounts are laid before
the Company and to authorise the Directors to agree their remuneration.
Special Business
As Special Business to consider and, if thought fit, to pass the following resolutions, of which resolution
number 5 will be proposed as an ordinary resolution and resolution number 6 will be proposed as a
special resolution:
5
That for the purposes of Section 80 of the Companies Act 1985 (the "Act") (and so that
expressions defined in that Section shall bear the same meanings as in this Resolution) the
Directors be, and they are, generally authorised to allot relevant securities up to a maximum
nominal amount of £4,871,400 to such persons at such times and on such terms as they think
proper during the period expiring on the date of the next Annual General Meeting after the
passing of this Resolution (or any adjournment thereof) save that the Company may before such
expiry make an offer or agreement which would or might require relevant securities to be allotted
after such expiry and the Board may allot relevant securities in pursuance of such offer or
agreement as if the authority conferred hereby had not expired.
6
That the Directors be and they are hereby generally authorised to allot for cash or otherwise
equity securities (as defined in Section 94 of the Act) of the Company pursuant to the authority
conferred by Resolution 5 above as if Section 89 of the Act did not apply to such allotment
provided that this power shall be limited:
(a)
to the allotment of equity securities in connection with a rights issue, open offer or
otherwise in favour of the holders of ordinary shares of 10 pence each ("Ordinary Shares")
where the equity securities respectively attributable to the interests
of all such
shareholders are proportionate (as nearly as may be practicable) to the respective
numbers of Ordinary Shares held by them on the record date for such allotment but
subject to such exclusions or other arrangements as the Directors may deem necessary
or expedient in relation to fractional entitlements or legal or practical problems under the
laws of, or the requirements, of any recognised regulatory body or any stock exchange in
any territory;
(b)
to the allotment of equity securities pursuant to the terms of any share schemes for
(c)
to the allotment otherwise than pursuant to subparagraphs (a) and (b) above of equity
Directors and employees of the Company or any of its subsidiaries; and
securities not exceeding in aggregate the nominal amount of £730,719,
provided further that the authority hereby granted shall expire at the conclusion of the next
Annual General Meeting after the passing of this Resolution (or any adjournment thereof) save
that the Directors shall be entitled to make at any time before the expiry of the power hereby
conferred any offer or agreement which might require equity securities to be allotted after the
expiry of such power.
By order of the Board
Matthew Idiens, Company Secretary
2 Park Lane
Leeds
LS3 1ES
7 April 2005
AGM Notice Page 2
Head Office
US Office
Mexico
18b Charles Street
AVEN Associates LLC
Minerales Vane SA de CV
Mayfair
7400 North Oracle Road #131
Humboldt No. 121
London
Tucson
Colonia del Valle,
W1J 5DU
AZ 85704
San Lus Potosí,
United Kingdom
USA
CP 78200
Phone: +44 (0) 20 7667 6322
Phone: +1 (520) 797 1393
Fax: +44 (0) 870 460 4162
Fax: +1 (520) 742 7280
México

Vane Minerals (UK) Limited

Transcription

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