LONDON, UNITED KINGDOM and BAIE VERTE, NEWFOUNDLAND and LABRADOR
-- (MARKET WIRE)
-- 10/17/11
Rambler Metals and Mining PLC (TSX VENTURE:RAB)(AIM:RMM) ("Rambler" or the "Company") is pleased to report its financial results and operational highlights for the year ended 31 July 2011. The Company is focused on bringing the Ming Copper-Gold Mine ("Ming Mine") located in Newfoundland and Labrador's Baie Verte Peninsula, Canada, into full production.
Operational Highlights
-- Produced 1,399 ounces of gold from the mining of its satellite deposits
at the Nugget Pond Crown Pillar and the Tilt Cove East Mine dump.
-- Released its final Feasibility Study moving the Ming Mine from pure
exploration and evaluation into the mine development stage. Following
the receipt of construction and final permits from the Government of
Newfoundland and Labrador during the year the Group drew down the
remaining US$15 million available under the Gold Loan.
-- Significant progress was made on all construction works throughout the
year including the Group's floatation circuit addition at the Nugget
Pond Mill and the site works at the Ming Mine enabling first
commissioning plans for calendar Q4 2011.
Financial Highlights (All expressed in CAD$)
-- The Group generated its first revenue of $2.1 million in gold sales from
its satellite deposits and additional revenue of $1.4 million from
various toll processing agreements.
-- The consolidated loss after taxation of the Group in respect of the year
ended July 31, 2011 amounted to $53,000 (a loss per share of $0.001)
versus a loss of $2,426,000 for the year ended 31 July 2010 (a loss per
share of $0.029).
-- The net assets of the Group amounted to $96.5 million as at the end of
the year. This included mineral properties of $38.5 million and
intangible assets of $16.6 million which consisted of accumulated
deferred exploration and evaluation expenditures on the Lower Footwall
Zone at the Ming Mine in Newfoundland and Labrador.
-- Raised $14.8 million after expenses through the placement of 27,777,778
Ordinary Shares providing additional working capital as the Group
continued with the construction phase required to bring the Mine into
production.
-- At October 14, 2011, the Company has $4.0 million in cash and cash
equivalents.
George Ogilvie, President and CEO, Rambler Metals & Mining commented;
"Strengthened by the operation of the Nugget Pond Mill and the near-term production at the Ming Copper-Gold Mine the Company is well positioned operationally and financially to be the leading copper and gold producer in Baie Verte. As more upside is realized by the much anticipated opening of the Ming Mine the Company will look to grow the Company organically from within as well as exploring external business opportunities to become the leading mine operator and resource developer in Atlantic Canada.
With the strong balance sheet, the Company is able to fund future developments, establish additional regional relationships and accelerate the production ramp-up at the Ming Mine."
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 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.
Following the successful publication of a positive Feasibility Study Rambler is now near completion of the construction phase of the project and expects to bring the Ming Mine back into production in the fourth quarter of 2011. In the interim, the Company has focused on its core strategy of becoming the premier mill for the region's processing needs.
Registered number: 05101822 (England and Wales)
Rambler Metals and Mining PLC
Report of the directors and
Audited Financial Statements
for the Year Ended July 31, 2011
Rambler Metals and Mining Plc
Contents of the financial statements
Page
Company Information 1
Chairman's Statement 2
Management's Discussion and Analysis 3
Report of the Directors 24
Statement of Directors' responsibilities 27
Corporate Governance 28
Independent Auditors' reports 29
Consolidated Income Statement 32
Consolidated Statement of Comprehensive Income 33
Company Statement of Comprehensive Income 33
Consolidated Balance Sheet 34
Company Balance Sheet 35
Consolidated Statement of Changes in Equity 36
Company Statement of Changes in Equity 37
Statement of Cash Flows 38
Notes to the Financial Statements 39
Rambler Metals and Mining Plc
Company Information
For the Year Ended July 31, 2011
Directors:
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts
J S Thomson
Secretary: P Mercer
Registered office: Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number: 5101822 (England and Wales)
Auditor: PKF (UK) LLP
20 Farringdon Road
London
EC1M 3AP
Rambler Metals and Mining Plc
Chairman's Statement for the Year Ended July 31, 2011
We are pleased to report the results for the year ended July 31, 2011.
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine ("Ming Mine") 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 on the TSX Venture Exchange under the symbol "RAB".
The presentational currency of the Group's financial statements is Canadian dollars ($).
Operational Highlights
Ahead of bringing the Ming Mine back into production in calendar Q4 2011, key achievements during the year include:
-- The Group generated its first revenue of $2.1 million in gold sales from
its satellite deposits and additional revenue of $1.4 million from
various toll processing agreements demonstrating the Group's ability to
source alternative revenue sources in the Baie Verte area.
-- The group released its final Feasibility Study moving the Ming Mine from
pure Exploration and Evaluation into the Mine Development Stage.
Following the receipt of construction and final permits from the
Government of Newfoundland and Labrador ("GNL") during the year the
Group drew down the remaining US$15 million available under the Gold
Loan.
-- Significant progress was made on all construction works including the
Group's floatation circuit addition at the Nugget Pond Mill and the site
works at the Ming Mine enabling first commissioning plans for calendar
Q4 2011.
-- On May 3, 2011 the Group placed 27,777,778 Ordinary Shares raising $14.8
million after expenses to provide additional working capital as the
Group continued with the construction phase required to bring the Mine
into production.
Financial Highlights
The consolidated loss after taxation of the Group in respect of the year ended July 31, 2011 amounted to $53,000 (a loss per share of $0.001) versus a loss of $2,426,000 for the year ended 31 July 2010 (a loss per share of $0.029).
The Group generated revenue of $2.1 million from the sale of gold during the year in addition to revenue of $1.4 million from toll processing agreements.
The net assets of the Group amounted to $96.5 million as at the end of the year. This included mineral properties of $38.5 million and intangible assets of $16.6 million which consisted of accumulated deferred exploration and evaluation expenditures on the Lower Footwall Zone at the Ming Mine in Newfoundland and Labrador.
Management has been successful in meeting key milestones and is well positioned to continue moving the project forward. My thanks to our employees, officers and directors of the Group for the progress which has been made during the year and I look forward to the Mine being brought back into production in calendar Q4 2011. A special thank-you to Mr Brian Dalton and Mr John Baker, both Non-Executive Directors who recently resigned from the Board, for their efforts over the past 5 years and we wish them every success in future endeavours.
DHW Dobson
Chairman
October 14, 2011
Rambler Metals and Mining Plc
Management's Discussion and Analysis for the Year Ended July 31, 2011
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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 October 14, 2011 and covers the
results of operations for the quarter and year ended July 31, 2011. This
discussion should be read in conjunction with the audited Financial
Statements for the year ended July 31, 2011 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. These statements together with the following MD&A are intended to
provide investors with a reasonable basis for assessing the potential future
performance.
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GROUP OVERVIEW
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine ('Ming Mine') located on Newfoundland and Labrador's Baie Verte Peninsula. See Appendix 1.
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 three strategic goals:
1. Become a profitable copper and gold producer.
2. Increase existing Ming Mine resources and reserves through further
exploration.
3. Selectively pursue growth opportunities within Atlantic Canada including
joint ventures and acquisitions.
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.
Rambler Metals and Mining Plc
Management's Discussion and Analysis for the Year Ended July 31, 2011
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2011
Ahead of bringing the mine back into production in calendar Q4 2011, the highlights of the 2011 fiscal year included:
Revenue
-- The Group received production approval from the Department of Natural
Resources to begin the open pit development of its Nugget Pond Crown
Pillar satellite deposit. Processing, at an average throughput rate of
430 tonnes per day, produced 978 ounces of gold at a cash cost of $411
per ounce generating revenue of $1.43 million.
-- The Group successfully negotiated Net Smelter Royalty (NSR) terms with
Metals Creek Resources Corp. ('MEK') to process surface material
remaining at the MEK's Tilt Cove East Mine Deposit, located 23
kilometres from the Nugget Pond Mill. A total of 421 ounces of gold were
processed generating revenue of $653,000.
-- The Group entered into a Toll Processing Agreement with Tenacity Gold
Mining Co. Ltd. ("Tenacity"). Tenacity delivered ore for processing from
its Stog'er Tight Gold Mine to the Group's Nugget Pond Mill generating
revenue of $1.1 million. Further toll milling revenue of $300,000 was
generated throughout the year including processing a test sample from
Crosshair Exploration and Mining Corp.
Financing
-- 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. Following its acceptance of the
Feasibility Study, Sandstorm Gold Ltd ("Sandstorm") made the second
instalment of US$2 million available under the terms of the Gold Loan
agreement ("Gold Loan").
-- The Group received further approval for the construction of its
Office/Dry facility and fresh water source at the Ming Mine and final
permits for the Ming Mine from the Government of Newfoundland and
Labrador ("GNL"). The receipt of these permits enabled the drawdown of
the balance of US$13 million under the terms of the Gold Loan.
-- The Group raised finance of $14.8 million after expenses from the
placing of 27,777,778 ordinary shares at 36 pence each (approximately
CDN$0.57) to support bringing the Ming Mine into production.
Capital development
-- The Ming Mine project moved from pure Exploration & Evaluation into the
Mine Development stage following completion of the Feasibility Study.
Subsequently, all expenditures incurred in bringing the Ming Mine
through the construction and development stage have been capitalised to
Mineral Properties.
-- Nugget Pond Mill concentrator expansion continued on schedule with
anticipated commission in calendar Q4 2011. The Mine Shaft Manway and
the new office/dry facility were completed and site construction of the
concentrate storage facility at the Group's port site in Goodyear's Cove
commenced and is anticipated to be completed in calendar Q4 2011. Pre-
production development to the ore bodies proceeded on pace and schedule
with development into the main ore bodies being the main focus for the
underground crews. At year end a total of 111 full time employees were
employed at the Ming Mine.
Exploration and evaluation
-- The Group's NI43-101 Resource Estimate for the Lower and Upper Footwall
Zones at the Ming Mine was updated and included an increase of 1.63
million tonnes in the Lower Footwall Zone representing an additional
27,375 tonnes of contained copper, 403 ounces of gold and 53,827 ounces
of silver representing an overall indicated resource increase of 21%.
The combined Footwall Resource at 1% copper cut-off now stands at 14.31
million tonnes.
-- Exploration of the Ming Mine continued as new drifts provided access to
previously underexplored areas. The discovery of high grade visible gold
on the 1700 level during calendar Q3, 2011 was of particular
significance and exploration will continue alongside pre-production
development.
FINANCIAL RESULTS
-- During the year the group generated gross profit of $1,769,000 from its
first sales of gold and toll processing agreements. During the quarter
the Group generated a gross profit of $1,319,000 from the sale of gold.
Gold sales resulted from the Group's Nugget Pond Crown Pillar and Tilt
Cove East Mine satellite deposits. The Nugget Pond Crown Pillar was
completed and produced 978 ounces of gold at a cash cost of $411 per
ounce resulting in a net profit of $1,031,897. An additional 74 ounces
are anticipated following the further refining of slag materials. The
Tilt Cove East Mine ore processing up to July 31 produced 421 ounces of
gold at a cash cost of $870 per ounce netting a profit of $282,602.
-- The net loss for the year was $53,000 compared with a loss of $2,426,000
for the year ended July 31, 2010. The net profit for the quarter ended
July 31, 2011 was $577,000 or $0.008 per share which compares to
$193,000 for Q3/11 and a net loss of $676,000 for Q4/10.
-- Cash flows utilized for operating activities were $1,352,000 compare
with $2,107,000 in the previous fiscal year. Cash flows generated from
operating activities were $573,000 in Q4/11 compared to cash utilized of
$406,000 in Q3/11 and $1,328,000 in Q4/10. The increase in the cash
generated is due to profits earned in Q4/11.
-- Cash resources (including short-term investments) as at July 31, 2011
were $10.2 million and as of October 14, 2011 had reduced to $4.0
million.
HEALTH AND SAFETY
-- The Group completed the quarter without any lost time accidents or
medical aid injuries.
-- The Health and Safety of the Group's employees continues to be a high
priority.
-- There were no environmental incidents.
OUTLOOK
Management continue to pursue the following objectives:
-- Completion of the construction and development at both the Nugget Pond
Mill, Ming Mine and Port sites in order to generate revenue from the
Ming Mine during calendar Q4 2011.
-- Complete Off-take agreement for the sale of copper concentrates in
calendar Q4 2011 and ship first concentrates in Calendar Q1 2012.
-- Finalize pre-production development in the Ming Mine to expose the 1806
and 1807 ore zones to permit both up-dip and down-dip exploration of
these zones.
-- Continue to evaluate the development of the Footwall Zones.
-- Become a strategic long term producer on the Baie Verte Peninsula and
throughout Atlantic Canada by selectively pursuing growth opportunities
including joint ventures and acquisitions.
See 'Forward Looking Information' for a description of the factors that may cause actual results to differ from forecast.
CAPITAL PROJECTS UPDATE
Effective September 1, 2010, following completion 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.
During the year the Group incurred expenditures of $17,566,000 on Mineral Property, $20,320,000 on property, plant and equipment and $478,000 on exploration and evaluation of the Ming Mine.
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Mineral Property (capital development of
Ming Mine) Total Q4/11 Q3/11 Q2/11 Q1/11
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$,000 $,000 $,000 $,000 $,000
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Labour costs 4,620 1,842 1,612 923 243
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Contractors' and consultancy expenses 2,161 187 122 1,085 767
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General materials and other costs 897 248 216 289 144
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Surface development 581 185 231 117 48
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Underground development 3,848 1,310 1,104 1,141 293
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Sub-total 12,107 3,772 3,285 3,555 1,495
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Finance costs 1,640 917 383 221 119
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Depreciation 2,172 907 692 386 187
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Reclamation and closure provision 1,647 224 561 51 811
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Total 17,566 5,820 4,921 4,213 2,612
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Mineral property costs increased in Q4/11 compared to Q3/11 in line with the aim of bringing the mine into production during the calendar Q4 2011. Q4 expenditure included a full quarter with a further increased workforce, increased finance costs representing the first quarter with the full Gold Loan liability, increased depreciation costs resulted from bringing on the office/mine dry building and other assets offset by a reduction in reclamation and closure provision expenses.
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Mineral Property (capital development of
Ming Mine by area, before finance cost,
depreciation and reclamation) Total Q4/11 Q3/11 Q2/11 Q1/11
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$,000 $,000 $,000 $,000 $,000
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Surface 1,899 802 705 265 127
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1806 ore zone 1,038 388 642 8 -
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1807 ore zone 1,441 506 108 827 -
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Ramp improvements 3,835 1597 1,361 667 210
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Shaft manway rehab 2,613 76 191 1,400 946
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Administrative 1,269 390 278 388 212
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Port site 12 12 - - -
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Total 12,107 3,772 3,285 3,555 1,495
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Surface related costs increased in Q4/11 compared to Q3/11 mainly due to the completion of the new office/dry facility and other site works at the Ming Mine. Increased costs were also experienced on the 1807 ore zone and ramp improvements in Q4/11 compared to Q3/11. Underground operations continued to focus on ramp improvements which subsequently allowed further development of the 1807 ore zone as a consequence 1806 ore zone expenditures decreased in Q4/11 compared to Q3/11. The Shaft manway rehabilitation was substantially completed during Q3/11 with final completion in Q4/11.
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Property, plant and equipment Total Q4/11 Q3/11 Q2/11 Q1/11
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$,000 $,000 $,000 $,000 $,000
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Mill purchase and construction 10,110 2,139 2,996 4,536 439
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Plant and equipment 8,127 521 3,650 3,790 166
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Buildings 1,845 617 552 674 2
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Other assets 238 104 48 17 69
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Total 20,320 3,381 7,246 9,017 676
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Property, plant and equipment reduced during Q4/11 compared to Q3/11 reflecting the significant increase in underground equipment purchased during Q3/11. Mill purchase and construction decreased during Q4/11 due to phasing of contractor payments.
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Exploration and evaluation costs (Ming
Mine) Total Q4/11 Q3/11 Q2/11 Q1/11
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$,000 $,000 $,000 $,000 $,000
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Labour costs 142 - 15 1 126
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Consultancy expenses 142 - 16 14 112
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Operating costs 48 (31) 1 1 77
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Finance costs 50 - - - 50
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Depreciation 96 - - - 96
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Total 478 (31) 32 16 461
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Effective September 1, 2010, following completion of the Ming Mine feasibility study, the Ming Mine project moved from pure Exploration & Evaluation into the Mine Development stage. Exploration expenditures incurred related to updating and validating of the Footwall Zone resources.
FINANCIAL REVIEW
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Fiscal
2011
Results
($000's) Commentary Comparatives
Fiscal
2010
($000's) B/(W)(i)
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3,523 Revenue of $2.1 million was generated from
the sale of gold from the Group's deposits
and $1.4 million from toll processing
agreements during the year. - n/a%
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1,754 Operating Costs relate to mill processing
expenditures incurred under the toll
processing agreements and the processing,
mining and general and administrative costs
associated with Groups satellite deposits. - n/a%
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2,750 General and administrative expenses were
higher than the previous year by $578,000.
Employment costs increased $367,000 as a
result of key management promotions and the
recruitment of additional administrative
staff, travel and investor relation costs
increased $89,000 and general office
expenses increased $122,000. 2,172 (27)%
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897 Foreign exchange gains arising on the Gold
Loan increased in the year as a result of
the strengthening of the Canadian dollar
against the US dollar during the year. (147) 710%
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79 Exploration costs decreased compared to the
previous year as the Group's main focus was
on the construction and development of the
Ming Mine. 91 13%
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17,566 Mineral Properties. The group incurred costs
of $17.6 million in the year including
labour costs of $4.7 million, contractor and
material costs of $3.6 million, underground
development costs of $3.9 million
depreciation of $2.2 million, finance costs
of $1.6 million and reclamation and closure
costs of $1.6 million. - n/a%
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20,320 Capital spending on property, plant and
equipment increased during the year compared
to the previous year reflecting the
increased spending on equipment for the
refurbishment of the mill, acquisition of
underground mining equipment and office/dry
building and other purchases related to
production preparations at the Ming Mine.
Underground mining equipment additions
include $6.7 million financed through
capital lease financing. 5,329 (281)%
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478 Capital spending on exploration and
evaluation costs reduced during the year
following the start of mine development on
September 1, 2010. 5,575 91%
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(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.
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Quarterly Results
(All amounts in 000s of Canadian Dollars, 4th 3rd 2nd 1st
except Loss per share figures) Quarter Quarter Quarter Quarter
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Fiscal 2011
Revenue 2,089 183 266 985
Net Income/ (loss) 577 193 (555) (268)
Earnings/(loss) per Share (Basic & Diluted) 0.008 0.002 (0.006) (0.003)
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Fiscal 2010
Revenue - - - -
Net Income/ (loss) (676) (644) (591) (515)
Loss per Share (Basic & Diluted) (0.008) (0.008) (0.007) (0.006)
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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 and rose again in the second quarter of 2011 following the completion of a toll processing agreement in November 2010. The profit arising in Q3 2011 included an exchange gain of $0.8 million arising on the retranslation of the Gold Loan following the weakening of the US Dollar against the Canadian Dollar during the quarter. The profit arising in Q4 2011 arose from the profits realised on the sale of gold from the Group's owned deposits.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
To date the Group has relied on private placement financings of equity securities, a Gold Loan facility and capital leases to finance its development requirements. Subsequent to the year end, the Group has secured additional short term funding of CAD$10 million to provide additional working capital to assist in meeting the objective of bringing the Ming Mine into production in calendar Q4, 2011. The last quarter of Fiscal 2011 was profitable and generated cash flows from operations of $0.6 million. Positive cash flows are expected to continue after production at the Ming Mine commences; however, there is no guarantee that expenses will not exceed income particularly during the start-up phase. If this is the case, the liquidity risk could be material, even with current cash resources.
Sales of gold and copper are likely to be made in US dollars and the majority of the Group's expenses are incurred in Canadian dollars. The Group's principal exchange rate risk relates to movements between the Canadian and US dollar. The Gold Loan is repayable in US dollars from future sales of gold mitigating the exchange risk. Management will closely monitor exchange fluctuation and consider the use of forward exchange contracts as required.
Interest rates on the capital leases and short term borrowings are fixed eliminating interest rate risk.
The Group's holding of cash balances is kept under constant review. 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:
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July 31, 2011 July 31, 2010
Resource $'000 $'000
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Cash $CDN 9,431 1,098
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Cash GBP 47 67
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Short-term Investments $CDN 25 6,351
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Short-term Investments GBP 667 484
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Total 10,170 8,000
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Interest of 0.95% was received on Canadian dollar deposits during the year.
Net proceeds from financing activities during the year amounted to $28.6 million from the placing of 27,777,778 Ordinary Shares raising $14.8 million after expenses and Gold loan receipts of $14.3 million net of financing fees offset by finance lease repayments of $0.5 million.
Cash flows used in investing activities amounted to $25.1 million for the year. Investments included $2.0 million in bearer deposit notes, $10.7 million in mine development, $10.1 million on the Nugget Pond Mill and $1.8 million on property, plant and equipment. 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 and Ming Mine. At year end the Group holds bearer deposit notes totalling $3.38 million.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on 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. In line with the extended terms of the Gold Loan, if by October 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a CAD$10 million credit facility (see note 25) and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. 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.
At October 14, 2011 the Group has $4.0 million in cash and cash equivalents.
Financial Instruments
The Group's financial instruments as at July 31, 2011 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 22 of the financial statements for the year ended July 31, 2011. There were no derivative instruments outstanding at July 31, 2011.
COMMITMENTS AND LOANS
At July 31, 2011, capital commitments made to third parties included:
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Capital Commitments $000
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Property, Plant and Equipment 2,506
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TOTAL 2,506
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These commitments together with the ongoing evaluation and development of the mine will be partially financed from existing cash reserves and from funds drawn down under the Group's credit facility agreement disclosed below in Subsequent Events.
At July 31, 2011, interest bearing loans and borrowings comprised a Gold Loan of $19,903,000, finance lease commitments of $6,956,000 and a bank loan of $29,000.
The Group entered into new finance leases of $6.7 million during the year to finance underground mining equipment. The finance leases are secured on the underlying assets. The Gold Loan is secured by a fixed and floating charge over the Ming Mine.
SUBSEQUENT EVENTS
On September 29, 2011 the Group agreed a Credit Facility of up to CAD$10 million with Sprott Resource Lending Partnership ("Sprott") for use as additional funding for the development of the Ming Mine. The facility is available in two instalments; the first instalment of $5 million must and will be drawn on or before October 29, 2011 and the final instalment for the balance up to $10 million is available until August 31, 2012 subject to a subsequent site visit and review of the Group's off-take agreement and then current financial forecasts. Interest will be payable at a fixed rate of 9.25% per annum, is repayable by March 29, 2013 and secured by a fixed and floating charge over the assets of the Group. In connection with the Credit Facility, a Structuring Fee of CAD$100,000 and a 3% Commitment Fee of CAD$300,000 were paid to Sprott in cash. Pursuant to the terms of the Credit Facility, the Company issued CAD$300,000 of ordinary shares of 1p each in the capital of the Company to Sprott in exchange for the repayment of the previously paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts drawn under the Credit Facility is to be satisfied by the issue of ordinary shares by the Company.
To view the "APPENDIX 1 - LOCATION MAP", please visit the following link: http://media3.marketwire.com/docs/appendix1_RAB.pdf.
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
----------------------------------------------------------------------------
Year ended July 31,
Financial Highlights
(All amounts in 000s of Canadian Dollars,
except shares and per share figures) 2011 2010 2009
----------------------------------------------------------------------------
Gold sales (Ounces) 1,399 - -
Average price (per ounce) 1,492 - -
----------------------------------------------------------------------------
Revenue 3,523 - -
Operating Expenses (1,754) - -
Exploration Expenditure (79) (91) -
Administrative expenses (2,750) (2,172) (2,076)
Net Income (loss) (53) (2,426) (2,048)
Cash Flow used in operating activities (1,352) (2,107) (1,670)
Cash Flow used in investing activities (25,092) (9,705) (6,419)
Cash Flow from (used in) financing
activities 28,623 17,725 (124)
Net increase (decrease) in cash 2,179 5,913 (8,213)
Cash and cash equivalents at end of period 10,170 8,000 2,089
----------------------------------------------------------------------------
Total Assets 96,473 54,162 37,731
Total Liabilities (34,495) (7,338) (1,554)
Working Capital 7,804 8,462 1,494
----------------------------------------------------------------------------
Weighted average number of shares
outstanding 102,282 83,581 59,385
Loss per share (0.001) (0.029) (0.034)
----------------------------------------------------------------------------
APPENDIX 3 - FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q4/11
Results
($000's) Commentary Comparatives
Q3/11 B/(W)(i) Q4/10 B/(W)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2,088 Revenue was generated through gold
sales from the Group's deposits. The
Group's final toll processing
agreement concluded in Q3/11 183 1,040% - N/a
----------------------------------------------------------------------------
770 Operating Costs relate to the
processing, mining and general and
administrative costs associated with
Groups satellite deposits. 175 (340)% - N/a
----------------------------------------------------------------------------
755 General and administrative expenses
were higher than the previous quarter
by $137,000. Employment costs
increased by $62,000 as a result of
key management promotions and the
recruitment of additional
administrative staff, promotional and
travel costs increased by $24,000,
establishment costs increased by
$33,000 and general office expenses
increased by $18,000.
In comparison to Q4/10 administrative
expenses increased by $241,000.
Employment costs increased by
$107,000, legal and professional fees
by $16,000, promotional and travel
costs by $29,000, and general office
expenses by $89,000. The increased
costs were as a result of increased
activity as a result of the mine
development. 618 (22)% 514 (47)%
----------------------------------------------------------------------------
(84) Foreign exchange differences arising
on the Gold Loan resulted in a loss in
Q4/11 as a result of the weakening of
the Canadian dollar against the US
dollar during the quarter. 836 (110)% (145) 42%
----------------------------------------------------------------------------
5 Exploration costs decreased compared
to the previous quarters as the
Group's main focus was on the
construction and development of the
Ming Mine. 16 69% 13 62%
----------------------------------------------------------------------------
5,820 Mineral Properties. The group incurred
costs of $5.8 million in the quarter
including labour costs of $1.8
million, contractor and material costs
of $0.4 million, underground
development costs of $1.6 million
depreciation of $0.9 million, finance
costs of $0.9 million and reclamation
and closure costs of $0.2 million. 4,920 18% - N/a
----------------------------------------------------------------------------
3,342 Capital spending on property, plant
and equipment reduced during the
quarter compared to the previous
quarter reflecting the slowing of
expenditure on plant and equipment as
production from the Ming Mine
approaches.
Expenditure in Q4/10 includes
expenditure of $3.5 million on the
acquisition of the Nugget Pond Mill. 7,246 54% 5,305 37%
----------------------------------------------------------------------------
(i)B / (W) = Better / (Worse)
APPENDIX 4 - 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.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on 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. In line with the extended terms of the Gold Loan, if by October 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a CAD$10 million credit facility (see note 25) and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. 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.
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, 2011.
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 20 of the financial statements for the year ended July 31, 2011).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 mineral properties 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 and its opportunities economic model which includes resource estimates and conversion of its inferred resources. 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:
Application Application
IFRS/ Nature of change to date of date for
Amendment Title accounting policy standard Group
----------------------------------------------------------------------------
Various Annual No change to
Improvements to accounting policy, August 1,
IFRSs therefore, no impact Various 2011
----------------------------------------------------------------------------
IAS 24 No change to
revised Related Party accounting policy, January 1, August 1,
Disclosures therefore, no impact 2011 2011
----------------------------------------------------------------------------
IFRS 9 Financial
instruments: No change to
Classification and accounting policy, January 1, August 1,
Measurement therefore, no impact 2013 2013
----------------------------------------------------------------------------
IFRS 10 Consolidated No change to
Financial accounting policy, January 1, January 1,
Statements therefore, no impact 2013 2013
----------------------------------------------------------------------------
IFRS 11 No change to
accounting policy, January 1, January 1,
Joint Arrangements therefore, no impact 2013 2013
----------------------------------------------------------------------------
IFRS 12 Disclosure of No change to
Interests in Other accounting policy, January 1, January 1,
Entities therefore, no impact 2013 2013
----------------------------------------------------------------------------
IFRS 13 No change to
Fair Value accounting policy, January 1, January 1,
Measurement therefore, no impact 2013 2013
----------------------------------------------------------------------------
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 July 31, 2011.
APPENDIX 5 - OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
----------------------------------------------------------------------------
Security Shares issued or Issuable Weighted Average Exercise Price
----------------------------------------------------------------------------
Common Shares 123,980,005 --
----------------------------------------------------------------------------
Options 4,287,000(i) $0.48
----------------------------------------------------------------------------
(i)if all options have fully vested
Mr. Peter Mercer assumed the role of Corporate Secretary on January 1, 2011. For future assistance Mr. Mercer can be reached directly at +1-709-800-1929 or pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains "forward-looking information" which may include, but is not limited to, statements with respect to the Group's objectives and strategy, future financial or operating performance of the Group 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 and development, environmental risks, title disputes or claims and limitations of insurance coverage. All statements, other than statements of historical fact, are forward-looking statements. 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 are necessarily based on a number of estimates and assumptions that, while considered reasonably by the Company, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Group 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; availability and cost of credit; fluctuations in Canadian dollar interest rates; fluctuations in the relative value of United States dollars, Canadian dollars and British Pounds; changes in planned parameters as plans continue to be refined; fluctuations in the market and forward prices of copper, gold, silver or certain other 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 the Report of Directors.
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. Unless stated otherwise, forward-looking statements contained herein are made as of the date of this MD&A. Other than as required by applicable securities law, the Company 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. All of the forward-looking statements made in this MD&A are qualified by these cautionary 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.
Rambler Metals and Mining Plc
Report of the Directors for the Year Ended July 31, 2011
The Directors present their report with the audited financial statements of the Group for the year ended July 31, 2011.
Principal Activity
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine located in Baie Verte, Newfoundland and Labrador, Canada. The principal activity of the parent company is that of a holding company.
Review of Business
A review of the Group's business and prospects is set out in the Management's Discussion and Analysis.
Future Developments
The Group is looking forward to becoming a copper and gold producer with the commissioning work on the floatation circuit at the Nugget Pond Mill scheduled for calendar Q4 2011 and continue its growth through the selective pursuit of opportunities within the region and Atlantic Canada as a whole including joint ventures and acquisitions.
Dividends
No dividends will be distributed for the year ended July 31, 2011.
Directors
The Directors during the period under review were:
J A Baker
B F Dalton
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts
J Thomson
Policy on Payment of Creditors
It is the Group's and Company's policy to settle all amounts due to creditors in accordance with agreed terms of supply and market practice in the relevant country.
The Group's average creditor payment period at July 31, 2011 was 39 days (2010: 20 days). The Company's average creditor payment period at July 31, 2011 was 33 days (2010: 9 days).
Political and Charitable Contributions
During the year, the Group made charitable donations of $2,988 (2010: $2,355) to various charities in the Baie Verte area.
Substantial Share Interests
At October 14, 2011 the parent Company was aware of the following substantial share interests:
Number of % of
Ordinary Shares Share Capital
CDS & Co. 14,584,853 11.76%
Legal and General Investment
Management 10,500,000 8.47%
Whitmill Trust Co Limited 8,838,000 7.13%
The Bank of New York (Nominees)
Limited 8,340,542 6.73%
Henderson Global Investors 6,474,000 5.22%
Vestra Wealth LLP 5,827,698 4.70%
SVM Asset Management 4,360,000 3.52%
Hargreaves Lansdown 4,136,169 3.34%
Waterhouse Securities 4,134,690 3.33%
Barclays Stockbrokers Limited 4,117,923 3.32%
Sector Investment Managers Limited 4,100,000 3.31%
Financial Instruments
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, liquidity risk, credit risk, interest rate risk and commodity price risk, each of which is discussed in note 22 to the Financial Statements. There were no derivative instruments outstanding at July 31, 2011.
Subsequent Events
Details of subsequent events are set out in the Management's Discussion and Analysis.
Risks and Uncertainties
An investment in Rambler should be considered highly speculative due to its present stage of development, the nature of its operations and certain other factors. An investment in Rambler's securities should only be made by persons who can afford the total loss of their investment. The risk factors which should be taken into account in assessing Rambler's activities and an investment in securities of Rambler include, but are not limited to, those set out below. Should any one or more of these risks occur, it could have a material adverse effect on the value of securities of Rambler and the business, prospects, assets, financial position or operating results of Rambler, any one of which may have a significant adverse effect on the price or value of any securities of Rambler.
The risks noted below do not necessarily comprise all those faced by Rambler and are not intended to be presented in any assumed order of likelihood or magnitude of consequences.
Mining risks
Mining operations are inheriting risky. These operations are subject to all hazards and risks encountered in the exploration for, and development and production of underground ore, including formation pressures, seismic activity, rock bursts, fires, power outages, cave-ins, flooding, explosions and other conditions involved in the drilling and removal of material. Any of these events could result in serious damage to the mine and other infrastructure, damage to life or property, environmental damage and possible legal liability.
The Company's profitability will depend, in part, on the economic returns and actual costs of developing its mining projects, which may differ from the estimates made by the Company. Events such as delays in construction, commissioning, and technical difficulties may result in the Company's current or future project target dates being delayed or additional capital expenditure being incurred.
Copper and Gold Price Volatility
The Group's revenues, if any, are expected to be derived from the extraction and sale of copper and gold concentrate. The prices of copper and gold have fluctuated widely, particularly in recent years, and are affected by numerous factors beyond the Group's control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increased global production due to new extraction developments and improved extraction and production methods. In recent years the price of copper has been affected by changes in the worldwide balance of copper supply and demand, largely resulting from economic growth and political conditions in China and other major developing economies. While this demand has resulted in higher prices for copper in recent years, if Chinese economic growth slows, it could result in lower demand for copper. The effect of these factors on the price of copper and gold cannot be accurately predicted. Any material decrease in the prevailing price of copper in particular for any significant period of time would have an adverse and material impact on the Group's economic evaluations and on the Group's results of operations and financial condition.
Additional Requirement for Capital
The Group may need to raise additional capital in due course to fund anticipated future development and ongoing operations. Future development of the Ming Mine, future acquisitions, base metal prices, environmental rehabilitation or restitution, revenues, taxes, capital expenditures and operating expenses and geological and processing successes are all factors which will have an impact on the amount of additional capital required.
Any additional equity financing may be dilutive to shareholders and debt financing, if available, may involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Group. If the Group is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, forfeit its interests in some or all of its properties, incur financial penalties and reduce or terminate its operations.
Uncertainty in the estimation of mineral resources and mineral reserves
The calculation of mineral reserves and mineral resources and related grades mined has a degree of uncertainty. Until such a time as the mineral reserves and mineral resources are actually mined and processed, the quantity of grades must be considered as estimates only. The mineral reserves estimates of the Company have been determined based on assume metal prices, cut-off grades and costs that may prove to be inaccurate. Any material change in these variables, along with differences in actual metal recoveries when compared to laboratory test results, may affect the economic outcome of current and future projects.
Statement as to Disclosure of Information to Auditor
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group's Auditor for the purposes of their audit and to establish that the Auditor is aware of that information. The Directors are not aware of any relevant audit information of which the Auditor is unaware.
Auditor
The auditor, PKF (UK) LLP, will be proposed for re-appointment in accordance with Section 489 of the Companies Act 2006.
On Behalf of The Board:
P Mercer
Company Secretary
October 14, 2011
Rambler Metals and Mining Plc
Statement of Directors' Responsibilities
The directors are responsible for preparing the directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have, as required by the AIM Rules of the London Stock Exchange, elected to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and have also elected to prepare the parent company financial statements in accordance with those standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and estimates that are reasonable and prudent;
-- state whether the financial statements have been prepared in accordance
with IFRSs as adopted by the European Union; and
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company and the group will continue in
business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other information included in annual reports may differ from legislation in other jurisdictions.
Rambler Metals and Mining Plc
Corporate Governance Report for the Year Ended July 31, 2011
In formulating the Group's corporate governance procedures the Board of Directors takes due regard of the principles of good governance set out in the UK Corporate Governance Code issued by the Financial Reporting Council in May 2010 (as appended to the Listing Rules of the Financial Services Authority) and the size and development of the Group. The Group also has regard to the Quoted Companies Alliance (QCA) Guidelines on Corporate Governance for AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director and eight non-executive Directors. D H W Dobson is the senior non-executive director and G Ogilvie is the Group's President and Chief Executive. It is the Board's policy to maintain independence by having at least half of the Board comprising non-executive directors. The structure of the Board ensures that no one individual or group dominates the decision making process.
The Board ordinarily meets no less than quarterly providing effective leadership and overall control of the Group's affairs through the schedule of matters reserved for its decision. This includes the approval of budgets and business plans, items of major capital expenditure, risk management policies and the approval of the financial statements. Formal agendas, papers and reports are sent to the directors in a timely manner, prior to Board meetings. The Board also receives a summary financial report before each Board meeting. The Board delegates certain of its responsibilities to Board committees which have clearly defined terms of reference. Between the Board meetings, the executive Director, the Chief Financial Officer and some of the non-executive directors meet on a regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary, who is responsible for ensuring that all Board procedures are followed. Any Director may take independent professional advice at the Group's expense in the furtherance of his duties.
The Audit Committee which meets not less than quarterly and considers the Group's financial reporting (including accounting policies) and internal financial controls, is chaired by J M Roberts, the other members being L Goodman, J A Baker (resigned October 13, 2011) and J S Thomson. The committee receives reports from management and from the Group's auditor. The Group has in place a series of procedures and controls designed to identify and prevent the risk of loss. These procedures are formally documented and are reported on regularly. The Audit Committee has reviewed the systems in place and considers these to be appropriate.
The Remuneration Committee which meets at least once a year and is responsible for making decisions on directors' remuneration packages, is chaired by L Goodman. J M Roberts and J A Baker (resigned October 13, 2011) are the other committee members.
Remuneration of executive Directors is established by reference to the remuneration of executives of equivalent status both in terms of time commitment, level of responsibility of the position and by reference to their job qualifications and skills. The Remuneration Committee will also have regard to the terms which may be required to attract an executive of equivalent experience to join the Board from another company. Such packages may include performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all price sensitive information is released to all shareholders at the same time in accordance with AIM and Toronto Stock Exchange-Venture market rules. The Group's principal communication is through the Annual General Meeting and through the annual report and accounts, quarterly and interim statements.
Independent Auditor's Report to the Members of Rambler Metals and Mining Plc
We have audited the financial statements of Rambler Metals and Mining plc for the year ended July 31, 2011 which comprise the consolidated income statement and the consolidated and company statements of comprehensive income, balance sheets, statements of changes in equity, statements of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the groups and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion;
-- the financial statements give a true and fair view of the state of the
group's and the parent company's affairs as at July 31, 2011 and of the
group's loss for the year then ended;
-- the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union as applied in
accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in Note 2 to the group financial statements the group, in addition to applying IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Emphasis of matter -going concern
In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note 1 to the financial statements concerning the Group's ability to continue as a going concern. As detailed within this note, management are working towards meeting the production deadline of October 31, 2011, as stipulated within the Gold Loan agreement. As explained in the note, there is a risk that the Ming Mine may not commence production within the timescales envisaged and this would necessitate an extension of the Gold Loan and may require further funding beyond that already secured for working capital purposes. This would indicate the existence of a material uncertainty which may cast significant doubt about the Company and the Group's ability to continue as a going concern. If the company is unable to secure additional funding, this may have a consequential impact on the carrying value of the related assets and the investments of the parent company. The outcome of any future fundraising cannot presently be determined, and no adjustments to asset carrying values that may be necessary should the company be unsuccessful, have been recognised in the financial statements.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Jason Homewood (Senior statutory auditor) London, UK
for and on behalf of PKF (UK) LLP, Statutory auditor October 14, 2011
Rambler Metals and Mining Plc
Independent Auditor's Report to the Directors of Rambler Metals And Mining plc in respect of Compatibility with Canadian GAAS
In accordance with the requirement contained in National Instrument 52-107 we report below on the compatibility of Canadian Generally Accepted Auditing Standards ("Canadian GAAS") and International Standards on Auditing (UK and Ireland).
We conducted our audit for the year ended July 31, 2011 in accordance with International Standards of Auditing (UK and Ireland). There are no material differences in the form or content of our audit report, as compared to an auditor's report prepared in accordance with Canadian GAAS and if this report were prepared in accordance with Canadian GAAS it would contain an unmodified audit opinion.
PKF (UK) LLP
London, UK
October 14, 2011
Rambler Metals and Mining Plc
Consolidated Income Statement
For the Year Ended July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Note 2011 2010
$'000 $'000
Revenue 3 3,523 -
Cost of sales (1,754) -
--------------------
Gross profit 1,769 -
Administrative expenses (2,750) (2,172)
Exploration expenses (79) (91)
--------------------
Operating loss 4 (1,060) (2,263)
--------------------
Exchange gain/(loss) 897 (147)
Bank interest receivable 90 19
Finance costs (9) (65)
--------------------
Net financing income/(expense) 978 (193)
--------------------
Loss before tax (82) (2,456)
Income tax credit 6 29 30
--------------------
Loss for the year attributable to owners of the
parent (53) (2,426)
--------------------
--------------------
Loss per share
Note 2011 2010
$ $
Basic and diluted loss per share 18 (0.001) (0.029)
------------------
------------------
Rambler Metals and Mining Plc
Consolidated Statement of Comprehensive Income
For the Year Ended July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
2011 2010
$'000 $'000
Loss for the year (53) (2,426)
------------------
Exchange differences on translation of foreign operations
(net of tax) 110 (25)
------------------
Other comprehensive loss for the year 110 (25)
------------------
------------------
Total comprehensive income/(loss) for the year and
attributable to the owners of the parent 57 (2,451)
------------------
------------------
Company Statement of Comprehensive Income
For the Year Ended July 31, 2011
2011 2010
$'000 $'000
Loss for the year (941) (716)
Exchange differences on translation into presentation
currency (1,144) (3,427)
----------------------
Other comprehensive loss for the year (1,144) (3,427)
----------------------
----------------------
Total comprehensive loss for the year (2,085) (4,143)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
Rambler Metals and Mining Plc
Consolidated Balance Sheet
As at July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Note
2011 2010
$'000 $'000
Assets
Intangible assets 8 16,627 37,051
Mineral properties 9 38,468 -
Property, plant and equipment 10 25,332 7,461
--------------------------
Total non-current assets 80,427 44,512
--------------------------
Inventory 13 934 -
Trade and other receivables 14 1,565 285
Cash and cash equivalents 15 10,170 8,000
Restricted cash 16 3,377 1,365
--------------------------
Total current assets 16,046 9,650
--------------------------
Total assets 96,473 54,162
--------------------------
--------------------------
Equity
Issued capital 17 2,299 1,863
Share premium 65,934 51,532
Merger reserve 214 214
Translation reserve 135 25
Accumulated losses (6,604) (6,811)
--------------------------
Total equity 61,978 46,823
--------------------------
Liabilities
Interest-bearing loans and borrowings 20 24,606 5,591
Provision 21 1,647 559
--------------------------
Total non-current liabilities 26,253 6,150
--------------------------
Interest-bearing loans and borrowings 20 2,282 388
Trade and other payables 19 5,960 801
--------------------------
Total current liabilities 8,242 1,189
--------------------------
Total liabilities 34,495 7,339
--------------------------
Total equity and liabilities 96,473 54,162
--------------------------
--------------------------
ON BEHALF OF THE BOARD:
Director
Approved and authorised for issue by the Board on October 14, 2011
Registered number: 05101822 (England and Wales)
Rambler Metals and Mining Plc
Company Balance Sheet
As at July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Note
2011 2010
$'000 $'000
Assets
Property, plant and equipment - 1
Investments 11 52,624 40,000
--------------------------
Total non-current assets 52,624 40,001
--------------------------
Trade and other receivables 14 47 68
Cash and cash equivalents 15 714 553
--------------------------
Total current assets 761 621
--------------------------
Total assets 53,385 40,622
--------------------------
--------------------------
Equity
Issued capital 17 2,299 1,863
Share premium 65,934 51,532
Translation reserve (10,220) (9,076)
Accumulated losses (4,754) (3,845)
--------------------------
Total equity 53,259 40,474
--------------------------
Liabilities
Trade and other payables 19 126 148
--------------------------
Total current liabilities 126 148
--------------------------
Total liabilities 126 148
--------------------------
Total equity and liabilities 53,385 40,622
--------------------------
--------------------------
ON BEHALF OF THE BOARD:
Director
Approved and authorised for issue by the Board on October 14, 2011
Rambler Metals and Mining Plc
Consolidated Statement of Changes in Equity
(EXPRESSED IN
CANADIAN Share Share Merger Translation Accumulated
DOLLARS) capital premium Reserve reserve Losses Total
$'000 $'000 $'000 $'000 $'000 $'000
Group
Balance at 1
August 2009 1,256 39,296 214 50 (4,639) 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 607 13,128 - - - 13,735
Share issue
expenses - (892) - - - (892)
Share-based
payments - - - - 254 254
------------------------------------------------------------
Transactions
with owners 607 12,236 - - 254 13,908
------------------------------------------------------------
Balance at 31
July 2010 1,863 51,532 214 25 (6,811) 46,823
------------------------------------------------------------
------------------------------------------------------------
Balance at 1
August 2010 1,863 51,532 214 25 (6,811) 46,823
------------------------------------------------------------
Comprehensive
loss
Loss for the
year - - - - (53) (53)
------------------------------------------------------------
Foreign exchange
translation
differences - - - 110 - 110
------------------------------------------------------------
Total other
comprehensive
loss - - - 110 - 110
------------------------------------------------------------
Total
comprehensive
income for the
year - - - 110 (53) 57
------------------------------------------------------------
Transactions
with owners
Issue of share
capital 436 15,252 - - - 15,688
Share issue
expenses - (850) - - - (850)
Share-based
payments - - - - 260 260
------------------------------------------------------------
Transactions
with owners 436 14,402 - - 260 15,098
------------------------------------------------------------
------------------------------------------------------------
Balance at July
31, 2011 2,299 65,934 214 135 (6,604) 61,978
------------------------------------------------------------
------------------------------------------------------------
Rambler Metals and Mining Plc
Company Statement of Changes in Equity
Share Share Translation Accumulated
(EXPRESSED IN CANADIAN capital premium reserve losses Total
DOLLARS) $'000 $'000 $'000 $'000 $'000
Balance at 1 August 2009 1,256 39,296 (5,649) (3,162) 31,741
---------------------------------------------------
Comprehensive loss
Loss for the year - - - (716) (716)
---------------------------------------------------
Foreign exchange
translation differences - - (3,427) - (3,427)
---------------------------------------------------
Total other comprehensive
loss - - (3,427) (3,427)
---------------------------------------------------
Total comprehensive loss
for the year - - (3,427) (716) (4,143)
---------------------------------------------------
Issue of share capital 607 13,128 - - 13,735
Share issue expenses - (892) - - (892)
Share-based payments - - - 33 33
---------------------------------------------------
Balance at 31 July 2010 1,863 51,532 (9,076) (3,845) 40,474
---------------------------------------------------
---------------------------------------------------
Balance at 1 August 2010 1,863 51,532 (9,076) (3,845) 40,474
---------------------------------------------------
Comprehensive loss
Loss for the year - - - (941) (941)
---------------------------------------------------
Foreign exchange
translation differences - - (1,144) - (1,144)
---------------------------------------------------
Total other comprehensive
loss - - (1,144) (1,144)
---------------------------------------------------
Total comprehensive loss
for the year - - (1,144) (941) (2,085)
Issue of share capital 436 15,252 - - 15,688
Share issue expenses - (850) - - (850)
Share-based payments - - - 32 32
---------------------------------------------------
Balance at July 31, 2011 2,299 65,934 (10,220) (4,754) 53,259
---------------------------------------------------
---------------------------------------------------
Rambler Metals and Mining Plc
Statements of Cash Flows
For the Year Ended July 31, 2011
(EXPRESSED IN CANADIAN DOLLARS)
Group Company Group Company
2011 2011 2010 2010
$'000 $'000 $'000 $'000
Cash flows from operating activities
Operating loss (1,060) (941) (2,410) (717)
Depreciation 141 - 151 1
Share based payments 248 21 247 26
Increase in inventory (934) - - -
(Increase)/decrease in debtors (1,280) 20 (146) (29)
Increase/(decrease) in creditors 1,513 (21) 85 (27)
----------------------------------------
Cash utilised in operations (1,372) (921) (2,073) (746)
Interest paid (9) - (65) -
Tax received 29 - 31 -
----------------------------------------
Net cash from operating activities (1,352) (921) (2,107) (746)
----------------------------------------
Cash flows from investing activities
Interest received 90 1 19 1
Loans to subsidiaries - (13,879) - (11,567)
Purchase of bearer deposit note (2,012) - (1,365) -
Acquisition of evaluation and
exploration assets (604) - (3,704) -
Acquisition of mineral properties (10,710)
Acquisition of property, plant and
equipment (11,856) - (4,655) (1)
----------------------------------------
Net cash from investing activities (25,092) (13,878) (9,705) (11,567)
----------------------------------------
Cash flows from financing activities
Proceeds from the issue of share
capital 15,688 15,688 13,735 13,735
Payment of transaction costs (850) (850) (892) (892)
Proceeds from exercise of share
options 12 12 7 7
Proceeds from Gold Loan (note 20) 14,268 - 5,139 -
Capital element of finance lease
payments (495) - (263) -
----------------------------------------
Net cash from financing activities 28,623 14,850 17,725 12,850
----------------------------------------
Net increase in cash and cash
equivalents 2,179 51 5,913 537
Cash and cash equivalents at
beginning of period 8,000 553 2,089 41
Effect of exchange rate fluctuations
on cash held (9) 109 (2) (25)
----------------------------------------
Cash and cash equivalents at end of
period 10,170 713 8,000 553
----------------------------------------
----------------------------------------
Rambler Metals and Mining Plc
Notes to the Financial Statements
1. Nature of operation and going concern
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine ("Ming Mine") located in Baie Verte, Newfoundland and Labrador, Canada.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on 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. In line with the extended terms of the Gold Loan, if by October 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a CAD$10 million credit facility (see note 25) and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. 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.
2. Significant accounting policies
Rambler Metals and Mining Plc (the "Company") is a company registered in England and Wales. The consolidated financial statements of the Company for the year ended July 31, 2011 comprise the Company and its subsidiaries (together referred to as the "Group").
These financial statements are presented in Canadian dollars. Although the parent company has a functional currency of GB pounds the majority of the Group's operations are carried out by its operating subsidiary which has a functional currency of Canadian dollars. Foreign operations are included in accordance with the policies set out in note 2(d). At July 31, 2011 the closing rate of exchange of Canadian dollars to 1 GB pound was 1.57 (31 July 2010: 1.61) and the average rate of exchange of Canadian dollars to 1 GB pound for the year was 1.59 (2010: 1.70).
(a) Statement of compliance
The consolidated financial statements of Rambler Metals and Mining plc have been prepared in accordance with International Financial Reporting Standards ("IFRS") and their interpretations issued by the International Accounting Standards Board ("IASB"), as adopted by the European Union and with IFRS and their interpretations adopted by the IASB. There are no material differences on application to the Group. The consolidated financial statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
New and revised standards which have been adopted during the year have not affected the disclosures presented in these financial statements.
The Group has not adopted any standards or interpretations in advance of the required implementation dates. It is not expected that adoption of standards or interpretations which have been issued by the International Accounting Standards Board but have not been adopted will have a material impact on the financial statements.
(b) Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the nearest dollar.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 26.
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
(d) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
(ii) Translation into presentation currency
The assets and liabilities of the UK parent are translated to Canadian dollars at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of the parent company are translated to Canadian dollars at rates approximating to the foreign exchange rates ruling at the dates of the transactions.
(iii) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in foreign operations are taken to translation reserve. They are released into the income statement upon disposal.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost. The cost of self-constructed assets includes the cost of materials, direct labour and the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation costs or Mineral Properties where appropriate, on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
- buildings 5 to 10 years
- plant and equipment 2 to 5 years
- motor vehicles 3 years
- computer equipment 3 years
- fixtures, fittings and equipment 3 years
The estimated useful lives and residual values of the assets are considered annually and restated as required.
(f) 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.
Mineral properties are amortised on a depletion percentage basis.
(g) Intangible assets
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation. They are capitalised as intangible assets pending determination of the feasibility of the project. When the existence of economically recoverable reserves and the availability of finance is established the related intangible assets are transferred to Mineral properties. Where a project is abandoned or is determined not to be economically viable, the related costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common to the natural resource sector. These include the extent to which the Group can establish economically recoverable reserves on its properties, the ability of the Group to obtain necessary financing to complete the development of such reserves and future profitable production or proceeds from the disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a project by project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise but typically when one of the following circumstances apply:
-- unexpected geological occurrences that render the resource uneconomic;
-- title to the asset is compromised;
-- variations in metal prices that render the project uneconomic; and
-- variations in the exchange rate for the currency of operation.
(h) Investments
Investments are stated at their cost less impairment losses (see accounting policy l).
(i) Inventory
Stockpiled ore is recorded at the lower of production cost and net realisable value. Production costs include all direct costs plus an allocation of fixed costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value. Cost is determined on an average cost basis.
(j) Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses (see accounting policy l).
(k) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
(l) Impairment
The carrying amounts of the Group's assets (except deferred exploration and evaluation costs (see accounting policy (g)(ii)) and deferred tax assets (see accounting policy 2(r)), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated (see accounting policy 2(l)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
Receivables with a short duration are not discounted.
The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
(ii) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(m) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Financial liabilities include bank loans and the Gold Loan which are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of comprehensive income over the period of the borrowings on an effective interest basis except where the difference between cost and redemption value qualify to be capitalised as part of the cost of a qualifying asset.
(n) Trade and other payables
Trade and other payables are stated at amortised cost.
(o) 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:
Sale of gold
Revenue associated with the sale of gold dore bars is recognised in accordance with contract terms negotiated with the refiner and when significant risks and rewards of ownership of the asset sold are transferred to the refiner, which is when the minimum determinable or agreed amount of gold has been determined and title has passed to the refiner.
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.
(p) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
(iii) Borrowing costs
Borrowing costs are recognised in the income statement where they do not meet the criteria for capitalisation. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised.
(q) Equity settled share based payments
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are determined indirectly by reference to the fair value of the share options awarded. Their value is appraised at the grant dates and excludes the impact of non-market vesting conditions.
All share-based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to the accumulated losses in the balance sheet.
If vesting periods apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if the number of share options ultimately exercised is different to that estimated on vesting. Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital.
(r) Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
3. Operating segments
The Group's operations relate to the exploration for, and development of mineral deposits with support provided from the UK and as such the Group has only one segment.
Information about geographical areas
2011 2010
UK Canada Consolidated UK Canada Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
Segment revenue - 3,523 3,523 - - -
------------------------------------------------------
Segment non-current
assets - 80,427 80,427 1 44,511 44,512
------------------------------------------------------
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
2011 2010
$'000 $'000
Customer A 2,087 -
Customer B 1,063
------------------------
Others 373 -
------------------------
3,523 -
------------------------
------------------------
4. Operating loss
The operating loss is after charging/(crediting):
2011 2010
$'000 $'000
Depreciation - owned assets 141 151
Directors' emoluments (see note 24) 332 348
Auditor's remuneration:
Audit of these financial statements 57 44
Fees payable to the auditor for other services:
Other services related to tax - 17
Other services 6 6
Operating lease rentals - 44
------------------------
------------------------
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is maintained.
In addition to the depreciation charge shown above, depreciation of $96,000 (2010: $1,746,000) was capitalised within exploration and evaluation assets and $2,172,000 (2010: $nil) within mineral properties.
5. Personnel expenses
Salary costs
Group Group
2011 2010
$'000 $,000
Wages and salaries 6,083 2,096
Share based payments 248 247
Compulsory social security contributions 997 134
------------------------
7,328 2,477
------------------------
------------------------
Salary costs of $127,000 (2010: $1,346,000) were capitalised as exploration and evaluation costs, $4,621,000 as mineral properties and $541,000 as assets under construction costs during the year.
Number of employees
The average number of employees during the year was as follows:
Group Group
2011 2010
Directors 9 9
Administration 9 6
Development 68 -
Exploration and evaluation - 19
------------------------
86 34
------------------------
------------------------
During the year the Group granted share options to key personnel to purchase shares in the entity. The options are exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
2011 2011 2010 2010
$ '000 $ '000
Outstanding at the beginning of
the year 0.467 3,952 0.416 3,313
Granted during the year 0.506 647 0.500 704
Exercised during the year 0.186 (52) - -
Cancelled during the year 0.379 (380) 0.890 (65)
------------ ------------
Outstanding at the end of the
year 0.484 4,167 0.467 3,952
------------ ------------
------------ ------------
Exercisable at end of year 3,077 2,170
------------ ------------
------------ ------------
The options outstanding at July 31, 2011 have an exercise price in the range of $0.18 to $1.10 and a weighted average remaining contractual life of 7 years (2010: 8 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.
Fair value of share options and assumptions 2011 2010
$'000 $'000
Fair value at measurement date 168 208
--------------------
Share price (weighted average) 0.490 0.467
Exercise price (weighted average) 0.490 0.467
Expected volatility (expressed as weighted average
volatility used in the modelling under
Black-Scholes model) 70.7% 67.2%
Expected option life 5 5
Expected dividends 0 0
Risk-free interest rate (based on national government
bonds) 2.35% 3.98%
--------------------
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 is no performance or market conditions associated with the share option grants.
The share-based payment expense relates to the following grants:
2011 2010
$'000 $'000
Share options granted in 2008 21 49
Share options granted in 2009 64 78
Share options granted in 2010 64 120
Share options granted in 2011 99 -
--------------------
Total expense recognised as employee costs 248 247
--------------------
--------------------
6. Income tax credit
Recognised in the income statement
2011 2010
$,000 $,000
Current tax expense
Current year - -
----------------------
- -
Deferred tax credit
Origination and reversal of temporary differences 1,737 438
Benefit of tax losses recognised (1,737) (438)
Tax losses surrendered for tax credit (29) (30)
----------------------
Total income tax credit in income statement (29) (30)
----------------------
----------------------
Reconciliation of effective tax rate
2011 2010
$'000 $'000
Loss before tax (82) (2,456)
----------------------
----------------------
Income tax using the UK corporation tax rate of 27.33%
(2010: 28%) (22) (688)
Effect of tax rates in foreign jurisdictions (rates
increased) 14 (17)
Non-deductible expenses (183) 91
Other timing differences (38) -
Capital allowances in excess of depreciation (1,103) (320)
Effect of tax losses carried forward 1,303 904
----------------------
(29) (30)
----------------------
----------------------
7. Loss of parent company
As permitted by section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was $941,000 (2010: $716,000).
8. Intangible assets - group
Exploration
and
evaluation
Costs
$'000
Cost
Balance at 1 August 2009 31,476
Additions 5,575
----------------
Balance at 31 July 2010 37,051
----------------
----------------
Balance at 1 August 2010 37,051
Additions 478
Transfer to mineral properties (20,902)
----------------
Balance at July 31, 2011 16,627
----------------
----------------
Carrying amounts
At 1 August 2009 31,476
----------------
----------------
At 31 July 2010 37,051
----------------
----------------
At 1 August 2010 37,051
----------------
----------------
At July 31, 2011 16,627
----------------
----------------
Consideration of impairment for exploration and evaluation costs
The directors have assessed whether there are any indicators of impairment in respect of 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. The directors do not consider that there are any indicators that exploration and evaluation costs are impaired ay the year end.
9. Mineral properties - group
Mineral
property
$'000
Cost
Balance at 1 August 2010 -
Transfer from exploration and evaluation costs 20,902
Additions 17,566
---------------
Balance at July 31, 2011 38,468
---------------
---------------
Carrying amounts
At 1 August 2010 -
---------------
---------------
At July 31, 2011 38,468
---------------
---------------
Effective September 1, 2010 following acceptance of the Ming Mine feasibility study by Sandstorm Gold Ltd. ('Sandstorm') (see note 20), the Ming Mine project moved from pure Exploration & Evaluation into the Mine Development stage. As a consequence, evaluation and exploration costs of $20.9 million relating to the Massive Sulfide Ore Zones of the Ming Mine were transferred to Mineral Properties.
The directors have assessed whether there are any indicators of impairment in respect of mineral property costs. In making this assessment they have considered the Group's recent Feasibility Study as well as its opportunities economic model which includes resource estimates and conversion of its inferred resources, movement of future processing capacity, the forward market and longer term price outlook for copper and gold. The directors do not consider that there are any indicators that mineral property costs are impaired at the year end.
10. Property, plant and equipment - group
Land and Assets under Motor Plant and
buildings construction vehicles equipment
$'000 $'000 $'000 $'000
Cost
Balance at 1 August 2009 1,025 8 118 6,019
Additions 71 5,192 - 19
Effect of movements in
foreign exchange - - - -
----------------------------------------------------
Balance at 31 July 2010 1,096 5,200 118 6,038
----------------------------------------------------
----------------------------------------------------
Balance at 1 August 2010 1,096 5,200 118 6,038
Additions 1,845 10,110 74 8,127
Disposals - - (39) -
----------------------------------------------------
Balance at July 31, 2011 2,941 15,310 153 14,165
----------------------------------------------------
----------------------------------------------------
Depreciation and
impairment losses
Balance at 1 August 2009 524 - 18 2,926
Depreciation charge for
the year 251 - 33 1,456
Effect of movements in
foreign exchange - - - -
----------------------------------------------------
Balance at 31 July 2010 775 - 51 4,382
----------------------------------------------------
----------------------------------------------------
Balance at 1 August 2010 775 - 51 4,382
Depreciation charge for
the year 151 - 40 2,070
Eliminated on disposals - - (20) -
----------------------------------------------------
Balance at July 31, 2011 926 - 71 6,452
----------------------------------------------------
----------------------------------------------------
Carrying amounts
At 1 August 2009 501 8 100 3,093
----------------------------------------------------
----------------------------------------------------
At 31 July 2010 321 5,200 67 1,656
----------------------------------------------------
----------------------------------------------------
At 1 August 2010 321 5,200 67 1,656
----------------------------------------------------
----------------------------------------------------
At July 31, 2011 2,015 15,310 82 7,713
----------------------------------------------------
----------------------------------------------------
Fixtures,
fittings and Computer
equipment equipment Total
$'000 $'000 $'000
Cost
Balance at 1 August 2009 54 496 7,720
Additions 2 45 5,329
Effect of movements in
foreign exchange - (1) (1)
----------------------------------------------------
Balance at 31 July 2010 56 540 13,048
----------------------------------------------------
----------------------------------------------------
Balance at 1 August 2010 56 540 13,048
Additions 34 130 20,320
Disposals - - (39)
----------------------------------------------------
Balance at July 31, 2011 90 670 33,329
----------------------------------------------------
----------------------------------------------------
Depreciation and
impairment losses
Balance at 1 August 2009 31 192 3,691
Depreciation charge for
the year 13 144 1,897
Effect of movements in
foreign exchange - (1) (1)
----------------------------------------------------
Balance at 31 July 2010 44 335 5,587
----------------------------------------------------
----------------------------------------------------
Balance at 1 August 2010 44 335 5,587
Depreciation charge for
the year 13 156 2,430
Eliminated on disposals - - (20)
----------------------------------------------------
Balance at July 31, 2011 57 491 7,997
----------------------------------------------------
----------------------------------------------------
Carrying amounts
At 1 August 2009 22 305 4,029
----------------------------------------------------
----------------------------------------------------
At 31 July 2010 12 205 7,461
----------------------------------------------------
----------------------------------------------------
At 1 August 2010 12 205 7,461
----------------------------------------------------
----------------------------------------------------
At July 31, 2011 33 179 25,332
----------------------------------------------------
----------------------------------------------------
Leased plant and machinery
The Group leases surface and underground equipment under a number of finance lease agreements. At the end of each lease the Group has the option to purchase the equipment at a beneficial price. At July 31, 2011, the net carrying amount of leased plant and machinery was $6,032,000 (2010: $127,000). The leased plant and machinery secures lease obligations (see note 20).
11. Investments - company
Investment in
subsidiary Loans Total
$'000 $'000 $'000
Cost
Balance at 1 August 2009 429 31,406 31,835
Advances (net) - 11,567 11,567
Effect of movements in foreign
exchange (42) (3,360) (3,402)
---------------------------------------------
Balance at 31 July 2010 387 39,613 40,000
---------------------------------------------
---------------------------------------------
Balance at 1 August 2010 387 39,613 40,000
Advances (net) - 13,879 13,879
Effect of movements in foreign
exchange (11) (1,244) (1,255)
---------------------------------------------
Balance at July 31, 2011 376 52,248 52,624
---------------------------------------------
---------------------------------------------
The company has interests in the following material subsidiary undertakings,
which are included in the consolidated financial statements.
Name Country of
Class Holding Activity Incorporation
Rambler Mines Limited Ordinary 100% Holding England
company
Rambler Metals and Common 100% Exploration Canada
Mining Canada Limited (indirectly) and
development
The aggregate value of shares in subsidiary undertakings is stated at cost less any amounts provided for impairment as deemed necessary by the directors.
The loans to the subsidiary undertakings are interest free.
12. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
Balance Balance Balance Balance Balance Balance
July 31, July 31, July 31, July 31, July 31, July 31,
2011 2010 2011 2010 2011 2010
$'000 $'000 $'000 $'000 $'000 $'000
Property, plant
and equipment - (273) 97 - 97 (273)
Mineral property - - 1,556 - 1,556 -
Intangible
assets - - 1,556 1,745 1,556 1,745
Tax value of
loss carry-
forwards
recognised (3,209) (1,472) - - (3,209) (1,472)
------------------------------------------------------------
Net tax (assets)
/ liabilities (3,209) (1,745) 3,209 1,745 - -
------------------------------------------------------------
------------------------------------------------------------
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following
items:
2011 2010
$'000 $'000
UK tax losses 831 740
Canadian tax losses 49 708
Other Canadian tax credits 3,768 2,528
----------------------------
4,648 3,976
----------------------------
----------------------------
The Canadian tax losses and other Canadian tax credits expire if not realized within 20 years based on current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits there from.
Movement in recognised deferred tax assets and liabilities
Balance Recognised Balance
Aug 1, 2009 in income July 31, 2010
$'000 $'000 $'000
Property, plant and equipment (79) (194) (273)
Intangible assets 1,247 498 1,745
Tax value of loss carry-
forwards (1,168) (304) (1,472)
---------------------------------------------
- - -
---------------------------------------------
---------------------------------------------
Balance Recognised Balance
Aug 1, 2010 in income Jul 31, 2011
$'000 $'000 $'000
Property, plant and equipment (273) 370 97
Mineral properties - 1,556 1,556
Intangible assets 1,745 (189) 1,556
Tax value of loss carry-
forwards (1,472) (1,737) (3,209)
---------------------------------------------
- - -
---------------------------------------------
---------------------------------------------
13. Inventory
Group Group Company Company
2011 2010 2011 2010
$'000 $'000 $'000 $'000
Metals in process 540 - - -
Operating supplies 394 - - -
----------------------------------------
934 - - -
----------------------------------------
----------------------------------------
14. Trade and other receivables
Group Group Company Company
2011 2010 2011 2010
$'000 $'000 $'000 $'000
Trade receivables 653 - - -
Other receivables 37 22 4 1
Sales taxes recoverable 616 57 14 10
Prepayments and accrued income 259 206 29 57
----------------------------------------
1,565 285 47 68
----------------------------------------
----------------------------------------
15. Cash and cash equivalents
Group Group Company Company
2011 2010 2011 2010
$'000 $'000 $'000 $'000
Short term deposits 692 6,861 667 484
Bank balances 9,478 1,139 47 69
----------------------------------------
----------------------------------------
Cash and cash equivalents in the
statement of cash flows 10,170 8,000 714 553
----------------------------------------
----------------------------------------
16. Restricted cash
Group Group Company Company
2011 2010 2011 2010
$'000 $'000 $'000 $'000
Bearer deposit notes 3,377 1,365 - -
----------------------------------------
----------------------------------------
The Group is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in respect of the reclamation and closure liability associated with the Ming Mine. Throughout the year additional Letters of Credit, beyond the $1,365,000 placed in fiscal 2010, were secured with the Government of Newfoundland and Labrador prior to the commencement of various stages of the project construction. Included in the additions during the year is a $121,000 Letter of Credit for the reclamation and closure liability associated with the Group's Nugget Pond Crown Pillar satellite deposit. The bearer deposit notes mature on differing dates throughout fiscal 2012 and have a nominal value of $3,424,000 giving an effective yield of 1.41%.
17. Capital and reserves
Share capital and share premium - group and company
Number '000
In issue at 1 August 2009 59,385
Issued for cash 36,100
--------------
In issue at 31 July 2010 95,485
--------------
--------------
In issue at 1 August 2010 95,485
Issued for cash 27,778
Issued on exercise of options 52
--------------
In issue at July 31, 2011 123,315
--------------
--------------
At July 31, 2011, the authorised share capital comprised 1,000,000,000 ordinary shares of 1p each.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.
Details of shares issued during the year ended July 31, 2011 are as follows:
On 29 November 2010 the company received monies to subscribe for 30,000 shares for $0.19 each raising a total of $5,700 following the exercise of options.
On 3 May 2011 the company received monies to subscribe for 27,777,778 shares for $0.564 each raising a total of $14,829,199 net of expenses.
On June 7, 2011 the company received monies to subscribe for 22,000 shares for $0.18 each raising a total of $3,960 following the exercise of options.
Merger reserve
The merger reserve arose from the acquisition of Rambler Mines Limited by Rambler Metals and Mining PLC. This acquisition was accounted for in accordance with the merger accounting principles set out in UK Financial Reporting Standard 6 and the Companies Act 1985, which continue under the Companies Act 2006, whereby the consolidated financial statements were presented as if the business previously carried out through Rambler Mines Limited had always been owned and controlled by the Company. The transition provisions of IFRS 1 allow all business combinations prior to transition to IFRS to continue to be accounted for under the requirements of UK GAAP at that time. Accordingly this acquisition has not been re-stated in accordance with that standard.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the parent company which has a different functional currency from the presentation currency. Exchange differences arising are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised in the income statement in the period of disposal of the operation.
Capital management
The Group's objectives when managing capital are to safeguard the entity's ability to continue as a going concern so that it can continue to increase the value of the entity for the benefit of the shareholders. Given the nature of the Group's current activities the entity will remain dependent on a mixture of debt and equity funding until such a time as the Group becomes self-financing from the commercial production of mineral resources.
The Group's capital was as follows:
2011 2010
$'000 $'000
Cash and cash equivalents 10,170 8,000
Finance leases (6,956) (797)
Bank loan (29) (32)
Gold loan (19,903) (5,150)
------------------------------
Net (debt)/cash (16,718) 2,021
Equity (61,978) (46,823)
------------------------------
Total capital (78,696) (44,802)
------------------------------
------------------------------
Details of employee share options outstanding are set out in note 5.
18. Loss per share
Basic loss per share
The calculation of basic loss per share at July 31, 2011 was based on the loss attributable to ordinary shareholders of $53,000 and a weighted average number of ordinary shares outstanding during the period ended July 31, 2011 of 102,282,000 calculated as follows:
Loss attributable to ordinary shareholders
2011 2009
$'000 $
Loss for the period (53) (2,426)
------------------------------
Loss attributable to ordinary shareholders (53) (2,426)
------------------------------
------------------------------
Weighted average number of ordinary shares
Number '000
At 1 August 2009 59,385
Effect of shares issued during the year 24,196
--------------
--------------
At 31 July 2010 83,581
--------------
--------------
In issue at 1 August 2010 95,485
Effect of shares issued during year 6,797
--------------
--------------
Weighted average number of ordinary shares at July 31, 2011 102,282
--------------
--------------
There is no difference between the basic and diluted loss per share. At July 31, 2011 there were 4,167,000 (2010: 3,952,000) share options in issue which may have a dilutive effect on the basic earnings or loss per share in the future.
19. Trade and other payables
Group Group Company Company
2011 2010 2011 2010
$'000 $'000 $'000 $'000
Trade payables 4,710 439 5 12
Non trade payables 187 232 3 6
Accrued expenses 1,063 130 118 130
----------------------------------------
5,960 801 126 148
----------------------------------------
----------------------------------------
20. 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 22.
2011 2010
$'000 $'000
Non-current liabilities
Bank loan 26 29
Finance lease liabilities 5,326 412
Gold Loan 19,254 5,150
------------------------------
24,606 5,591
------------------------------
------------------------------
Current liabilities
Current portion of bank loan 3 3
Current portion of finance lease liabilities 1,630 385
Current portion of Gold Loan 649 -
------------------------------
2,282 388
------------------------------
------------------------------
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
Payments Interest Principal Payments Interest Principal
2011 2011 2011 2010 2010 2010
$'000 $'000 $'000 $'000 $'000 $'000
Less than one
year 1,965 335 1,630 426 41 385
Between one and
five years 5,918 592 5,326 427 15 412
------------------------------------------------------------
7,883 927 6,956 853 56 797
------------------------------------------------------------
------------------------------------------------------------
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are secured on the underlying assets.
Gold Loan
During the previous year, the Group entered into an agreement ("Gold Loan") with Sandstorm to sell a portion of the life-of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm made staged upfront cash payments for the gold to the Group totalling US$20 million.
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 has been produced, the Group has agreed to sell 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, the Group has agreed to sell 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.
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:
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. This date was extended to October 31, 2011
subsequent to the year end.
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
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 $1,501,277 was accrued during the year. $49,906 (2010: $218,595) was included in exploration and evaluation expenditure and $1,451,371 (2010: $nil) charged to mineral properties.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
21. Provisions
2011 2010
$'000 $'000
Reclamation and closure provision
At 1 August 2009 559 -
Provision during the year 1,007 559
Unwinding of discount 81
------------------------------
At July 31, 2011 1,647 559
------------------------------
------------------------------
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 Ming Mine's useful life. 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 all three sites associated with the Ming Mine project: mill, mine and port sites. The liability is secured by Letters of Credit for $3,376,555.
22. Financial risk management
The Group's principal financial assets comprise: cash and cash equivalents, restricted cash 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 and 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 exchange risk, liquidity risk, credit risk, interest rate risk and commodity price risk each of which is discussed below. There were no derivative instruments outstanding at July 31, 2011.
Foreign exchange 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 20. 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.
The policy in relation to the translation of foreign currency assets and liabilities is set out in note 2(d), 'Accounting Policies Foreign Currencies' to the consolidated financial statements.
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.
Equity
2011 2010
$ $
10% strengthening of GB pound 64 53
10% weakening of GB pound (57) (47)
10% strengthening of US dollar (1,920) (515)
10% weakening of US dollar 1,746 468
------------------------------
------------------------------
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 20). 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 July 31, 2011.
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 2011 2010
$'000 $'000
Due within one year 2,282 388
Due within one to two years 3,608 5,524
Due within two to three years 4,814 22
Due within three to four years 2,272 24
Due within four to five years 2,030 5
Due after five years 11,882 16
------------------------------
26,888 5,979
------------------------------
------------------------------
Fixed rate 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:
Fixed rate liabilities 2011 2010
$'000 $'000
Due within one year 1,633 388
Due within one to two years 1,465 374
Due within two to three years 1,508 22
Due within three to four years 1,478 24
Due within four to five years 888 5
Due after five years 13 16
------------------------------
6,985 829
------------------------------
------------------------------
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2011 was 6.01%.
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. 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. There is little perceived credit risk in respect of trade and other receivables (see note 12). The Group and Company's maximum exposure to credit risk at July 31, 2011 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 20.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group's and Company's reported results.
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.
As explained in note 26 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.
Gross assets
2011 2010
$'000 $'000
10% increase in the price of gold (292) (37)
25% decrease in the price of gold 783 106
------------------------------
------------------------------
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 year end the cash and short term deposits were as follows:
Average
Average interest
Floating period for rates for
Fixed rate rate which rates fixed rate
At July 31, 2011 assets Assets Total are fixed assets
$'000 $'000 $'000 Months %
Sterling 667 47 714 1 0.25
Canadian $ 25 9,431 9,456 1.3 0.95
----------------------------------
692 9,478 10,170
----------------------------------
----------------------------------
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
----------------------------------
----------------------------------
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.
23. Capital and operating lease commitments
The Group has commitments totalling $2.506 million (2010: $1.24 million) with various vendors relating to the purchase of equipment for the Nugget Pond Mill copper floatation upgrade.
At July 31, 2011 the company had the following operating lease commitments:
2011 2010
$'000 $'000
Other
Payable within one year 4 16
Payable within one to two years - 4
------------------------------
4 20
------------------------------
------------------------------
24. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries (see note 11) and with its directors and executive officers.
Transactions with key management personnel
The directors' compensations were as follows:
2011 2010
$'000 $'000
Salary - executive
G Ogilvie 229 200
J Thomson (became non-executive on 2 May 2010) - 76
Fees - non-executive
D H W Dobson - -
S Neamonitis 13 14
J M Roberts 13 14
L D Goodman 13 14
B F Dalton 2 2
J A Baker 2 2
B D Hinchcliffe 13 14
J Thomson 47 13
------------------------------
332 349
------------------------------
------------------------------
D H W Dobson waived his entitlement to director's fees for the current and preceding periods. At July 31, 2011 fees of $19,000 (2010: $38,000) remained outstanding.
Brian Dalton and John Baker, directors of the company are also directors of Altius Resources Inc ("Altius").
Consultancy fees were payable to Altius Mineral Corporation for the year ended July 31, 2011 for the consultancy services of J Baker & B Dalton amounting to $21,000 (2010: $22,000). At July 31, 2011, consultancy fees of $5,000 (2010: $21,000) were outstanding.
Share options held by directors were as follows:
At 31.07.11 At 31.07.10
No. No.
'000 '000
G Ogilvie(1) 1,100 1,100
J Thomson(2) 400 400
D H W Dobson(3) 45 45
S Neamonitis(3) 45 45
J M Roberts(3) 45 45
L D Goodman(3) 45 45
B F Dalton(3) 45 45
J A Baker(3) 45 45
B D Hinchcliffe(3) 45 45
------------------------------
1,815 1,815
------------------------------
------------------------------
(1) 200,000 options at an exercise price of $0.93 expiring on 7 December
2016, 150,000 options at an exercise price of $1.10 expiring on 12
November 2017 and 750,000 options at an exercise price of $0.19 expiring
on 10 November 2018.
(2) 100,000 options at an exercise price of $0.93 expiring on 7 December
2016 and 300,000 options at an exercise price of $0.19 expiring on 10
November 2018.
(3) options at an exercise price of $0.19 expiring on 10 November 2018.
Total key management personnel compensations were as follows:
2011 2010
$'000 $'000
Salaries 641 382
Share based payments 80 122
------------------------------
721 504
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Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note 11.
25. Subsequent events
On September 29, 2011 the Group agreed a Credit Facility of up to CAD$10 million with Sprott Resource Lending Partnership ("Sprott") for use as additional funding for the development of the Ming Mine. The facility is available in two instalments; the first instalment of $5 million must and will be drawn on or before October 29, 2011 and the final instalment for the balance up to $10 million is available until August 31, 2012 subject to a subsequent site visit and review of the Group's off-take agreement and then current financial forecasts. Interest will be payable at a fixed rate of 9.25% per annum, is repayable by March 29, 2013 and secured by a fixed and floating charge over the assets of the Group. In connection with the Credit Facility, a Structuring Fee of CAD$100,000 and a 3% Commitment Fee of CAD$300,000 were paid to Sprott in cash. Pursuant to the terms of the Credit Facility, the Company issued CAD$300,000 of ordinary shares of 1p each in the capital of the Company to Sprott in exchange for the repayment of the previously paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts drawn under the Credit Facility is to be satisfied by the issue of ordinary shares by the Company.
26. Critical accounting estimates and judgements
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 Company's financial statements, providing some insight also to uncertainties that could impact the Company's financial results.
Going Concern
The risks associated with going concern are explained in note 1.
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.
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.
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 20).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.
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.
Contacts:
Rambler Metals and Mining Canada Limited
George Ogilvie, P.Eng.
President and CEO
709-800-1929
709-800-1921 (FAX)
Rambler Metals & Mining Plc.
Corporate Office
+44 (0) 20-8652-2700
+44 (0) 20-8652-2719 (FAX)
www.ramblermines.com
Seymour Pierce Limited
Nandita Sahgal
Jeremy Stephenson
+44 (0) 20-7107-8000
Pelham Bell Pottinger
Philippe Polman
+44 (0) 20-7861-3861
Ocean Equities Limited
Guy Wilkes
+44 (0) 20-7786-4370
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