TIDMENK
RNS Number : 9213F
ENK PLC
22 June 2012
ENK PLC
(formerly European Nickel PLC)
Annual Report
for the year ended 31 March 2012
Directors
Mr Peter Rowe Chairman
Mr Robert Gregory Managing Director
Mr Mark Hanlon Finance Director
Mr Paul Lush Non Executive Director
Mr Neil Herbert Non Executive Director
Mr Guy Walker Non Executive Director
Company Secretary
Mr Mark Hanlon
Registered Office
ENK PLC
c/- 6(th) Floor
Kildare House
3 Dorset Rise
London EC4Y 8EN
Tel: +44 (0) 20 7290 3130
Tel: +44 (0) 20 7071 4300
Email: info@enk.co.uk
Australian Regional Philippines Regional
Office Office
Level 1 4(th) Floor, Pilgrim
83 Havelock Street Building
West Perth WA 111 Aguirre Street,
6005 Legaspi Village
Tel: +61 (0) 8 Makati City, Philippines
9226 1111 1229
Fax: +61 (0) 8 Tel: +63 2 815
9226 1011 1656
Fax: +63 2 815
1655
Auditors
PKF (UK) LLP
Farringdon Place
20 Farringdon Road
London EC1M 3AP
Tel: +44 (0) 20 7065 0000
Fax: +44 (0) 20 7065 0650
Share Registrars
United Kingdom Australia
Computershare Investor Computershare Investor
Services PLC Services Pty Ltd
PO Box 82 GPO Box D182
The Pavilions Perth WA 6840
Bridgewater Road Tel: +61 (0) 8 9323 2000
Bristol BS99 7NH Fax: +61 (0) 8 9323 2033
Tel: +44 (0) 870 702 0003
Fax: +44 (0) 870 703 6101
Internet Address:
www.enk.co.uk
London Stock Exchange & Australian Securities Exchange
Code:
ENK
ENK PLC
Chairman's statement
Dear Shareholders,
On behalf of your Board of Directors I am pleased to report on
your Company's activities and achievements over the past financial
year.
On one hand it has been a year of considerable change for the
Company, while on the other, we have stuck closely to our stated
plans for developing the Company's flagship Acoje atmospheric leach
project in the Philippines.
From an economic perspective the world continued to tentatively
recover from the global financial crisis during the past year with
commodity prices remaining volatile though generally on an upward
momentum for much of the year, and world stock markets generally
improving throughout the period. The recovery was always likely to
be hesitant, while Europe struggles to prevent parts of the
eurozone falling deeper into crisis and China showing signs of
slowing, albeit to growth levels that are still considerably more
robust than the rest of the world.
Within this macro framework your Board and management have kept
focus on the delivery of ENK's stated objective to be a nickel
development company, focused on the economic processing of nickel
laterite ores. To do so however required a consolidation of past
activities and assets to ensure that management kept focus on our
strategic objectives.
During the first part of the year the Company determined that
the most appropriate way to realise full value from its Calda
project in Turkey, which had been on care and maintenance since
December 2010, was to sell this asset outright. An arms-length
sales process was conducted by the Company's financial advisors
which culminated in the sale of the project for US$40 million cash,
which completed on 17 November 2011. These funds have enabled the
Company to stick to its objective of not raising further capital
from shareholders to fund the completion of the Acoje Bankable
Feasibility Study ('BFS') and the Company's working capital
requirements.
In addition to the sale of the Calda project the Company
recently announced that it has sold its 18.7% interest in Berong
Nickel Corporation ('BNC') for US$6.55 million as well as its
remaining shares held in Toledo Mining Corporation ('TMC') for
US$0.7 million. The BNC sale agreement is conditional upon the
other current shareholders not exercising their pre-emption rights.
The sale is expected to settle in early July 2012.
In addition to the sale of non-core assets the Acoje direct ore
shipping venture with DMCI Mining ('DMCI') continued throughout the
year with over 500,000 tonnes of ore shipped which raised
approximately US$2 million in profits for ENK.
The primary focus of the Company during the year was the Acoje
project. There have been four main activities occurring at Acoje,
being the heap leach trial, DSO mining, downstream processing at
the Acoje Test Centre and the Acoje BFS.
The heap leach trial commenced in early April 2011 and ran to
completion in the final part of the year. Its primary role was the
production of pregnant leach solution to enable testing to continue
in our downstream processing facility. In addition to this the
trial also tested the leaching characteristics of tropical laterite
ores as well as rain mitigation methodologies for the heap leach
pad. All of this test work was successful and the information
gathered enabled the Company to move forward into the feasibility
study with an enhanced knowledge of the atmospheric processing of
laterite ores. In addition, it highlighted the logistical
difficulties that would be encountered in stacking heap leach pads
during the wet season. As a consequence the Company made the
decision to run an atmospheric tank leach trial. The enhanced
recoveries of tank leaching, over very short time periods, together
with lower up front capital expenditure and better economics meant
the Company was able to determine that tank leaching was the
preferred process to be taken through into the BFS.
The pilot downstream processing plant was successfully
commissioned in October 2011 when it produced the first nickel
product from pregnant leach solution produced from the heap leach
trial. The plant has now produced in excess of 400 kilograms of
nickel hydroxide product which is being sent to potential
off-takers for suitability test work. The downstream plant
incorporates ion exchange and resin in pulp technology which
separate out the various metals to enable the production of a low
contaminant product which will have a wider market appeal than the
mixed hydroxide product previously produced at the Company's Calda
project in Turkey.
Much of the year was spent working on the Acoje BFS. The initial
work comprised the heap leach trial which lead to the tank leach
study and a decision to take tank leaching into the BFS as the
preferred upstream process. By the beginning of 2012 Jacobs
Engineering of Perth had been appointed to complete the BFS and by
the end of the period under review, all of the vendor components
and sub-consultants of the study had been appointed. A number of
these studies are quite advanced and the Company is working towards
a completion date of the end of September 2012.
In addition to the test work at our research facility, the
Company embarked on drilling campaigns at both the Acoje and nearby
Zambales tenements. The Acoje drilling program, completed in late
October 2011, was designed to convert Joint Ore Reserves Committee
('JORC') Inferred resources to JORC Indicated status to enable
these resources to be included in the BFS. The Company announced an
upgrade to the JORC resource in mid March 2012. In addition to this
upgrade, the Company recently announced that it would undertake a
further drilling program designed to convert a proportion of the
further JORC Inferred resources uncovered in the recent drill
program to Indicated status. This program is currently
underway.
The Zambales drilling program, which was designed to move
existing JORC Inferred material to JORC Indicated status and to
test the previously undrilled saprolite horizon, was completed
during March 2012. The Company recently announced that the historic
Falconbridge test pit data collected in the 1970's, which was used
to calculate the previous JORC Inferred resource estimate, is of
insufficient detail to be used in the calculation of a JORC
Indicated resource estimate due to the lack of ancillary elements
and detailed logging data that the newer drilling data has
provided. As such the Company will now undertake the drilling of
additional holes, adjacent to the historic test pits, to collect
the missing data. The Zambales resource update is now expected to
be available by the end of September 2012.
There were several changes to the composition of the Board
during the year with David Whitehead and John McManus stepping
down. I was appointed during the year and Guy Walker was appointed
subsequent to the end of the year.
I would like to thank all of our shareholders for their support
over the past year and I look forward to a very busy and exciting
period ahead. Once the Acoje BFS is complete your Company will be
seeking to finalise the financing structure for the project and to
commence construction as soon as it can. Of course there are no
givens in these current turbulent economic times. However, I can
assure you that we will be working with diligence and determination
to ensure the best possible outcome for all stakeholders.
Yours sincerely,
Peter Rowe
Chairman
ENK PLC
Business review
Overview
The past 12 months has been a time of considerable change for
your Company. To some extent this has been a continuation of the
previous period which precipitated these changes. This included the
merger acquisition of Rusina Mining NL, reorganisation at Board
level, and the sale of the Company's Calda project in Turkey.
The consolidation of the Company's business is now largely
complete. The majority of changes over the past year have occurred
at the corporate level, with the sale of the Calda project and
other non-core tenements. The Company also changed its name to ENK
and closed the London office. These steps have been positive and
necessary for the Company to move forward in its goal of being a
low cost developer of nickel in the near future.
At the operational level the Company continued its focus on
finalising process development at its ENK Research Facility
('ERF'). This included a comparative study between heap leaching
and tank leaching as alternative upstream process, which resulted
in tank leaching being chosen as the preferred process to be taken
into the Acoje Bankable Feasibility Study ('BFS').
Acoje project
The Acoje project is situated on the island of Luzon,
Philippines, approximately 250km north of Manila. A preliminary
feasibility study was completed in late 2008 however the BFS was
delayed due to the merger acquisition of Rusina Mining NL and the
need to focus on the Calda project in Turkey at that time. Work on
the Acoje BFS recommenced this year following the sale of Calda
.
The principal activities being undertaken at Acoje during the
past year include the direct shipping of nickel laterite ore
('DSO'), operation of the ERF, drilling of the Acoje ore body in
order to upgrade the JORC resource and field work associated with
the BFS such as geotechnical and environmental studies.
ENK research facility
A fully functional advanced metallurgical research facility has
been established on the old airstrip at Acoje. The ERF consists of
a heap leach pilot plant with crushing, agglomeration, irrigation
pads and solution ponds. In addition there is functional downstream
testing facility that tests precipitation, ion exchange, filtration
and tank leaching. Several metallurgical laboratories, built and
designed by BHP Billiton, conduct a myriad of tests from large
scale column tests to analytical chemical analysis.
The heap leach trial, which commenced in mid April 2011, has run
to completion and is in the process of being decommissioned and
rehabilitated. Nickel extraction reached 65% during the trial and a
further 5-10% extraction is forecast to occur during the rinse
phase. Cobalt and iron extraction reached 78% and 21% respectively
which was in line with expectations based on column test data.
While the heap leach trial demonstrated that the technology
worked successfully in a tropical environment, the 5.2 metres
(double the annual average) of rainfall that occurred during the
trial made the logistics of operating of a full scale heap leach
project less than optimal.
Concurrent to the heap leach trial the Company undertook tank
leach trials, initially at the ERF and subsequently with BGRIMM in
China. The tests were very positive with nickel and cobalt
recoveries of 92% and 97% respectively over a 22 hour period. A
bridging study was conducted comparing the economics of heap
leaching to tank leaching that highlighted the significant economic
advantages of tank leaching.
The other key technology tested at the ERF has been the use of
Ion Exchange ('IX') to produce separate nickel ('NHP') and cobalt
products rather than the Mixed (nickel+cobalt) Hydroxide Product
('MHP') produced with standard precipitation. Solution from the
heap leach trial was run through an IX plant and to date over 400
kilograms of NHP has been produced. The NHP was assayed on a washed
basis by the Company at 52.6% nickel. The product is currently
being analysed by the Natural History Museum in London and the
report to be produced will be sent to potential end users and
future off-take partners.
Bankable feasibility study
The BFS is progressing well. Key decisions on how the project
will be implemented have been made. A staged approach has been
chosen, where a 1.5 million tonne per annum plant will be
constructed and operated with elevated head grades to produce
15,000 tonnes of contained nickel, followed by an expansion to a 3
million tonnes per annum plant which is forecast to produce 24,000
tonnes of nickel. Construction of an acid plant will be delayed
until the second stage, while the sulfuric acid will be trucked or
piped to site during stage 1. The project is being constructed
within the same boundaries as the existing Environmental Compliance
Certificate ('ECC') that was obtained in early 2010 that covered a
3 million tonne per annum heap leach facility.
Many of the project components from the original approval of the
ECC remain unchanged during the migration from heap leaching to
tank leaching however an amendment to the ECC will be required to
be submitted to cover those areas that have altered. The BFS is
being overseen by Jacobs Engineering (formerly Aker Solutions). A
number of sub-consultants are working on specialised components
including: Outotec Oyj for leaching circuit and solid/liquid
separation design, Puritech for continuous ion exchange design, GHD
for the spent ore storage, environmental and geotechnical studies,
Gorham & Partners for the marketing study, Orway Consultants
for the comminution circuit and Transammonia for the acid
study.
The BFS is expected to be completed by the end of September 2012
at which time the Company will publish the report and announce the
Board's decision with respect to project implementation.
Acoje resource upgrade
The Acoje resource upgrade drilling program to convert Inferred
material to Indicated category was undertaken during the year
completing a total of 124 holes for 1,736 metres. Only the
Indicated category resource can be used for reserves for the
BFS.
Snowden Mining Consultants of Perth calculated an Indicated and
Inferred JORC (2004) resource estimate (at a cut-off of 0.8% Ni)
of:
Indicated: 40.9 million tonnes grading 1.08% Ni, 0.05% Co
Inferred: 29.0 million tonnes grading 0.96% Ni, 0.06% Co
This represented an increase of 36% in contained nickel from the
November 2008 resource estimate. In addition to the material that
was converted to Indicated status an additional 13 million tonnes
of new Inferred material was delineated. A further drilling program
to convert as much of the additional Inferred material to Indicated
status is currently underway.
Table 1 - Resource estimate for the Acoje project (March
2012)*
Property JORC Million Ni Co Contained Contained
(2004) Tonnes (%) (%) Metal Metal
Category Ni (t) Co (t)
------------------ ----------- -------- ----- ----- ---------- ----------
Acoje Limonite Indicated 15.9 0.96 0.08 152,640 12,720
----------- -------- ----- ----- ---------- ----------
Inferred 21.5 0.93 0.08 199,950 17,200
------------------------------ -------- ----- ----- ---------- ----------
Acoje Saprolite
/ Rocky
Saprolite Indicated 17.9 1.22 0.03 218,380 5,370
------------------ ----------- -------- ----- ----- ---------- ----------
Inferred 4.8 1.08 0.04 51,840 1,920
------------------------------ -------- ----- ----- ---------- ----------
Acoje Saprolitic
Rock Indicated 7.1 0.98 0.02 69,580 1,420
----------- -------- ----- ----- ---------- ----------
Inferred 2.6 0.98 0.02 25,480 520
------------------------------ -------- ----- ----- ---------- ----------
Total Acoje Indicated 40.9 1.08 0.05 441,720 20,450
----------- -------- ----- ----- ---------- ----------
Inferred 29.0 0.96 0.07 278,400 20,300
------------------------------ -------- ----- ----- ---------- ----------
Grand Total Ind.
Acoje + Inf. 69.9 1.03 0.06 719,970 41,940
------------------ ----------- -------- ----- ----- ---------- ----------
*This represents a 100% project interest - ENK's current
economic interest is 92%. Cut off grade 0.8%
Direct shipping ore
A new mining agreement was entered into with partner DMCI Mining
Corporation ('DMCI') during the year. The mining agreement requires
DMCI to undertake all the financial risk, mining, trucking,
shipping and marketing associated with the mining and sale of
nickel laterite ore and pay ENK a royalty fee on each shipment
made. The royalty is based on the LME nickel price and grade of ore
sold.
DMCI, operating out of their own port at Santa Cruz, shipped a
total of 520,096 tonnes of ore during the period under review at an
average grade of 1.8% nickel. Post reporting date, a further
191,441 tonnes of ore have been shipped.
Due to the onset of the wet season DMCI has now completed its
mining operations at Acoje with final stockpiles currently being
moved to the port.
It is intended that new DSO operations will be commenced at the
Zambales project, upon that tenement obtaining all necessary
approvals and licenses to enable mining operations to occur.
Zambales Chromite Mining Corporation
The Zambales Chromite Mining Corporation ('Zambales') tenement
is located approximately 5km north of Acoje and is likely to be an
extension of the same nickel laterite deposit that hosts the Acoje
resource. ENK has a 40% economic interest in Zambales with the
remainder being held by local partner, Montemina Resource
Corporation ('MRC').
A drilling program to upgrade the Zambales JORC Inferred
resource estimate to Indicated status and drill the previously
untested saprolite ore horizon commenced in November 2011 and was
finalised in March 2012. The Company, in conjunction with Snowden
Mining Consultants of Perth recently determined that the exiting
test pit data is of insufficient detail to enable the calculation
of a new Inferred resource estimate. A new drilling program has
been planned to provide the data to enable Snowden Mining
Consultants to calculate an Indicated resource estimate. The
drilling will commence around the beginning of July 2012 and the
revised Indicated resource estimate should be finalised by the end
of September 2012.
Table 2 - Resource estimate for the Zambales project (December
2007)*
Property JORC Million Ni Co Contained Contained
(2004) Tonnes (%) (%) Metal Metal
Category Ni (t) Co (t)
---------------- ----------- -------- ----- ----- ---------- ----------
Zambales
Laterite Inferred 23.5 1.18 0.05 277,300 11,750
Total Zambales Inferred 23.5 1.18 0.05 277,300 11,750
---------------- ----------- -------- ----- ----- ---------- ----------
ENK Interest* Inferred 15.0 1.18 0.05 177,472 7,520
---------------- ----------- -------- ----- ----- ---------- ----------
*ENK has an economic interest in Zambales of 64%. Cut off grade
0.75%.
Corporate
The Company continued to work on the consolidation of its
business after its merger acquisition of Rusina Mining NL in mid
2010. This entailed a review and rationalisation of its assets,
including surplus mining tenements and investments. As a result of
the sale of its non-core assets and investments the Company has
sufficient cash resources in order to finalise the Acoje BFS and
provide adequate working capital into the medium term. It also
provides the Company with the option of commencing preliminary
works at Acoje while the full financing structure is being
finalised.
There were several changes at Board level during the year. David
Whitehead and John McManus both retired from the Board while Peter
Rowe has been appointed to the Board as non-executive Chairman, and
Guy Walker, was appointed to the Board at the request of our major
shareholder. Peter has a strong background in the management of
mining operations as well as experience in nickel and the
Philippines and we are pleased to have a director with his
operational experience join the Board.
In addition to the changes at director level, the Company began
a process of strengthening its management team as we seek to fast
track the BFS and subsequently seek to commence preliminary
construction works. In mid 2011 we appointed our BFS Study Manager,
Rudi Rautenbach, as well as several other key staff. In early 2012
Dean Stuart was appointed as Chief Operating Officer in order to
oversee the BFS as well as the subsequent construction of the
project. His operating experience with Avocet Mining and in
Indonesia and Malaysia will be valuable as the Company seeks to
expand its interests beyond the Acoje and Zambales projects.
During mid 2011 management determined that, as the Calda project
was in the process of being sold and the primary focus of the
Company would be on its Philippine projects, it no longer made
financial or operational sense to maintain an office in London. The
Company moved all of its head office functions to its Perth office,
which is on the same time zone as the Philippines, and sub-let its
London office for the remaining term of its lease.
In June this year the Company announced the Philippine mining
company, Golden Harvest Global Corporation ('GHGC'), had purchased
a 60% interest in local partner Montemina Resources Corporation
('MRC'), which owns a 60% interest in the Zambales tenement and a
20% interest in the Acoje tenement. A total of US$11m, which will
be used to repay loans from ENK, and will be paid over a maximum
period of 2 years with US$2m already received post year-end. In
addition to the purchase of shares in MRC, GHGC also entered into
agreements to explore and mine the underground chromite ore on the
Acoje property and to mine the nickel laterite ore on the Zambales
tenement.
Other assets
Calda
During the early part of 2011 the Company undertook a review of
the Calda project, which had been placed on care and maintenance in
late 2010, with a view to determining the most appropriate way to
maximise its value for shareholders. This was determined to be an
outright sale of the asset and in mid 2011 a sales process was
undertaken on an arms-length basis which resulted in the sale of
the Turkish holding companies for US$40 million cash. The sale was
completed in November 2011.
Albania
In 2010 the Board determined that there was no strategic or
financial advantage to be gained from remaining invested in
Albania. Subsequent to the end of the period under review the
Company has sold its 100% interest in Adriatic Resources Sh.p.k for
a nominal sum and is currently in the process of selling its 50%
interest in Devolli Resources Sh.p.k., a joint venture with Balkan
Resources Inc., also for a nominal sum.
Berong/ Toledo
The Company holds a minority stake in Berong Nickel Corporation
('BNC'), owner of the Berong tenement on the island of Palawan in
the Philippines. This stake was originally acquired in order to
utilise the Company's heap leach technology at the Berong project
however AIM-listed Toledo Mining Corporation ('TMC'), 56% owner of
Berong, rejected the use of this process and thus there was no
strategic, technical or operational reason to continue to maintain
this investment and a small holding in TMC shares.
Subsequent to the end of the financial year the Company
announced the sale of its 5.01% interest in TMC for US$698,000 and
the conditional sale of its 18.7% interest in BNC for US$6,552,000
to World Fund Pte Limited ('WFP').
The sale of the BNC shares is conditional upon the other
shareholders of BNC, being TMC and Atlas Consolidated Mining
Corporation ('Atlas') not exercising their pre-emption rights. In
the event TMC or Atlas decide to exercise their pre-emption right
they have to match the price offered by WFP. Atlas and TMC have 60
days to exercise their pre-emption rights. The BNC sale is expected
to settle in early July 2012.
Abogado/Barlo
In early March 2011 the Company signed a Deed of Assignment of
the Abogado exploration permit located in Sultan Kudarat, southern
Philippines to Mineral Development Corporation. An initial payment
of US$200,000 was paid however, due to the state of world equity
markets, the Company agreed to amend the terms for the second
payment of US$300,000 and provision of US$2.0m in listed company
shares, to be payable by early July 2012.
The Company signed sale documents with Arena Resources Limited
("Arena") for its Barlo, Pan de Azucar and Guimeras exploration
permits (EPs) in March 2011. An initial payment of US$50,000 has
been paid. Further consideration of US$550,000 cash and 5,000,000
shares is payable by Arena upon the listing of Arena on the ASX
within 6 months of the completion of the assignment process. Two
additional payments of US$1,000,000 in shares or cash are payable
upon Arena attaining a JORC resource of 50kt and 100kt of +1.0%
copper equivalent. A payment of US$5,000,000 in shares or cash is
payable upon completion of a bankable feasibility study at each of
the three EPs.
Due to a moratorium on the approval or transfer of EPs and
tenements the assignment process has not been able to be completed.
The Company has modified the sale agreement with Arena to enable
the sale of the corporate entity that holds the EPs. This new
agreement has now been completed and it is anticipated that the 6
month time frame will commence by no later than the beginning of
July 2012.
The information in this report that relates to Mineral Resources
is based on information compiled by Mr Robert Gregory, who is a
Member of The Australasian Institute of Mining and Metallurgy. Mr
Gregory is Managing Director of ENK PLC and has sufficient
experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration
results, Mineral Resources and Ore Reserves". Mr Gregory consents
to the inclusion in this report of the matters based on this
information in the form and context in which it appears.
ENK PLC
Directors' report
The directors present their report together with the annual
report of ENK PLC (formerly European Nickel PLC) ("the Company")
and of the consolidated entity, being the Company and its
subsidiaries, and the consolidated entity's interest in associates
and jointly controlled entities for the year ended 31 March
2012.
Directors
The names and details of the directors of the Company during or
since the end of the financial year are:
Peter Rowe - Chairman
Peter has extensive mining industry experience gained over a 35
year career in Australia and South Africa. Following 20 years with
Anglo American and De Beers, he moved to Australia in the early
1990's where he held a number of senior managerial positions
including Project Director of the Fimiston expansion (Kalgoorlie
Superpit) General Manager of the Boddington Gold Mine and of the
Boddington Expansion Project and Managing Director and DEO of
Bulong Nickel. He joined AngloGold Ashanti in 2004 as head of
AngloGold Ashanti Australia and transferred to Johannesburg in
2006. He holds a BSc in Chemical Engineering, is a Fellow of the
Australasian Institute of Mining and Metallurgy and a Fellow of the
Australian Institute of Company Directors. He was appointed to the
Board on 27 July 2011 and was appointed Chairman on 30 August
2011.
Robert Gregory - Managing Director
Robert has over 20 years experience in the mining industry,
initially as a mining engineer, where he gained extensive
experience in mine development and operation, and, later, in more
executive roles including Vice President of Mine Development -
Climax Mining's Didipio Project in the Philippines (1996 - 2000),
General Manager of Operations - Giants Reef Mining (2003 - 2005),
Managing Director of Rusina Mining NL (2005-2010). He was appointed
to the Board on 16 June 2010.
Mark Hanlon - Finance Director & Company Secretary
Mark has over ten years of experience in commercial and merchant
banking, having worked for Partnership Pacific Ltd, Westpac and the
Bank of New Zealand before entering commerce in 1994. He has a
broad background of senior executive experience across a wide range
of industries, including mining services, electricity distribution,
electronics contract manufacturing, packing and insurance. Mark has
previously held the position or equivalent position of CFO with
other publicly listed companies such as Century Drilling and
International Contract Manufacturing Limited. He holds a Bachelor
of Finance and Accounting Degree and a Master Degree in Banking and
Finance. He was appointed to the Board on 16 June 2010.
Paul Lush - Non Executive Director
Paul is a lawyer and executive with more than 20 years'
experience in the mining industry, including time at Rio Tinto PLC
where he served, inter alia on the board of Rio Tinto's principal
exploration company, and at BHP Billiton where he was group legal
counsel and a director of a number of group companies. He then
joined the law firm CMS Cameron McKenna as a partner in their
mining and projects group before joining Alterra Partners Ltd as
senior vice-president and General Counsel. He is currently
executive chairman of Churchill Airports Limited. He was appointed
to the Board on 21 March 2003. He is also a member of both the
Company's Remuneration and Audit Committees.
Neil Herbert - Non Executive Director
Neil is currently the Executive Co-Chairman and Managing
Director of Polo Resources Ltd (AIM, TSX: POL), the mining and
exploration group focused on investing in or acquiring and
developing advanced stage coal and uranium projects. Prior to
joining Polo Resources in May 2008, he has held a number of senior
executive roles, including Finance Director for UraMin Inc, until
its acquisition by Areva NC for US$2.5 billion and Group Financial
Controller for Antofagasta PLC. He has over 20 years experience in
finance and has worked in the management of mining and exploration
companies for over 12 years. He is a Fellow of the Associated
Chartered Certified Accountants. He was appointed to the Board on
29 June 2010. He is also a member of both the Company's
Remuneration and Audit Committees.
Guy Walker - Non Executive Director
Guy is a former fund manager and Chief Operating Officer of
Talisman Global Asset Management Limited and former Group Treasurer
of the William Pears Group. He joined Talisman in March 2000 and
held the positions of Fund Manager and Chief Operating Officer
until April 2006. He is a Chartered Accountant and Chartered
Financial Analyst and holds a Bachelor of Commerce &
Administration in Accounting. Guy is a nominee of major
shareholders Montoya Investments Limited and D&A Income
Limited. He was appointed to the Board on 18 April 2012.
The above named directors held office during the whole of the
financial year and since the end of the financial year except
for:
-- Peter Rowe - appointed as Non Executive Director on 27 July
2011, and then appointed Chairman on 30 August 2011.
-- Guy Walker - appointed as Non Executive Director on 18 April 2012.
-- David Whitehead - resigned as Chairman on 30 August 2011.
-- John McManus - resigned as Non Executive Director on 13 January 2012.
Change of company name
Effective 1 September 2011, European Nickel PLC changed its name
to ENK PLC following shareholder approval at the Company's AGM,
held 30 August 2011.
Principal activities
The principal activities of the consolidated entity are the
identification, acquisition, development and exploitation of nickel
assets in the Philippines and are further disclosed within the
Business Review.
Business review
A review of the consolidated entities activities and future
developments are set out in the Business Review on pages 3 to
7.
Results and dividends
The consolidated entity made a net loss attributable to the
parent company for the year ended 31 March 2012 of US$('000)30,620
(for the eighteen month period ended 31 March 2011: loss of
US$('000)73,975).
No dividends have been paid by the Company during the year ended
31 March 2012, nor have the directors recommended any dividend to
be paid.
Financial risk management
The consolidated entity's approach to the management of
financial risks is set out in note 28 to the financial
statements.
Post balance sheet events
There has not been any matter or circumstance occurring
subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the
Company, the results of those operations, or the state of affairs
of the Company in future financial years except for the
following:
1. On 8 May 2012, the Company announced the sale of its 5.01%
interest in AIM-listed Toledo Mining Corporation ('TMC') for
US$('000')686 in cash and the conditional sale of its 18.7%
interest in Berong Nickel Corporation ('BNC') for US$('000')6,552
in cash to World Fund Pte Limited. Both assets were considered
non-core assets by the directors. The Company's interest in these
non-core assets are disclosed in the statement of financial
position as available for sale financial assets. In the prior year
the Company's interest in BNC was held in the financial statements
at US$3.48 million, the revaluation of the interest in BNC to the
conditional sale value has resulted in a change in the fair value
of US$('000')3,072 disclosed in the consolidated statement of
comprehensive income.
The sale of the BNC shares is conditional upon the other
shareholders of BNC, being TMC and Atlas Consolidated Mining
Corporation ('Atlas') not exercising their pre-emption rights. In
the event TMC or Atlas decide to exercise their pre-emption right
they have to match the price offered by World Fund Pte Limited.
Atlas and TMC have 60 days to exercise their pre-emption rights.
The BNC sale is expected to settle in early July 2012.
2. On 6 June 2012, the Company announced that Montemina
Resources Corporation ('MRC'), 60% owner of the Zambales Project,
has entered into an agreement with Philippine company, Golden
Harvest Global Corporation ('GHGC') wherein GHGC will acquire 60%
interest in MRC for a total consideration of US$11m. The proceeds
will be used by MRC to repay loans from members of the consolidated
entity which will result in all of the funds (less taxes and costs)
being available for use by the Company. The payment terms for the
sale are:
- US$2m upon signing;
- US$2m by no later than 15 August 2012;
- US$2m by no later than 15 November 2012; and
- US$5m linked to the Direct Ship Operations ('DSO') revenues
from the Zambales tenement, but in any event, payable no later than
the second anniversary of signing.
GHGC has also entered into a mining agreement with Zambales
Chromite Mining Corporation ('ZCMCI'), 40% owner of the Zambales
tenement. This agreement provides for the mining of nickel laterite
ore for Direct Ship Operations ('DSO') on the basis that GHGC
provides all mining equipment, capital labour, trucking, marketing
and port facilities in return for a 50% profit share of ore sales.
DSO will commence once Zambales and GHGC obtain the required
permits for this operation.
In addition to the above agreements, GHGC has entered into an
Exploration Services Agreement ('ESA') with Zambales Diversified
Metals Corporation ('ZDMC'), holder of the Acoje tenement and a
subsidiary of ENK, for the exploration of chromite and other
underground minerals on the Acoje tenement. The ESA is for a period
of 2 years with annual options to extend thereafter, subject to
minimum performance requirements and payment of advance
royalties.
If a decision to develop the chromite or other underground
minerals is made by GHGC then ZDMC has, at its option, the ability
to require a payment of US$20m to enable GHGC to acquire 100% of
the rights to these minerals, or, to elect to have a free carry for
ZDMC for a 20% interest in this project. In the event the lump sum
payment is chosen, mining royalties at a rate to be agreed, will
also be payable to ZDMC.
Substantial shareholdings
As at 31 May 2012 the following had notified the Company of a
substantial shareholding of 3% or more of the nominal value of the
Company's shares:
No. ordinary %
shares
=================================== ============= ======
Pershing Nominees Limited 47,805,809 18.24
W B Nominees Limited 31,810,917 12.14
AAA Australian Control Account 30,654,796 11.70
Hanover Nominees Limited 19,500,000 7.44
Vidacos Nominees Limited 18,370,327 7.01
Goldman Sachs International 13,321,513 5.08
Chase (GA Group) Nominees Limited 8,041,869 3.07
=================================== ============= ======
Directors' interests
The directors who held office during the financial year and
their interests in the share capital of the Company at 31 March
2012 was as follows:
Ordinary shares Unlisted options
================================= =========================
Directors 31 March 31 March 2012/ 31 March 31 March
2011 Date of resignation 2011 2012/
Date of
resignation
==================== ========== ===================== ========== =============
Peter Rowe(1) N/A - N/A 400,000
Robert Gregory 1,210,000 1,235,000 2,000,000 2,000,000
Mark Hanlon 476,800 776,800 1,500,000 1,500,000
Paul Lush 441,355 441,355 230,000 530,000
Neil Herbert 900,000 900,000 - 300,000
David Whitehead(2) 26,250 26,250 210,000 -
John McManus(3) 100,000 100,000 - 300,000
==================== ========== ===================== ========== =============
(1) Appointed 27 July 2011
(2) Resigned 30 August 2011
(3) Resigned 13 January 2012
Directors' remuneration
The consolidated entity remunerates the directors at a level
commensurate with the size of the Company and the experience of its
directors. The Remuneration Committee has reviewed the directors'
remuneration and believes it upholds the objectives of the Company
with regard to this issue.
The following tables disclose the compensation of the directors
of the consolidated entity during the financial year and the
previous eighteen month period. This information has been
audited.
Year ended Salary Bonus* Post-employment Share-based Total
31 March & fees benefits payments
2012
==================== ======== ======== ================ ============ ========
Directors $US'000 $US'000 $US'000 $US'000 $US'000
==================== ======== ======== ================ ============ ========
Peter Rowe(1) 45 - 5 70 120
Robert Gregory 433 151 2 - 586
Mark Hanlon 309 108 27 - 444
Paul Lush 54 - 4 52 110
Neil Herbert 55 - 4 52 111
David Whitehead(2) 38 - - - 38
John McManus(3) 36 - - 52 88
==================== ======== ======== ================ ============ ========
Total 970 259 42 226 1,497
==================== ======== ======== ================ ============ ========
(1) Appointed 27 July 2011
(2) Resigned 30 August 2011
(3) Resigned 13 January 2012
* Bonuses were paid pursuant to performance targets being
successfully achieved.
18 months Salary Bonus** Post-employment Consultancy Share-based Compensation Total
ended & fees benefits fees payments for loss
31 March for services of office
2011 rendered
===================== ======== ======== ================ ============== ============ ============= ========
Directors $US'000 $US'000 $US'000 $US'000 $US'000 $US'000 $US'000
===================== ======== ======== ================ ============== ============ ============= ========
David Whitehead 176 - - - - - 176
Robert Gregory(1) 283 107 - - 624 - 1,014
Mark Hanlon(1) 192 77 17 - 468 - 754
Paul Lush 112 - - 52 - - 164
Neil Herbert(2) 34 - - - - - 34
John McManus(3) 34 - - - - - 34
Simon Purkiss(4) 380 - - - - 240 620
Andrew Lindsay(5) 182 - 44 - - 489 715
Euan Worthington(5) 71 - - - - 12 83
Sir David
Logan(5) 74 - - - - 11 85
Chris Pointon(6) 18 - - - - - 18
===================== ======== ======== ================ ============== ============ ============= ========
Total 1,556 184 61 52 1,092 752 3,697
===================== ======== ======== ================ ============== ============ ============= ========
(1) Appointed 16 June 2010 (3) Appointed 24 August 2010
(2) Appointed 29 June 2010 (4) Resigned 31 January 2011
(5) Resigned 16 June 2010 (6) Resigned 29 March 2010
** Bonuses were paid pursuant to performance targets being
successfully achieved prior to the merger acquisition in accordance
with previous director's agreements with Rusina Mining NL.
Options are granted at an exercise price above the existing
share price as at the date of grant. The value of options granted
during the period has been calculated using the Black-Scholes
formula method using the inputs set out in note 29.
Corporate governance
A statement on Corporate Governance is set out on page 20 to
28.
Operating environmental, principal risks and uncertainties
Operating risks
In addition to the usual economic conditions, share market
fluctuations and general business and investments risks involved in
investing in a listed company, the Company is subject to a number
of specific risks, which include:
Exploration, mining, development and processing risks
The business of mineral exploration, project development, mining
and processing by its nature contains elements of risk. The success
of these activities is dependent on many factors such as:
(i) the discovery and/or acquisition of economically recoverable ore reserves;
(ii) successful conclusions to bankable feasibility studies;
(iii) access to adequate capital for project development;
(iv) design and construction of efficient mining and processing
facilities within capital expenditure budgets;
(v) securing and maintaining title to tenements;
(vi) obtaining consents and approvals necessary for the conduct of exploration and mining;
(vii) access to competent operational management and prudent
financial administration, including the availability and
reliability of appropriately qualified employees, contractors and
consultants;
(viii) the ability to procure major equipment items and key
consumables in a timely and cost-effective manner;
(ix) access to road and port networks for shipment of the mixed
nickel-cobalt hydroxide product; and
(x) favourable weather conditions for importation of sulphur and
exploration and mining activities.
In common with other enterprises undertaking business in the
mining sector, the Company's exploration, mine development and
related activities are subject to conditions beyond its control
that can reduce production or increase costs. These conditions
include abnormal weather conditions and natural disasters,
unexpected maintenance or technical problems, key equipment
failures and variations in geological and metallurgical
conditions.
The Company's development plans for the Acoje project represents
a significant increase in the scale and complexity of its business.
This increase in scale and complexity will have a marked impact on
the Company's business processes, systems and information
technology. Unless these development plans are able to be
adequately resourced and managed, and the appropriate people hired
and retained, the Company's performance could be adversely
affected.
Reserve and resource estimates
Reserve estimates are expressions of judgement based on
knowledge, experience and industry practice. Estimates, which were
valid when made, may change significantly when new information
becomes available. In addition, reserve estimates are imprecise and
depend to some extent on interpretations which may prove to be
inaccurate. The actual reserves may differ from those estimated
which may result in the Company altering its plans which could have
either a positive or negative effect on the Company's
operations.
In addition, the inclusion of mineral resource estimates should
not be regarded as a representation that these amounts can be
economically exploited and no assurances can be given that such
resource estimates will be converted into reserves.
Production estimates
Actual production may vary from estimates of future production
for a variety of reasons, and there is a greater likelihood that
actual production will vary from estimates of production for
properties not yet in production although such estimates are based
upon considered evaluation by the Company and, in certain
instances, by qualified independent consultants.
Capital cost estimates
The capital cost estimates for the Acoje project is dependent on
a number of variable factors, including:
(i) major equipment costs;
(ii) the cost of construction items such as steel and cement;
(iii) the accuracy of engineering designs; and
(iv) certain assumptions regarding financial parameters
including exchange rates and applicable import taxes.
Delays to the construction of the Acoje project
Planned construction of the Acoje project may be delayed by a
number of factors, which include:
(i) delays in procuring new equipment - the lead times for major
equipment may have a material effect on the anticipated
commencement of a project;
(ii) delays in receiving requisite government approvals; and
(iii) delays in obtaining funding.
Delays to the construction of the Acoje project may lead to cost
overruns.
Development funding requirement risk
External financial and credit markets are subject to numerous
influences so there can be no assurance that equity or debt funding
will be available to the Company and whether credit approvals for
the Acoje project development will be forthcoming. 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 development
funding will be available on terms acceptable to the Company. If
the Company is unable to obtain development funding as needed, it
may be required to reduce or terminate its operations, scale back
its exploration, development and production programs, forfeit its
interests in some of its properties and incur financial
penalties.
Project financing of the Acoje project may expose the Company to
adverse interest rate movements and also potentially nickel and
cobalt price movements (depending on the type and quantity of
commodity hedging entered into as a requirement of the project
financing) that may significantly increase the financial risk
inherent in its business and could have a material impact on
profitability and cash flow.
Country risk
The Company will operate predominantly in the Philippines. There
is a sovereign risk involved with investing in foreign countries,
including the risk that mining concessions may be revised or
cancelled by new laws or changes in direction by the government in
question. These are matters over which the Company has no control.
Whilst these risks are always present, the Company directors have
no present reason to believe that the current exploration and
mining concessions held by the Company in the Philippines will be
varied or cancelled.
Regulatory, consenting and permitting risks
The business of mineral exploration, project development, mining
and processing is subject to various national and local laws and
plans relating to:
(i) permitting and maintenance of title;
(ii) environmental protection;
(iii) taxation;
(iv) employee relations;
(v) heritage / historic matters;
(vi) health and safety;
(vii) royalties;
(viii) land acquisition; and
(ix) other matters.
There is a risk that the necessary land acquisitions, permits,
consents, authorisations and agreements required to implement
planned exploration, project development, or mining may not be
obtained under conditions or within time frames that make such
plans economic, that applicable laws, regulations or the governing
authorities will change or that such changes will result in
additional material expenditures or time delays.
The permitting and consent process in the Philippines requires
extensive consultation and enables many interested third parties to
participate in the process. This imposes additional risk that
permits and consents may be delayed or rejected.
Tenement applications
The Company has been granted some mining tenements and has
applications for other mining tenements over particular exploration
properties. There can be no assurance that the Company will be
granted all the mining tenements for which it has applied.
Operating risks
The Company's operations may be affected by various factors,
including failure to locate or identify mineral deposits; failure
to achieve predicted grades in exploration and mining; operational
and technical difficulties encountered in mining; difficulties in
commissioning and operating plant and equipment; mechanical failure
or plant breakdown; unanticipated metallurgical problems which may
affect extraction costs; adverse weather conditions; industrial and
environmental accidents; industrial disputes; and unexpected
shortages or increases in the costs of consumables (particularly
sulphur), spare parts, plant and equipment.
Furthermore the hydrometallurgical treatment of Acoje nickel
laterite ores has not been tested at commercial scale. While
indications from laboratory and large scale test-work are positive
the scale up of the use of a heap leaching process route on low
grade nickel laterite ores remains a risk. The failure to achieve
the necessary leach recoveries would have a serious impact on the
financial performance of the Company and the ability to treat the
Acoje deposits.
The Company intends to have in place risk management plans in
order to minimise the potential damage flowing from these possible
events.
Environmental risk
The Company's projects and operations are subject to significant
regulation regarding environmental hazards and the storage and
discharge of hazardous waste and materials. Open pit mining and
processing nickel laterite ores, as planned at the Acoje project,
are subject to such risks and hazards, including environmental
hazards, industrial accidents and discharge of toxic chemicals. The
occurrence of any of these events can halt production, increase
production costs or result in liability to the Company. Such
incidents may also result in a breach of the conditions of a mining
privilege, resource or other consent, or relevant regulatory
regime, with consequent exposure to enforcement procedures,
including possible revocation of a mining privilege.
Reliance on key personnel
The Company's prospects depend in part on the ability of its
executive officers and senior management to operate effectively,
both individually and as a group. Further, the success of the Acoje
project partly depends on the Company's ability to attract and
retain additional qualified management and operating personnel.
The Company will have in place employment contracts with key
employees and will have the objective of providing attractive
employment conditions in general to assist in retaining key
employees. However, there can be no guarantee that the Company can
retain its key employees. If the Company cannot attract and retain
suitably qualified management and operating personnel, the
Company's business and future growth may be adversely affected.
Commodity price risk
If the Company commences production, revenues will be derived
from the sales of mixed nickel-cobalt hydroxide product, the value
of which will be directly related to nickel and cobalt prices in
the world market. Commodity prices fluctuate widely and are
affected by numerous industry factors beyond the Company's control.
These factors may include the demand for stainless steel, nickel
production levels (quantity and cost) in major nickel producing
regions, and industrial production levels. Any variation in the
market price of nickel and cobalt for a sustained period would have
a material impact on the profit and cash flow of the Company's
future operations.
The proposed product from the Acoje project is a mixed
nickel-cobalt hydroxide. The treatment of this product has been
discussed with various refineries, which currently have excess
capacity. However, if there should be a downturn in the market,
there may be no final market for this product, or the product could
be sold at a significantly discounted rate. While the adoption of
long term contracts may mitigate this position the reduction in
revenue from the product would have a material impact on the profit
and cash flow of the Company's future operations.
Exchange rate risk
The Company's forecast revenue from the sale of mixed
nickel-cobalt hydroxide product from the Acoje projects will be in
US dollars whilst its cost basis will be payable in Philippines
pesos, British pounds, Australian dollars and Euros.
The exchange rates between the various currencies are affected
by numerous factors beyond the control of the Company. These
factors include economic conditions in the relevant country and
elsewhere and the outlook for interest rates, inflation and other
economic factors. These factors may have a positive or negative
effect on the Company's exploration, project development and
production plans and activities, together with the ability to fund
those plans and activities.
The Company is also exposed to exchange rate risk in the conduct
of its daily operations, for example where purchases are
denominated in currencies other than US dollars and where these
impacts are not mitigated through financial risk management
programs such as local currency hedging.
Technology risk
The hydrometallurgical treatment of nickel laterite ores has
only been tested in the laboratory and at the consolidated entity's
demonstration facility, but has not been demonstrated on a
commercial scale. It has been used commercially in uranium and gold
projects. The failure to achieve the necessary leach recoveries
would have a serious impact on the financial performance of the
Company and the ability to treat the Acoje deposit.
Intellectual property rights
Securing rights to intellectual property, and in particular
patents, is an integral part of securing potential product value.
Competition in retaining and sustaining protection of intellectual
property and the complex nature of intellectual property can lead
to expensive and lengthy patents disputes for which there can be no
guaranteed outcome.
The granting of a patent does not guarantee that the rights of
others are not infringed or that competitors will not develop
competing intellectual property that circumvents such patents.
ENK's success depends, in part, on its ability to obtain patents,
maintain trade secret protection and operate without infringing the
proprietary rights of third parties.
There can be no assurance that any patents ENK may own, control
or licence now and in the future will afford the Company
commercially significant protection of the intellectual property,
or that any of the projects that may arise from the intellectual
property will have commercial applications.
Further, there is always a risk of third parties claiming
involvement in technological discoveries, and if any disputes
arise, they could adversely affect the Company.
Regulation in the Philippines
The Philippines Constitution provides that all natural resources
are owned by the State which may enter into a co-production, joint
venture or production sharing agreement with citizens of the
Philippines or corporations or associations at least 60% of whose
capital is owned by Philippine citizens.
Commonwealth Act No. 108, as amended (otherwise known as the
"Anti-Dummy" Act), provides penalties for, amongst others:
(i) Filipinos who permit aliens to use them as nominees or
dummies so that the aliens could enjoy privileges otherwise
reserved for Filipinos or Filipino corporations; and
(ii) aliens or foreigners who profit from the adoption of these
dummy relationships. It also penalises the act of falsely
simulating the existence of minimum stock or capital as owned by
citizens of the Philippines or any other country in cases in which
a constitutional or legal provision requires that before a
corporation or association may exercise or enjoy a right, franchise
or privilege, not less than a certain percentage of its capital
must be owned by such citizens.
The Anti-Dummy Act likewise prohibits aliens from intervening in
the management, operation, administration or control of
nationalised business or enterprises, whether as officers,
employees or labourers, with or without remuneration, except that
aliens may take part in technical aspects only, provided:
(i) no Filipino can do such technical work; and
(ii) it is with express authority from the Secretary of Justice.
The Anti-Dummy Act also allows the election of aliens as members
of the boards of directors or the governing bodies of corporations
or association engaged in partially nationalised activities in
proportion to their allowable participation or share in the capital
of such entities. Whilst the Company has received advice that its
structure complies with all Philippine regulations, there is a risk
that it could be questioned or challenged given limited precedents
to date in country.
Likely future developments
The consolidated entity will continue to pursue its policy of
increasing the asset value and market share of its major business
sectors during the next financial year. The consolidated entity
will focus on the exploration of its portfolio of mineral licenses
and the evaluation, merger, acquisition and/or joint venture of new
projects and assets.
Policy and practice on payment of creditors
The consolidated entity's strategy is to develop mutually
beneficial relationships with key suppliers. The consolidated
entity has agreed appropriate terms and conditions of supply with
its longer term creditors and will abide by these terms and
conditions, provided that it is satisfied that the supplier has
also complied with them. Trade creditors of the consolidated entity
at 31 March 2012 represent 15 days' purchases.
Disclosure of information to auditor
The directors who held office at the date of approval of this
Directors' Report confirm that:
-- so far as each director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
-- each director has taken all the steps that he ought to have
taken as a director in order to make themselves aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
Auditors
A resolution for the reappointment of PKF (UK) LLP as auditors
of the Company will be proposed at the forthcoming Annual General
Meeting.
Directors' responsibilities statement
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 consolidated entity's 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
consolidate entity and of the profit or loss of the consolidated
entity 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 accounting 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
consolidated entity 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 consolidated entity 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 consolidated entity 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.
This report was approved by the Board on 21 June 2012
Mark Hanlon
Company Secretary
ENK PLC
Corporate governance statement
Approach to Corporate Governance
ENK PLC (Company) has adopted comprehensive systems of control
and accountability as the basis for the administration of corporate
governance. Some of these policies and procedures are summarised in
this statement.
The Company is incorporated in the United Kingdom and listed on
the Alternative Investment Market of London Stock Exchange plc
(AIM). The Company listed on the Australian Securities Exchange
(ASX) on 28 June 2010. Following its listing on ASX, the Company
commenced a process of reviewing its corporate governance policies
and procedures. Since 30 September 2010, the Company has been
acting in accordance with the policies and procedures as described
in this statement however; these policies and procedures were not
formally adopted by the Board until 17 June 2011.
Commensurate with the spirit of the ASX Corporate Governance
Council's Corporate Governance Principles and Recommendations 2nd
edition (Principles & Recommendations), the Company has
followed each recommendation where the Board has considered the
recommendation to be an appropriate benchmark for its corporate
governance practices. Where the Company's corporate governance
practices follow a recommendation, the Board has made appropriate
statements reporting on the adoption of the recommendation. In
compliance with the "if not, why not" reporting regime, where,
after due consideration, the Company's corporate governance
practices depart from a recommendation, the Board has offered full
disclosure and an explanation for the adoption of its own
practice.
The following governance-related documents can be found on the
Company's website at www.enk.co.uk, under the section marked "Who
We Are" "Corporate Governance":
Charters
Board
Audit Committee
Nomination Committee
Remuneration Committee
Policies and Procedures
Policy and Procedure for Selection and (Re)Appointment of
Directors
Policy on Assessing the Independence of Directors
Diversity Policy (summary)
Code of Conduct (summary)
Policy on Continuous Disclosure (summary)
Compliance Procedures (summary)
Procedure for the Selection, Appointment and Rotation of
External Auditor
Shareholder Communication Policy
Risk Management Policy (summary)
The Company reports below on how it has followed (or otherwise
departed from) each of the recommendations during the 2011/2012
financial year (Reporting Period). The information in this
statement is current at 1 June 2012.
Board
Roles and responsibilities of the Board and Senior
Executives
(Recommendations: 1.1, 1.3)
The Company has established the functions reserved to the Board,
and those delegated to senior executives and has set out these
functions in its Board Charter.
The Board is collectively responsible for promoting the success
of the Company through its key functions of overseeing the
management of the Company, providing overall corporate governance
of the Company, monitoring the financial performance of the
Company, engaging appropriate management commensurate with the
Company's structure and objectives, involvement in the development
of corporate strategy and performance objectives, and reviewing,
ratifying and monitoring systems of risk management and internal
control, codes of conduct and legal compliance.
Senior executives are responsible for supporting the Managing
Director and assisting the Managing Director in implementing the
running of the general operations and financial business of the
Company in accordance with the delegated authority of the Board.
Senior executives are responsible for reporting all matters which
fall within the Company's materiality thresholds at first instance
to the Managing Director or, if the matter concerns the Managing
Director, directly to the Chair or the lead independent director,
as appropriate.
As the Board Charter was not formally adopted until 17 June
2011, it was not available on the Company's website until this
time.
Skills, experience, expertise and period of office of each
Director
(Recommendation: 2.6)
A profile of each Director setting out their skills, experience,
expertise and period of office is set out in the Directors'
Report.
The members of the Board have a diverse range of skills, as
evident from the profile of each director in the Directors' Report.
The Board aims to have a mix of skills amongst its members, and
considers that members with operational and technical skills, legal
skills, corporate and financial skills and regional experience will
benefit the Company at this stage of its development.
Director independence
(Recommendations: 2.1, 2.2, 2.3, 2.6)
The Board does not have a majority of directors who are
independent. During the Reporting Period, the Board comprised an
equal number of independent and non-independent directors. The
Board believes that its structure is appropriate and adequate for
the Company's current size and operations, and is aligned with
shareholder expectations. The Board will continue to monitor its
composition and make appropriate changes to its composition as and
when the Board deems fit.
The independent directors of the Company are Peter Rowe (Chair,
appointed 30 August 2011), Neil Herbert and Paul Lush. David
Whitehead was Chair until 30 August 2011 and was also independent.
These directors are independent as they are non-executive directors
who are not members of management and who are free of any business
or other relationship that could materially interfere with, or
could reasonably be perceived to materially interfere with, the
independent exercise of their judgment.
The Board considers the independence of directors having regard
to the relationships listed in Box 2.1 of the Principles &
Recommendations, the following additional relationships and the
Company's materiality thresholds:
-- has, or has had within the last three years, a material
business relationship with the Company, either
directly or as a partner, shareholder, director or employee of a
body that has a relationship with the Company;
-- has received or receives additional remuneration from the
Company apart from a director's fee, participates in any share
option or performance-related pay scheme, or is a members of the
Company's pension scheme;
-- has close family ties with any of the Company's advisers, directors or senior employees;
-- holds cross-directorships or significant links with other
directors through involvement in other companies or bodies; or
-- has served on the Board for more than nine years from the date of first election.
The Board has agreed on the following guidelines, as set out in
the Company's Board Charter for assessing the materiality of
matters:
-- Statement of financial performance items are material if they
have a value of more than 10% of net assets.
-- Income statement items are material if they will have an
impact on the current year operating result of 10% or more.
-- Items are also material if they impact on the reputation of
the Company, involve a breach of legislation, are outside the
ordinary course of business, could affect the Company's rights to
its assets, if accumulated would trigger the quantitative tests,
involve a contingent liability that would have a probable effect of
10% or more on the statement of financial performance or income
statement items, or will have an effect on operations which is
likely to result in an increase or decrease in net income or
dividend distribution of more than 10%; or they would need to be
announced to the market under either AIM Rules or ASX Rules.
-- Contracts will be considered material if they are outside the
ordinary course of business, contain exceptionally onerous
provisions in the opinion of the Board, impact on income or
distribution in excess of the quantitative tests, there is a
likelihood that either party will default, and the default may
trigger any of the quantitative or qualitative tests, are essential
to the activities of the Company and cannot be replaced, or cannot
be replaced without an increase in cost which triggers any of the
quantitative tests, contain or trigger change of control
provisions, are between or for the benefit of related parties, or
otherwise trigger the quantitative tests or they would need to be
announced to the market under wither AIM Rules or ASX Rules.
The non-independent directors of the Company are Robert Gregory
(Managing Director), Mark Hanlon (Finance Director), John McManus
(resigned 13 February 2012), and Guy Walker (appointed 18 April
2012).
The independent Chair of the Board from the beginning of the
Reporting Period until 30 August 2011 was David Whitehead. Mr
Whitehead was replaced by Peter Rowe as independent Chair on 30
August 2011. The Managing Director, Robert Gregory, is not also
Chair of the Board.
Independent professional advice
(Recommendation: 2.6)
To assist directors with independent judgement, it is the
Board's policy that if a director considers it necessary to obtain
independent professional advice to properly discharge the
responsibility of their office as a director then, provided the
director first obtains approval for incurring such expense from the
Chair or independent non-executive director, the Company will pay
the reasonable expenses associated with obtaining such advice.
Selection and (Re)Appointment of Directors
(Recommendation: 2.6)
In determining candidates for the Board, the Nomination
Committee (or equivalent) follows a prescribed process whereby it
evaluates the mix of skills, experience, expertise and diversity of
the existing Board. In particular, the Nomination Committee (or
equivalent) is to identify the particular skills and diversity that
will best increase the Board's effectiveness. Consideration is also
given to the balance of independent directors. Potential candidates
are identified and, if relevant, the Nomination Committee (or
equivalent) recommends an appropriate candidate for appointment to
the Board. Any appointment made by the Board is subject to
ratification by shareholders at the next annual general
meeting.
The Board recognises that Board renewal is critical to
performance and the impact of Board tenure on succession planning.
A director (other than the Managing Director) must not hold office
(without re-election) past the third annual general meeting
following the director's appointment or three years, whichever is
the longer. Re-appointment of directors is not automatic.
As the Company's Policy and Procedure for the Selection and
(Re)Appointment of Directors was not formally adopted until 17 June
2011, it was not available on the Company's website until this
time.
Board committees
Nomination Committee
(Recommendations: 2.4, 2.6)
The Board has not established a separate Nomination Committee.
Given the current size and composition of the Board, the Board
believes that there would be no efficiencies gained by establishing
a separate Nomination Committee. Accordingly, the Board performs
the role of the Nomination Committee. Items that are usually
required to be discussed by a Nomination Committee are marked as
separate agenda items at Board meetings when required. When the
Board convenes as the Nomination Committee it carries out those
functions which are delegated to it in the Company's Nomination
Committee Charter. The Board deals with any conflicts of interest
that may occur when convening in the capacity of the Nomination
Committee by ensuring that the director with conflicting interests
is not party to the relevant discussions.
The full Board, in its capacity as the Nomination Committee,
held one meeting during the Reporting Period. All Board members
attended. In addition, further nomination-related discussions
occurred from time to time during the year as required.
The Company has adopted a Nomination Committee Charter which
describes the role, composition, functions and responsibilities of
the Nomination Committee. As the Company's Nomination Committee
Charter was not formally adopted until 17 June 2011, it was not
available on the Company's website until this time.
Audit Committee
(Recommendations: 4.1, 4.2, 4.3, 4.4)
The Board has established an Audit Committee, which is
structured in compliance with Recommendation 4.2.
The Audit Committee held two meetings during the Reporting
Period. Details of the directors' who are members of the Audit
Committee, and their attendance at Audit Committee meetings are set
out in the following table:
Name No. of meetings
attended
============================================ ================
Neil Herbert (Chair) (independent
non-executive director) 2
-------------------------------------------- ----------------
Paul Lush (independent non-executive
director) 2
-------------------------------------------- ----------------
David Whitehead (independent non-executive
director) (resigned 30 August 2011) 1
-------------------------------------------- ----------------
Peter Rowe (independent non-executive
director) (appointed 30 August 2011) 1
============================================ ================
The Company has adopted an Audit Committee Charter which
describes its role, composition, functions and responsibilities of
the Audit Committee. As the Company's Audit Committee Charter was
not formally adopted until 17 June 2011, it was not available on
the Company's website until this time.
Details of each of the director's qualifications are set out in
the Directors' Report. All members of the Audit Committee are
financially literate, and Neil Herbert is a Fellow of the
Associated Chartered Certified Accountants.
The Company has established procedures for the selection,
appointment and rotation of its external auditor. The Board is
responsible for the initial appointment of the external auditor and
the appointment of a new external auditor when any vacancy arises,
as recommended by the Audit Committee (or its equivalent).
Candidates for the position of external auditor must demonstrate
complete independence from the Company through the engagement
period. The Board may otherwise select an external auditor based on
criteria relevant to the Company's business and circumstances. The
performance of the external auditor is reviewed on an annual basis
by the Audit Committee (or its equivalent) and any recommendations
are made to the Board.
As the Company's Audit Committee Charter and Procedure for the
Selection, Appointment and Rotation of External Auditor were not
formally adopted until 17 June 2011, they were not available on the
Company's website until this time.
Remuneration Committee
(Recommendations: 8.1, 8.2, 8.3)
The Board has established a Remuneration Committee, which is
structured in accordance with Recommendation 8.2.
The Remuneration Committee held two meetings during the
Reporting Period. Details of the directors' who are members of the
Remuneration Committee, and their attendance at the Remuneration
Committee meeting are set out in the following table:
Name No. of meetings
attended
---------------------------------------------- ----------------
Paul Lush (Chair) (independent non-executive
director) 2
---------------------------------------------- ----------------
Neil Herbert (independent non-executive
director) 2
---------------------------------------------- ----------------
David Whitehead (independent non-executive
director) (resigned 30 August 2011) 1
---------------------------------------------- ----------------
Peter Rowe (independent non-executive
director) (appointed 30 August 2011) 1
============================================== ================
The Board has adopted a Remuneration Committee Charter which
describes the role, composition, functions and responsibilities of
the Remuneration Committee.
Details of remuneration, including the Company's policy on
remuneration, are contained in the "Remuneration Report" which
forms of part of the Directors' Report. Non-executive directors are
remunerated at a fixed fee for time, commitment and
responsibilities. Remuneration for non-executive directors is not
linked to individual performance. The Company may consider it
appropriate to issue unlisted options to non-executive directors,
subject to obtaining the relevant approvals. This policy is subject
to annual review. Pay and rewards for executive directors and
senior executives consists of a base salary and performance
incentives. Short term performance incentives may include cash
bonuses, which is designed to encourage and reward superior
performance. Long term performance incentives may include options
granted at the discretion of the Remuneration Committee and subject
to obtaining the relevant approvals. Executives are offered a
competitive level of base pay at market rates and are reviewed
annually to ensure market competitiveness.
There are no termination or retirement benefits for
non-executive directors (other than for superannuation).
The Company's Remuneration Committee Charter includes a
statement of the Company's policy on prohibiting transactions in
associated products which limit the risk of participating in
unvested entitlements under any equity based remuneration
schemes.
The Company is incorporated under the laws of the United Kingdom
and is not required to comply with section 300A of the Corporations
Act or AASB 124 Related Party Disclosures. However, the Company is
required to and has included equivalent information in its annual
report pursuant to the International Financial Reporting Standards.
Please refer to note 30.
As the Company's Remuneration Committee Charter was not formally
adopted until 17 June 2011, it was not available on the Company's
website until this time.
Performance evaluation
Senior executives
(Recommendations: 1.2, 1.3)
The Managing Director is responsible for evaluating the
performance of all senior executives (except the Finance Director).
All Company personnel go through an annual performance review at
which their performance is discussed in detail. The Company's
country manager in the Philippines is responsible for his
respective staff performance reviews. The Managing Director
undertakes performance reviews of senior executives, including the
country manager through a prescriptive process that evaluates their
performance against a list of criteria that are relevant to their
job description. The process determines areas where further
training may be required and, utilising a skill-based review, looks
at succession planning for key roles.
During the Reporting Period, the Managing Director evaluated the
performance of senior executives in accordance with the process
disclosed above. The process was not disclosed on the Company's
website during the Reporting Period, as the process has not been
formally adopted by the Board. The Remuneration Committee reviewed
and approved of the process for performance evaluation of senior
executives on 20 June 2012 and the Company is in the process of
disclosing this on its website.
Board, its committees and individual directors
(Recommendations: 2.5, 2.6)
The Chair is responsible for evaluation of the Board and, when
deemed appropriate, Board committees and individual directors. The
Remuneration Committee is responsible for evaluating the Managing
Director and the Finance Director.
The Board has not adopted a formal process for the evaluation of
the Board, its committees and individual directors. However, it
intends to put a formal process in place during the next financial
year. The Board did intend for an evaluation of the Board, its
committees and individual directors to take place during the
Reporting Period, however there were further changes to the Board,
including the appointment of a new Chair, and a change in direction
for the Company. An evaluation of the Board, its committees and
individual directors will take place during the next financial
year.
The performance of the Managing Director and the Finance
Director is reviewed annually by the Remuneration Committee against
a list of key performance indicators, to determine whether or not
the executive are performing according to their expected level. The
Remuneration Committee takes into consideration external factors
and changes in Company policy that may affect the ability of the
executive directors to perform in accordance with their key
performance indicators.
Ethical and responsible decision making
Code of Conduct
(Recommendations: 3.1, 3.3)
The Company has established a Code of Conduct as to the
practices necessary to maintain confidence in the Company's
integrity, the practices necessary to take into account its legal
obligations and the reasonable expectations of its stakeholders and
the responsibility and accountability of individuals for reporting
and investigating reports of unethical practices.
As the Code of Conduct was not formally adopted by the Board
until 17 June 2011, a summary of it was not available on the
Company's website until this time.
Diversity
(Recommendations: 3.2, 3.3, 3.4, 3.5)
The Company has established a Diversity Policy, which includes
requirements for the Board to establish measurable objectives for
achieving gender diversity and for the Board to assess annually
both the objectives and progress towards achieving them.
The Board has not set measurable objectives for achieving gender
diversity. In light of the Company's stage of development and the
location and nature of the Company's operations, the Board does not
consider it practical to formally establish measurable objectives
for achieving gender diversity at this time. However, the Company
is committed to actively managing diversity as a means of enhancing
the Company's performance by recognising and utilising the
contribution of diverse skills and talent from its directors,
officers and employees.
The proportion of women employees in the whole organisation,
women in senior executive positions and women on the Board are set
out in the following table:
Proportion of women
--------------------------- --------------------
Whole organisation 50 out of 228 (22%)
--------------------------- --------------------
Senior Executive positions 0 out of 4 (0%)
--------------------------- --------------------
Board 0 out of 6 (0%)
=========================== ====================
As the Diversity Policy was not formally adopted by the Board
until 17 June 2011, a summary of it was not available on the
Company's website until this time.
Continuous Disclosure
(Recommendations: 5.1, 5.2)
The Company has established written policies and procedures
designed to ensure compliance with ASX Listing Rule and AIM Rules
disclosure requirements and accountability at a senior executive
level for that compliance.
As the Policy on Continuous Disclosure and Compliance Procedures
were not formally adopted by the Board until 17 June 2011, a
summary of the policy and procedure was not available on the
Company's website until this time.
Shareholder Communication
(Recommendations: 6.1, 6.2)
The Company has designed a communications policy for promoting
effective communication with shareholders and encouraging
shareholder participation at general meetings.
As the Shareholder Communication Policy was not formally adopted
by the Board until 17 June 2011, it was not available on the
Company's website until this time.
It is the Company's policy to require the external auditor to
attend its annual general meeting and be available to respond to
shareholder questions.
Risk Management
Recommendations: 7.1, 7.2, 7.3, 7.4)
The Board has adopted a Risk Management Policy, which sets out
the Company's risk profile. Under the policy, the Board is
responsible for approving the Company's policies on risk oversight
and management and satisfying itself that management has developed
and implemented a sound system of risk management and internal
control.
Under the policy, the Board delegates day-to-day management of
risk to the Managing Director, who is responsible for identifying,
assessing, monitoring and managing risks. The Managing Director is
also responsible for updating the Company's material business risks
to reflect any material changes, with the approval of the
Board.
In fulfilling the duties of risk management, the Managing
Director may have unrestricted access to Company employees,
contractors and records and may obtain independent expert advice on
any matter he believes appropriate, with the prior approval of the
Board.
The Board has established a separate Audit Committee to monitor
and review the integrity of financial reporting and the Company's
internal financial control systems and risk management systems.
In addition, the following risk management measures have been
adopted by the Board to manage the Company's material business
risks:
-- the Board has established authority limits for management,
which, if proposed to be exceeded, requires prior Board
approval;
-- the Board has adopted a compliance procedure for the purpose
of ensuring compliance with the Company's continuous disclosure
obligations; and
-- the Board adopted a corporate governance manual on 17 June
2011 which contains other policies to assist the Company to
establish and maintain its governance practices.
The Company's risk management system includes the preparation of
a risk register by management to identify the Company's material
business risks and risk management strategies for those risks. In
addition, the process of management of material business risks will
be allocated to members of senior management. The risk register is
reviewed quarterly and updated, as required. Periodically, the
Company may engage an external party to facilitate risk management
planning within the organisation. This took place during the
Reporting Period, following the Company's move to focus on its
project in the Philippines.
The categories of risk reported on as part of the Company's
systems and processes for managing material business risk include:
commodity price risk; development funding risk; sovereign risk;
operational risk; environmental risk; and legal and compliance
risk.
The Board has required management to design, implement and
maintain risk management and internal control systems to manage the
Company's material business risks. The Board also requires
management to report to it confirming that those risks are being
managed effectively. The Board has received a report from
management as to the effectiveness of the Company's management of
its material business risks for the Reporting Period.
The Managing Director and the Finance Director are not required
to provide a declaration to the Board in accordance with section
295A of the Corporations Act as the Company is subject to the laws
of the United Kingdom. However, these laws require a similar
declaration to that required under section 295A of the Corporations
Act. The Board requires the Managing Director and the Finance
Director to provide a declaration in the terms of section 295A of
the Corporations Act and assure the Board that the declaration is
founded on a sound system of risk management and internal control
and that the system is operating effectively in all material
respects in relation to financial reporting risks. The Managing
Director and the Finance Director have provided a declaration to
the Board in the terms of section 295A of the Corporations Act and
have assured the Board that such declaration is founded on a sound
system of risk management and internal control and that the system
is operating effectively in all material respects in relation to
financial reporting risks.
As the Risk Management Policy was not formally adopted by the
Board until 17 June 2011, a summary of it was not available on the
Company's website until this time.
ENK PLC
Independent auditor's report to the members of ENK PLC
We have audited the financial statements of ENK PLC for the year
ended 31 March 2012 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated and company statements of financial position, the
consolidated and company statements of changes in equity, the
consolidated and company 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 directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. 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 consolidated entity's 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 consolidated entity's and the company's affairs as at
31 March 2012 and of the consolidated entity's loss for the year
then ended;
-- the consolidated entity's financial statements have been
properly prepared in accordance with IFRSs as adopted by the
European Union;
-- the 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.
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 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.
Stuart Barnsdall (Senior statutory auditor)
for and on behalf of PKF (UK) LLP, Statutory auditor
London, UK
21 June 2012
ENK PLC
Consolidated income statement
===================================== ============================================
For the year ended 31 March Note Year ended 18 mth
2012 31 March ended
12 31 March
US$'000 11
US$'000
* Restated
===================== =====================
Continuing operations
Administration expenses (4,666) (2,615)
Exceptional gain 32 - 17,375
Impairment loss 27 - (30,297)
Exploration and development
costs (6,973) (5,128)
Other operating costs (3,424) (3,013)
Other operating income 9 2,139 -
===================== =====================
Operating loss (12,924) (23,678)
Finance income 10 46 1,209
Finance costs 11 (2) (2,378)
Loss on disposal of investment
in associate 15(b) - (7,719)
Gain/(loss) on disposal of
available for sale financial
assets 15(b) 78 (1,278)
Share of loss of associates
and joint ventures 15(a) (747) (40)
Loss before tax (13,549) (33,884)
Income tax credit 21 1,838 1,953
===================== =====================
Loss for the year from continuing
operations (11,711) (31,931)
Discontinued operations
Loss for the year from discontinued
operations 12 (21,465) (42,617)
===================== =====================
Loss for the year 8 (33,176) (74,548)
===================== =====================
Attributable to:
Equity shareholders of the
parent company (30,620) (73,975)
Non-controlling interest (2,556) (573)
===================== =====================
(33,176) (74,548)
===================== =====================
Loss per share (basic and
diluted)
From continuing and discontinuing
operations 24 (0.013) (0.041)
From continuing operations 24 (0.004) (0.017)
* Restated in respect of classification of discontinued
operations
ENK PLC
Consolidated statement of comprehensive
income
========================================== =======================
For the year ended 31 March Year ended 18 mth
2012 31 March ended
12 31 March
US$'000 11
US$'000
=========== ==========
Loss for the year (33,176) (74,548)
Other comprehensive income/(expense):
Exchange differences arising
on translation of foreign operations 1,772 1,277
Reclassification of exchange 788 -
differences on disposal of subsidiary
Reclassified on disposal of (460) -
available for sale financial
assets
Reclassification arising on
acquisition - 1,245
Change in the fair value of
available for sale financial
assets 3,072 243
=========== ==========
Total comprehensive expense
for the year (28,004) (71,783)
=========== ==========
Total comprehensive expense
attributable to:
Equity shareholders of the parent
company (26,174) (72,544)
Non-controlling interests (1,830) 761
=========== ==========
(28,004) (71,783)
=========== ==========
ENK PLC
Consolidated statement of
financial position
As at 31 March 2012
=============================== ======================
Note As at As at
31 March 31 March
12 11
US$'000 US$'000
========== ==========
Assets
Non-current assets
Intangible assets 13 91,096 91,234
Property, plant and equipment 14 1,397 47,605
Investments accounted for
using the equity method 15(a) - 747
Available for sale financial
assets 15(b) 7,238 4,782
Other receivables 16 21 7,808
========== ==========
Total non-current assets 99,752 152,176
========== ==========
Current assets
Trade and other receivables 16 1,700 6,381
Inventories 17 - 93
Cash and cash equivalents 18 33,710 10,910
Total current assets 35,410 17,384
========== ==========
Total assets 135,162 169,560
========== ==========
Liabilities
Current liabilities
Trade and other payables 19 2,197 4,640
Total current liabilities 2,197 4,640
========== ==========
Net current assets 33,213 12,744
========== ==========
Non-current liabilities
Provisions 20 24 2,428
Deferred tax liability 21 18,643 20,527
========== ==========
Total non-current liabilities 18,667 22,955
========== ==========
Total liabilities 20,864 27,595
========== ==========
Net assets 114,298 141,965
========== ==========
Equity
Ordinary shares 22 17,538 17,531
Share premium account 22 233,720 233,708
Merger reserve 23 18,641 18,641
Translation reserve 23 1,422 (412)
Fair value reserve 23 2,822 210
Accumulated losses (180,441) (150,139)
========== ==========
Equity attributable to equity
holders of the parent 93,702 119,539
========== ==========
Non-controlling interest 20,596 22,426
========== ==========
Total equity 114,298 141,965
========== ==========
These financial statements were approved and authorised for
issue by the Board of Directors on 21 June 2012 and were signed on
its behalf by:
Robert Gregory
Managing Director
ENK PLC
Company statement of financial
position
As at 31 March 2012
================================= ======================
Note As at As at
31 March 31 March
12 11
US$'000 US$'000
========== ==========
Assets
Non-current assets
Property, plant and equipment 14 - 87
Investments in associates
and joint ventures 15(a) - 1,169
Available for sale financial
assets 15(b) 7,238 4,782
Investments in subsidiaries 15(c) 32,557 81,888
Long term receivables 15(d) 13,500 9,375
========== ==========
Total non-current assets 53,295 97,301
========== ==========
Current assets
Trade and other receivables 16 304 43,052
Cash and cash equivalents 18 31,212 3,174
Total current assets 31,516 46,226
========== ==========
Total assets 84,811 143,527
========== ==========
Liabilities
Current liabilities
Trade and other payables 19 1,192 1,598
Total current liabilities 1,192 1,598
========== ==========
Net current assets 30,324 44,628
========== ==========
Non-current liabilities
Deferred tax liability 21 3 -
========== ==========
Total non-current liabilities 3 -
========== ==========
Total liabilities 1,195 1,598
========== ==========
Net assets 83,616 141,929
========== ==========
Equity
Ordinary shares 22 17,538 17,531
Share premium account 22 233,720 233,708
Merger reserve 23 17,865 17,865
Translation reserve 23 (18) 4
Fair value reserve 23 2,822 210
Accumulated losses (188,311) (127,389)
========== ==========
Total equity 83,616 141,929
========== ==========
These financial statements were approved and authorised for
issue by the Board of Directors on 21 June 2012 and were signed on
its behalf by:
Rob Gregory
Managing Director
ENK PLC
Consolidated statement of changes in equity
For the year ended 31 March 2012
Share Fair Non-controlling
Ordinary premium Merger Translation value Accumulated interest Total
shares account reserve reserve reserve losses Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
October
2009 8,480 207,496 776 (355) (1,278) (73,009) 142,110 - 142,110
Loss for the
period - - - - - (73,975) (73,975) (573) (74,548)
Exchange
differences
arising on
translation
of foreign
operations - - - (57) - - (57) 1,334 1,277
Change in the
fair
value of
available
for sale
financial assets - - - - 243 - 243 - 243
Reclassification
arising on
acquisition - - - - 1,245 - 1,245 - 1,245
========= ======== ======== ============ ======== ============ ========== ================ =========
Total
comprehensive
income/(expense)
for the period - - - (57) 1,488 (73,975) (72,544) 761 (71,783)
========= ======== ======== ============ ======== ============ ========== ================ =========
Issue of shares 5,479 26,780 - - - - 32,259 - 32,259
Issue of shares
pursuant to
acquisition 3,572 - 17,865 - - - 21,437 - 21,437
Expenses incurred
issuing shares - (568) - - - - (568) - (568)
Non-controlling
interest arising
on business
combination - - - - - - - 15,602 15,602
Change in
non-controlling
interest - - - - - (6,063) (6,063) 6,063 -
Share-based
payments - - - - - 2,908 2,908 - 2,908
========= ======== ======== ============ ======== ============ ========== ================ =========
As at 31 March
2011 17,531 233,708 18,641 (412) 210 (150,139) 119,539 22,426 141,965
========= ======== ======== ============ ======== ============ ========== ================ =========
Balance at 1
April
2011 17,531 233,708 18,641 (412) 210 (150,139) 119,539 22,426 141,965
Loss for the year - - - - - (30,620) (30,620) (2,556) (33,176)
Exchange
differences
arising on
translation
of foreign
operations - - - 1,046 - - 1,046 726 1,772
Reclassification
of exchange
differences
on disposal of
subsidiary
(note 12) - - - 788 - - 788 - 788
Change in the
fair
value of
available
for sale
financial assets
(note 15b) - - - - 3,072 - 3,072 - 3,072
Reclassified on
disposal of
available
for sale
financial
assets - - - - (460) - (460) - (460)
Total
comprehensive
income/(expense)
for the year - - - 1,834 2,612 (30,620) (26,174) (1,830) (28,004)
========= ======== ======== ============ ======== ============ ========== ================ =========
Issue of shares 7 12 - - - - 19 - 19
Share-based
payments - - - - - 318 318 - 318
========= ======== ======== ============ ======== ============ ========== ================ =========
As at 31 March
2012 17,538 233,720 18,641 1,422 2,822 (180,441) 93,702 20,596 114,298
========= ======== ======== ============ ======== ============ ========== ================ =========
ENK PLC
Company statement of changes in equity
For the year ended 31 March 2012
======================================================================================================================
Share Fair
Ordinary premium Merger Translation value Accumulated Total
shares account reserve reserve reserve losses Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 October 2009 8,480 207,496 - (2) (1,278) (35,306) 179,390
Loss for the period - - - - - (94,991) (94,991)
Exchange differences arising
on translation of foreign
operations - - - 6 - - 6
Change in the fair value of
available for sale financial
assets - - - - 243 - 243
Reclassification arising on
acquisition - - - - 1,245 - 1,245
========= ========= ========= ============ ========= ============ =========
Total comprehensive
income/(expense)
for the period - - - 6 1,488 (94,991) (93,497)
========= ========= ========= ============ ========= ============ =========
Issue of shares 5,479 26,780 - - - - 32,259
Issue of shares pursuant to
acquisition 3,572 - 17,865 - - - 21,437
Expenses incurred issuing
shares - (568) - - - - (568)
Share-based payments - - - - - 2,908 2,908
========= ========= ========= ============ ========= ============ =========
As at 31 March 2011 17,531 233,708 17,865 4 210 (127,389) 141,929
========= ========= ========= ============ ========= ============ =========
Balance at 1 April 2011 17,531 233,708 17,865 4 210 (127,389) 141,929
Loss for the year - - - - - (61,240) (61,240)
Exchange differences arising
on translation of foreign
operations - - - (22) - - (22)
Change in the fair value of
available for sale financial
assets (note 15b) - - - - 3,072 - 3,072
Reclassified on disposal of
available for sale financial
assets - - - - (460) - (460)
Total comprehensive expense
for the year - - - (22) 2,612 (61,240) (58,650)
========= ========= ========= ============ ========= ============ =========
Issue of shares 7 12 - - - - 19
Share-based payments - - - - - 318 318
========= ========= ========= ============ ========= ============ =========
As at 31 March 2012 17,538 233,720 17,865 (18) 2,822 (188,311) 83,616
========= ========= ========= ============ ========= ============ =========
ENK PLC
Consolidated statement of
cash flows
or the year ended 31 March
2012
=================================== =======================
Note Year ended 18 mth
31 Mar ended
12 31 March
US$'000 11
US$'000
=========== ==========
Cash flows from operating
activities
Net cash used in operating
activities (18,946) (17,578)
=========== ==========
Cash flows from investing
activities
Cash acquired from acquisition 32 - 1,271
Proceeds from disposal of
discontinued operations,
net of cash disposed of 33 39,902 -
Proceeds from disposal of
available for sale financial
assets 15(b) 234 1,031
Purchase of property, plant
and equipment (288) (3,546)
Interest and similar income
received 48 1,210
Net cash provided by/(used
in) investing activities 39,896 (34)
=========== ==========
Cash flows from financing
activities
Proceeds from the issue
of share capital 19 32,259
Expenses incurred issuing
share capital - (568)
Interest and similar charges
paid (2) (1,556)
Repayment of long-term borrowings - (4,000)
=========== ==========
Net cash provided by financing
activities 17 26,135
=========== ==========
Net increase in cash and
cash equivalents 20,967 8,523
Cash and cash equivalents
at the beginning of the
year 10,910 1,530
Effects of exchange rate
fluctuations on cash held 1,833 857
=========== ==========
Cash and cash equivalents
at the end of the year 18 33,710 10,910
=========== ==========
Cash flows from operating activities
Loss for the year (33,176) (74,548)
Adjustments for:
Income tax credit (1,838) (1,953)
Share of loss of associates
and joint ventures 747 40
Finance costs - 2,378
Finance income (48) (1,209)
(Gain)/loss on disposal
of available for sale financial
assets (78) 1,278
Loss on disposal of investment
in associate - 7,719
Impairment loss 13,103 67,016
Intangibles (990) (7,894)
Exceptional gain - (17,375)
Depreciation and amortisation 202 520
Share-based payment expense 318 2,908
Net foreign exchange loss/(gain) 714 (394)
========= =========
(21,046) (21,514)
Movements in working capital:
(Increase)/decrease in assets:
Trade and other receivables 2,229 2,360
Inventories 3 9
Increase/(decrease) in liabilities
Trade and other payables (132) 1,567
========= =========
Net cash used in operating
activities (18,946) (17,578)
========= =========
ENK PLC
Company statement of cash flows
For the year ended 31 March 2012
Note Year ended 18 mth
31 Mar ended
12 31 March
US$'000 11
US$'000
=========== ==========
Cash flows from operating
activities
Net cash used in operating
activities (7,933) (8,087)
=========== ==========
Cash flows from investing
activities
Investment in subsidiaries - (8,676)
Loans to subsidiaries (5,309) (10,816)
Loans to associates (223) -
Proceeds from disposal of
discontinued operations,
net of cash disposed of 33 39,902 -
Proceeds from disposal of
available for sale financial
assets 15(b) 234 1,031
Purchase of property, plant
and equipment - (5)
Interest and similar income
received 1,370 1,101
Net cash provided by/(used
in) investing activities 35,974 (17,365)
=========== ==========
Cash flows from financing
activities
Proceeds from the issue
of share capital 19 32,259
Expenses incurred issuing
share capital - (568)
Interest and similar charges
paid - (158)
Repayment of long-term borrowings - (4,000)
=========== ==========
Net cash provided by financing
activities 19 27,533
=========== ==========
Net increase in cash and
cash equivalents 28,060 2,081
Cash and cash equivalents
at the beginning of the
year 3,174 1,105
Effects of exchange rate
fluctuations on cash held (22) (12)
=========== ==========
Cash and cash equivalents
at the end of the year 18 31,212 3,174
=========== ==========
Cash flows from operating activities
Loss for the year (61,240) (94,991)
Adjustments for:
Finance costs - 979
Finance income (1,367) (1,101)
Loss on disposal of available
for sale financial assets 673 10,311
Impairment loss 54,183 73,820
Depreciation and amortisation 72 146
Share-based payment expense 318 2,908
========= =========
(7,361) (7,928)
Movements in working capital:
(Increase)/decrease in assets:
Trade and other receivables (388) 649
Increase/(decrease) in liabilities
Trade and other payables (184) (808)
========= =========
Net cash used in operating
activities (7,933) (8,087)
========= =========
ENK PLC
Notes to the financial statements
For the year ended 31 March 2012
1. General information
The consolidated entity's financial statements of ENK PLC ("the
Company") for the year ended 31 March 2012 were authorised for
issue by the Board on 21 June 2012 and the statement of financial
positions signed on the Board's behalf by Robert Gregory. The
Company's ordinary shares are traded on the AIM Market operated by
the London Stock Exchange and on the Australian Securities Exchange
(trading under the symbol "ENK").
The Company is a UK registered and domiciled public company
whose registered office address is the 6(th) Floor, Kildare House,
3 Dorset Rise, London EC4Y 8EN.
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been applied consistently to all the years presented, unless
otherwise stated.
2. Application of new and revised International Financial Reporting Standards
There have been no changes to accounting policies as a result of
standards and interpretations that became effective for this
accounting period. Any standards and interpretations that have been
issued but are not yet effective, and that are available for early
application, have not been applied by the consolidated entity in
these financial statements. Application of these Standards and
Interpretations is not expected to have a material effect on the
financial statements in the future.
3. Basis of preparation
These financial statements have been prepared in accordance with
IFRS as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
A separate statement of comprehensive income for the parent
Company has not been presented as permitted by section 408 of the
Companies Act 2006.
The financial statements are presented in US dollars and all
values are rounded to the nearest thousand dollars (US$'000) unless
otherwise stated.
4. Going concern basis
The financial statements have been prepared on the going concern
basis which contemplates the continuity of normal business activity
and the realisation of assets and the settlement of liabilities in
the normal course of business.
The consolidated entity has incurred a net loss after tax for
the year ended 31 March 2012 of US$('000)30,620 (for the 18 month
period to 31 March 2011: US$('000)73,975, and a net cash outflow
from operations of US$('000)18,946 (for the 18 month period to 31
March 2011: US$('000)17,578. As at 31 March 2012, the consolidated
entity had cash and cash equivalents available to it of
US$('000)33,710 (2011: US$('000)10,910.
The directors have reviewed the business outlook and cash flow
forecast for the period to 30 June 2013 and are of the opinion that
the use of the going concern basis of accounting is appropriate as
a result of the following:
a) The significant cash balances currently held by the consolidated entity;
b) On 8 May 2012, the consolidated entity completed the sale of
non-core assets being, its 5.01% interest in AIM-listed Toledo
Mining Corporation ('TMC') for US$('000')698 in cash and the
conditional sale of its 18.7% interest in Berong Nickel Corporation
('BNC') for US$('000')6,552 in cash to World Fund Pte Limited;
c) On 6 June 2012, the Company announced that Golden Harvest
Global Corporation will acquire a 60% interest in Montemina
Resources Corporation for a total consideration of US$11m.
d) The progression of development of the Acoje project or if
necessary the ability to defer current levels of expenditure;
and
e) The active management of the current levels of discretionary expenditure.
5. Accounting policies
(a) Consolidation and investments in associates and joint ventures
These financial statements are the consolidated financial
statements of ENK PLC and all of its subsidiaries ("the
consolidated entity").
Subsidiaries are all entities over which the consolidated entity
has the power to govern the financial and operating policies so as
to obtain benefits from their activities. Subsidiaries are fully
consolidated from the date on which control is transferred until
the date that the control ceases.
Inter-company transactions, balances and unrealised gains and
losses on transactions between the consolidated entity companies
are eliminated.
Non-controlling interests in subsidiaries are presented
separately from the equity attributable to equity owners of the
parent Company. Non-controlling shareholders' interest may
initially be measured either at fair value or at the
non-controlling interests' proportionate share of the fair value of
the acquiree's identifiable net assets. The choice of measurement
basis is made on each acquisition individually. Subsequent to
acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the
non-controlling interests' share of subsequent changes in equity.
Total comprehensive income is attributable to non-controlling
interests even if this results in the non-controlling interests
having a deficit balance.
Acquisitions or disposals of non-controlling interests which do
not affect the parent Company's control of the subsidiary are
accounted for as transactions with equity holders. Any difference
between the amount paid or received and the change in
non-controlling interests is recognised directly in equity.
An associate is an entity over which the consolidated entity has
significant influence and that is neither a subsidiary nor an
interest in a joint venture. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
The investment in an associate is initially recognised at cost and
adjusted for the consolidated entity's share of the changes in the
net assets of the investee after the date of acquisition, and for
any impairment in value. If the consolidated entity's share of
losses of an associate exceeds its interest in the associate, the
consolidated entity discontinues recognising its share of further
losses.
A joint venture is an entity over which the consolidated entity
has joint control. Joint control is the contractually agreed
sharing of control over an economic activity, and exists only when
the strategic financial and operating decisions relating to the
activity require the unanimous consent of the parties sharing
control. The investment in a joint venture is initially recognised
at cost and adjusted for the consolidated entity's share of the
changes in the net assets of the joint venture after the date of
acquisition, and for any impairment in value. If the consolidated
entity's share of losses of a joint venture exceeds its interest in
the joint venture, the consolidated entity discontinues recognising
its share of further losses.
(b) Subsidiaries, investments in associates and joint ventures
Subsidiaries, investments in associates and joint ventures in
the Company's financial statements are stated at cost less
provision for impairment.
(c) Business combinations
Business combinations are accounted for using the acquisition
method. The consideration for acquisition is measured at the fair
values of assets given, liabilities incurred or assumed, and equity
instruments issued by the Company in order to obtain control of the
acquiree (at the date of exchange). Costs incurred in connection
with the acquisition are recognised in profit or loss as
incurred.
Where a business combination is achieved in stages, previously
held interests in the acquiree are remeasured to fair value at the
acquisition date (date the consolidated entity obtains control) and
the resulting gain or loss, is recognised in profit or loss
Adjustments are made to fair values and to bring the accounting
policies of acquired businesses into alignment with those of the
consolidated entity. The costs of integrating and reorganising
acquired businesses are charged to the post acquisition profit or
loss.
If the initial accounting is incomplete at the reporting date,
provisional amounts are recorded. These amounts are subsequently
adjusted during the measurement period, or additional assets or
liabilities are recognised when new information about their
existence is obtained during this period.
(d) Intangible assets
Intangible assets acquired as part of an acquisition are
capitalised at their fair value where this can be measured
reliably. Mining rights and similar assets are capitalised where
they are considered to have an enduring benefit, and are amortised
over their useful economic lives from the date that they are
capitalised. Other licences are written-off to the income statement
as incurred.
Property, plant and equipment
Items of property, plant and equipment are stated at cost. 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.
Depreciation is charged to the income statement on a
straight-line basis to write off the cost less the estimated
residual value of property, plant and equipment in use over the
estimated useful economic lives of each part of an item of
property, plant and equipment. Land is not depreciated. The
estimated useful economic lives are as follows:
Plant and equipment - 10% straight line
Furniture - 20% straight line
Computers and office equipment - 20% straight line
Buildings and improvements - 20% straight line
Leasehold improvements - 20% straight line
Motor vehicles - 20% straight line
Useful economic lives and residual values of assets are reviewed
annually and adjustments are made where appropriate.
Assets in the course of construction include pre-production and
development expenditure incurred once commercial viability of the
respective projects has been established. Depreciation will
commence upon commercial production.
(e) Impairment of assets
The carrying amounts of the consolidated entity's and Company's
assets are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If there is any indication
that an asset may be impaired, its recoverable amount is estimated.
The recoverable amount is the higher of its net selling price and
its value in use. In assessing value in use, the expected future
cash flows from the asset 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. Impairment losses are recognised in the income
statement. A previously recognised impairment loss is reversed if
the recoverable amount increases as a result of a change in the
estimates used to determine the recoverable amount but not to an
amount higher than the carrying amount that would have been
determined (net of depreciation) had no impairment loss been
recognised in prior years.
Available for sale financial assets
Available for sale financial assets are initially stated at cost
and subsequently measured at fair value. Fair values are derived by
reference to market pricing and movements in fair values are taken
directly to equity with the exception of impairment losses which
are recognised directly in the income statement. When an investment
is disposed, any cumulative gains and losses previously recognised
in equity are included in the income statement.
(f) Trade and other receivables
Trade and other receivables do not carry any interest and are
stated at their nominal value as reduced by appropriate provisions
for irrecoverable amounts.
(g) 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 consolidated entity's and Company's cash
management are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
(h) Trade and other payables
Trade payables are stated at their original invoiced value, as
the interest that would be recognised from discounting future cash
payments over the short payment period is not considered to be
material.
(i) Equity instruments
Equity instruments issued by the consolidated entity are
recorded at the value of proceeds received, net of costs directly
attributable to the issue of the instruments.
(j) Impairment of financial assets
All financial assets, except for those at fair value through
profit or loss, are assessed for indicators of impairment at each
reporting date.
(k) Share-based payments
Equity-settled share-based payments are measured at fair value
at the date of the grant and expensed on a straight-line basis over
the vesting period, based on an estimate of the shares that will
eventually vest. Fair values are determined through use of a
Black-Scholes based model.
(l) Finance income
Finance income is recognised in the period in which interest is
earned. The amount of revenue is measured using the effective
interest rate method.
(m) Inventories
Inventories are valued at the lower of cost and net realisable
value.
(n) Operating leases
Operating lease rentals are charged to the income statement on a
straight-line basis over the period of the lease.
Taxation
Income tax for the period is based on the taxable income for the
year. Taxable income differs from profit as reported in the
statement of comprehensive income for the period as there are some
items which may never be taxable or deductible for tax and other
items which may be deductible or taxable in other periods. Income
tax for the period is calculated using the current ruling tax
rate.
Deferred tax is the future tax consequences of temporary
differences between the carrying amounts and tax bases of assets
and liabilities shown on the statement of financial position.
Deferred tax assets and liabilities are not recognised if they
arise in the following situations: the initial recognition of
goodwill; or the initial recognition of assets and liabilities that
affect neither accounting nor taxable profit. The amount of
deferred tax provided is based on the expected manner of recovery
or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantially enacted at the statement
of financial position date.
The consolidated entity does not recognise deferred tax
liabilities, or deferred tax assets, on temporary differences
associated with investments in subsidiaries, joint ventures and
associates where the parent Company is able to control of the
timing of the reversal of the temporary differences and it is not
considered probable that the temporary differences will reverse in
the foreseeable future. It is the consolidated entity's policy to
reinvest undistributed profits arising in the consolidated entities
companies.
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. The carrying amount of the
deferred tax assets are reviewed at each statement of financial
position date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the asset to be recovered.
(o) Provisions
Provisions are recognised when the consolidated entity has a
present obligation as a result of an event that occurred in the
past and the settlement of that obligation will result in an
outflow of resources, but the timing of or amount that will be
required to settle is uncertain. The amount recognised as a
provision is the best estimate of the consideration which will be
required to settle the obligation.
(p) Foreign currencies
Transactions in foreign currencies are translated into the
functional currency using the rate of exchange ruling at the date
of the transaction. Monetary assets and liabilities denominated in
foreign currencies are translated into the functional currency
using the rate of exchange ruling at the balance sheet date and the
gains or losses on translation are included in the income
statement.
The assets and liabilities of overseas subsidiaries and
associates are translated to US dollars (the presentational
currency) at the foreign exchange rate ruling at the balance sheet
date. The revenue and expenses of such undertakings are translated
at the average rates of exchange during the year. Exchange
differences arising on these translations are taken to the
translation reserve.
The exchange differences are released in the income statement
upon disposal. On consolidation exchange differences arising on the
net investment in foreign operations are taken to equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and are translated at the closing rate. The US
dollar to sterling exchange rate as at 31 March 2012 was 1.59873
(2011: 1.60315) to the pound.
Accounting estimates and judgements
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 consolidated and
Company's financial statements, providing some insight also to
uncertainties that could impact the consolidated financial
results.
(q) Key sources of estimation uncertainty
Share-based payments
The consolidated entity 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
29.
Provisions
Note 20 contain information about environmental rehabilitation
costs. The key assumptions and risk factors used in the calculation
could lead to possible misstatement of environmental rehabilitation
costs.
Impairment review
The consolidated entity's assets have been assessed for
impairment.
Note 15(b) and 27 provides detail on the key estimates and
assumptions that have been used in the impairment assessment.
6. Operating segments
The consolidated entity's operating segments have been
determined with reference to the monthly management accounts used
by the chief operating decision makers to make decisions regarding
the consolidated entity's operations and allocation of working
capital. Due to the size and nature of the consolidated entity, the
Managing Director and the Board of Directors as a whole have been
determined as the chief operating decision makers. The consolidated
entity identifies operating segments primarily according to the
country of operations, Turkey and the Philippines with the
remainder, including investments, being unallocated. The
consolidated entity has not commenced production, the other
operating income is royalty income derived via an agreement with
DMCI. DMCI is conducting mining operations in a defined area
covered by a Mineral Production Sharing Agreement ('MPSA') held by
Zambales Diversified Metals Corporation ('ZDMC') until 31 December
2012.
The analysis of operating loss before taxation and the net
assets employed by geographical segments of operation is shown
below.
Geographical Turkey Philippines Unallocated Total
segments (Discontinued)
===================== ==================== ==================== ==================== ====================
31 31 31 31 31 31 Mar 31 Mar 31 Mar
Mar Mar Mar Mar Mar 11 12 11
12 11 12 11 12 US$'000 US$'000 US$'000
US$'000 US$'000 US$'000 US$'000 US$'000
Result
Other operating
income - - 2,139 - - - 2,139 -
Segment result (21,465) (43,941) (10,729) (7,429) (4,334) (3,401) (36,528) (54,771)
Exceptional
gain - - - - - 17,375 - 17,375
Impairment
loss - - - - - (30,297) - (30,297)
Finance income - - 14 101 32 1,108 46 1,209
Finance costs - - - (1) (2) (979) (2) (980)
Loss on disposal
of investments
in associate - - - - - (7,719) - (7,719)
Gain/(loss)
on disposal
of available
for sale
financial
assets - - - - 78 (1,278) 78 (1,278)
Share of
loss of associates
and joint
ventures - - - - (747) (40) (747) (40)
===================== ========= ========= ========= ========= ========= ========= ========= =========
Loss for
the year (21,465) (43,941) (8,576) (7,329) (4,973) (25,231) (35,014) (76,501)
===================== ========= ========= ========= ========= ========= ========= ========= =========
Geographical Turkey Philippines Unallocated Total
segments (Discontinued)
=================== ===================== ==================== ==================== ====================
31 Mar 31 31 31 31 31 31 31
12 Mar Mar Mar Mar Mar Mar Mar
US$'000 11 12 11 12 11 12 11
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Other information
Non-current
assets - 50,931 92,505 14,631 7,247 86,614 99,752 152,176
Total assets - 55,897 95,616 16,005 39,546 97,658 135,162 169,560
Total liabilities - (2,730) (20,562) (4,518) (302) (20,347) (20,864) (27,595)
=================== ========== ========= ========= ========= ========= ========= ========= =========
7. Staff numbers and costs
The average number of persons employed (including directors)
during the year, analysed by category, were as follows:
Consolidated
Number of employees
=======================
31 March 31 March
12 11
Administration 45 12
Exploration, evaluation and
development 183 123
=========== ==========
228 135
=========== ==========
The aggregate payroll costs of these persons were as
follows:
Consolidated
====================
31 March 31 March
12 11
US$'000 US$'000
Wages and salaries 5,020 5,857
Social security and other pension
costs 52 304
Share-based payments 318 2,516
5,390 8,677
========= =========
8. Loss for the year
Consolidated operating loss before tax is stated after
(charging)/crediting:
31 March 31 March
12 11
$US'000 $US'000
========= =========
Depreciation and amortisation (201) (520)
Operating leases (315) (443)
Research and development - (1,669)
Acquisition costs - (431)
Exceptional gain (note 32) - 17,375
Impairment loss (note 27) - (67,016)
Loss on disposal of investment
in associate - (7,719)
Gain/(loss) on disposal of
available for sale financial
assets 78 (1,278)
Share of loss of associates
and joint ventures (747) (40)
========= =========
9. Other operating income
Consolidated Consolidated
31 March 31 March
12 11
US$'000 US$'000
============= =============
Royalty income 2,139 -
============= =============
Royalty income derived from mining operations being conducted
within a defined area covered by a Mineral Production Sharing
Agreement ('MPSA') held by Zambales Diversified Metals
Corporation.
10. Finance income
Consolidated Consolidated
31 March 31 March
12 11
US$'000 US$'000
============= =============
Bank interest receivable 46 1,209
============= =============
11. Finance costs
Consolidated Consolidated
31 March 31 March
12 11
US$'000 US$'000
============= =============
Bank interest payable 2 -
Interest payable on other borrowings - 1,794
Share-based payments - 584
2 2,378
============= =============
12. Discontinued operations
Turkish operations
On 17 November 2011, the consolidated entity finalised the sale
of the entire issued capital of two Turkish subsidiaries being
Sardes Nikel Madencilik A.S and Turmad Madencilik Ve Ticaret A.S,
which includes its 100% Calda nickel project in Turkey for US$40m.
The sale was announced in September 2011 and these assets were
recorded as non-current assets held for sale at the period ended 30
September 2011. In accordance with IFRS 5 these assets were carried
at the lower of cost and the fair value less of sale and,
accordingly, an impairment loss of US$('000')13,103 was recognised
at that date. At the prior year-end, the fair value less cost of
sale was estimated to be US$50m and, as a result, an impairment of
US$('000')36,719 was recorded.
Upon completion of the sale on 17 November 2011 a loss on
disposal arose. Details of the assets and liabilities disposed of,
and the calculation of the loss on disposal are disclosed in note
33.
Loss for the year from discontinued operations
The results of the discontinued operations included in the
consolidated income statement are set out below. The Turkish
operations were not classified as held for sale or as a
discontinued operation at 31 March 2011 therefore, the comparative
consolidated income statement has been restated to show the
discontinued operations separately from continuing operations.
31 March 31 March
12 11
US$'000 US$'000
Results of discontinued operation
Administration expenses (775) (4,020)
Other operating costs - (1,895)
Other operating income - 11
Finance income 3 6
Impairment loss (13,103) (36,719)
========= =========
(13,875) (42,617)
========= =========
Loss on disposal of Turkish
operation
including reclassification (7,590) -
of foreign exchange translation
reserves of US$('000)788 on
disposal (note 33)
========= =========
Loss for the year from discontinued
operations (21,465) (42,617)
========= =========
12. Discontinued operations
(cont'd)
31 March 31 March
12 11
US$'000 US$'000
========= =========
Basic and diluted loss per
share (0.008) (0.016)
========= =========
Cash flows provided by (used
in) discontinued operation
Net cash used in operating
activities (773) (5,897)
Net cash provided by investing 39,902 -
activities
========= =========
Effect on cash flows 39,129 (5,897)
========= =========
Consideration received, satisfied
in cash 40,000
Cash and cash equivalents disposed
of (98)
=========
Net cash inflow 39,902
=========
13. Intangible assets
Licenses Goodwill Total
and similar
rights
and assets
====================== ============= ========= ========
Cost
As at 1 October 09 5,442 1,096 6,538
Exchange differences 5,677 - 5,677
Acquired on business
combination 84,000 - 84,000
Impairment (note 27) (968) (1,096) (2,064)
As at 31 March 11 94,151 - 94,151
====================== ============= ========= ========
Exchange differences 1,007 - 1,007
Disposals (4,062) - (4,062)
====================== ============= ========= ========
As at 31 March 12 91,096 - 91,096
====================== ============= ========= ========
Amortisation
As at 1 October 09 2,801 - 2,801
Charged in period 116 - 116
====================== ============= ========= ========
As at 31 March 11 2,917 - 2,917
====================== ============= ========= ========
Impairment (note 27) 1,145 - 1,145
Disposals (4,062) - (4,062)
====================== ============= ========= ========
As at 31 March 12 - - -
====================== ============= ========= ========
Net book value
As at 31 March 12 91,096 - 91,096
As at 31 March 11 91,234 - 91,234
==================== ======= ====== =======
As at 30 September
09 2,641 1,096 3,737
An impairment of US$('000)1,145 (2011:US$('000)2,064) was
recognised as at 31 March 2012 in relation to the above intangible
assets (refer note 27).
14. Property, plant and equipment
Freehold Leasehold Assets Plant Furniture, Total
land, improvements under equipment computers
buildings construction and motor and office
and improvements vehicles equipment
======================= ================== ============== ============== =========== ============ =========
Cost
As at 1 October
09 267 108 76,183 2,968 950 80,476
Additions 121 - 3,420 - 5 3,546
Disposals - - - (1,271) (157) (1,428)
Acquired on
business combination - - - 459 - 459
Exchange differences - - - (19) (1) (20)
Impairment
(note 27) - - (34,655) - - (34,655)
======================= ================== ============== ============== =========== ============ =========
As at 31 March
11 388 108 44,948 2,137 797 48,378
Additions 98 - 860 163 82 1,203
Disposals (388) (108) (32,673) (1,619) - (34,788)
Exchange differences 61 - (317) (282) (128) (666)
Impairment
(note 27) - - (11,958) - - (11,958)
======================= ================== ============== ============== =========== ============ =========
As at 31 March
12 159 - 860 399 751 2,169
======================= ================== ============== ============== =========== ============ =========
Depreciation
As at 1 October
09 48 49 - 1,231 595 1,923
Charge for
period 49 32 - 207 39 327
Disposals - - - (1,420) (33) (1,453)
Exchange differences - - - (18) (4) (22)
As at 31 March
11 97 81 - - 597 775
Charge for
year 22 27 - 75 78 202
Disposals (97) (108) - - - (205)
As at 31 March
12 22 - - 75 675 772
======================= ================== ============== ============== =========== ============ =========
Net book value
As at 31 March
12 137 - 860 324 76 1,397
As at 31 March
11 291 27 44,948 2,137 202 47,605
======================= ================== ============== ============== =========== ============ =========
As at 30 September
09 219 59 76,183 1,737 355 78,553
Leasehold Plant equipment Furniture, Total
improvements and motor computers
vehicles and office
equipment
==================== ============== ================ ============ ========
Company US$'000 US$'000 US$'000 US$'000
Cost
As at 1 October
09 108 19 351 478
Additions - - 5 5
Disposals - - (35) (35)
==================== ============== ================ ============ ========
As at 31 March
11 108 19 321 448
Disposals (108) (19) (185) (312)
As at 31 March
12 - - 136 136
==================== ============== ================ ============ ========
Depreciation
As at 1 October
09 49 19 159 227
Charge for period 32 - 102 134
==================== ============== ================ ============ ========
As at 31 March
11 81 19 261 361
Charge for year 27 - 45 72
Disposals (108) (19) (170) (297)
==================== ============== ================ ============ ========
As at 31 March
12 - - 136 136
==================== ============== ================ ============ ========
Net book value
As at 31 March - - - -
12
As at 31 March
11 27 - 60 87
==================== ============== ================ ============ ========
As at 30 September
09 59 - 192 251
15. Investments
Consolidated Company Consolidated Company
31 March 31 March 31 March 31 March
12 12 11 11
US$'000 US$'000 US$'000 US$'000
============= ========== ============= ==========
Investments in associates
(a) - - 747 1,169
Available for sale
financial assets (b) 7,238 7,238 4,782 4,782
Investments in subsidiaries
(c) - 32,557 - 81,888
Long term receivables
(d) - 13,500 - 9,375
============= ========== ============= ==========
a) Investments in associates
Percentage
Country
of of ordinary
Principal shares Effective
incorporation activity held interest
Devolli Resources Mining and
Sh.p.k(1) Albania exploration - 50%
Intermediate
Heraan Holdings Incorporated Philippines holding 40% -
Asian Nickel Research
& Technology Corporation(2) Philippines Mining technology 40% 64%
=============== ================== ============ ==============
(1) The 50% investment in Devolli Resources Sh.p.k
is held by the wholly owned subsidiary, Adriatic
Nickel Resources Sh.p.k which has been sold by
the consolidated entity subsequent to the end of
the financial year for a nominal value.
(2) As a result of 60% of Asian Nickel Research
and Technology Corporation being held by Heraan
Holdings Incorporated the directors have concluded
that control does not exist. As such Asian Nickel
Research and Technology Corporation has been treated
as an investment and accounted for using the equity
method. The consolidated entity's share of loss
of associates and joint ventures exceeded the investment
value resulting in the investment in associates
being reduced to nil as at 31 March 2012.
31 March 31 March
Aggregate amounts relating 12 11
to associates US$'000 US$'000
============== ==================
Assets 3,874 3,858
Liabilities (3,925) (2,571)
Revenues - 1
Loss (747) (40)
============== ==================
b) Available for sale financial assets
Percentage
Country
of of ordinary
Principal shares
incorporation activity held
=============== ============== ============
Toledo Mining
Corporation Mining and
Plc UK exploration 5.01%
Berong Nickel Mining and
Corporation Philippines exploration 18.7%
=============== ============== ============
Investment in Toledo Mining Corporation Plc
The investment in Toledo Mining Corporation Plc ('TMC') was
originally recorded as investment in associate. During the prior 18
month period, the consolidated entity received proceeds of
US$('000')1,031 and recognised a loss of US$('000')7,719 in the
income statement following the disposal of 2,750,000 shares held in
TMC. Subsequent to the disposal, the directors considered that the
Company no longer exerted significant influence and reclassified
the investment to an available for sale financial asset. An
impairment of US$('000')7,875 was recorded at this time.
During the year, the consolidated entity received proceeds of
US$('000)234 and recognised a profit of US$('000)78 in the income
statement following the disposal of 440,000 share held in TMC.
15. Investments (cont'd)
Subsequent to the end of the financial year on 4 May 2012, the
consolidated entity sold the remaining interest of 5.01% in TMC for
US$('000')686 in cash to World Fund Pte Limited. The closing share
price on 4 May 2012 was 17.25p valuing the consolidated entity's
interest at US$('000)686. The valuation of TMC is a level 3 fair
value measurement, in the fair value hierarchy as set out in IFRS
7.
Investment in Berong Nickel Corporation
The investment in Berong Nickel Corporation ('BNC') was
originally recorded as an investment in an associate. In the prior
18 month period, the directors considered that the Company no
longer exerted significant influence and reclassified the
investment to an available for sale financial asset. An impairment
of US$('000')22,422 was recorded at this time.
The valuation in BNC, as an available for sale financial asset,
was based on an economic value per tonne of US$40 and the directors
concluded that it was appropriate to value the consolidated
entity's interest in BNC at US$('000')3,480.
Subsequent to the end of the financial year on 4 May 2012, the
consolidated entity conditionally sold its 18.7% interest in BNC
for US$('000')6,552 in cash to World Fund Pte Limited. The sale of
the BNC shares is conditional upon the other shareholders of BNC,
being TMC and Atlas Consolidated Mining Corporation ('Atlas') not
exercising their pre-emption rights. In the event TMC or Atlas
decide to exercise their pre-emption right they have to match the
price offered by World Fund Pte Limited. Atlas and TMC have 60 days
to exercise their pre-emption rights. The BNC sale is expected to
be completed in early July 2012.
As at 31 March 2012 the valuation is based on the conditional
sale value of US$('000')6,552 resulting in a change in the fair
value of US$('000')3,072 recognised in the consolidated statement
of comprehensive income. The valuation of BNC is a level 3 fair
value measurement, in the fair value hierarchy as set out in IFRS
7.
c) Investments in subsidiaries
Loans Equity Total
US$'000 US$'000 US$000
======================== ======== ========= ========
Cost
At 1 October 2009 27,246 54,074 81,320
Additions - 32,117 32,117
======================== ======== ========= ========
As at 31 March 2011 27,246 86,191 113,437
Additions - 3,683 3,683
======================== ======== ========= ========
At 31 March 2012 27,246 89,874 117,120
======================== ======== ========= ========
Provisions
Impairment loss at 31
March 2011 27,246 4,303 31,549
Impairment loss during
the year (refer note
27) - 53,014 53,014
======================== ======== ========= ========
Impairment loss at 31
March 2012 27,246 57,317 84,563
======================== ======== ========= ========
Net book value
At 31 March 2012 - 32,557 32,557
======================== ======== ========= ========
At 31 March 2011 - 81,888 81,888
======================== ======== ========= ========
15. Investments (cont'd)
As at 31 March 2012 the subsidiary undertakings in which the
consolidated entity has an interest, which are included in the
consolidated financial statements, are as follows:
Country Principal Effective
of incorporation activity interest
=============================== =================== ================ ==========
Adriatic Nickel Resources Mining and
Sh.p.k.(1) Albania exploration 100%
European Nickel Holding Investment
Iberia S.L. Spain holding 100%
European Nickel Spain Investment
S.L. Spain holding 100%
European Nickel Holland Investment
B.V. Holland holding 100%
European Nickel Philland Investment
B.V. Holland holding 100%
Mining project
Rusina Mining NL Australia management 100%
Fil-Asian Strategic
Resources & Properties Mining and
Corporation Philippines exploration 100%
Montemina Resources Mining and
Corporation Philippines exploration 1%*
Zambales Diversified Mining and
Metals Corporation Philippines exploration 64.22%
Zambales Chromite Mining Mining and
Corporation Philippines exploration 64.36%
Fil-Euro Asia Nickel Mining and
Corporation Philippines exploration 100%
Investment
ZDMC Holdings Corporation Philippines holding 40.36%*
Mining and
Mt. Lanat Metals Corporation Philippines exploration 40.60%*
Zambales Nickel Processing Mining and
Corporation Philippines exploration 80.20%
Investment
Zamnorth Holdings Corporation Philippines holding 40.60%*
Investment
Enickel Holdings Inc Philippines holding 100%
Investment
Enickel Berhold Inc Philippines holding 100%
=============================== =================== ================ ==========
* For these subsidiaries control is exercised through the
existence of potential voting rights that can be exercised at the
discretion of the consolidated entity.
(1) Disposed subsequent to the end of the financial year for a
nominal value.
d) Long term receivables
Company Company
31 March 31 March
12 11
US$000 US$000
========= =========
Amounts owed by subsidiaries 13,500 9,375
========= =========
16. Trade and other receivables
Consolidated Consolidated Company Company
31 March 31 March 31 March 31 March
12 11 12 11
US$'000 US$'000 US$'000 US$'000
============= ============= ========== ==========
Non-current
Other receivables 21 7,808 - -
21 7,808 - -
============= ============= ========== ==========
16. Trade and other receivables (cont'd)
Consolidated Consolidated Company Company
31 March 31 March 31 March 31 March
12 11 12 11
US$'000 US$'000 US$'000 US$'000
============= ============= ========== ==========
Current
Other receivables 1,490 2,189 150 844
Term deposits 24 - - 42,150
Refundable deposits 109 4,065 109 -
Prepayments and accrued
income 77 127 45 58
============= ============= ========== ==========
1,700 6,381 304 43,052
============= ============= ========== ==========
Consolidated other receivables includes an amount of
US$('000)717 recoverable from DMCI in relation to royalty income
derived from mining operations being conducted within a defined
area covered by a Mineral Production Sharing Agreement ('MPSA')
held by Zambales Diversified Metals Corporation.
The term deposits are amounts held on trust and
are not convertible to cash within a 3 month
period.
17. Inventories
Consolidated Consolidated
31 March 31 March
12 11
US$'000 US$'000
============== =============
Raw materials and consumables - 73
Stockpiled ore - 20
============== =============
- 93
============================================== =============
18. Cash and cash equivalents
Consolidated Consolidated Company Company
31 March 31 March 31 March 31 March
12 11 12 11
US$'000 US$'000 US$'000 US$'000
Bank balances
Cash on hand and
balances with banks 33,710 10,910 31,212 3,174
Cash and cash equivalents
in the statement
of cash flows 33,710 10,910 31,212 3,174
============= ============= ========== ==========
19. Trade and other payables
Consolidated Consolidated Company Company
31 March 31 March 31 March 31 March
12 11 12 11
US$'000 US$'000 US$'000 US$'000
============= ============= ========== ==========
Trade creditors 448 565 113 235
Amounts owed to associates 650 874 904 1,126
Taxation and social
security 154 126 40 29
Other payables 473 2,018 - 42
Accruals and deferred
income 472 1,057 135 166
============= ============= ========== ==========
2,197 4,640 1,192 1,598
============= ============= ========== ==========
20. Provisions
Consolidated
US$000
====================================================== ==============
At 1 October 2009 2,400
Provided during the period 28
====================================================== ==============
As at 31 March 2011 2,428
Reduction arising from payments (4)
Reduction of environmental rehabilitation
provision
due to disposal of Turkish operations (2,400)
====================================================== ==============
At 31 March 2012 24
====================================================== ==============
21. Taxation
Income tax recognised in year 31 March 31 March
2012 2011 US$'000
US$'000
Current tax:
========= ==============
Current tax expense in respect (43) -
of the current year
========= ==============
Deferred tax:
========= ==============
Deferred tax credit recognised
in the current year 1,881 1,953
========= ==============
Total income tax credit recognised
in the current year 1,838 1,953
========= ==============
The income tax credit for the year can be reconciled to the
accounting loss for the year as follows:
31 March 31 March
2012 2011 US$'000
US$'000
Loss before tax from continuing
operations (13,549) (33,884)
========= ==============
Tax at 26% (2011:28%) (3,523) (9,488)
Effect of expenses that are
not deductible in determining
taxable profit 639 8,970
Effect of income not taxable (56) (6,818)
Effect of unused tax losses
and tax offsets not recognised
as deferred tax assets 524 4,297
Effect of different tax rates
of subsidiaries operating in
other jurisdictions 578 1,086
Income tax credit recognised
in loss (1,838) (1,953)
========= ==============
The tax rates used in the above reconciliations
is the UK corporate tax rate. For the 31 March
2012 year it was 26% and for the 31 March 2011
period it was 28%. The deferred tax credit has
been calculated using the corporate tax rate
of 30% applied in the Philippines.
21. Taxation (cont'd) Income tax recognised
directly in equity 31 March 31 March
2012 2011 US$'000
US$'000
Exchange difference attributable
to Company (28) (930)
Exchange differences attributable
to non-controlling interest - (523)
========= ==============
(28) (1,453)
========= ==============
Deferred tax balances
The following is the analysis of deferred tax
assets/(liabilities) presented in the consolidated
statement of financial position: 31 March 31 March
2012 2012 US$'000
US$'000
Deferred tax assets - -
Deferred tax liabilities (18,643) (20,527)
========= ==============
Opening Recognised Closing
balance in loss balance
US$'000 US$'000 US$'000
Deferred tax assets/(liabilities)
in relation to:
Intangibles assets (19,074) 1,912 (17,162)
Exchange difference on
foreign operation (1,453) (28) (1,481)
========= =========== =========
(20,527) 1,884 (18,643)
========= =========== =========
Unrecognised tax losses
Items for which no deferred tax assets have
been recognised are attributable to the following: Deferred tax assets in relation 31 March 31 March
to: 2012 2011 US$'000
US$'000
Tax losses - revenue 9,600 26,200
Other short-term timing differences 370 680
========= ==============
Tax losses
The above unused tax losses for which no deferred tax asset has
been recognised will be subject to the relevant company satisfying
the requirements imposed by the regulatory taxation authorities.
The benefits of deferred tax assets will only be recognised if:
-- Future assessable income is derived of a nature and of an
amount sufficient to enable the benefit to be realised;
-- The conditions for deductibility imposed by tax legislation
continue to be complied with; and
-- No changes in tax legislation adversely affect the Company in realising the benefit.
22. Called up share
capital
======================
Ordinary shares Share premium
account
============================================== ===================================================
31 March 31 March 31 March 31 March
2012 2011 US$'000 2012 2011 US$'000
US$'000 US$'000
262,104,003
fully paid
ordinary shares
of 4p each
(2011:261,979,003) 17,538 17,531 233,720 233,708
============================ ================ ========================= ========================
Ordinary Ordinary shares Share
shares Share premium premium
account US$'000 account
No. US$'000 US$'000 No. US$'000
================ ============ ============== ========================= ================ ==========
Fully paid
ordinary shares
Balance at
beginning of
financial period 261,979,003 17,531 233,708 470,727,857 8,480 207,496
Shares issued at
10p per share as
vested options
from the December
2008 series were
exercised 125,000 7 12 - - -
Shares issued at
7p per share - - - 172,357,000 2,891 14,454
Shares issued to
pay penalty fee - - - 1,345,571 22 135
1 for 4
consolidation - - - (483,322,821) - -
Shares issued on
merger to
Rusina
shareholders - - - 60,481,396 3,572 -
Shares issued at
32p per share - - - 10,500,000 641 4,487
Shares issued at
20p per share - - - 29,890,000 1,925 7,704
Expenses incurred
issuing shares - - - - - (568)
================ ============ ============== ========================= ================ ==========
Balance at end of
financial period 262,104,003 17,538 233,720 261,979,003 17,531 233,708
================ ============ ============== ========================= ================ ==========
All fully paid ordinary shares entitle the holder to one vote and equal rights to dividends
declared.
23. Reserves
Consolidated Company
============================================== =========================================
31 March 31 March 31 March 31 March
2012 2011 US$'000 2012 2011
US$'000 US$'000 US$'000
================ ============================ ========================= ==============
Merger reserve 18,641 18,641 17,865 17,865
Translation
reserve 1,422 (412) (18) 4
Fair value
reserve 2,822 210 2,822 210
The merger reserve arose at 30 September 2009 from the acquisition of certain minority interests
and the acquisition of Rusina Mining N.L. on 16 June 2010. The Company has utilised the provisions
of the Companies Act 2006 to account for the issue of the shares in accordance with the merger
relief principles.
The translation reserve comprises all foreign exchange differences arising from the translation
of the financial statements of subsidiaries that do not have a US dollar functional currency.
Exchange differences arising are classified as equity and transferred to the consolidated
entity's translation reserve. Such translation differences are recognised in the income statement
in the period in which the operation is disposed of.
The fair value reserve comprises the fair value adjustments on the revaluation of the Company's
available for sale investments.
24. Loss per share
2012 2011
Cents Cents
Loss per share (basic and diluted) per share per share
============ =================
From continuing operations (0.004) (0.017)
From discontinuing operations (0.009) (0.024)
============ =================
Total (0.013) (0.041)
============ =================
The loss and weighted average number of ordinary shares used in the calculation of basic and
diluted loss per share are as follows:
2012 2011
US$'000 US$'000
============ =================
Loss used in the calculation of loss per share (33,176) (74,548)
Loss for the year from discontinued operations (21,465) (42,617)
============ =================
Loss for the year from continuing operations (11,711) (31,931)
============ =================
Weighted average number of ordinary shares
for the purposes of basic and diluted loss per share 262,041,845 183,940,184
============ =================
There is no difference in the basic and diluted loss per share as share options in existence
at 31 March 2012 (refer note 29) are considered anti-dilutive. As such existing share options
are not included in the calculation of diluted loss per share.
25. Contingent liabilities and contingent assets
There were no contingent assets or liabilities at the year
end.
26. Commitments
Commitments under operating leases represent lease of the office premises and 3 car bays in
Perth expiring 30 November 2013, the lease of 2 floors of office premises and 4 car bays in
Manilla expiring 31 October 2012, lease of an office in Santa Cruz, Philippines for a period
of 10 years to 31 October 2019 with rental fixed for 5 years and then fixed for a further
5 years.
Lease payments in Perth are increased annually by approximately 4%. Lease payments in the
Philippines are fixed.
31 March 31 March
2012 2011
US$'000 US$'000
Payable in less than one
year 106 293
Payable between one and
two years 128 46
Payable between two and
five years 16 49
Payable between five and
ten years 26 25
The minimum exploration commitments required to hold exploration
permits in the Philippines are as follows:
31 March 31 March
2012 2011
US$'000 US$'000
Payable in less than one
year 149 73
Payable between one and
two years 297 73
Payable between two and
five years 609 374
26. Commitments (cont'd) In addition to the above exploration commitments, the consolidated
entity has two years remaining on an agreed three year exploration and environmental work
program with the Department of Environment and Natural Resources in relation to the Mineral
Production Sharing Agreements ('MPSA') held in Zambales Diversified Metals Corporation ('ZDMC')
& Zambales Chromite Mining Corporation Inc ('ZCMCI'). The agreed and approved expenditure
under the work programs is as follows. This expenditure can be varied should required funding
not be available to the consolidated entity. Year 1 Year 2
US$'000 US$'000
ZDMC 3,770 766
ZCMCI 438 -
27. Impairment review
The consolidated entity and Company has recorded impairment losses in the current and prior
periods in respect to the following assets:
* Toledo Mining Corporation (previously associate
company) - refer note 15(b);
* Berong Nickel Corporation (previously associate
company) - refer note 15(b); and
* Turkish operations and related holding companies -
refer note 12.
The impairment losses have been allocated to assets as follows: Assets Consolidated Consolidated Company Company
31 March 31 March 31 March 31 March
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
Goodwill - 1,096 - -
Intangibles 1,145 968 - 79
Property, plant
and equipment 11,958 34,655 - -
Investments in
subsidiaries - - 53,014 27,744
Long term receivables - - - 11,367
Investments in
associates - 30,297 1,169 34,630
============= ============= ========== ==========
13,103 67,016 54,183 73,820
============= ============= ========== ==========
The related holding companies mentioned above held the share
capital of the Turkish operations and on disposal of the shares
there are no remaining assets within these entities. As a result a
full impairment has been recorded in the current year in respect of
the investments in subsidiaries.
28. Financial instruments
The consolidated entity and Company's principal financial assets
comprising loans and receivables being cash and cash equivalents
and trade and other receivables; and available for sale financial
assets. In addition the Company's financial assets include amounts
due from subsidiaries. The consolidated entity and Company's
financial liabilities comprise: trade and other payables.
All of the consolidated entity and Company's financial
liabilities are measured at amortised cost. With the exception of
available for sale financial assets, which are recorded at fair
value, all of the consolidated entity and Company's financial
assets are classified as loans and receivables.
The directors determine, as required, the degree to which it is
appropriate to use financial instruments to mitigate financial
risks. The main risks for which such instruments may be appropriate
are interest rate risk, liquidity risk and foreign currency risk,
each of which is discussed below.
Credit risk
Credit risk refers to the risk that the consolidated entity and
Company's financial assets will be impaired by the default of a
third party. The consolidated entity is exposed to credit risk
primarily on its cash and cash equivalents as set out in note 18,
and other receivables set out in note 16. The Company is also
exposed to credit risk with related party debtors. Credit risk for
cash and cash equivalents is managed by ensuring that surplus funds
are deposited only with financial institutions with high quality
credit ratings. The maximum exposure to credit risk is not
considered to be different from the carrying values of the current
other receivables detailed in note 16 and the cash and cash
equivalents detailed in note 18.
Foreign currency risk
Foreign currency risk refers to the risk that the value of a
financial commitment, recognised asset or liability will fluctuate
due to changes in foreign currency rates. The consolidated entity
is exposed to foreign currency risk due to the following:
(i) Transactional exposure relating to operating costs and
capital expenditure incurred in currencies other than the
functional currency of operations;
(ii) Translation exposures relating to monetary assets and
liabilities, including cash and short-term investment balances,
held in currencies other than the functional currency of
operations; and net investments that are not denominated in US
Dollars.
Exchange gains and losses on financial assets or future
transactions are recognised in the income statement. A proportion
of the consolidated entity and Company's costs are incurred in
sterling, Philippine pesos, euros and Australian dollars.
Accordingly, movements in the US dollar exchange rate with
sterling, Philippine pesos, euros and Australian dollars could have
a detrimental effect on the consolidated entity's and Company's
results and financial condition.
Foreign exchange risk is managed by maintaining some cash
deposits in currencies other than US dollars. The table below shows
the currency profiles of cash and cash equivalents for the
consolidated entity:
2012 2011
Currency US$000 US$000
==================== ======= =======
Sterling 375 1,736
US dollars 32,800 8,510
Euros 37 77
Philippine peso 302 287
Turkish lira - 127
Australian dollars 196 173
==================== ======= =======
33,710 10,910
==================== ======= =======
28. Financial instruments (cont'd)
In addition to cash and cash equivalents located in the UK, the
consolidated entity and Company's principal assets are located in
the Philippines (Philippine peso functional currency).
Movements in currencies against the US dollar do not have a
material effect on the consolidated entity and Company's statement
of financial position. Exchange gains and losses resulting from
such currency fluctuations are recognised directly in the income
statement. The consolidated entity and Company do not hedge their
exposure to investments in foreign companies denominated in
currencies other than US dollars.
The table below shows an analysis of net monetary assets and
liabilities by functional currencies of the consolidated
entity:
US dollars Peso Euro Aud Total
2012 US$000 US$000 US$000 US$000 US$000
====================== =========== ======= ======= ======= =======
Balances denominated
in
Sterling 321 - - - 321
US dollars 31,101 1,136 11 993 33,241
Euros 24 - 1 - 25
Australian dollars (5) 3 - 53 51
Philippine peso - (404) - - (404)
31,441 735 12 1,046 33,234
====================== =========== ======= ======= ======= =======
US dollars Peso Euro Lek Aud Total
2011 US$000 US$000 US$000 US$000 US$000 US$000
====================== =========== ======= ======= ======= ======= =======
Balances denominated
in
Sterling 2,987 - - - - 2,987
US dollars 1,278 192 - - 7,025 8,495
Euros 44 14 14 7 - 79
Australian dollars 1 9 - - (69) (59)
Philippine peso - 1,300 - - - 1,300
Lek - - - 102 - 102
Turkish lira 7,555 - - - - 7,555
====================== =========== ======= ======= ======= ======= =======
11,865 1,515 14 109 6,956 20,459
====================== =========== ======= ======= ======= ======= =======
A 10 percent weakening of the US dollar against the Philippine
peso at 31 March 2012 would have decreased equity and loss by the
amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant. The
analysis is performed on the same basis for 31 March 2011.
Loss Equity
================ ================
2012 2011 2012 2011
US$000 US$000 US$000 US$000
======= ======= ======= =======
Philippine peso (139) (220) (139) (220)
======= ======= ======= =======
A 10 percent strengthen of the US dollar against the Philippine
peso at 31 March 2012 would have had the equal but opposite effect
to the amounts shown above, on the basis that all other variables
remain constant. A 10% fluctuation is considered to be an
acceptable level of exposure to the above currencies.
28. Financial instruments (cont'd)
Commodity price risk
Commodity price risk is the risk that the consolidated entity's
future earnings will be adversely impacted by changes in the market
prices of commodities. The consolidated entity is exposed to
commodity price risk as its future revenues are determined by
reference to market prices of nickel at the delivery date.
Fluctuations in the nickel price can affect the viability of the
consolidated entity's projects.
The consolidated entity manages commodity price risk by
considering the impact of fluctuations in the nickel price on the
present value of the consolidated entity's projects. The
consolidated entity will consider entering into forward sales
contracts for the project off-take in order to protect future
earnings.
Liquidity risk
Liquidity risk relates to the ability of the consolidated entity
to meet future obligations and financial liabilities. The
consolidated entity monitors its risk to a shortage of funds using
cash flow models, which consider existing financial assets,
liabilities and projected cash inflows and outflows from
operations.
The table below sets out the maturity profile of financial
liabilities at 31 March 2012:
2012 2011
US$'000 US$'000
========= =========
Due in less than one
month (923) (3,162)
Due between one and
three months (308) (1,478)
Due between three -
months and one year (966)
====================== ========= =========
(2,197) (4,640)
====================== ========= =========
Capital management
The consolidated entity's and Company'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.
Development of the consolidated entity's projects will be
dependent upon the consolidated entity's ability to obtain further
financing through joint ventures, equity or debt financing or other
means. Although the consolidated entity has been successful in the
past in obtaining equity financing there can be no assurance that
the consolidated entity will be able to obtain adequate financing
in the future or that the terms of such financing will be
favourable.
Interest rate risk profile of financial assets
Interest rate risk is the risk that the value of a financial instrument or cash flows associated
with the instrument will fluctuate due to changes in market interest rates. Interest rate
risk arises from interest bearing financial assets and liabilities that the consolidated entity
uses. Interest bearing assets comprise cash and cash equivalents.
Price risk
Investments by the consolidated entity in available for sale
financial assets expose the consolidated entity to price risk. The
directors do not consider this risk to be material as the
consolidated entity does not have a significant portfolio of
available for sale financial assets.
Fair values of financial assets and liabilities
The consolidated entity has performed a review (refer impairment
review note 27) of the financial assets and liabilities as at 31
March 2012 and has concluded the fair value of those assets and
liabilities is not materially different to book value. Available
for sale financial assets are level 3 financial assets.
29. Share based payments
Employee share options
The consolidated entity has Share Option Plans for executives and employees of the Company.
In accordance with the terms and conditions with the relevant Share Option Plan, as approved
by shareholders at a previous annual general meeting, executives and employees may be granted
options at the discretion of the directors.
Each employee share option converts into one ordinary share of ENK PLC on exercise. No amounts
are paid or payable by the recipient on receipt of the option. The options carry neither rights
to dividends nor voting rights. Options may be exercised at any time from the date of vesting
to the date of their expiry.
The number of options granted is at the sole discretion of the directors subject to the total
number of outstanding options being issued under the Share Option Plan not exceeding 5% of
the Company's issued capital at any one time.
The exercise price is calculated with reference to a formula
contained within the rules governing the Share Option Plan and
which rewards employees against the extent of the Company's
performance on the capital markets. Where appropriate the directors
have established appropriate vesting conditions related to the
employees employment to incentivise executives and employees to
remain in the employ of the Company.
Share based payment arrangements in existence at balance date
The following share options were in existence at 31 March 2012: Option series Number Expiry Exercise
date price
GBP
Issued 31 March 31 March
2004 75,000 2014 1.28
Issued 24 December 24 December
2004 27,713 2014 0.92
Issued 29 June 26 June
2005 25,000 2015 1.20
Issued 20 October 20 October
2005 18,499 2015 1.62
Issued 4 June 4 June
2007 25,000 2017 2.35
Issued 18 June 18 June
2007 45,773 2017 2.35
Issued 17 October 17 October
2007 40,871 2017 1.80
Issued 27 February 27 February
2008 29,997 2018 1.60
Issued 12 March 12 March
2008 153,358 2018 1.60
Issued 16 December 16 December
2008 125,000 2018 0.10
Issued 15 April 15 April
2009 370,940 2019 0.40
Issued 1 October 1 October
2010 3,500,000 2015 0.28
Issued 19 October 19 October
2010 1,851,000 2015 0.38
Issued 31 August 30 August
2011 1,300,000 2016 0.28
Issued 14 October 15 October
2011 2,973,000 2016 0.21
==================== ========== ============ =========
29. Share based payments (cont'd)
Options issued during the year were priced using a Black-Scholes pricing model. Expected volatility
is based on the movement of the underlying share price around its average share price over
the expected term of the option. The directors have determined the expected period of exercise
to be similar to the option life based on historical experience. Inputs to the model Option Option
series series
======================== ========== ===========
Grant date 31 August 14 October
2011 2011
Grant date share price
(GBP) 0.14 0.15
Exercise price (GBP) 0.28 0.21
Expected volatility 124% 124%
Expiry date 30 August 15 October
2016 2016
Risk-free interest
rate 1.44% 1.44%
Fair value at grant
date (GBP) 0.11 0.12
======================== ========== ===========
The following reconciles the outstanding share options granted at the beginning and end of
the financial year:
2012 2011
================================================ =================================================
Weighted average Weighted average exercise
exercise price price
Number of options GBP Number of options GBP
Balance at beginning
of the year 10,419,708 0.5149 24,191,919 0.2653
Consolidation on a 1
for 4 basis - - (18,143,939) 0.2653
Granted during the
year 4,273,000 0.2313 7,427,000 0.3329
Exercised during the
year (125,000) 0.10 - -
Lapsed during the
year (4,006,557) 0.6973 (3,055,272) 1.1403
======================= ======================= ===================== ==========================
Balance at end of the
year 10,561,151 0.3359 10,419,708 0.5149
======================= ======================= ===================== ==========================
The average remaining contractual life of the outstanding options as at 31 March 2012 was
4.1 years (2011: 5.2 years).
30. Related party transactions
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 15(c)
to the financial statements.
Equity interests in associates and joint ventures
Details of the interest in associates and joint ventures are disclosed in note 15(a) to the
financial statements.
b) Transactions with key management personnel
1. Compensation of directors
The remuneration of directors during the year was as follows and is further disclosed in the
directors remuneration section of the Directors' Report. 2012 2011
US$'000 US$'000
Short-term employee
benefits 1,228 1,740
Post-employment benefits 43 61
Consultancy fees for
services rendered - 52
Compensation for loss
of office - 752
Share-based payments 226 1,092
========= =========
1,497 3,697
========= =========
2. Directors equity holdings
Fully paid ordinary shares in ENK PLC
Directors Balance Increase Balance Balance
2012 at during on resignation at
1 April year No. 31 Mar
2011 No. 2012
No. No.
==================== ========== ========= ================ ==========
Peter Rowe(1) N/A - N/A -
Robert
Gregory 1,210,000 25,000 N/A 1,235,000
Mark Hanlon 476,800 300,000 N/A 776,800
Paul Lush 441,355 - N/A 441,355
Neil Herbert 900,000 - N/A 900,000
David Whitehead(2) 26,250 - 26,250 -
John McManus(3) 100,000 - 100,000 -
==================== ========== ========= ================ ==========
(1) Appointed 27 July 2011
(2) Resigned 30 August 2011
(3) Resigned 13 January 2012
30. Related party transactions (cont'd)
Directors Balance Increase Balance Balance
2011 at during on resignation at
1 Oct 2009* year No. 31 Mar
No. No. 2011
No.
===================== ============= ========== ================ ==========
David Whitehead 26,250 - N/A 26,250
Robert
Gregory(1) N/A 1,210,000 N/A 1,210,000
Mark Hanlon(1) N/A 476,800 N/A 476,800
Paul Lush 441,355 - N/A 441,355
Neil Herbert(2) N/A 900,000 N/A 900,000
John McManus(3) N/A 100,000 N/A 100,000
Simon Purkiss(4) 2,222,440 - 2,222,440 -
Andrew
Lindsay(5) 134,780 - 134,780 -
Euan Worthington(5) 33,500 - 33,500 -
Sir David
Logan(5) 10,288 - 10,288 -
Chris Pointon(6) 11,500 - 11,500 -
===================== ============= ========== ================ ==========
* Number of ordinary shares and unlisted options have been
restated following the merger acquisition with Rusina Mining N.L
and the related 1 for 4 consolidation on 16 June 2010.
(1) Appointed 16 June 2010
(2) Appointed 29 June 2010
(3) Appointed 24 August 2010
(4) Resigned 31 January 2011
(5) Resigned 16 June 2010
(6) Resigned 29 March 2010
Share options in ENK PLC
Director Balance Granted Exercised Lapsed Balance Balance Exercise Expiry
at on resignation at price date
1 Apr 31 Mar
2011 2012
================ ========== ======== ========== ========== ================ ========== ========= ========
2012 No. No. No. No. No. No. GBP
P Rowe(1) N/A 400,000 - - N/A 400,000 0.28 30/8/16
================ ========== ======== ========== ========== ================ ========== ========= ========
R Gregory 2,000,000 - - - N/A 2,000,000 0.28 1/10/15
================ ========== ======== ========== ========== ================ ========== ========= ========
M Hanlon 1,500,000 - - - N/A 1,500,000 0.28 1/10/15
P Lush 75,000 - - - N/A 75,000 1.28 31/3/14
25,000 - - - N/A 25,000 1.20 29/6/15
25,000 - - - N/A 25,000 2.35 4/6/17
30,000 - - - N/A 30,000 1.60 27/2/18
75,000 - - - N/A 75,000 0.40 15/4/19
- 300,000 - - N/A 300,000 0.28 30/8/16
================ ========== ======== ========== ========== ================ ========== ========= ========
N Herbert - 300,000 - - N/A 300,000 0.28 30/8/16
================ ========== ======== ========== ========== ================ ========== ========= ========
D Whitehead(2) 25,000 - - (25,000) - - 2.35 4/6/17
60,000 - - (60,000) - - 1.60 27/2/18
125,000 - - (125,000) - - 0.40 15/4/19
================ ========== ======== ========== ========== ================ ========== ========= ========
J McManus(3) - 300,000 - - 300,000 - 0.28 30/8/16
================ ========== ======== ========== ========== ================ ========== ========= ========
(1) Appointed 27 July 2011
(2) Resigned 30 August 2011
(3) Resigned 13 January 2012
30. Related party transactions (cont'd)
Director Balance Granted Exercised Lapsed Balance on Balance at Exercise Expiry date
at resignation 31 Mar 2011 price*
1 Oct
2009*
================= ======== ========= ========== ======= =========
2011 No. No. No. No. No. No. GBP
D Whitehead 25,000 - - - N/A 25,000 2.35 4/6/17
60,000 - - - N/A 60,000 1.60 27/2/18
125,000 - - - N/A 125,000 0.40 15/4/19
======== ========== =================== ============ =========
R Gregory(1) N/A 2,000,000 - - N/A 2,000,000 0.28 1/10/15
======== ========== =================== ============ =========
M Hanlon(1) N/A 1,500,000 - - N/A 1,500,000 0.28 1/10/15
======== ========== =================== ============ =========
P Lush 75,000 - - - N/A 75,000 1.28 31/3/14
25,000 - - - N/A 25,000 1.20 29/6/15
25,000 - - - N/A 25,000 2.35 4/6/17
30,000 - - - N/A 30,000 1.60 27/2/18
75,000 - - - N/A 75,000 0.40 15/4/19
======== ========== =================== ============ =========
S Purkiss(4) 91,666 - - - 91,666 - 1.20 29/6/15
78,500 - - - 78,500 - 2.35 4/6/17
108,125 - - - 108,125 - 1.60 27/2/18
275,000 - - - 275,000 - 0.40 15/4/19
======== ========== =================== ============ =========
A Lindsay(5) 125,000 - - 125,000 - - 1.28 31/3/14
75,000 - - 75,000 - - 1.20 29/6/15
71,000 - - 71,000 - - 2.35 4/6/17
97,813 - - 97,813 - - 1.60 27/2/18
250,000 - - 250,000 - - 0.40 15/4/19
======== ========== =================== ============ =========
E Worthington(5) 75,000 - - 75,000 - - 1.28 31/3/14
25,000 - - 25,000 - - 1.20 29/6/15
25,000 - - 25,000 - - 2.35 4/6/17
30,000 - - 30,000 - - 1.60 27/2/18
75,000 - - 75,000 - - 0.40 15/4/19
======== ========== =================== ============ =========
Sir D Logan(5) 75,000 - - 75,000 - - 1.28 30/6/14
25,000 - - 25,000 - - 1.20 29/6/15
25,000 - - 25,000 - - 2.35 4/6/17
30,000 - - 30,000 - - 1.60 27/2/18
75,000 - - 75,000 - - 0.40 15/4/19
======== ========== =================== ============ =========
C Pointon(6) 27,500 - - 27,500 - - 2.12 23/10/17
30,000 - - 30,000 - - 1.60 27/2/18
75,000 - - 75,000 - - 0.40 15/4/19
======== ========== =================== ============ =========
* Number of options and expiry price have been restated following the merger acquisition with
Rusina Mining N.L and the related 1 for 4 consolidation on 16 June 2010.
(1) Appointed 16 June 2010
(2) Appointed 29 June 2010
(3) Appointed 24 August 2010
(4) Resigned 31 January 2011
(5) Resigned 16 June 2010
(6) Resigned 29 March 2010
30. Related party transactions (cont'd)
3. Transactions with other related parties
Other related parties include:
-- subsidiaries
-- associates
-- consultancy services provided by directors
Loans to related parties
31 Mar 2012 31 March 2011
US$'000 US$'000
Enickel Services (Philippines)* 4,560 4,560
Rusina Mining N.L 16,735 9,956
Stratten Limited - 648
European Nickel Spain S.L. - 29,958
European Nickel Holding Iberia S.L. - 678
Sardes Nikel Madencilik A.S. - 532
European Nickel Philland B.V. 236 217
European Nickel Holland B.V. 111 84
Fil-Euro Asia Nickel Corporation 49 49
Adriatic Nickel Resources Sh.p.k 2,594 2,583
Asian Nickel Research & Technology Corporation 4,305 4,357
Berong Nickel Corporation 444 221
* Enickel Services (Philippines trades as a branch of the
Company)
Amounts receivable from related parties are unsecured, interest
free, and have no fixed terms of repayment. The balances will be
settled in cash. No guarantees have been given or received. The
above amounts are stated before any provisions or the stated
impairment charges below.
Provisions for doubtful debts have been raised against amounts
owed by Adriatic Nickel Resources Sh.p.k. for US$('000)2,594
(2011:US$('000)2,583) and the Philippine subsidiaries totalling
US$('000)3,336 (2011:US$('000)3,385).
Consultancy services provided by the directors:
31 Mar 2012 31 March 2011
US$'000 US$'000
Paul Lush - 52
Paul did not receive any consulting fees during the financial
year to 31 March 2012. In the prior reporting period Paul received
US$('000)16 and US$('000)36 through Churchill Resources a corporate
entity in which he provided legal consulting services.
31. Auditors' remuneration
31 Mar 2012 31 March 2011
US$'000 US$'000
Auditor of the Company - PKF (UK) LLP
Audit of the financial reports of Company 93 102
Review of the financial reports of the Company 47 46
Audit fees payable to associates of the Company's auditor 15 22
Auditor of Philippine subsidiaries - SGV & Co
Audit and review of the financial reports of subsidiaries 57 95
Auditor of Australian subsidiaries - Somes & Cooke
Audit and review of the financial reports of subsidiaries 8 12
=============
Total audit fees 220 277
=============
Taxation services 18 69
Other services - 20
=============
Total non-audit fees 18 89
=============
Total auditors' remuneration 238 366
=============
32. Business combination
Prior year merger acquisition
Entity Date of acquisition Previous ownership Current ownership Consideration transferred
US$'000
Rusina Mining NL 16 June 2010 2.9% 100% 21,246
Rusina Mining NL ('Rusina') is a Philippines focused mineral
exploration and development company. Its major asset is the Acoje
Nickel Laterite Project. It also has a portfolio of exploration
properties that are prospective for base metals, precious metals
and chromite. The acquisition of Rusina will allow the consolidated
entity improved access to development capital; a strengthened
management team; the creation of a nickel development company of
significant scale; geographical and project diversification and a
platform for growth.
The purchase consideration was US$('000)21,246, being the fair
value of the shares issued to the Rusina shareholders and option
holders on 16 June 2010 the date the merger became binding and
control was obtained. The fair value was determined by reference to
the share price on the acquisition date. The premium of the shares
issued was credited to the merger reserve.
Consideration transferred
Fair values
US$'000
Cash and cash equivalents 1,271
Intangible assets 84,000
Property, plant and equipment 459
VAT reclaimable 439
Trade and other receivables 831
Trade and other payables (847)
Borrowings (1,427)
Deferred tax (21,027)
Net identifiable assets 63,699
Previously held interests (18,062)
Non-controlling interests (15,602)
Purchase consideration (21,246)
Exceptional gain arising on bargain purchase (8,789)
32. Business combination (cont'd)
The fair value of the intangible assets were assessed by an
independent expert using a discounted cashflow model and both the
indicated and inferred resources of the underlying project.
Non-controlling interests in the acquired entities were measured at
their proportionate share of the acquiree's net assets. Key
assumptions for the fair valuation of the assets and inputs
were:
-- The expected value (EV) per tonne of contained nickel at
Acoje and ZCMC was assessed using appropriate comparator companies.
As ZCMC is at an earlier stage of development than Acoje a
different set of comparator companies were used.
-- EV per tonne of contained nickel
o Acoje $131.50
o ZCMC $50.50
Exceptional gain
US$'000
Exceptional gain arising on bargain purchase (as stated above) 8,789
Rusina Mining N.L. (1) 472
Fil-Euro Asian Nickel Corporation(2) 5,230
Zambales Chromite Mining Corporation(3) 4,780
Administration and other associated costs(4) (1,896)
Exceptional gain arising on bargain purchase 17,375
(1) The consolidated entity recognised a gain of US$('000)472 as
a result of measuring at fair value its 2.9% equity interest in
Rusina Mining N.L held prior to the acquisition date.
(2) The consolidated entity recognised a gain of US$('000)5,230
as a result of measuring at fair value its 20% equity interest in
Fil-Euro Asian Nickel Corporation ('FEANC') held prior to the
acquisition date.
(3) The consolidated entity recognised a gain of US$('000)4,780
as a result of measuring at fair value its 40% equity interest in
Zambales Chromite Mining Corporation ('ZCMC') held prior to the
acquisition date.
(4) Directly attributable acquisition costs of US$('000)1,896
were incurred in the transaction. US$('000)1,270 of these costs are
recognised within administration expenses in the current period as
part of the operating result of the unallocated operating segment
with the remainder being recognised within the translation
reserve.
The directors believe that the bargain purchase resulted from
the increased volatility in the share price at the time the
transaction was completed. The gain arising would not have been
recognised if, as anticipated at the time, the share price had
reached a level whereby the valuation cap under the Merger Scheme
of Arrangement had become operational.
Net cash inflow on merger acquisition
16 June 2010
US$'000
Cash and cash equivalents balances acquired 1,271
Impact of acquisition on the results of the consolidated
entity
Included in the loss for the prior period is US$('000)3,200
attributable to Rusina Mining N.L. Had the business combination
been affected at 1 October 2009, it is largely unknown what effect
this would have had on the financial position of the consolidated
entity.
33. Disposal of subsidiary
On 17 November 2011, the consolidated entity disposed of the
entire issued capital of two Turkish subsidiaries being Sardes
Nikel Madencilik A.S and Turmad Madencilik Ve Ticaret A.S, which
included its 100% Calda nickel project in Turkey.
Consideration received
17 November
2011
US$'000
Total consideration received in cash and cash equivalents 40,000
Analysis of assets and liabilities over which control was
lost
17 November 2011
US$'000
Non-current assets
Property, plant and equipment 38,061
Current assets
Trade and other receivables 10,109
Inventories 90
Cash and cash equivalents 98
Current liabilities
Trade and other payables (2,310)
Net assets disposed of 46,048
Gain on disposal of subsidiary 17 November 2011
US$'000
Consideration received 40,000
Less costs to sell (754)
Net assets disposed of (46,048)
Cumulative exchange differences
in respect
of the net assets of the subsidiary
reclassified
from equity to loss of control
of subsidiary (788)
Loss on disposal (note 12) (7,590)
The loss on disposal is included in the loss for the year from
discontinued operations in the income statement.
Net cash inflow on disposal of subsidiary 17 November 2011
US$'000
Consideration received in cash
and cash equivalents 40,000
Less: cash and cash equivalent
balances disposed of (98)
39,902
34. Post balance sheet events
There has not been any matter or circumstance occurring
subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the
Company, the results of those operations, or the state of affairs
of the Company in future financial years except for the
following:
1. On 8 May 2012, the Company announced the sale of its 5.01%
interest in AIM-listed Toledo Mining Corporation ('TMC') for
US$('000')686 in cash and the conditional sale of its 18.7%
interest in Berong Nickel Corporation ('BNC') for US$('000')6,552
in cash to World Fund Pte Limited. Both assets were considered
non-core assets by the directors. The Company's interest in these
non-core assets are disclosed in the statement of financial
position as available for sale financial assets. In the prior year
the Company's interest in BNC was held in the financial statements
at US$3.48 million, the revaluation of the interest in BNC to the
conditional sale value has resulted in a change in the fair value
of US$('000')3,072 disclosed in the consolidated statement of
comprehensive income.
The sale of the BNC shares is conditional upon the other
shareholders of BNC, being TMC and Atlas Consolidated Mining
Corporation ('Atlas') not exercising their pre-emption rights. In
the event TMC or Atlas decide to exercise their pre-emption right
they have to match the price offered by World Fund Pte Limited.
Atlas and TMC have 60 days to exercise their pre-emption rights.
The BNC sale is expected to settle in early July 2012.
2. On 6 June, the Company announced that Montemina Resources
Corporation ('MRC'), 60% owner of the Zambales Project, has entered
into an agreement with Philippine company, Golden Harvest Global
Corporation ('GHGC') wherein GHGC will acquire 60% interest in MRC
for a total consideration of US$11m. The proceeds will be used by
MRC to repay loans from members of the consolidated entity which
will result in all of the funds (less taxes and costs) being
available for use by the Company. The payment terms for the sale
are:
- US$2m upon signing;
- US$2m by no later than 15 August 2012;
- US$2m by no later than 15 November 2012; and
- US$5m linked to the Direct Ship Operations ('DSO') revenues
from the Zambales tenement, but in any event, payable no later than
the second anniversary of signing.
GHGC has also entered into a mining agreement with Zambales
Chromite Mining Corporation ('ZCMCI'), 40% owner of the Zambales
tenement. This agreement provides for the mining of nickel laterite
ore for Direct Ship Operations ('DSO') on the basis that GHGC
provides all mining equipment, capital labour, trucking, marketing
and port facilities in return for a 50% profit share of ore sales.
DSO will commence once Zambales and GHGC obtain the required
permits for this operation.
In addition to the above agreements, GHGC has entered into an
Exploration Services Agreement ('ESA') with Zambales Diversified
Metals Corporation ('ZDMC'), holder of the Acoje tenement and a
subsidiary of ENK, for the exploration of chromite and other
underground minerals on the Acoje tenement. The ESA is for a period
of 2 years with annual options to extend thereafter, subject to
minimum performance requirements and payment of advance
royalties.
If a decision to develop the chromite or other underground
minerals is made by GHGC then ZDMC has, at its option, the ability
to require a payment of US$20m to enable GHGC to acquire 100% of
the rights to these minerals, or, to elect to have a free carry for
ZDMC for a 20% interest in this project. In the event the lump sum
payment is chosen, mining royalties at a rate to be agreed, will
also be payable to ZDMC.
ENK PLC
ASX additional information
Additional information has not been audited and does not form
part of the financial statements. The information set out below has
been provided as required by the Australian Securities Exchange
Limited's Listing Rules and which have not been disclosed elsewhere
in this report.
Shareholdings as at 31 May 2012
Class of shares and voting rights
a) at meetings of members or classes of members each member is
entitled to vote and may vote in person or by proxy or attorney;
and
b) on a show of hands every person present who is a member has
one vote and on a poll every person present in person or by proxy
or by attorney has one vote for each ordinary share held.
Quoted equity securities Number of shares Number of Shareholders
Ordinary shares of 4p 231,449,207 566
Chess Depositary Interests (CDI'S) 30,654,796 2,052
262,104,003 2,618
Distribution of quoted equity securities
Number of
Category (number of shares) Shareholders
1 - 1,000 1,080
1,001 - 10,000 988
10,001 - 100,000 413
100,001 - 1,000,000 135
1,000,001 and over 2
2,618
The number of shareholders holding less than a marketable parcel is 1,420. The minimum parcel
size is 3,449 shares.
Twenty largest shareholders as at 31 May 2012
Fully paid ordinary shares
Name Number Percentage
Pershing Nominees Limited <KSCLT> 47,805,809 18.24
W B Nominees Limited 31,810,917 12.14
AAA Australian Control Account 30,654,796 11.70
Hanover Nominees Limited <HAYC2> 19,500,000 7.44
Vidacos Nominees Limited <FGN> 18,370,327 7.01
Goldman Sachs International <CREPTEMP> 13,321,513 5.08
Chase (GA Group) Nominees Limited <GA> 8,041,869 3.07
TD Direct Investing Nominees (Europe) Limited <SMKTNOMS> 7,665,770 2.92
The Bank of New York (Nominees) Limited <UKREITS> 7,333,000 2.80
Lynchwood Nominees Limited <2006420> 5,823,484 2.22
Barclayshare Nominees Limited 5,213,126 1.99
The Bank of New York (Nominees) Limited <BIL> 4,782,257 1.82
Pershing Nominees Limited <PSL981> 4,025,100 1.54
KBC Securities NV <CLIENT> 3,605,078 1.38
L R Nominees Limited <NOMINEE> 3,554,701 1.36
James Capel (Nominees) Limited <PC> 3,244,393 1.24
HSBC Client Holdings Nominee (UK) Limited 2,950,464 1.13
Investor Nominees Limited <NOMINEE> 2,896,074 1.10
Skandinaviska Enskilda Banken AB (PUBL) 2,696,526 1.03
Goldman Sachs Securities (Nominees) Limited <ILSEG> 1,975,000 0.75
Total 225,270,204 85.96
Stock Exchanges
ENK Plc shares are dual listed on the AIM market and the
Australian Securities Exchange. On the ASX they are traded as
CDI's.
END
For more information or to view a copy of this document, please
visit www.enk.co.uk or contact:
Mark Hanlon, Finance Director, ENK Tel: +61 (0)8 9226 1111
Robert Gregory, Managing Director, ENK Tel: +63 917 513 4970
Chris Sim or Neil Elliot, Investec Investment Banking Tel: +44
(0)20 7597 5970
Tim Blythe or Matthew Neal, Blythe Weigh Communications Tel: +44
20 7138 3204
This information is provided by RNS
The company news service from the London Stock Exchange
END
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