TIDMSKR
RNS Number : 5032E
Sunkar Resources PLC
13 May 2013
13 May 2013
Sunkar Resources PLC
("Sunkar" or "the Company")
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
HIGHLIGHTS IN 2012
-- Balance of US$11.8 million received under the conditional
subscription agreement with Sun Avenue Partners Corp ("SAPC").
-- Loss of US$9.2 million (2011: US$10.1 million). Group net
cash inflow in the year was US$0.3 million (2011: net cash outflow
- US$1.5 million).
-- ATF Bank Kazakhstan debt refinancing with new US$3 million credit line from AsiaCredit Bank (Kazakhstan); cost of borrowing reduced from 14% to 9.5% per annum.
-- Commenced work on an approximately US$8.1 million earth
moving contract with a general contractor building a new railway in
Western Kazakhstan.
-- Listing on the Kazakhstan Stock Exchange completed in December 2012.
POST YEAR END HIGHLIGHTS
-- Detailed Feasibility Study ("DFS") completed, demonstrating
robust economics and attractive IRRs for the Chilisai Phosphate
Project (the "Project").
-- New resource update for 100% of the Chilisai licence area
(the "Licence Area") estimates a 130% increase in contained P(2)
O(5) in total resource compared with previous resource estimate for
40% of the Licence Area.
-- Signed second earth moving contract valued at approximately
US$12 million (at current exchange rates).
Chairman Teck Soon Kong commented:
"Following approval of the amendment to the mining commitments
under the Subsoil Use Contract, the conversion of the SAPC loan
notes and the completion of the DFS after the year end, the Group
is in a position to progress the Chilisai Phosphate Project with a
view to awarding the basic engineering contract in the second half
of 2013, leading to Stage I production by the end of 2016.
"Short-term cash flows will be managed by completion of the
existing earth moving contracts, pursuit of additional contracts
and further sales of direct application rock and ground phosphate
rock backed up by the support of the majority shareholder. I
believe that we are in a strong position to progress with the
Chilisai Phosphate Project."
For further information, please contact:
Sunkar Resources
plc Tel: +44 20 7397
Teck Soon Kong, 3730
Chairman
Serikjan Utegen,
CEO
Strand Hanson Limited
Simon Raggett Tel: +44 20 7409
Stuart Faulkner 3494
David Altberg
Bankside Consultants
Simon Rothschild Tel: +44 20 7367
8888
or visit: www.sunkarresources.com
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2012
Chairman's Statement
This year has been one of consolidation following the receipt of
the balance of $11.8 million under the conditional subscription
agreement with Sun Avenue Partners Corp ("SAPC") for the
subscription in two tranches of up to $12.8 million of convertible
loan notes and the readmission of the ordinary shares of 0.1 pence
each in the Company (the "Ordinary Shares") to trading on AIM on 20
January 2012.
In October 2012, the Company was granted a waiver by the
Ministry of Industry and New Technologies of the Republic of
Kazakhstan ("MINT") relating to the Republic of Kazakhstan's
pre-emptive right to acquire the Ordinary Shares of the Company,
following the investment by SAPC, as required by Kazakhstan's
Subsoil Use Law. In December 2012, the Company listed on the
Kazakhstan Stock Exchange ("KASE") and the conversion of the SAPC
loan notes was completed in February 2013 with the issue of
174,476,283 Ordinary Shares to SAPC, resulting in it becoming the
owner of approximately 51% of the issued share capital of the
Company.
Throughout the year the Company focused on the completion of its
Feasibility Study and further sales of Direct Application Rock
("DAR"). The other strategic development was the completion of
verification and infill drilling of historical drill hole database,
which was necessary for the finalisation of the resource estimate
for 100% of Chilisai licence area. The drilling was requested by
the Company's geological contractor - Wardell Armstrong
International ("WAI") - in accordance with JORC procedures. As a
result, the resource estimate was completed during Q2 2013,
demonstrating total contained P(2) O(5) increasing by 130% compared
with the previous resource estimate for 40% of the Licence Area.
The completion of this drilling program was possible due to the
investment made by SAPC.
During Q2 2013, idle beneficiation plant was contracted to a
quarry contractor to generate revenue. The Company also commenced
work on an earth moving contract with a general contractor that is
building a new railway in Western Kazakhstan. The value of this
first earth moving contract is approximately $8.1 million.
The Company announced, on 10 May 2012, that it had agreed to
vary the repayment schedule on $5 million of existing loans from
ATF Bank Kazakhstan. Under the terms of the refinancing, Sunkar
paid $1.5 million on 11 May 2012 and a further $1 million on 1 July
2012. The remaining loan was repaid in December 2012 following the
negotiation of a $3 million loan facility with AsiaCredit Bank
(Kazakhstan) ("ACB").
FINANCIAL RESULTS
The audited financial statements are prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union. For 2012, the Group reported a loss of $9.2 million
(2011: $10.1 million). Group net cash inflow in the year was $0.3
million (2011: net cash outflow - $1.5 million).
FEASIBILITY STUDY
In February 2013, the Company was pleased to announce that the
Detailed Feasibility Study ("DFS") on its Chilisai Phosphate
Project (the "Project") had been completed. The DFS is expected to
form the foundation for a prospective project financing
arrangement. It outlines robust economics with attractive IRRs,
drawing on Chilisai's natural advantages of low cost mining,
proximity to sulphur and well established regional infrastructure,
as well as attainable markets both locally in Kazakhstan and
internationally in Western China and through Black Sea ports. The
DFS has identified no major technical hurdles with the Chilisai
Project and an announcement of the award of the basic engineering
contract is currently anticipated in the second half of 2013,
leading to Stage I production by the last quarter of 2016.
The highlights of the study were as follows:
Project economics
-- An estimated Project Internal Rate of Return ("IRR") of 14.1%
after tax and 17.2% before tax, on a 100% equity financed
basis.
-- When discounted at 10%, the Net Present Value ("NPV") of the
Project is estimated to be $715.2m (after tax) on a 100% equity
financed basis.
-- Estimated EBITDA of $278m per annum in 2017 and $533m per annum by 2025.
-- Total revenue over the life of the Project is estimated at approximately $22.3bn.
-- Nominal cash cost of diammonium phosphate ("DAP") production
is estimated at $195 per metric tonne in 2017 and at $232 per
metric tonne in 2025.
-- Nominal cash cost of monoammonium phosphate ("MAP")
production is estimated at $171 per metric tonne in 2017 and at
$219 per metric tonne in 2025.
Capital costs
-- Estimated total construction cost for both phases of the
Project (including initial plant and final plant) of approximately
$1.94bn (escalated).
-- Include $889.7m on equipment and material supply, $749.2m on
site works, $297.6m on engineering and $5.6m on pre-commissioning
ramp-up costs.
DIRECT APPLICATION ROCK AND GROUND PHOSPHATE ROCK SALES
The Company continued the pursuit of its strategy for marketing
DAR to the local agricultural sector as well as ground phosphate
rock sales to industrial partners. During the year the Company
generated revenue of $1.5 million from sales to farmers and
industrial users. Temir-Service LLP, has shipped 12,223 tonnes in
bulk to a Russian fertilizer plant, and 13,960 tonnes has been
bagged and sold to farmers. Kazakhstan farmers have purchased 2,496
tonnes and Russian farmers purchased 11,464 tonnes.
After 4 years of application of small trial quantities of DAR,
the feedback from farmers is that, although DAR application has
increased yields as expected, a lack of the specialised equipment
required to apply DAR is the key limiting factor. Management
intends to help farmers to develop such equipment base by way of
co-investing into equipment and allowing partial deferrals of
payments for DAR purchases under the condition that the deferred
funds are used for the purchase of this specialised equipment. The
Chilisai deposit is the only DAR supplier in Kazakhstan. The
closest foreign DAR suppliers are located in Russia, in Kursk,
Moscow, and Kirov regions, so Chilisai DAR has certain cost
advantages due to logistics. Kazakhstan subsidises domestic
fertilizer use at higher rates than foreign products, however, this
advantage may cease if Kazakhstan becomes a member of the World
Trade Organisation in 2013.
BENEFICIATION EQUIPMENT CONTRACTING AND EARTH MOVING
CONTRACTS
In October 2012, the Group signed an earth moving contract with
a general contractor that is building a new railway line in Western
Kazakhstan. The VAT inclusive value of the contract is KZT 1.2
billion (approximately $8.1 million at current exchange rates). The
Company received a prepayment amounting to 30% of the total
contract value and recorded revenues of $0.5 million during the
year.
The Group pursued this earth moving contract to make use of
equipment that was idle due to the reduced mining commitments at
Chilisai, in order to generate additional cash flow for the Company
from its existing asset base. Due to the flat and shallow
geological structure of the Company's phosphate deposit, Temir uses
earth moving equipment and mining techniques similar to those used
in laying foundation for major railroads and major highways in flat
terrain. The Group holds the relevant state licences for road
construction and has experience of building roads on its contract
territory.
The contract is for the construction of a rail track foundation
on a stretch of the new railway line from Beineu to Tassai stations
in Western Kazakhstan and is scheduled to be completed during Q2
2013. Following progress made with the initial earth moving
contract, at the end of April 2013 the Group has concluded a
further contract with the same general contractor for another
stretch of the rail track foundation. The new contract value is
approximately $12 million and it is expected that the Group will
have to outsource some of the works in order to complete earth
moving of 2 million cu m in Q4 this year.
The Group generated revenue of $244,000 from the contracting of
its beneficiation plant during the year.
The Directors believe the revenue from earth moving business
will make a significant contribution to the working capital of the
Company and will help to retain its core qualified personnel for
the mining season of 2014.
SUBSOIL USE CONTRACT
During the year the Group applied to MINT for the ore volumes to
be produced under the Subsoil Use Contract ("SUC") to be amended to
300,000 tonnes per annum for 2012-2014, 5 million tonnes per annum
for 2015-2017 and 10 million tonnes from 2018. The proposed
amendment to the Work Programme under the SUC was approved by the
Kazakh authorities early in 2013 subject to the Work Programme
documentation being prepared for formal inclusion within the SUC
and the execution of the amended SUC and the Work Programme by
MINT. Given that the Group is now substantially in compliance with
the SUC and, following completion of the DFS in February 2013,
which provides support for the carrying value, the directors do not
consider that any impairment of the carrying value of intangible
assets is required.
The Company's commitment to meet associated cumulative
development expenditure of $115 million from the end of 2014 to
2020 has not changed.
CONCLUSION
Following approval of the amendment to the mining commitments
under the SUC, the conversion of the SAPC loan notes and the
completion of the DFS after the year end, the Group is in a
position to progress the Chilisai Project with a view to awarding
the basic engineering contract in the second half of 2013, leading
to Stage I production by the end of 2016.
Short-term cash flows will be managed by completion of the
existing earth moving contracts, pursuit of additional contracts
and further sales of DAR and ground phosphate rock backed up by the
support of the majority shareholder.
Finally, I would like to thank our management team, staff,
consultants, contractors and my fellow directors for their effort
throughout the year to market DAR and secure the first earth moving
contract to generate revenue to fund the working capital. To all
shareholders, in general, and SAPC, our majority shareholder, in
particular, thank you for your continued support and interest in
Sunkar.
Teck Soon Kong
CHAIRMAN
Business Review - Financials
The injection of $12.8 million by SAPC, sales of DAR and
phosphate rock and the commencement of the earth moving contracts
have allowed the Group to stabilise its financial position during
the year and to complete its Detailed Feasibility Study, the
results of which were released in February 2013 demonstrating the
robustness of the Chilisai Phosphate Project.
During March 2012, the Group had received the balance of $11.8
million from SAPC. These funds have been utilised to continue work
on the DFS, a drilling program for an updated resource estimate,
repay part of the ATF Bank ("ATF") loan facility, certain
directors' loans and outstanding trade payables.
In October 2012, the Group announced the signing of an earth
moving contract worth approximately $8.1 million and received a
prepayment of $2.4 million in order to commence work.
In December 2012, Sunkar refinanced the balance of the ATF loan
with a loan facility of $3 million from ACB and the Group will
benefit from the reduction in interest rates to 9.5%. The new loan
is repayable in monthly instalments over 3 years.
INCOME STATEMENT
The Group made a loss after tax of $9.2 million for the year
ended 31 December 2012 compared with a loss of $10.1 million for
the year ended 31 December 2011 as follows:
Income Statement 2012 2011
$,000 $,000
Revenue 2,248 170
Cost of sales (2,624) (506)
UK administrative expenses (2,109) (2,919)
Kazakhstan administrative expenses (2,697) (2,706)
Other operating costs (1,057) (1,893)
Depreciation (67) (80)
Share-based payments - (1,101)
Foreign exchange losses (707) (413)
Finance costs (2,223) (658)
Loss after tax (9,236) (10,106)
======= ========
Revenue and cost of sales have increased due to higher sales of
DAR as well as new sources of revenue arising from the earth moving
contract and beneficiation plant contracting. However, the overall
gross loss arising has remained relatively unchanged at $0.4
million (2011: $0.3 million). Management and administrative costs
including depreciation and share-based payments have reduced by
$1.9 million during the year mainly as a result of reduced
corporate finance and travel costs as well as the cancellation of
all outstanding share options during 2011. Other operating costs
include idle time of $0.4 million and a write down of inventory of
$0.4 million. Finance costs include $1.7 million in respect of the
convertible loan notes.
BALANCE SHEET
The net assets of the Group are summarised as follows:
Balance Sheet 2012 2011
$,000 $,000
Tangible fixed assets 15,658 16,819
Intangible fixed assets 68,864 69,741
Long-term inventories 8,705 7,530
Current assets 4,955 3,472
======== ========
Total assets 98,182 97,562
Long-term liabilities (14,089) (12,798)
Current liabilities (18,601) (10,566)
======== ========
Net assets 65,492 74,198
======== ========
Net assets decreased by $8.7 million to $65.5 million.
Property, plant and equipment decreased by $1.2 million
primarily as a result of depreciation in the period.
The decrease in intangible assets includes spending on the DFS
of $0.9 million offset by amortisation of $0.9 million and an
exchange difference of $0.9 million.
Inventory balances of $8.7 million have been included as
non-current to reflect the expected usage profile, with a further
$2.0 million included within current assets.
Excluding the convertible loan of $13.6 million (converted to
equity post year-end), current liabilities reduced by $5.6 million
as a result of the repayment/refinancing of the ATF loan and
reduction in trade payables by $1.1 million and directors' loans by
$0.3 million.
Long-term liabilities relate to deferred tax, the non-current
portion of the ACB loan and a historical cost liability.
CASH FLOW
Net Cash Flow 2012 2011
$,000 $,000
Operating activities (6,530) (4,655)
Investing activities (2,103) (2,488)
Financing activities 8,905 5,688
Effect of exchange rate fluctuations
on cash held (23) 18
------- -------
Net cash increase/(decrease) 249 (1,437)
Opening cash 213 1,650
------- -------
Closing cash 462 213
------- -------
The Group cash flows in 2012 are centred around the proceeds
received from the SAPC loan notes and the utilisation of those
funds. Capital expenditure declined by $0.4 million and cash
utilised in operating activities increased by $1.9 million as a
result of repaying trade and other payables.
The financing activities of $8.9 million relates to $11.7
million received from the proceeds of the SAPC convertible loan
notes (net of expenses), $2.5 million from the ACB loan offset by
the repayment of the ATF loans of $4.9 million and $0.3 million
repaid to directors.
In order for the Company to meet its mining commitments and
operational costs, the Company is generating funds from earth
moving contracts and additional phosphate rock sales with support
from the new majority shareholder if necessary as explained further
in the Going Concern section of the Directors' Report.
Serikjan Utegen
CHIEF EXECUTIVE OFFICER
Corporate Social Responsibility
The Group is committed to maintaining high standards of social
responsibility. The Corporate Social Responsibility and
Environmental Committee has the duty of establishing and guiding
evolving policies and practices. In particular, we seek always to
abide by the rule of law and behave fairly in business and be
respectful of the rights of others. We strive to minimise the
environmental effects of our operations, provide a safe and healthy
workplace for all our employees and contractors and promote social
programmes in the communities where we operate.
Social Responsibility
Temir Service LLP, in accordance with amended order for
fulfilment of social obligations under SUC, has paid total of
KZT330,000 ($2,200) to Aktobe Oblast tax committee.
Environment
Highlights
-- No environmental incidents to date
-- Quarterly environmental monitoring was conducted and
environmental reports were approved by the Regulator
The Group views environmental protection as an essential part of
its operations and a key element of Group strategy. We have set
high standards for environmental protection and constantly monitor,
assess and collect data. Temir Service has contracted one of the
most experienced advisers in the area of environmental monitoring
and assessment to minimise any adverse effects its activities may
cause.
Government Inspections
The Group is compliant with local environmental and occupational
health legislation. No fine or sanctions have been imposed as a
result.
Environmental Protection
A baseline environmental impact assessment was carried out in
2009 in accordance with the Environment Code of Republic of
Kazakhstan. After the emissions permits expired by end of 2012,
Temir Service has obtained permits for emissions until end of
2015.
Temir Service maintains an environmental monitoring programme of
its mining and milling activities which includes quarterly
monitoring of the following:
-- Air emissions
-- Soil
-- Water sources
-- Radioactivity
-- Waste generation and disposal
The monitoring is being performed by a local licensed
contractor.
The Group, as in past years, filed its reports on greenhouse gas
emissions in 2012.
Occupational Health and Safety
Safety awareness has been key to local management and the HSE
team's success in maintaining a safe working environment and is
promoted through:
-- Walk-through inspections with Senior Management on site
-- On the job instructions and training
-- Continuous safety knowledge testing
During 2012, Temir Service had worked a total of 207,561 man
hours. Out of this total, 149,042 man hours has been worked at
field operations.
In 2012, only one light injury had been recorded. The worker has
fully recovered after a normal intra-shift break of 15 days and for
another 15 days shift he was allocated light work with his normal
salary preserved.
Directors' Report
The directors present their report with the audited financial
statements for the year ended 31 December 2012.
Principal Activity and Business Review
The principal activity of the Group for the period under review
was the mining of phosphate rock and the preparation of its
Feasibility Study for the Project in Kazakhstan.
Further information on the development of the Project and the
Group's business and financial results, as required by the Enhanced
Business Review requirements of the Companies Act 2006, can be
found in the Chairman's Statement and Business Review sections of
this report.
Dividends
The directors do not recommend the payment of a dividend (2011:
$nil).
Directors
The directors during the year under review and subsequently
were:
TS Kong Non-executive Chairman
S Utegen Chief Executive Officer
N Damitov Director, Corporate Affairs
C de Chezelles Non-executive director
Interests of Directors
The interests of the directors, who held office at year end, in
the issued share capital of the Company are as follows:
Name Number Number
of shares of shares
held 31 held 31
December December
2012 2011
================ =========== ===========
TS Kong(1) 2,000,000 1,000,000
S Utegen(2) 20,413,500 20,413,500
N Damitov(3) 21,427,799 21,427,799
C de Chezelles - -
Further details in respect of share options are disclosed in
note 22 to the financial statements.
Notes:
[1] The shares are registered in the name of Hero Nominees
Limited, which holds the shares on behalf of Kongs Everlasting
Settlement, a family trust of which Mr Kong is a beneficiary.
2 16,413,500 shares are registered in the name of Novita
Advisors Corporation of which Mr Utegen is the beneficial
owner.
3 20,413,500 shares are registered in the name of Upminster
Advisors Corp of which Mr Damitov is the beneficial owner.
1,014,299 shares are held by Euroclear as custodian, for the
ultimate beneficial ownership of Mr Damitov.
Substantial Share Interests
The Company has been notified or is otherwise aware of the
following significant holdings of voting rights in its shares as at
30 April 2013:
Shareholder (* Number of Ordinary % of Issued Share
Director) Shares Capital
Sun Avenue Partners
Corporation 174,476,283 51.15
N Damitov* 21,427,799 6.28
S Utegen* 20,413,500 5.98
Share Capital
Details of the share capital and warrants are set out in note 22
to the financial statements.
Directors' indemnity insurance
Directors' and officers' liability insurance was maintained for
directors and other officers of the Group during the year ended 31
December 2012 as permitted by the Companies Act 2006.
Financial Risk Management
Details regarding the risks associated with the Group's use of
financial instruments are discussed in note 27 to the financial
statements.
Risks, Uncertainties and Performance Indicators
Risk assessment and evaluation is an essential part of the
Group's planning and an important part of the Group's internal
control procedures. The key risks the Group faces have been
addressed as part of the DFS and are set out below.
General and economic risks
Continued financial and economic uncertainty in the world's
major economies and a protracted period of recovery. The Group's
response has been to conserve cash through efficient use of
resources and seeking to generate early cash flow through sales of
DAR and phosphate rock and utilisation of spare capacity by
performing an earth moving contract.
Currency exchange fluctuations, particularly, in respect of the
relative prices of the US Dollar, Kazakhstan Tenge, GB Pound and
Euro. Foreign currency risk is managed by holding cash resources in
USD and purchasing currencies only when requirements can be
forecast with some degree of certainty.
Technical risk
The main technical risk of the Project until 2011 was low grade
phosphate rock which has certain impurities - aluminium, iron, and
magnesia oxides - that reduce quality of final products. This risk
now is fully addressed from both economic and technical points of
view.
The DFS completed in February 2013 has concluded that the
Chilisai chemical complex will be able to convert Chilisai
phosphate rock into high analysis fertilizers - DAP and MAP - using
traditional phosphoric acid and ammoniation /granulation
technology. Two options had been analysed in terms of quality of
final products.
The first and core option was to manufacture fertilizers from
phosphoric acid as is, without its purification to remove minor
elements, such as alumina, iron and magnesia oxides. The resulting
products - DAP and MAP - will then be of limited quality in terms
of their water solubility. The independent market study prepared
for DFS purposes by CRU Strategies, the well-known fertilizer
market observer, has estimated that products of such limited
quality may have been priced approximately 5.5% lower at FOB Black
Sea market. The DFS concluded that unless there will be specific
demand for full quality fertilizers by a prospective off-take
arrangement, the limited quality fertilizers sales will be the base
option for chemical complex configuration. The conclusion is
supported by the detailed financial model provided with DFS.
The second option is to manufacture full internationally
accepted quality DAP and MAP. The Company's consultant,
SNC-Lavalin, has taken into consideration the results of pilot
plant tests of phosphoric acid purification technologies to be used
in the manufacturing process. Two technologies, and their
respective test results, have been considered and recognized as
feasible for the purposes of Chilisai phosphate rock originated
phosphoric acid purification - ion exchange technology and
preliminary ammoniation technology. Both technologies have been
widely used at an industrial scale, and are recognized to be
applicable for Chilisai's chemical complex's phosphoric acid
purification unit. Both technologies, if applied, will produce
phosphoric acid clean enough to be converted into full
specification DAP and MAP, while purification process's waste will
be converted into lower analysis fertilizers - single
superphosphate in case with ion exchange or lower analysis
ammoniated phosphate compound in case with preliminary ammoniation.
Both by-products are expected to find their niche market in
Kazakhstan and adjacent regions. The consultant has run basic
economic sensitivity analysis of the use of phosphoric acid
purification technologies and has concluded that the benefits from
full specification products manufacturing and elimination of
quality discount during
sales may be offset by the cost of processing and capital
expenses for additional equipment installation. The change in net
present value of the project after insertion of the effects of full
quality fertilizer manufacturing into the financial model fell well
within +/-15% margin, and therefore the difference between the base
case and acid purification case was not considered material.
Market risk
The pricing of agricultural minerals in Kazakhstan and Russia,
including DAR and phosphate rock, and finished products is not
transparent and customers usually do not buy from a terminal market
on the basis of common publicly disclosed prices. Transactions are
usually negotiated with multiple suppliers, each with differing
product availability and specifications, logistics, price and
credit terms.
There is a risk of DAR, phosphate rock and fertilizer demand
varying significantly from that predicted including that related to
weather-related factors. The Group's focus on its target markets
may negatively impact the Group's results in the event of a
slowdown in demand. There can be no assurance that the current
growth in the economies of the Group's target markets will
continue. An overall slowdown in these markets, as a result of
either political or economic forces, could bring about a decrease
in demand for the Group's products. Some of the target markets are
expanding their own production of phosphates and this could also
bring about a decrease in demand for the Group's products.
This is mitigated due to the Project's low cost base which will
be essential to be able to trade profitably.
The high analysis final products (DAP and MAP) markets, such as
Black and Baltic seas ports, are quite well defined and observed by
well-established information agencies. Except for a period of
volatility in 2008-2009, since early 2000s this market has had a
relatively consistent trend. Therefore, from the beginning of
Chilisai project's development, the Company has been targeting high
analysis products, which represent the majority of P(2) O(5)
nutrient traded cross-border and/or overseas - DAP and MAP. The
detailed feasibility study accounts for past prices analysis and
future prices forecasts, it has precision of +/- 15%, and therefore
enables the Company to conduct project finance talks.
Funding risk
The Group may not be able to raise sufficient funds, either by
debt or further equity, to enable completion of its planned
fertilizer manufacturing project. The Group raises funds as and
when required to achieve the next stage of the Project's
development. The capital expenditure estimate to build Stage I of
the Group's fertilizer project is considerable and raising funding
presents a significant challenge. The Group is therefore carefully
investigating the next phase of development and is seeking
strategic equity partners following completion of its DFS in
February 2013. The Group also faces shorter-term funding risks as
discussed further in the Going Concern section of this report.
Regulatory Risk
The Group's production activities are subject to various laws
and regulations governing prospecting, mining, development,
royalties, permitting and licensing requirements, production,
taxes, labour standards and occupational health, mine safety,
protection of the environment, toxic substances, land use, water
use, land claims of local people and other matters. Although the
Group's development activities are currently carried out in
compliance with all applicable rules and regulations, no assurance
can be given that new rules and regulations will not be enacted or
that existing rules and regulations will not be applied in a manner
which could limit or curtail exploration, development or
production.
The Group is at an early stage of its development and to date,
it has been successful in gaining support for the Project.
The Government has previously shown support for the Group's
development plans. The Group's projects to establish a phosphate
rock business and to develop a world scale phosphate fertilizer
complex have both been included in the Government of the
Kazakhstan's State Development Program.
Key Performance Indicators
One of the Company's key performance indicators for the year was
the mining of 306,000 tonnes of ore which was above the SUC mining
commitment of 300,000 tones revised in 2012.
The Chairman's Statement provides details and commentary on the
Company's renegotiation of the terms of the Sub Soil Use Contract
during the year.
Internal Controls
The Board is responsible for establishing and maintaining Group
policy and systems of internal control. The effectiveness of
procedures adopted for financial, operational and compliance
matters are reviewed on an on-going basis. The internal controls
can only provide reasonable and not absolute assurance against
material misstatement or loss.
Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement. The financial position of
the Group, its cash flows and liquidity position are described in
the Business Review. In addition, note 27 to the financial
statements includes the Group's objectives, policies and processes
for managing its capital, its financial risk management objectives,
details of its financial instruments and its exposure to credit
risk and liquidity risk.
The Company requires additional funds to meet its mining
commitments and operational costs whilst also finding a strategic
partner to secure finance for the construction of the fertilizer
manufacturing complex. The Group's strategy is to achieve this
through an increase in the level of phosphate rock sales,
generation of positive cash flows from earth moving contracts and
continued management of its cost base.
The Group has received a letter of support from JSC
"Interfarma-K", a company owned by Almas Mynbayev, owner of SAPC
(see note 31), stating that JSC "Interfarma-K" will, subject to the
agreement of mutually acceptable terms, provide financial support
to assist the Group to meet its liabilities as they fall due, which
we believe should remove any likely requirement to seek other
external sources of financing in the short to medium term.
However, as this letter of support may not be legally binding, a
material uncertainty still exists in respect of the Company's
ability to continue as a going concern. The Directors remain
confident that based on the current sales projections, including
the revenue to be generated from the additional earth moving
contract signed in April 2013, and the letter of support referred
to above, sufficient funding will be made available to enable the
Group and Company to continue in operational existence for the
foreseeable future. Accordingly, the financial statements have been
prepared on a going concern basis.
Policy on Payment of Creditors
While it is the Group's general policy to settle all amounts due
to creditors in accordance with agreed terms of supply and market
practice in the relevant country, in 2012, the Group sought to
manage trade creditors with a view to minimise the demands for
repayment.
The Group's average creditor payment period at 31 December 2012
was 136 days (31 December 2011: 149 days). The Company's average
creditor payment period was 110 days (31 December 2011: 147
days).
Political and Charitable Donations
No political contributions or donations for political purposes
or charitable donations were made during the year.
Statement as to Disclosure of Information to the Auditor
So far as each director is aware, there is no relevant audit
information (as defined by Section 418 of the Companies Act 2006)
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 himself aware of any relevant audit information and
to establish that the Company's Auditor is aware of that
information.
Auditor
Deloitte LLP have expressed their willingness to continue in
office and a resolution will be proposed at the Annual General
Meeting for reappointment in accordance with Section 489 of the
Companies Act 2006.
Annual General Meeting
The notice convening the Company's Annual General Meeting, to be
held on 6June 2013, is included with this report. Full details of
the resolutions proposed at that meeting may be found in the
explanatory notes at the end of the notice. The directors of the
Company consider that all the proposals to be considered at the
Annual General Meeting are in the best interests of the Company and
its members as a whole and are most likely to promote the success
of the Company for the benefit of its members as a whole. The
directors unanimously recommend shareholders to vote in favour of
the resolutions proposed.
By order of the Board
TECK SOON KONG
DIRECTOR
7 May 2013
Directors
TECK SOON KONG
NON-EXECUTIVE CHAIRMAN
Teck Soon Kong was appointed as a non-executive director of the
Company on 23 October 2006 and the non-executive Chairman in May
2007. He is a chemical engineer with more than 48 years of
experience in the international oil and gas industry, mainly in
various senior roles with Shell across the globe. Teck Soon Kong's
other business and professional interests include marine
engineering, international finance, mining and IT. He has been
doing business in the FSU countries since 1996 with a particular
emphasis on Kazakhstan and Russia. He is an independent director of
Sterling Resources Limited which is listed on the Toronto Stock
Exchange, and a Trustee of Harapan, a UK registered charity.
SERIKJAN UTEGEN
CHIEF EXECUTIVE OFFICER
Serikjan Utegen was appointed as Chief Executive Officer of the
Company on 23 October 2006. He has previously held the positions of
director of operations and then President for KKM Holdings JSC
developing three oil fields in Western Kazakhstan and has
experience in the management of exploration, financing and
corporate development. He has worked for a range of Kazakhstan oil
companies, including the position of Head of the Transportation
Department of KazTransOil National Oil Pipeline Utility of
Kazakhstan.
NURDIN DAMITOV
EXECUTIVE DIRECTOR, CORPORATE AFFAIRS
Nurdin Damitov was appointed as Director, Corporate Affairs on 9
May 2008 and has been involved in various oil, gas and mineral
consulting activities and IPOs. He was appointed as General
Director of Temir Service in 2008 but stepped back from this role
in March 2011. He has extensive experience of banking and finance
from his time as a director of PricewaterhouseCoopers (Kazakhstan),
as a managing director of Halyk Bank of Kazakhstan and through his
work in the Government of Kazakhstan as a director of the State
Investment Committee of the Republic of Kazakhstan and Assistant
Chairman of the National Securities Commission of the Republic of
Kazakhstan.
CHARLES DE CHEZELLES
NON-EXECUTIVE DIRECTOR
Charles de Chezelles was appointed as a non-executive director
of the Company on 23 October 2006 and has spent most of his career
in the financial industry in the US and Europe as well as the
natural resources sector. He is currently managing director of
Camor Gold S.A. (Dubai) and Damerin Limited (London) and sits on
the boards of several public companies in the natural resource
field.
Statement of Directors' Responsibilities
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable laws 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 for Companies (the "AIM Rules"),
prepared the Group financial statements in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union ("EU") and have also elected to prepare the
Company financial statements in accordance with those standards.
Under company law, the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and the Group and of
the profit or loss of the Group for that period. In preparing these
financial statements, IAS 1 requires that the directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and the Group and to enable them
to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements and other
information included in annual reports may differ from legislation
in other jurisdictions.
We confirm to the best of our knowledge:
1. the financial statements, prepared in accordance with IFRS as
adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation taken as a
whole; and
2. the management report, which is incorporated into the
Directors' Report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
By order of the Board
TECK SOON KONG
DIRECTOR
7 May 2013
Corporate Governance Report for the Year ended 31 December
2012
In formulating the Group's corporate governance procedures, the
Board takes due regard of the principles of good governance set out
in the UK Corporate Governance Code issued by the Financial
Reporting Council (as appended to the Listing Rules of the
Financial Services Authority) as varied by the recommendations on
corporate governance of the Quoted Companies Alliance (QCA) for
companies with shares traded on the AIM Market of the London Stock
Exchange and the size and development of the Group.
The Board of the Company is currently comprised of the Chairman
(who is an independent non-executive director), two executive
directors and one independent non-executive director. It is the
Board's policy to maintain independence by having at least two
independent non-executive directors.
The directors have formed, and have adopted terms of reference
for, an audit committee, a remuneration committee, a nomination
committee and a corporate social responsibility and environmental
committee. The UK Corporate Governance Code requires that all the
members of the audit committee and remuneration committee and a
majority of the members of the nomination committee should be
independent non-executive directors.
COMMITTEES OF THE DIRECTORS
Audit Committee
The audit committee is chaired by Charles de Chezelles and its
other member is Teck Soon Kong. It will normally meet not less than
four times a year. This committee is comprised exclusively of
non-executive directors. The audit committee has responsibility
for, amongst other things, the planning and review of the Group's
annual report and accounts and half-yearly reports and the
involvement of the Group's Auditor in that process. The committee
focuses in particular, on compliance with legal requirements,
accounting standards and the AIM Rules and on ensuring that an
effective system of internal financial control is maintained. The
ultimate responsibility for reviewing and approving the annual
report and accounts and the half-yearly reports remains with the
Board. The terms of reference of the audit committee cover such
issues as membership and the frequency of meetings, as mentioned
above, together with the role of the secretary and the requirements
of notice of and quorum for and the right to attend meetings. The
duties of the audit committee covered in the terms of reference
are: financial reporting, internal controls and risk management
systems, whistle blowing, internal audit, external audit, and
reporting responsibilities. The terms of reference also set out the
authority of the committee to exercise its duties.
Remuneration Committee
The remuneration committee is chaired by Charles de Chezelles
and its other member is Teck Soon Kong. It normally meets not less
than twice a year. This committee will be staffed exclusively by
non-executive directors. The remuneration committee has
responsibility for making recommendations to the Board in respect
of the Group's policy on the remuneration of certain senior
executives (including senior management), the implementation and
operation of share incentive schemes and for the determination,
within agreed terms of reference, of specific remuneration packages
for each of the executive directors, including pension rights and
any compensation payments.
The terms of reference of the remuneration committee cover such
issues as membership and frequency of meetings, as mentioned above,
together with the role of secretary and the requirements of notice
of and quorum for and the right to attend meetings. The duties of
the remuneration committee covered in the terms of reference relate
to the following: determining and monitoring policy on
remuneration, early termination, performance related pay, pension
arrangements, authorising claims for expenses from the Chief
Executive and Chairman, reporting and disclosure, and remuneration
consultants. The terms of reference also set out the reporting
responsibilities and the authority of the committee to exercise its
duties.
Nomination Committee
The nomination committee is chaired by Teck Soon Kong and its
other members are Charles de Chezelles and Serikjan Utegen. It
normally meets twice a year. This committee will always have a
majority of independent non-executive directors. The nomination
committee has responsibility for regularly reviewing the structure,
size and composition (including the skills, knowledge and
experience) of the Board and making recommendations to the Board
with regard to any changes. Its duties include: giving full
consideration to succession planning for directors and other senior
executives in the course of its work, taking into account the
challenges and opportunities facing the Company, and the skills and
expertise needed on the Board in the future and reporting to the
Board regularly; identifying and nominating for the approval of the
Board, candidates to fill Board vacancies as and when they arise,
save that appointments as Chairman or Chief Executive should be
matters for the whole Board; and, before any appointment is made by
the Board, evaluating the balance of skills, knowledge and
experience on the Board, and, in the light of this evaluation
preparing a description of the role and capabilities required for a
particular appointment. The nomination committee will also make
recommendations to the Board as to the composition of the
audit and remuneration committees.
The terms of reference for the nomination committee also cover
such issues as the role of the secretary, notice of and quorum for
and the right to attend meetings, as well as the reporting
responsibilities of the committee and the authority of the
committee to exercise its duties.
Corporate Social Responsibility and Environmental ("CSRE")
Committee
The CSRE committee is chaired by Teck Soon Kong and its other
members are Serikjan Utegen and Nurdin Damitov. It normally meets
not less than two times per year. The CSRE committee has
responsibility for reviewing the policies and conduct of the Group
with respect to corporate responsibility, health and safety of its
employees and the community in which the Group operates, the
environment in which the Group operates, and the social impact of
the Group on the communities in which the Group operates, with the
aim of assisting the board of directors to efficiently and
effectively manage the Company.
The terms of reference for the CSRE committee also cover such
issues as the role of the secretary, notice and quorum for and the
right to attend meetings, as well as the reporting responsibilities
of the committee and the authority of the committee to exercise its
duties.
GUIDELINES FOR DEALING WITH MAJOR SHAREHOLDERS
Corporate governance guidelines have been put in place with
certain major shareholders, including directors Serikjan Utegen,
Nurdin Damitov and the new investor Sun Avenue Partners Corp, in
order to ensure that:
1. The Board can operate in a manner independent of those major
shareholders and therefore in the interest of shareholders as a
whole; and
2. Any dealings with major shareholders are on an arm's length
basis and on normal commercial terms.
Independent Auditor's Report to the Members of Sunkar Resources
PLC
We have audited the financial statements of Sunkar Resources plc
for the year ended 31 December 2012 which comprise the Consolidated
Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Balance Sheets, the
Consolidated and Company Statements of Changes in Equity, the
Consolidated and Company Cash Flow Statements, and the related
notes 1 to 31. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group'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 the financial and non-financial
information in the annual report to identify material
inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the parent company's affairs as at 31
December 2012 and of the Group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and 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.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
note 3 to the financial statements concerning the Company's and the
Group's ability to continue as a going concern. The Group is
reliant on securing significant additional sales volumes of
phosphate rock and additional sources of funding during the next
twelve months in order to continue to meet its obligations as they
fall due. These conditions, along with other matters explained in
note 3 to the financial statements, indicate the existence of a
material uncertainty which may cast doubt about the Company's and
the Group's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the
Company and Group were unable to continue as a going concern.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report
for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
DAVID PATERSON (SENIOR STATUTORY AUDITOR)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
7 May 2013
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2012
Restated*
Notes 2012 2011
$'000 $'000
Continuing operations
Revenue 2,248 170
Cost of sales (2,624) (506)
========== =============
Gross loss (376) (336)
Other operating costs (1,057) (1,893)
Administrative expenses (4,873) (6,806)
Foreign exchange losses (707) (413)
==========
Operating loss before financing
costs 8 (7,013) (9,448)
Finance costs 11 (2,223) (658)
---------- -------------
Loss before tax (9,236) (10,106)
Income tax charge 12 - -
Loss for the year (9,236) (10,106)
---------- -------------
Attributable to:
Equity holders of the parent (9,236) (10,106)
(9,236) (10,106)
---------- -------------
2012 2011
Basic and diluted loss per share
(cents) 13 (5.5) (6.2)
===== =====
*- see note 5
Consolidated statement of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2012
2012 2011
$'000 $'000
Loss for the year (9,236) (10,106)
------- --------
Exchange differences on translation
of foreign operations (202) (189)
------- --------
Other comprehensive (loss) for the
year (202) (189)
Total comprehensive loss for year (9,438) (10,295)
------- --------
Attributable to:
Equity holders of the parent (9,438) (10,295)
(9,438) (10,295)
-------
Registered number: 05759399 (England and Wales)
Consolidated and Company balance sheets
AS AT 31 DECEMBER 2012
Notes
Group Company Group Company
2012 2012 2011 2011
$'000 $'000 $'000 $'000
Assets
Property, plant and equipment 14 15,658 2 16,819 2
Intangible assets 15 68,864 8,525 69,741 8,345
Investments 16 - 51,016 - 51,016
Loans and finance lease receivables 17 - 51,946 - 43,327
Inventories 18 8,705 - 7,530 -
Total non-current assets 93,227 111,489 94,090 102,690
======== ========= ======== =========
Inventories 18 2,044 - 3,028 -
Trade and other receivables 19 2,449 314 231 143
Cash and cash equivalents 20 462 111 213 18
======== ========= ========
Total current assets 4,955 425 3,472 161
======== ========= ======== =========
Total assets 98,182 111,914 97,562 102,851
======== ========= ======== =========
Equity
Issued capital 22 309 309 309 309
Share premium 22 112,641 112,641 112,641 112,641
Share warrant reserve 22 100 100 100 100
Translation reserve (8,721) - (8,519) -
Convertible loan note reserve 22 732 732 - -
Accumulated losses (39,569) (16,798) (30,333) (14,582)
======== ========= ======== =========
Total equity 65,492 96,984 74,198 98,468
Liabilities
Interest bearing loans and
borrowings 23 1,667 - - -
Other payables 24 822 - 1,016 -
Deferred tax liabilities 25 11,600 - 11,782 -
Total long-term liabilities 14,089 - 12,798 -
======== ========= ======== =========
Interest bearing loans and
borrowings 23 15,072 14,238 5,864 894
Trade and other payables 26 3,529 692 4,702 3,489
======== =========
Total current liabilities 18,601 14,930 10,566 4,383
======== ========= ======== =========
Total liabilities 32,690 14,930 23,364 4,383
======== ========= ========
Total equity and liabilities 98,182 111,914 97,562 102,851
======== ========= ======== =========
ON BEHALF OF THE BOARD:
TECK SOON KONG
DIRECTOR
Approved and authorised for issue by the Board on 7 May 2013
Consolidated statement of changes in equity
Share Share Share Translation Retained Convertible Total
capital premium warrant reserve Losses loan Equity
reserve note
$,000 $,000 $,000 $,000 $,000 Reserve $,000
$,000
Balance at 1 January 2011 298 110,366 100 (8,330) (21,328) - 81,106
======== ======== ======== =========== ======== =========== ========
Loss for the year - - - - (10,106) - (10,106)
======== ======== ======== =========== ======== =========== ========
Other comprehensive loss - - - (189) - - (189)
Total comprehensive loss for
the year - - - (189) (10,106) - (10,295)
======== ======== ======== =========== ======== =========== ========
Issue of share capital 11 2,275 - - - - 2,286
Share-based payments - - - - 1,101 - 1,101
-------- -------- -------- ----------- -------- ----------- --------
Balance at 31 December 2011 309 112,641 100 (8,519) (30,333) - 74,198
-------- -------- -------- ----------- -------- ----------- --------
Balance at 1 January 2012 309 112,641 100 (8,519) (30,333) 74,198
======== ======== ======== =========== ======== =========== ========
Loss for the year - - - - (9,236) (9,236)
======== ======== ======== =========== ======== =========== ========
Other comprehensive loss - - - (202) - (202)
Total comprehensive loss for
the year - - - (202) (9,236) (9,438)
======== ======== ======== =========== ======== =========== ========
Equity element of convertible
loan - - - - - 732 732
======== ======== ======== =========== ======== =========== ========
732 732
======== ======== ======== =========== ======== =========== ========
Balance at 31 December 2012 309 112,641 100 (8,721) (39,569) 732 65,492
-------- -------- -------- ----------- -------- ----------- --------
Company statement of changes in equity
Share Convertible
Share Share warrant Retained loan
capital premium reserve losses note Total
$,000 $,000 $,000 $,000 Reserve $,000
$,000
Balance at 1 January 2011 298 110,366 100 (12,890) - 97,874
======== ======== ======== ========= =========== =======
Loss for the year - - - (2,793) - (2,793)
======== ======== ======== ========= =========== =======
Total comprehensive loss
for the year - - - (2,793) - (2,793)
Issue of share capital 11 2,275 - - - 2,286
Share-based payments - - - 1,101 - 1,101
Balance at 31 December 2011 309 112,641 100 (14,582) - 98,468
-------- -------- -------- --------- ----------- -------
Balance at 1 January 2012 309 112,641 100 (14,582) - 98,468
======== ======== ======== ========= =========== =======
Loss for the year - - - (2,216) - (2,216)
======== ======== ======== ========= =========== =======
Total comprehensive loss
for the year - - - (2,216) - (2,216)
Equity element of convertible
loan - - - - 732 732
Balance at 31 December 2012 309 112,641 100 (16,798) 732 96,984
-------- -------- -------- --------- ----------- -------
Consolidated and Company statement of cash flows
FOR THE YEAR ENDED 31 DECEMBER 2012
Note Group Company Group Company
2012 2012 2011 2011
$'000 $'000 $'000 $'000
Cash flows from operating activities
Operating loss before financing
costs (7,013) (1,934) (9,448) (4,121)
Depreciation and amortisation 2,080 3 1,981 15
Share-based payments - - 1,101 1,101
Exchange rate differences 629 (95) 208 112
(Increase) in inventories (191) - (744) -
(Increase)/decrease in receivables (1,246) (72) 936 26
(Decrease)/increase in payables (343) (1,779) 1,942 1,493
Cash utilised in operations (6,084) (3,877) (4,024) (1,374)
Interest paid (446) (4) (631) -
======= ======= ------- -------
Net cash utilised in operating
activities (6,530) (3,881) (4,655) (1,374)
======= ======= ------- -------
Cash flows from investing activities
Loan advances to subsidiary - (7,003) - (3,009)
Loan repayments from subsidiary - - - 120
Acquisition of intangible fixed
assets (1,031) (180) (2,313) (964)
Acquisition of property, plant
and equipment (1,072) (2) (175) -
Net cash utilised in investing
activities (2,103) (7,185) (2,488) (3,853)
======= ======= ------- -------
Cash flows from financing activities
Bank loan received 2,500 - 1,505 -
Bank loan repaid (4,966) - - -
Directors Loan (repaid)/received (294) (294) 897 894
Loan from Sun Avenue (Investor) 11,665 11,665 1,000 1,000
Issue of share capital - - 2,286 2,286
Loan to subsidiary - (189) - (210)
Net cash from financing activities 8,905 11,182 5,688 3,970
======= ======= ------- -------
Net increase/(decrease) in
cash and cash equivalents 272 116 (1,455) (1,257)
Cash and cash equivalents at
beginning of year 213 18 1,650 1,258
Effect of exchange rate fluctuations
on cash held (23) (23) 18 17
======= ======= ------- -------
Cash and cash equivalents at
end of year 20 462 111 213 18
======= ======= ------- -------
Notes to the consolidated financial statements
1. GENERAL INFORMATION
Sunkar Resources plc (the "Company") is a Company registered in
England and Wales. The consolidated financial statements of the
Company for the year ended 31 December 2012 comprise the Company
and its subsidiaries Temir Service LLP and Chilisai Chemicals LLP
(together referred to as the "Group").
These financial statements are presented in US Dollars because
that is the currency of the primary economic environment in which
the Group operates. Foreign operations are included in accordance
with the policies set out in note 3. At 31 December 2012, the
closing rate of exchange of US Dollars to one GB Pound was 1.62 (31
December 2011: 1.55) and the average rate of exchange of US Dollars
to one GB Pound for the year was 1.58 (2011: 1.55). At 31 December
2012, the closing rate of exchange of Kazakhstan Tenge to one US
Dollar was 150.74 (2011: 148.40) and the average rate was 149.57
(2011: 147.90).
2. ADOPTION OF NEW AND REVISED STANDARDS
The Group has adopted all of the new and revised Standards and
Interpretations issued by the International Accounting Standards
Board ("IASB") that are relevant to its operations and effective
for accounting periods beginning 1 January 2012. The adoption of
these new and revised Standards and Interpretations had no material
effect on the profit or loss or financial position of the
Group.
The Group has not adopted any standards or interpretations in
advance of the required implementation dates. It is not expected
that adoption of standards or interpretations which have been
issued by the International Accounting Standards Board but have not
been adopted will have a material impact on the financial
statements.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
IAS 1 (amended)- Financial statement presentation-presentation
of items of other comprehensive income
IAS 19 (revised)- Employee benefits
IAS 27 (revised)- Separate financial statements
IAS 28 (revised)- Investments in associates and joint
ventures
IAS 32 - Offsetting financial assets and financial
liabilities
IFRS 7 (amended)- Financial instruments: Disclosures
IFRS 9- Financial instruments
IFRS 10- Consolidated financial statements
IFRS 11- Joint arrangements
IFRS 12- Disclosures of interests in other entities
IFRS 13- Fair value measurement
IFRIC 20- Stripping costs in the production phase of a surface
mine
3. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
and their interpretations adopted by the International Accounting
Standards Board ("IASB"), as adopted by the European Union. They
have also been prepared with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared for the year ended 31
December 2012.
The financial statements have been prepared on the historical
cost basis. The accounting policies set out below have been applied
consistently by Group entities to the periods presented in these
consolidated financial statements.
GOING CONCERN
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement. The financial position of
the Group, its cash flows and liquidity position are described in
the Business Review. In addition, note 27 to the financial
statements includes the Group's objectives, policies and processes
for managing its capital, its financial risk management objectives,
details of its financial instruments and its exposure to credit
risk and liquidity risk.
The Company requires additional funds to meet its mining
commitments and operational costs whilst also finding a strategic
partner to secure finance for the construction of the fertilizer
manufacturing complex. The Group's strategy is to achieve this
through an increase in the level of phosphate rock sales,
generation of positive cash flows from earth moving contracts and
continued management of its cost base.
The Group has received a letter of support from JSC
"Interfarma-K", a company owned by Almas Mynbayev, owner of SAPC
(see note 31), stating that JSC "Interfarma-K" will, subject to the
agreement of mutually acceptable terms, provide financial support
to assist the Group in meeting its liabilities as they fall due,
which we believe should remove any likely requirement to seek other
external sources of financing in the short and medium term.
However, as this letter of support may not be legally binding, a
material uncertainty still exists in respect of the Company's
ability to continue as a going concern. The Directors remain
confident that based on the current sales projections, including
the revenue to be generated from the additional earth moving
contract signed in April 2013, and the letter of support referred
to above, sufficient funding will be made available to enable the
Group and Company to continue in operational existence for the
foreseeable future. Accordingly, the financial statements have been
prepared on a going concern basis.
(B) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) for each calendar year to 31 December. Control
is achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
(C) BUSINESS COMBINATIONS
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair
value of contingent consideration classified as an asset or
liability are accounted for in accordance with relevant IFRSs.
Changes in the fair value of contingent consideration classified as
equity are not recognised.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree
prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss,
where such treatment would be appropriate if that interest were
disposed of.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS
3(2008) are recognised at their fair value at the acquisition date,
except that:
-- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
-- liabilities or equity instruments related to the replacement
by the Group of an acquiree's share-based payment awards are
measured in accordance with IFRS 2 Share-based Payment; and
-- assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
Standard.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see below), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
The measurement period is the period from the date of
acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition
date, and is subject to a maximum of one year.
(D) FOREIGN CURRENCIES
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in US Dollars, which
is the functional currency of the Company, and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. The
resulting exchange differences are recorded in the Income
Statement.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
classified as equity and recognised in the Group's foreign currency
translation reserve. Such translation differences are recognised as
income or as expenses in the period in which the operation is
disposed of.
Fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
(E) INTANGIBLE ASSETS
Mining licences in the exploration and evaluation phases arising
from a business combination are recognised as an intangible asset
and initially measured at estimated fair value, generally based on
the excess of the cost of the business combination over the Group's
interest in the net fair value of the other identifiable assets,
liabilities and contingent liabilities recognised, unless a more
reliable indicator of fair value is available.
Expenditure on the acquisition of the licence and subsequent
exploration and evaluation expenditure are carried as intangible
assets until such a time as it is determined that there are
commercially exploitable reserves, at which time such costs are
transferred to mineral properties to be amortised over the expected
productive life of the asset.
Mineral properties relate to those properties where commercial
extraction is demonstrable. Mineral properties acquired in a
business combination are recognised as an intangible asset, being
the excess of the present value of the economic reserves over the
allocated amount of related property, plant and equipment and
exploration and evaluation costs.
Exploration and evaluation assets are carried forward during the
exploration and evaluation stage and are assessed for impairment in
accordance with the indicators of impairment as set out in IFRS 6
'Exploration for and Evaluation of Mineral Resources'. In
circumstances where a property is abandoned or otherwise determined
not to be commercial, the cumulative capitalised costs relating to
the property are written off in the period. Overburden costs
incurred, relating to the removal of materials required to access
the ore body are initially capitalised and subsequently amortised
in full when the related rehabilitation activity takes place. No
other amortisation is charged prior to the commencement of
production.
(F) PROPERTY, PLANT AND EQUIPMENT
On initial recognition, land, property, plant and equipment are
valued at cost, being the purchase price and the directly
attributable cost of acquisition or construction required to bring
the asset to the location and condition necessary for the asset to
be capable of operating in the manner intended by the Group.
DEPRECIATION
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. The estimated useful
lives are as follows:
-- motor vehicles 4 years
-- fixtures and fittings 4 years
-- plant and equipment based on hours of operation
-- land and buildings 10 years
The residual value, if not insignificant, is reassessed
annually.
(G) IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each balance sheet date, the Group reviews the carrying
amounts of its property, plant and equipment assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash inflows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time, value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately.
(H) INVESTMENTS
Investments are stated at cost less any provision for permanent
diminution in value.
(I) INVENTORIES
Stockpiled ore, phosphate concentrate and milled concentrate are
valued at the lower of cost and net realisable value. Net
realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs of
selling the final product.
Cost is determined by the weighted average method and comprises
direct purchase costs and an appropriate portion of fixed and
variable overhead costs, including depreciation and amortisation,
incurred in converting materials into finished product.
Materials and supplies are valued at the lower of cost and net
realisable value. Cost is determined by the FIFO method. Any
provision for obsolescence is determined by reference to specific
items of stock. A regular review is undertaken to determine the
extent of any provision for obsolescence.
(J) FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
(K) TRADE AND OTHER RECEIVABLES
Trade and other receivables are measured at initial recognition
at fair value, and are subsequently measured at amortised cost
using the effective interest rate method. Appropriate allowances
for estimated irrecoverable amounts are recognised in the income
statement when there is objective evidence that the asset is
impaired. The allowance recognised is measured as the difference
between the asset's carrying amount and the present value of
estimated future cash flows discounted at the effective interest
rate computed at initial recognition.
(L) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
(M) PROVISIONS
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are measured
at the directors' best estimate of the expenditure required to
settle the obligation and, if the effect is material, provisions
are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the
liability.
(N) TRADE AND OTHER PAYABLES
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost using the effective
interest rate method.
(O) CONVERTIBLE LOAN
The proceeds received on issue of the Group's convertible debt
are allocated into their liability and equity components. The
amount initially attributed to the liability component equals the
discounted cash flows using a market rate of interest that would be
payable on a similar debt instrument that does not include an
option to convert. Subsequently, the debt component is accounted
for as a financial liability measured at amortised cost until
extinguished on conversion or maturity of the bond. The remainder
of the proceeds is allocated to the conversion option and
recognised in the "Convertible loan note reserve" within
shareholders' equity and is not remeasured. Issue costs are
apportioned between the liability and equity components based on
their relative carrying value at the date of issue. The portion
relating to the equity component is charged directly against
equity. The interest expense on the liability component is
calculated by applying the prevailing market rate referred to above
to the liability component.
(P) OPERATING LEASE PAYMENTS
Payments made under operating leases are recognised in the
income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the income
statement as an integral part of the total lease expense.
(Q) INCOME TAX
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years. Taxable profit differs from net profit
as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary
differences are not provided for: goodwill not deductible for tax
purposes, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit, and differences
relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
(R) EQUITY SETTLED 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 shares that will
eventually vest. Fair values are determined through use of a
Black--Scholes based model.
(S) FINANCE LEASE PAYMENTS
It is the Company's policy to lease certain plant and equipment
to its subsidiaries under finance leases. The average lease term is
five years. Interest rates are calculated on average yearly LIBOR
plus two percent. For the year ended 31 December 2012, the average
effective borrowing rate was 3.6% (2011: 3.6%). All leases are on a
fixed repayment basis and no arrangements have been entered into
for contingent rental payments.
The lease obligations are denominated in US Dollars and Euro.
The fair value of the Companies' finance lease assets approximates
to their carrying amount.
(T) BORROWING: FINANCE COSTS
Borrowing costs are recognised in the income statement where
they do not meet the criteria for capitalisation. Borrowing costs
directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised.
(U) REVENUE RECOGNITION
Sale of phosphate rock and flour
Revenue from the sales of phosphate rock and flour is recognised
when the Group has transferred the significant risks and rewards of
ownership to the buyer and it is probable that the Group will
receive the previously agreed upon payment. These criteria are
considered to be met when the goods are delivered to the buyer.
Earth Moving Contract
Revenue from the earth moving contract is recognised on the
basis of cubic metres of earth moved during the period as agreed
with the customer, multiplied by the unit rate specified in the
contract in accordance with IAS 11 Construction Contracts
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATIO NUNCERTAINTY
CRITICAL JUDGEMENTS IN APPLYING THE GROUP'S ACCOUNTING
POLICIES
In the process of applying the Group's accounting policies,
which are described in note 3, management has made the following
judgements that have the most significant effect on the amounts
recognised in the financial statements (apart from those involving
estimations, which are dealt with below).
IMPAIRMENT OF INTANGIBLE ASSETS
The assessment of intangible assets (see note 15) for any
indication of impairment involves judgement. If an indication of
impairment, as defined in IFRS 6, Exploration for and Evaluation of
Mineral Resources, exists a formal estimate of recoverable amount
is performed and an impairment loss recognised to the extent that
carrying amount exceeds recoverable amount. Recoverable amount is
determined as the higher of fair value less costs to sell and value
in use. The calculation of recoverable amount requires an
estimation of the value in use of the cash-generating units to
which the intangible assets are allocated. In assessing value in
use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows
have not been adjusted.
KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of financial statements requires management to
make estimates and assumptions that affect the amounts reported for
assets and liabilities as at the balance sheet date and the amounts
reported for revenues and expenses during the year. The nature of
estimation means that actual outcomes could differ from those
estimates. The key sources of estimation uncertainty that have a
significant risk of causing material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
INVENTORIES
Inventories of ore and beneficiated rock are valued at the lower
of cost and net realisable value. In determining the net realisable
value the Group has made its own estimates of regional selling
prices of phosphate rock adjusted for P(2) O(5) grade, budgeted
costs of milling and selling DAR. A write down was recorded in 2012
as described further in note 18.
SUBSOIL USE CONTRACT
At each balance sheet date an assessment is made as to whether
the carrying amount of the SUC asset is recoverable. The review
will take into consideration whether the title to the SUC is
compromised, DAP prices render the project uneconomic or other
significant adverse conditions exist. In undertaking the review a
detailed project economic model requiring forecasts for capital and
operational costs, operational variables and product prices is
prepared. Future net cash flows are discounted and compared with
the carrying amount. If the recoverable amount is less than the
carrying amount an impairment is made. See note 15 for a summary of
the considerations made at 31 December 2012.
5. RESTATEMENT OF 2011 COMPARATIVES
The full year 2011 results recorded sales of DAR within other
operating costs as its operations in Kazakhstan are not yet in full
scale commercial production. However, the Directors have reassessed
this treatment in the current year and concluded that, as the sales
achieved to date do not represent test production of the proposed
phosphate fertilizer plant, it is more appropriate to record DAR
sales and its associated cost of sales within revenue and cost of
sales. This amendment has no impact on the brought forward retained
earnings at 1 January 2012.
6. OPERATING SEGMENTS
Operating segments are identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the chief operating decision maker in order to allocate
resources to the segments and to assess their performance.
In the previous year the Group's operations related to the
evaluation and development of the Chilisai Phosphate project and as
such the Group had only one segment. In 2012 the Group expanded its
operations to include both construction contracts to utilise spare
capacity and the leasing of beneficiation equipment to a third
party. Revenue and direct costs are reported separately in respect
of these activities and accordingly it has been concluded that
these represent separate operating segments. All the Group's
activities are in Kazakhstan with administrative support provided
from the UK. Additional information regarding geographical location
is provided below.
DAR Earth Beneficiation Total DAR Earth Beneficiation Total
and moving equipment and moving equipment
rock leasing rock leasing
sales 2012 2012 2012 sales 2011 2011 2011
2012 2011
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Revenue 1,490 514 244 2,248 170 - - 170
Cost of sales (1,684) (557) (383) (2,624) (506) - - (506)
------- ------- ------------- ------- ------ ======= ============= =====
Gross loss (194) (43) (139) (376) (336) - - (336)
------- ------- ------------- ------- ------ ======= ============= =====
Geographical information
2012 2011
$'000 $'000
Total non-current assets excluding
financial assets
Kazakhstan 93,225 94,088
UK 2 2
====== ======
Total 93,227 94,090
====== ======
Capital expenditure on deferred
exploration and evaluation costs
Kazakhstan 937 2,424
UK - -
====== ======
Total 937 2,424
====== ======
Capital expenditure on property,
plant and equipment
Kazakhstan 1,072 173
UK 2 -
====== ======
Total 1,074 173
====== ======
Depreciation
Kazakhstan 1,212 1,219
UK 3 15
====== ======
Total 1,215 1,234
====== ======
Liabilities
Kazakhstan 17,858 18,982
UK 14,832 4,383
====== ======
Total 32,690 23,365
====== ======
Information about major customers
Revenues from transactions with a single customer exceeding 10%
of total revenues were as follows:
DAR Earth Beneficiation Total DAR Earth Beneficiation Total
and moving equipment and moving equipment
rock leasing rock leasing
sales 2012 2012 2012 sales 2011 2011 2011
2012 2011
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Customer A - 514 - 514 - - - -
Customer B - - 244 244 - - - -
Customer C 390 - - 390 - - - -
Others 1,100 - - 1,100 170 - - 170
------ ------- ------------- ----- ------ ======= ============= =====
1,490 514 244 2,248 170 - - 170
------ ------- ------------- ----- ------ ======= ============= =====
7. RESULT OF THE COMPANY
As permitted by section 408 of the Companies Act 2006, the
income statement of the Company has not been presented as part of
these financial statements. The Company made a loss of $2,215,294
(2011: loss $2,794,177) during the year.
8. OPERATING LOSS
The operating loss is stated after charging:
2012 2011
$,000 $,000
Depreciation of property, plant
and equipment 1,215 80
Write down of inventory 403 1,358
Directors' emoluments (see
note 10) 623 845
Foreign exchange losses 707 413
Operating lease rentals 251 265
====== ======
9. AUDITOR'S REMUNERATION
The analysis of Auditor's remuneration is as follows:
2012 2011
$,000 $,000
Fees payable to the Company's
Auditor for the audit of the
Company's annual accounts 60 62
Fees payable to the Company's
Auditor and their associates
for other services to the Group:
The audit of the Company's
subsidiary pursuant to legislation 64 60
------ ------
Total audit fees 124 122
Audit related assurance services:
interim review 20 20
Corporate finance 58 -
------ ------
Total Fees 202 142
------ ------
10. STAFF COSTS
2012 2011
$,000 $,000
Wages and salaries 2,381 2,865
Share-based payments (see note 21) - 1,101
Compulsory social security contributions 243 294
2,624 4,260
====== ======
The Group does not provide pension arrangements for its
employees.
The average number of employees (including executive directors)
during the year was as follows:
2012 2011
No. No.
Directors 2 3
Management and administration 41 39
Production 75 99
====
118 141
==== ====
Directors' remuneration
Fees Salary 2012 2011
$,000 $,000 $,000 $,000
TS Kong 98 - 98 97
S Utegen - 272 272 273
DA Sinclair (resigned
December 2011) - - - 158
N Damitov - 190 190 194
C de Chezelles 63 - 63 64
NR Clarke (resigned December
2011) - - - 59
161 462 623 845
====== ====== ====== ======
Details of share options held by directors during the year are
included in note 29.
11. FINANCE COSTS
2012 2011
$,000 $,000
Bank loan interest 422 631
Convertible loan interest 1,782 -
Unwinding of discount on historic
cost liability payable under SUC 19 27
2,223 658
====== ======
12. INCOME TAX
2012 2011
$,000 $,000
Current tax - -
Deferred tax (Note 25) - -
====== ======
Total income tax expense in income - -
statement
====== ======
UK corporation tax is calculated at 24.5% (2011: 26.5%) of the
estimated taxable loss for the year. Taxation of other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The charge for the year can be reconciled to the loss per the
income statement as follows:
2012 2011
$,000 $,000
Loss before tax (9,236) (10,106)
======= ========
Income tax using the UK domestic corporation
tax rate of 24.5% (2011: 26.5%) (2,263) (2,678)
Effect of differences between UK and
overseas tax rates 310 423
Items permanently disallowed for tax
purposes 340 610
Other temporary differences 700 4
Effect of tax losses not recognised 913 1,641
- -
======= ========
Deferred tax assets have not been recognised in respect of the
following items:
2012 2011
$,000 $,000
UK tax losses 14,820 12,731
Overseas tax losses expiring 2022 1,428 -
Overseas tax losses expiring 2021 4,238 4,304
Overseas tax losses expiring 2020 3,251 3,302
Overseas tax losses expiring 2019 9,567 9,718
Overseas tax losses expiring 2018 2,825 2,870
36,129 32,925
====== ------
UK tax losses may be carried forward indefinitely and set off
against future taxable profits. The overseas tax losses are
available to be carried forward as stated above. Deferred tax
assets have not been recognised in respect of these items because
it is not probable that future taxable profit will be available
against which the Group can utilise the benefits therefrom.
In March 2013, the UK government announced reductions in the UK
tax rate in stages, falling to 20% by 2015.
13. LOSS PER SHARE
Basic loss per share
2012 2011
Basic and diluted loss per share
(cents) (5.5) (6.2)
===== =====
The calculation of basic loss per share is based on the
following data:
Loss attributable to ordinary shareholders
2012 2011
$,000 $,000
Loss for the year (9,236) (10,106)
=======
Loss attributable to ordinary shareholders (9,236) (10,106)
======= --------
Weighted average number of ordinary Shares
shares ,000
Issued ordinary shares at 1 January
2011 159,849
Effect of shares issued during year 3,849
Weighted average number of ordinary
shares at 31 December 2011 163,698
-------
Issued ordinary shares at 1 January
2012 166,634
Effect of shares issued during year -
-------
Weighted average number of ordinary
shares at 31 December 2012 166,634
-------
The convertible loans and warrants in issue are not considered
dilutive since the Group made a loss in both the current and prior
years. The number of shares potentially arising in respect of these
instruments are disclosed in notes 22 and 23. Subsequent to year
end the convertible loans were converted to 174,476,283 ordinary
shares (see note 31).
14. PROPERTY, PLANT AND EQUIPMENT
GROUP Plant Land Motor Fixtures
and equipment and vehicles and Total
buildings fittings
$,000 $,000 $,000 $,000 $,000
Cost
Balance at 1 January
2011 14,314 8,534 303 107 23,258
Additions 74 44 39 16 173
Disposals (89) - (43) (56) (188)
Exchange differences (35) (58) (2) - (95)
============== ==========
Balance at 31 December
2011 14,264 8,520 297 67 23,148
============== ========== ========= ========= ======
Balance at 1 January
2012 14,264 8,520 297 67 23,148
Additions 188 (224) 94 42 100
Reclassification - (200) - 200 -
Exchange differences (81) (129) (5) (1) (216)
============== ==========
Balance at 31 December
2012 14,371 7,967 386 308 23,032
============== ========== ========= ========= ======
Depreciation
Balance at 1 January
2011 4,722 349 115 70 5,256
Depreciation charge
for the year 713 391 105 25 1,234
Disposals (90) (16) (39) (145)
Exchange differences (12) (3) (1) - (16)
Balance at 31 December
2011 5,333 737 203 56 6,329
===== ===== ==== ==== ======
Balance at 1 January
2012 5,333 737 203 56 6,329
Depreciation charge
for the year 624 473 70 48 1,215
Exchange differences (151) (15) (4) - (170)
Balance at 31 December
2012 5,806 1,195 269 104 7,374
===== ===== ==== ==== ======
Carrying amounts
At 31 December 2011 8,931 7,783 94 11 16,819
===== ===== ==== ==== ======
At 31 December 2012 8,565 6,772 117 204 15,658
===== ===== ==== ==== ======
15. INTANGIBLE ASSETS
GROUP Subsoil
Use
Cost Contract
$,000
Balance at 1 January 2011 68,450
Additions 2,406
Exchange differences (414)
=========
Balance at 31 December 2011 70,442
=========
Balance at 1 January 2012 70,442
Additions 937
Exchange differences (948)
=========
Balance at 31 December 2012 70,431
=========
Amortisation
Balance at 1 January 2011 -
Charge for the year 701
---------
Balance at 31 December 2011 701
---------
Balance at 1 January 2012 701
Charge for the year 866
Balance at 31 December 2012 1,567
=========
Carrying amounts
At 31 December 2011 69,741
=========
At 31 December 2012 68,864
=========
IMPAIRMENT TESTS FOR INTANGIBLE ASSETS
The directors have considered whether there is an indication of
impairment of the Subsoil Use Contract ("SUC") intangible asset at
the balance sheet date, in accordance with IFRS 6: Exploration for
and Evaluation of Mineral Resources.
The SUC contains minimum ore extraction volume commitments and
cumulative expenditure commitments. The Group met the ore
extraction obligations in 2008, 2009 and 2010 but was not in
compliance in 2011. During 2012 the Group produced 306,000 tonnes
of ore in line with its amended mining plan for which it sought
approval from the Kazakh authorities earlier.
During the year the Group applied to MINT for the ore volumes to
be produced under the Subsoil Use Contract ("SUC") to be amended to
300,000 tonnes per annum for 2012-2014, 5 million tonnes per annum
for 2015-2017 and 10 million tonnes from 2018. The proposed
amendment to the Work Programme under the SUC was approved by the
Kazakh authorities early in 2013 subject to the Work Programme
documentation being prepared for formal inclusion within the SUC
and the execution of the amended SUC and the Work Programme by
MINT. Given that the Group is now substantially in compliance with
the SUC and, following completion of the DFS in February 2013 (see
note 31) which provides support for the carrying value, the
directors do not consider that any impairment of the carrying value
of intangible assets is required.
The Company's commitment to meet associated cumulative
development expenditure of $115 million from the end of 2014 to
2020 has not changed.
Development of the Project will be dependent on continued
compliance with the Subsoil Use Contract and the ability to obtain
financing.
Subsoil
COMPANY Use
Contract
$,000
Cost
Balance at 1 January 2011 7,287
Additions 1,058
=========
Balance at 31 December 2011 8,345
=========
Balance at 1 January 2012 8,345
Additions 180
=========
Balance at 31 December 2012 8,525
=========
Carrying amounts
At 31 December 2011 8,345
=========
At 31 December 2012 8,525
=========
16. INVESTMENTS - COMPANY
Investment
in subsidiaries
$,000
Cost
Balance at 1 January 2011 51,016
Investment in subsidiary -
Balance at 31 December 2011 51,016
================
Balance at 1 January 2012 51,016
Investment in subsidiary -
Balance at 31 December 2012 51,016
================
At 31 December 2012, the Company's investments in subsidiaries
comprise 100% of the issued share capital of Temir Service LLP and
Chilisai Chemicals LLP (see note 30 for further detail).
17. LOANS AND FINANCE LEASE RECEIVABLES - COMPANY
Finance
Loans Leases Total
$,000 $,000 $,000
Balance at 1 January 2011 30,259 8,981 39,240
Advances 3,009 - 3,009
Repayments (120) - (120)
Exchange difference - (129) (129)
Interest 1,040 287 1,327
Balance at 31 December 2011 34,188 9,139 43,327
======= ======= ======
Balance at 1 January 2012 34,188 9,139 43,327
Advances 7,003 - 7,003
Exchange difference - 116 116
Interest 1,210 290 1,500
Balance at 31 December 2012 42,401 9,545 51,946
======= ======= ======
The Company has provided two loan facilities to Temir Service
LLP for $12 million and $35 million. The first loan facility was
entered into in 2006 and was interest free for the first 12 months
and then subject to interest at LIBOR plus 2%. The second loan is
subject to interest at LIBOR plus 2%. The loans are effectively
repayable within five years from the date of the agreements (17
April 2008 and 12 December 2008). These loans are not expected to
be repaid until Temir Service LLP is profitable and will be
rescheduled in due course. An amount of $4.6 million remains
undrawn under these loan facilities.
The Company has various finance lease agreements for plant and
equipment with Temir Service LLP. The finance leases are interest
free for the first 12 months. The payment schedules for lease
repayments are to be agreed between the Company and Temir Service
LLP not later than 30 days after the subsoil use operations become
profitable for Temir Service LLP, and are accordingly considered to
fall due between one and five years. At 31 December 2012, the total
future payments receivable are $10,047,000 (31 December 2011:
$9,910,000) and unearned interest income is $1,454,000 (31 December
2011: $1,434,000). Residual values in the leases are considered to
be $nil and no write-down has been made at 31 December 2012.
18. INVENTORIES
Group Company Group Company
2012 2012 2011 2011
(restated)
$,000 $,000 $,000 $,000
Raw materials 1,005 - 1,893 -
Stockpiled ore 6,453 - 4,375 -
Phosphate flour 223 - 234 -
Phosphate concentrate 3,068 - 4,056 -
====== ======= =========== =======
10,749 - 10,558 -
====== ======= =========== =======
Realisable within one year 2,044 - 3,028 -
Realisable after one year 8,705 - 7,530 -
10,749 - 10,558 -
====== ======= =========== =======
At 31 December 2012 raw material, ore and flour inventories have
been recognised at cost. Phosphate concentrate has been written
down by $403,000 to reflect its estimated net realisable value.
19. TRADE AND OTHER RECEIVABLES
Group Company Group Company
2012 2012 2011 2011
$,000 $,000 $,000 $,000
Trade receivables 151 - - -
Overseas VAT recoverable 1,368 - - -
Other receivables and prepayments 819 203 120 32
Deposits 111 111 111 111
2,449 314 231 143
====== ======= ------ -------
There are no trade receivables which are past due.
20. CASH AND CASH EQUIVALENTS
Group Company Group Company
2012 2012 2011 2011
$,000 $,000 $,000 $,000
Cash and cash equivalents 462 111 213 18
====== ======= ====== =======
21. SHARE-BASED PAYMENTS
No options were issued during 2012. During 2011 the Company
cancelled 11,003,000 options issued to Directors and employees.
22. CAPITAL AND RESERVES - GROUP AND COMPANY
The Company had 166,634,074 ordinary shares of 0.1p each in
issue at 31 December 2012 (2011: 166,634,074). The movements in
share capital were as follows:
Number Share Share Number Share Share
of shares capital premium of shares capital premium
2012 2012 2012 2011 2011 2011
No.
No.000 $000 $000 000 $000 $000
Balance at beginning of
year 166,634 309 112,641 159,849 298 110,366
1,851,852 issued on 15
April for GBP0.27 ($0.43) - - - 1,852 3 799
3,157,895 issued on 08
June for GBP0.19 ($0.31) - - - 3,158 5 983
1,775,000 issued on 03
August for GBP0.17 ($0.28) - - - 1,775 3 493
Balance at end of year 166,634 309 112,641 166,634 309 112,641
---------- -------- -------- ---------- -------- --------
SHARE WARRANT RESERVE - GROUP AND COMPANY
2012 2012 2011 2011
No.
No.000 $000 000 $000
Balance at beginning and end
of year 1,000 100 1,000 100
------ ---- ----- ----
On 29 June 2010 the Company issued 1,000,000 warrants carrying
the right to subscribe for one ordinary share of 0.1p each at a
price of 30p per ordinary share which expire on 29 June 2013. The
fair value of the commission was determined at the date of issue by
using the Black-Scholes model assuming an expected volatility of
70%, a risk free rate of 2.6% and a contractual life of three
years. This measure is used in the absence of information on the
fair value of the services provided. The total fair value of
$100,000 was expensed in the income statement.
TRANSLATION RESERVE - GROUP
The translation reserve is used to record exchange differences
arising from the translation of the financial statements of the
foreign subsidiary.
CONVERTIBLE LOAN NOTE RESERVE - GROUP AND COMPANY
2012 2011
$000 $000
Balance at beginning of year - -
Equity portion of convertible loan 732 -
---- ----
Balance at end of year 732 -
---- ----
The convertible loan note reserve represents the amount of
proceeds on issue of the convertible debts relating to the equity
component (see note 23).
23. INTEREST BEARING LOANS AND BORROWINGS
Group Company Group Company
2012 2012 2011 2011
$'000 $'000 $'000 $'000
Bank loan repayable within
one year 834 - 4,970 -
Convertible loan 13,638 13,638 - -
Directors' loans repayable
within one year (see note 29) 600 600 894 894
Total loans repayable within
one year 15,072 14,238 5,864 894
====== ======= ====== =======
Bank loan repayable within
one to two years 833 ---
Bank loan repayable within
two to three years 834 ---
-----
Total bank loan repayable after
one year 1,667 ---
-----
In May 2012 the Group agreed to reschedule bank loans due to ATF
Bank Kazakhstan ("ATF") pursuant to which Sunkar immediately repaid
$1.5 million with a further $1.0 million repayment on 1 July 2012.
The remaining loan was agreed to be repaid in monthly instalments
until December 2014.
In December 2012 Asia Credit Bank ("ACB") agreed to provide a
credit line of up to $3 million to refinance the balance of the
loan due to ATF and to provide additional working capital. The
Group received $2.5 million on 27 December 2012 with balance of
$0.5 million received in early 2013. The Group provided security
over its physical assets with a year-end carrying value of $11.2
million.
The ACB loan is repayable over three years and carries interest
at 9.5%.
The Company issued $ 2.8 million 10% convertible loan notes on
17 January 2012 and a further $10 million of convertible loan notes
on 26 March 2012. The loans are repayable within 1 year from the
issue date or can be converted at any time into 174,476,283 shares
at the holder's option. The value of the liability component and
the equity conversion component were determined at the date the
instrument was issued and were $12,060,000 and $740,000
respectively (prior to allocation of fees). The loans were
converted on 13 February 2013.
The fair value of the liability component, included in current
borrowings, at inception was calculated using a market interest
rate for an equivalent instrument without conversion option. The
discount rate applied was 16.75%.
The fair value of the convertible bond at 31 December 2012
amounted to $14,370,000, which was calculated using cash flow
projections discounted at 16.75%.
24. OTHER LONG-TERM PAYABLES
Group Company Group Company
2012 2012 2011 2011
$'000 $'000 $'000 $'000
Historic cost liability payable
under the Subsoil Use Contract 822 - 1,016 -
822 - 1,016 -
====== ======= ====== =======
Under the terms of the Subsoil Use Contract an amount of $1
million remains payable at 31 December 2012 in relation to access
to historic geological exploration data. This is payable over the
life of the contract and its carrying amount has been recorded at
its net present value calculated on the basis of equal quarterly
instalments over this period using a 2% discount factor.
25. DEFERRED TAX LIABILITIES
Deferred
tax
$,000
Balance at 1 January 2011 11,862
Exchange differences (80)
========
Balance at 31 December 2011 11,782
========
Balance at 1 January 2012 11,782
Exchange differences (182)
--------
Balance at 31 December 2012 11,600
--------
The deferred tax balance reflects the temporary difference on
the fair value adjustment to the Subsoil Use Contract made on the
acquisition of the subsidiary. As described in note 12, deferred
tax assets have not been recognised in respect of UK or overseas
tax losses because of the uncertainty of whether future taxable
profits will be available against which the Group can utilise the
benefits therefrom.
There were no temporary differences in relation to the Company's
investment in the subsidiary for which deferred tax liabilities
have not been recognised.
26. TRADE AND OTHER PAYABLES
Group Company Group Company
2012 2012 2011 2011
$'000 $'000 $'000 $'000
Trade payables 469 - 1,058 -
Non trade payables 881 508 1,984 1,799
Advance for Earth Moving Contract 1,995
Advance from Sun Avenue Partners
Corp ("SAPC") - - 1,000 1,000
Amounts payable to subsidiary
undertakings - - - 90
Accrued expenses 184 184 660 600
===== ======= ----- -------
3,529 692 4,702 3,489
===== ======= ----- -------
27. FINANCIAL INSTRUMENTS
The Board determines, as required, the degree to which it is
appropriate to use financial instruments and hedging techniques to
mitigate risks. The main risks for which such instruments may be
appropriate are foreign exchange risk, interest rate risk and
liquidity risk, each of which is discussed below. There were no
derivative instruments outstanding at 31 December 2012 (2011:
$nil).
LIQUIDITY RISK AND CAPITAL MANAGEMENT
The Group's objectives when managing capital are to safeguard
the entity's ability to continue as a going concern so that it can
continue to increase the value of the entity for the benefit of
shareholders.
Given the nature of the Group's current activities the entity
will remain dependent on short-term financing and equity funding in
the short to medium term until such time as the Group becomes
self-financing from the commercial production of phosphate
fertilizers. Management monitors forecasts of the Group's liquidity
by projecting rolling 18 month cash flows.
The Group cash position at 31 December 2012 was $0.5 million
(2011 $0.2 million).
INTEREST RATE RISK
The Group's exposure to the risk of changes in market interest
rates relates to the Group's cash holdings and ACB Loan.
The following table demonstrates the sensitivity to a reasonably
possible change in interest rates, with all other variables held
constant, of the Group's profit before tax through the impact on
short-term deposits on year end cash and cash equivalents and bank
loans.
EFFECT ON LOSS BEFORE TAX FOR THE YEAR 2012 2011
ENDED:
Increase/ Increase/
(Decrease) (Decrease)
$,000 $,000
+1.0% (25) (58)
-0.5% 13 29
=========== ===========
CREDIT RISK
The Board considers that there is minimal credit risk in respect
of other receivables as it primarily relates to VAT due from the
Kazakhstan government which will be offset against VAT arising on
future sales. The Board reviews the credit ratings of the financial
institutions used for holding cash balances in order to minimise
the credit risk. The maximum credit risk to which the Group was
exposed at 31 December 2012 was $2,911,000 (2011: $444,000).
FOREIGN CURRENCY RISK
The presentational currency of the Group is US Dollars. The
functional currency of the Company is US Dollars and the functional
currency of its subsidiaries is Kazakhstan Tenge. The Group is
exposed to foreign currency risk due to movements in the Kazakhstan
Tenge against the US Dollar exchange rate in relation to
transactions and balances of the subsidiaries and movements in GB
Pounds and Euros against the US Dollar Exchange rate in respect of
transactions and balances of the Company.
The Group has a general policy of not hedging against foreign
currency risks. The Group manages foreign currency risk by
reviewing and matching forecasted foreign currency payments with
foreign currency balances.
The primary currency of international fertilizer trading is the
US Dollar.
The Group had the following financial instruments in currencies
other than the presentational currency of the parent company. The
amounts are stated in US Dollar equivalents.
2012 2011
$,000 $,000
Cash and cash equivalents 421 175
Trade and other receivables 3,223 895
Trade and other payables (3,432) (3,547)
======= =======
212 (2,477)
======= =======
An analysis of financial instruments by currency:
2012 2012 2012 2011 2011 2011
GBP,000 EUR,000 KZT,000 GBP,000 EUR,000 KZT,000
Cash and cash
equivalents 44 - 52,710 8 - 24,110
Trade and other
receivables 133 - 453,378 92 - 111,639
Trade and other
payables (125) - (480,160) (1,073) (209) (238,700)
------- ------- --------- ------- ------- ---------
52 - 25,928 (973) (209) (102,951)
------- ------- --------- ------- ------- ---------
Exchange rate fluctuations may adversely affect the Group's
financial position and results. The following table details the
Group's sensitivity to a 10% strengthening and weakening in the US
Dollar against the relevant foreign currencies of GB Pound and
Kazakhstan Tenge. 10% represents management's assessment of the
reasonable possible exposure, calculated on cash and cash
equivalents, trade and other receivables/payables.
Profit Equity sensitivity
or loss
sensitivity
10% 10% 10% 10%
strengthening weakening strengthening weakening
$'000 $'000 $'000 $'000
GB Pounds (7) 9 (7) 9
Kazakhstan Tenge (16) 17 (16) 17
(23) 26 (23) 26
============== ========== -------------- ----------
The above risk exposures are also considered to apply to the
Company in relation to the movement of the US Dollar exchange rate
against GB Pounds.
FAIR VALUES
In the directors' opinion there is no material difference
between the book value and fair value of any of the Group's
financial instruments.
The classes of financial instruments are the same as the line
items included on the face of the balance sheet and have been
analysed in more detail in the notes to the accounts. Financial
assets comprise cash and cash equivalents and trade and other
receivables (excluding overseas VAT). Financial liabilities
comprise loans and borrowings and trade and other payables
(excluding the earth moving advance payment). All the Group's
financial assets are categorised as loans and receivables and
recognised at amortised cost using the effective interest rate
method and all financial liabilities are measured at amortised
cost.
28. COMMITMENTS
Under the SUC, the Group's current financial obligations are to
spend $115 million cumulatively by the end of 2020. It has invested
$30.7 million cumulatively at 31 December 2012.
Obligations under operating leases at 31 December 2012 were
$150,000 (2011: $285,000).
29. RELATED PARTIES
IDENTITY OF RELATED PARTIES
The Group has a related party relationship with its
subsidiaries, its directors and executive officers and the
directors of its subsidiaries.
Sunkar Resources plc was the ultimate controlling entity of the
Group at 31 December 2012.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key management personnel comprise directors and the chief
financial officer of the Company.
The key management personnel compensation is set out below:
Key management personnel
2012 2012 2012 2011 2011
Directors Other Total Directors Total
$'000 key management $'000 $,000 $'000
$'000
Salaries and fees 623 103 726 845 845
Termination payment - 53 53 - -
Compulsory social security
contributions 69 14 83 92 92
Share-based payments - - - 907 907
========= =============== ====== ========= ======
692 170 862 1,844 1,844
========= =============== ====== ========= ======
No share options were granted to directors and key management
during the year and there were no unexercised options held by
directors and key management at 31 December 2012 (2011: nil).
Loans due to Directors were as follows:
2012 2011
$,000 $,000
TS Kong - 234
S Utegen 300 300
N Damitov 300 300
C de Chezelles - 60
Total 600 894
===== =====
The loans are unsecured and carry an annual interest rate of 10
percent. The loans were initially to be repaid by 28 March 2012 and
were extended pending settlement with ATF Bank on its loans. The
loans from T S Kong and C de Chezelles were repaid on 24 July 2012.
A new repayment date has not yet been determined in respect of the
loans from S Utegen and N Damitov. Interest of $35,000 and $37,000
has been accrued on the respective loans during 2012 (2011:
$20,000)
TRANSACTIONS WITH SUBSIDIARY UNDERTAKINGS
Details of loans advanced to Temir Service LLP, a subsidiary
undertaking are included in note 17. Interest income earned under
these arrangements during the year was $1.5 million (2011: $1.3
million).
At 31 December 2012 the Company was owed $99,000 (2011: owed to
$90,000) by Chilisai Chemicals LLP, a subsidiary undertaking.
OTHER RELATED PARTY TRANSACTIONS
The Company had no other related party transactions for the year
under review.
30. GROUP ENTITIES
SIGNIFICANT SUBSIDIARIES
Country Ownership Nature
of incorporation interest of business
Temir Service LLP Kazakhstan 100% Mining
Chilisai Chemicals LLP Kazakhstan 100% Chemicals
31. SUBSEQUENT EVENTS
On 13 February 2013 the Company issued 174,476,283 ordinary
shares of 1 pence each on conversion of the loan notes of $12.8
million held by SAPC following the granting of permission to issue
the shares received from the National Bank of Kazakhstan. Following
this transaction, SAPC now holds approximately 51% of the Company's
shares. Almas Mynbayev, owner of SAPC, is the ultimate controlling
party
On 25 February 2013 the Company announced that the Ministry of
Industry and New Technologies of the Republic of Kazakhstan had
approved changes to the Company's mining plan and Work Programme
commitments regarding the development of the Chilisai Phosphate
deposit.
On 28 February 2013 the Company announced the completion of its
detailed Feasibility Study on its Chilisai Phosphate project which
is expected to form the foundation for a prospective project
financing arrangement.
On 26 April 2013 the Company announced the signing of an
additional earth moving contract. The new contract value is
approximately $12 million and it is expected that the Group will
have to outsource some of the works in order to complete earth
moving of 2 million cu m in Q4 this year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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