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Audited Financial Results for year ended 31 December 2013
African Eagle Resources plc
Incorporated in England and Wales
(Registration number 3912362)
(AIM share code: AFE AIM ISIN: GB0003394813)
(JSE share code: AEA JSE ISIN: GB0003394813)
(“African Eagle” or the “Company”)
Audited Financial Results for year ended 31 December 2013
African Eagle Resources plc (the "Company") (AIM: AFE; AltX: AEA) today announces its results and
the publication of its 2013 Annual Report and Financial Statements for the year ended
31 December 2013. This is being posted to shareholders today and will be available on the
Company's website shortly: www.africaneagle.co.uk.
As announced on 6 June 2014, the Annual General Meeting of the Company will be held at 9.30 a.m.
(BST) on Monday, 30 June 2014, at the offices of Beaumont Cornish Limited, 29 Wilson Street,
London, EC2M 2SJ, United Kingdom.
The financial information for the year ended 31 December 2013 has been extracted from the accounts
for the year ended 31 December 2013 on which the report of the auditors was unqualified. The
financial information included in this announcement for the years ended 31 December 2013 and 2012
does not comprise statutory accounts for the purposes of Section 434 of the Companies Act 2006.
Chairman’s Statement
2013 proved to be a very difficult year for your Company which culminated in the sale of materially all
of the assets in August 2013 as a result of being unable to raise further funding in the capital markets.
This resulted in the Company becoming an investing company under AIM rules and adopting an
Investing Policy to seek opportunities in the natural resources, infrastructure and services sectors in
all geographic areas. Despite this disappointment your Board is optimistic that your Company can
have a positive future. The sale of 90% of the assets in Tanzania resulted in the Company no longer
being exposed to the tax liability of approximately £600,000 which was provided for in the 2012
accounts. This, together with the cutting of corporate costs to the bare minimum to maintain the
listing, redundancies, the mitigation of other potential and actual liabilities and a placing to raise
working capital has established a strong base for a renaissance in the Company’s fortunes.
The Company retains two potentially valuable assets:
- approximately 9% interest in Elephant Copper Limited. Elephant Copper Limited is preparing
to list on the TSX Venture Exchange in Toronto and holds 100% of the Mkushi copper mine
in Zambia and the aim of bringing it back into production.
- 10% free carried interest in the Tanzanian assets sold in 2013 until US$20 million of
expenditure has been incurred and met on the assets. Further information on events since
the disposal are as follows:
o The majority owner of the asset, Blackdown Resources (UK) Limited, has appointed
Rui de Sousa as Chairman and Ian Stalker as CEO along with in country expertise.
Mr de Sousa is a well known figure in the sector and has 35 years’ experience. Mr
Stalker has over 30 years’ experience in the industry and is the former CEO of
UraMin Inc. ("UraMin"), a London and Toronto listed uranium company until its
acquisition by Areva in August 2007 for US$2.5 billion.
o Low nickel prices in the latter part of 2013 hampered the ability to raise further funds
to progress the main asset, the Dutwa Nickel project. However work has continued
with the aim of producing a pre-feasibility study with lower operating costs than were
previously envisaged.
o The tax liability provided for in the 2012 accounts has been settled by the majority
owner.
o The nickel price has increased substantially in 2014 (up over 30%) as a result of the
ban on the export of ore from Indonesia. It is hoped that this increase will be
sustained and thus be reflected in valuations for development stage projects and the
ability to raise capital for them.
More recently the appointment of myself and Nick Clarke to the Board on 30 May 2014 has brought a
new dimension and renewed enthusiasm to your Company.
The cash position of the Company at the time of writing is approximately £40,000, however on
17 June 2014 the Company entered into a loan facility with Nick Clarke and myself whereby it can
draw down a maximum of £365,000 until 30 November 2015 paying interest on the sum drawn down
and any unpaid interest at 5% per annum. The Company is actively examining ways of improving its
cash position and intends to replace the loan facility with a longer term solution in due course.
Finally, I would like to take this opportunity to express my and my fellow Directors’ appreciation for the
hard work and dedication of the former staff and directors who worked tirelessly in Tanzania and
London during very difficult times and without whose efforts it is unlikely that the Company would
have a realistic future.
Kola Karim
Chairman
17 June 2014
Strategic Review Report
Financial Performance
As set out in the Financial and Risk Review below, the Company reduced its losses by £31.5m as a
result of the impairment of assets in the 2012 financial statements. Further details are given in the
Financial and Risk Review.
Business Review
Nickel Assets - Dutwa
As reported in the 2012 Annual Report, the difficult capital markets and the requirement that Dutwa
would need a strategic partner resulted in the Company appointing Cutfield Freeman and Co Ltd. as
financial adviser for the development of Dutwa. Significant efforts were directed toward discussions
with the large nickel producers and other potential parties in both 2012 and early 2013. Several large
companies expressed interest in Dutwa but the global challenges then faced by the wider nickel
industry and commodities generally meant that no potential strategic partners committed to the
project.
This situation resulted in a transaction being sought for all of the Tanzanian assets, including the
Dutwa nickel project, for cash and/or a carried interest in the project. Whilst potential transactions
were being progressed immediate cost cutting measures took place, including redundancies,
termination of supplier and consultant contracts and the funding of subsidiaries on a case by case
basis. This preserved working capital to allow the transaction to be completed and also maintained
the exploration licences in good order.
Discussions were progressed with a number of interested parties and, following a restructure of the
subsidiaries into a new entity called Blackdown Minerals, a transaction to sell 90% of the Company’s
subsidiaries, assets and liabilities to Blackdown Resources (UK) Limited, a company owned by Nick
Clarke (appointed CEO of the Company on 30 May 2014) completed on 8 August 2013. The
Company received US$100,000 and has a 10% free carry in the assets until US$20 million has been
incurred and met on the exploration and development of the assets. At the same time the Company
was reclassified as an investing company under AIM rules.
As a result the Board of Directors assembled for the development of Dutwa was recognised as no
longer being suitable for the changed needs of the Company and Chris Pointon, Don Newport and
Paul Rupia stepped down in mid-August, following the departure of Trevor Moss at the end of June
and David Newbold at the end of March. I would like to express my thanks and appreciation for their
support and contribution to the successful transition of the Company.
Consequently, Paul Colucci, Venkat Siva and Mark Thompson were appointed Directors to seek a
transaction to inject new assets or a business into the Company using their considerable combined
expertise. At the same time efforts to reduce corporate costs continued and as part of this I became
the Company’s only employee from the start of October 2013. Advisers terms were renegotiated or
new advisers sought to suit the Company’s situation. The lease for the office in London was assigned
at the start of December. These changes reduced the monthly cash burn to realistically the lowest
possible whilst maintaining the AIM and Johannesburg AltX quotations.
During this time the new Directors, along with Julian McIntyre and myself, worked hard to seek a
transaction for the Company that was value enhancing for shareholders, and this work continued into
2014. A number of potential transactions were examined that were mostly, but not exclusively, in the
resources sector. Unfortunately none of these potential transactions progressed to the stage where
any binding agreements were reached and as a result Nick Clarke through his wholly owned company
Salkeld Investments Limited (which subsequently sold 16.18% of the issued share capital in the
Company to Shoreline Energy International, a company of which Kola Karim owns 90% of the issued
share capital and of which he is CEO) purchased the Directors’ shares in early April 2014 and both he
and Kola Karim were appointed to the Board on 30 May 2014. Paul Colucci, Venkat Siva, Mark
Thompson and Julian McIntyre all stepped down as Directors prior to these appointments.
Copper Assets - Zambia
The Company’s copper assets in Zambia were sold to Elephant Copper (“Elephant”) with the sale
closing in November 2012. As a result of the transaction the Company and a subsidiary held a 21%
interest in Elephant, a private company managed from South Africa that is seeking to list on the
Toronto Stock Exchange. This interest has subsequently been reduced to 8.7% by the sale of the
subsidiary and dilution from Elephant’s acquisition of the 51% interest in the Mkushi copper mine that
it didn’t own during August 2013, bringing its interest therein to 100%.
Key Performance Indicators
The Board actively monitors KPI’s as described in more detail in the Financial and Risk Review with
the primary objective of ensuring adequate working capital for the Company.
Principal Risks and Uncertainties
The principal risk faced by the Company is the risk of running out of working capital. During 2013 this
risk was mitigated by the cost cutting measures described above and the mitigation of potential legacy
liabilities. The Board has worked closely with major shareholders to maintain adequate funding.
Outlook
We believe that inherent value remains in the Company’s shareholdings in Blackdown Minerals and in
Elephant Copper and the directors continue to explore ways of realising that value whilst maintaining
the Company as a going concern and seeking new investments for the Company that will implement
the Investing Policy.
Robert McLearon
Finance Director
17 June 2014
Financial and Risk Review
As set out in the Chairman’s Statement, the Strategic Review Report and in note 2(a) to the financial
statements, the Company disposed of all of its subsidiaries on 8 August 2013. As a result these
financial statements are for the Company only and the comparatives for 2012 have also been
prepared for the Company. The main differences between the Company results and the consolidated
results for 2012 are an increase in loss of £5.8 million as a result of impairment of assets being £6.4
million higher. This is partially offset by the £0.6 million tax liability not being applicable to the
Company. The main differences for the statement of financial position are the removal of the £0.6
million tax liability, a reduction in payables of £1.1 million and there no longer being a merger or
foreign currency reserve.
Comprehensive loss
The loss before taxation attributable to owners of the Company decreased from £34.7 million in 2012
to £3.3 million in 2013 mainly as a result of impairment charges of £31.8 million in 2012. The loss in
2013 was also significantly impacted by the loan impairments of £2.2 million. Employee benefits and
other expenses decreased from £1.6 million in 2012 to £0.5 million in 2013 mainly as a result of the
reduction in staff numbers during the year. The loss per share decreased from 5.67 pence in 2012 to
0.44 pence in 2013.
Statement of financial position
As set out in note 12 to the financial statements the investments in Elephant Copper Limited and
Blackdown Minerals Limited were revalued at 31 December 2013 resulting in an increase in
investments of £0.8 million. This partially offset a decrease in assets of £2.6 million, largely as a
result of the decrease in cash of £3.4 million.
Payables decreased by £0.46 million as a result of lower corporate activity.
Share capital and share premium increased by £0.3 million after expenses as a result of a fund
raising in September 2013.
Cash flow
Net cash decreased over the year to £0.18 million at 31 December 2013 compared to £3.6 million at
31 December 2012. £0.3 million after expenses was raised by share issuance during the year (2012:
£12.2 million). £2.04 million was used in investing activities and £1.67 million in operating activities
principally prior to the disposal of the Tanzanian assets completed on 8 August 2013.
Key performance indicators
The Board of African Eagle monitors the following relevant KPIs on a monthly basis:
Financial KPIs
The Directors regularly review operating costs, capital expenditure and forecasts in order to ensure
that there are sufficient cash resources to finance the continuing and future development of the
Company. The principal KPIs are set out below:
- Total expenditure burn rates – post disposal the burn rate was rapidly reduced and now averages
£20,000-£25,000 per month
- Monthly cash flow budget comparisons – post the disposal of subsidiaries the monthly cash flow
followed budgeted figures closely except for unanticipated expenditure relating to the termination
of a former supplier and an insurance premium
- Annual budget and forecast reviews – a new budget was approved following the disposal of
subsidiaries to reflect the new circumstances of the Company
The KPIs can be applied to the financial results as follows although it should be noted that
comparability with the prior year is difficult as significant expenditure was incurred in 2012 when the
Company was developing the Dutwa project in Tanzania:
Year to Year to
31 December 31 December
2013 2012
£ £
Cash flow used in operating activities (1,670,123) (2,387,153)
Cash flow used in investing activities (2,043,396) (8,250,834)
Cash flow from financing activities 300,000 12,202,857
Non-financial KPIs
Health and safety - number of reported incidents. There were no serious incidents reported during the
year.
Risk review
The risks inherent in an investing Company have been reviewed by the Board. The principal risk is
detailed below.
Liquidity risk
Liquidity risk is the risk of running out of working and investment capital. African Eagle will rely on the
issue of equity capital and loans to finance its activities in the near future. However, there can be no
assurance that adequate funding will be available when required to finance the Company’s activities
and expansion.
Robert McLearon
Finance Director
17 June 2014
Report of the Directors
To the members of African Eagle Resources plc, Company number 3912362
The Directors present their report together with the audited financial statements for the year ended
31 December 2013.
Business review
A review of the Company's trading during the year and future developments is contained in the
Chairman's Statement and the Strategic Review Report as set out above.
The Company’s financial and non-financial indicators are set out in the Financial and Risk Review
above. There was a Company loss after taxation for the year of £3,267,492 (2012: £34,745,456). The
Directors do not recommend the payment of a dividend.
Going Concern
It is the prime responsibility of the board to ensure the Company remains as a going concern. The
Company announced on 15 May 2013, that the Directors were taking immediate steps to minimise
costs and preserve the Company’s cash position, and were undertaking a restructuring as a result of
not being able to secure further funding. This resulted in the financial statements for the year ended
31 December 2012 being produced on a break up basis. On 8 August 2013 the Company completed
the sale of 90% of substantially all of the Company’s assets and business in Tanzania and became an
Investing Company. That disposal along with the raising of £300,000 (after expenses) in September
2013 and the reduction of corporate overheads has allowed the Company to continue as a going
concern. The Company has reviewed its forecasts for the next 12 months from the date of approval
of these financial statements and concluded that as the Company has entered into a loan facility with
Nick Clarke and Kola Karim (as described in the Chairman’s Statement above and in Note 22 to the
financial statements) it will have access to adequate working capital funding to continue as a going
concern. The Directors therefore consider it appropriate to adopt the going concern basis of
accounting for the financial statements.
Directors
The Directors in office during the year and current at the date of this report are listed below. The
interests of the Directors in the shares of the Company at 31 December 2013 or the date of
resignation, and 31 December 2012 were as follows:
As at 31 December As at 31 December
2013 2012
Ordinary Shares Options Ordinary Options
Shares
Paul Colucci 14/08/2013 (Appointed) 14,285,714 -
08/05/2014 (Resigned)
Venkat Siva 14/08/2013 (Appointed) - -
28/05/2014 (Resigned)
Mark 14/08/2013 (Appointed) 17,526,571 -
Thompson 08/05/2014 (Resigned)
Chris 26/01/2012 (Appointed) 750,000 150,000 750,000 150,000
Pointon 14/08/2013 (Resigned)
Trevor Moss 01/12/2011 (Appointed) 1,187,500 6,000,000 1,187,500 6,000,000
28/06/2013 (Resigned)
David 02/07/2012 (Appointed) - 3,000,000 - 3,000,000
Newbold 31/03/2013 (Resigned)
Don Newport 26/01/2012 (Appointed) - - - -
14/08/2013 (Resigned)
Julian 28/04/2011 (Appointed) 184,245,047 - 78,530,761 -
McIntyre 28/05/2014 (Resigned)
Paul Rupia 27/07/2012 (Appointed) - 150,000 - 150,000
14/08/2013 (Resigned)
Robert 20/06/2012 (Appointed)
McLearon 03/07/2012 (Resigned) - 262,000 - 262,000
24/06/2013 (Appointed)
Kola Karim 30/05/2014 (Appointed) - -
Nick Clarke 30/05/2014 (Appointed) - -
Mark Parker 19/01/2000 (Appointed) 4,563,967 3,676,328
24/04/2012 (Resigned)
Christopher 01/02/2001 (Appointed) 1,047,165 3,504,618
Davies 24/04/2012 (Resigned)
Andrew 01/12/2011 (Appointed) 182,500 3,000,000
Robertson 07/06/2012 (Resigned)
Euan 08/12/2000 (Appointed) 1,193,333 2,205,824
Worthington 24/04/2012 (Resigned)
Geoffrey 13/10/2003 (Appointed) 975,967 1,637,230
Cooper 04/04/2012 (Resigned)
Total 217,994,832 9,562,000 88,431,193 23,586,000
Substantial shareholdings
As at 6 June 2014, the only holdings of 3% or more in the issued share capital are:
Shares in the Company Approximate % of the
Company’s issued share
1
capital
2
Shoreline Energy International Limited 140,937,440 16.18%
Coburg Group Plc 98,080,999 11.26%
3
Salkeld Investments Ltd 87,119,892 10.00%
Barclayshare Nominees Ltd 49,601,647 5.69%
TD Direct Investing Nominees 42,532,189 4.88%
HSBC Client Holdings Nominee 36,105,165 4.14%
HSDL Nominees Ltd 32,343,070 3.71%
Notes to substantial shareholdings
1
Based on 871,157,261 shares issued and outstanding at 6 June 2014
2
Kola Karim has a 90% interest in Shoreline Energy International
3
Salkeld Investments is wholly owned by Nick Clarke
Directors’ remuneration
Directors’ emoluments are shown in note 8.
Statement of Directors’ Responsibilities
In respect of the Strategic Report, the Directors’ Report and the Financial Statements
Directors' responsibilities for the financial statements
The Directors are responsible for preparing the Annual Report and financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under
that law the Directors have elected to prepare financial statements in accordance with applicable law
and International Financial Reporting Standards (“IFRSs”) as adopted by the European Union (”EU”).
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 of the profit or loss for
that period. The Directors are also required to prepare the financial statements in accordance with
the rules of the London Stock Exchange for companies trading on the AIM market.
In preparing these financial statements, the Directors are required to:
- Select suitable accounting policies and then apply them consistently;
- Make judgments and estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRSs as adopted by the European
Union, subject to any material departures disclosed and explained in the financial statements; and
- Prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that disclose with reasonable
accuracy at any time the financial position of the Company and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Statement of disclosure to auditor
In so far as each of the Directors is aware:
- There is no relevant audit information of which the Company's auditors are unaware; and
- The Directors have taken all steps that they ought to have taken to make themselves aware of
any relevant audit information and to establish that the auditors are aware of that information.
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 financial statements may differ from legislation in other jurisdictions.
Events after Balance Sheet date
Refer to note 22 for details of the events after the balance sheet date.
Payment policy and practice
It is the Company's normal practice to settle the terms of payment when agreeing the terms of a
transaction, to ensure that suppliers are aware of those terms, and to abide by them. The Company
had no trade payables at the year end.
Financial risk management objectives and policies
The Company's financial risk management objectives and policies are set out in the Financial and
Risk Review above and comply with the disclosure made in note 19 relating to the disclosure required
by IFRS 7 Financial Instruments.
Auditors
Jeffreys Henry LLP replaced PricewaterhouseCoopers LLP as auditors during the year. Jeffreys
Henry LLP offer themselves for reappointment as auditors in accordance with Section 489 (4) of the
Companies Act 2006.
On Behalf of the Board
Robert McLearon
Finance Director
17 June 2014
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF AFRICAN EAGLE RESOURCES
PLC
We have audited the financial statements African Eagle Resources PLC for the year ended 31
December 2013 which comprise Statements of Financial Position, Statement of Comprehensive
Income, Statement of Cash Flows, Statements of Changes in Equity and the related notes. The
financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and is
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 auditors' report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the Directors’ Responsibilities Statement set out above 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 Company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by
the directors; and the overall presentation of the financial statements. In addition, we read all the
financial and non-financial information in the Chairman’s Statement, Strategic Review and Directors’
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 Company’s affairs as at 31
December 2013 and of the Company’s loss and Company’s cash flow for the year then ended;
- the financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union; and
- the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on the other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Review Report and Directors’ Report for the
financial period 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 Company, or returns adequate for our
audit have not been received from branches not visited by us: or
- the Company financial statements are not in agreement with the accounting records and returns;
or
- certain disclosures of directors’ remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
Justin Randall
(Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP
Chartered Accountants
Registered Auditors
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
17 June 2014
Statement of Comprehensive Income
For the year ended 31 December 2013
Year to Year to
31 December 31 December
2013 2012
Note £ £
Employee benefits expense 4 (495,529) (1,649,651)
Reversal of impairment of available for sale investment 5 242,601 -
Impairment of assets 5 (46,789) (8,564,872)
Other expenses 6 (925,871) (1,412,548)
Depreciation expense 11 (488) (14,515)
Profit on disposal of subsidiaries 64,937 -
Loan impairment 14b (2,191,106) (23,214,698)
Operating loss
(3,352,245) (34,856,284)
Finance income:
Bank interest receivable 20,175 108,448
Foreign exchange gain on translation 64,578 2,380
Loss before tax (3,267,492) (34,745,456)
Income tax expense 9 - -
Loss for the year (3,267,492) (34,745,456)
Other comprehensive gain/(loss):
Available for sale investments fair value adjustment 12 655,022 (40,000)
Other comprehensive gain/(loss) for the year 655,022 (40,000)
Total comprehensive loss for the year (2,612,470) (34,785,456)
Loss per share:
Basic and diluted loss per share 10 (0.44p) (5.67p)
Headline loss per share 10 (0.17p) (0.48p)
The accompanying notes form an integral part of these financial statements.
Statement of Financial Position
As at 31 December 2013
Note 31 December 31 December
2013 2012
£ £
Assets
Property, plant and equipment 11 - -
Available for sale investments 12 897,623 68,000
Investments in subsidiaries - -
Other receivables – Short term 14a 75,557 77,018
Other receivables – Long term 14b - -
Cash and cash equivalents 15 176,997 3,590,516
Total assets 1,150,177 3,735,534
Liabilities
Current liabilities
Other payables 16 (87,857) (547,889)
Total liabilities (87,857) (547,889)
Net assets 1,062,320 3,187,645
Equity
Equity attributable to equity holders of Company
Share capital 17 7,117,288 6,940,145
Share premium account 36,682,600 36,559,743
Available for sale revaluation reserve 655,022 -
Retained losses (43,392,590) (40,312,243)
Total equity 1,062,320 3,187,645
The accompanying notes form an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on
17 June 2014.
Company No. 03912362
Robert McLearon
Director
17 June 2014
Statement of Changes in Equity
For the year ended 31 December 2013
Share Share Available for Retained Total
Capital premium sale Losses Equity
account revaluation
reserves
£ £ £ £ £
Balance at 1 January 2012 4,095,862 27,201,169 40,000 (5,882,109) 25,454,922
Loss for year - - - (34,745,456) (34,745,456)
Other comprehensive
income/(loss):
Available for sale investments - - (40,000) - (40,000)
– fair value adjustment
Total comprehensive loss - - (40,000) (34,745,456) (34,785,456)
for the year
Transactions with equity
owners for 2012:
Issue of share capital 2,844,283 9,807,116 - - 12,651,399
Share issue costs - (448,542) - - (448,542)
Share-based payments - - - 315,322 315,322
Total transactions with 2,844,283 9,358,574 - 315,322 12,518,179
equity owners
Balance at 31 December 6,940,145 36,559,743 - (40,312,243) 3,187,645
2012
Loss for year - - - (3,267,492) (3,267,492)
Other comprehensive
income/(loss):
Available for sale investments - - 655,022 - 655,022
– fair value adjustment
Total comprehensive loss - - 655,022 (3,267,492) (2,612,470)
for the year
Transactions with equity
owners for 2013:
Issue of share capital 177,143 132,857 - - 310,000
Share issue costs - (10,000) - - (10,000)
Share-based payments - - - 187,145 187,145
Total transactions with 177,143 122,857 - 187,145 487,145
equity owners
Balance at 31 December 7,117,288 36,682,600 655,022 (43,392,590) 1,062,320
2013
The accompanying notes form an integral part of these financial statements.
Statement of Cash Flow
For the year ended 31 December 2013
Year to Year to
31 December 31 December
2013 2012
Note £ £
Operating activities
Loss after taxation (3,267,492) (34,745,456)
Adjustments for non-cash items:
Impairment of assets 5 46,789 8,564,872
Reversal of impairment of available for sale investment 5 (242,601) -
Depreciation expense 11 488 14,515
Profit on disposal of subsidiaries (64,937) -
Loan impairment 2,191,106 23,214,698
Profit on disposal of assets (41,876) -
Loss on disposal of property, plant and equipment - 694
Share-based payments 18 187,145 315,322
Interest received (20,175) (108,448)
Decrease/(increase) in other receivables 1,462 (39,669)
(Decrease)/increase in other payables (460,032) 396,319
Cash flow used in operating activities (1,670,123) (2,387,153)
Investing activities
Payments to acquire property, plant and equipment 11 (1,955) (87,964)
Funds advanced to subsidiaries (2,191,106) (8,271,318)
Proceeds from sale of assets 43,342 -
Proceeds from disposal of subsidiaries 64,937 -
Proceeds from disposal of available-for-sale investment 21,211 -
Interest received 20,175 108,448
Cash flow used in investing activities (2,043,396) (8,250,834)
Financing activities
Net proceeds from issue of share capital 300,000 12,202,857
Cash flow from financing activities 300,000 12,202,857
Net increase/(decrease) in cash and cash equivalents (3,413,519) 1,564,870
Cash and cash equivalents at beginning of year 15 3,590,516 2,025,646
Cash and cash equivalents at end of year 15 176,997 3,590,516
The accompanying notes form an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 31 December 2013
1 NATURE OF OPERATIONS AND GENERAL INFORMATION
African Eagle Resources plc (“African Eagle” or the “Company”) whose registered address is 64 New
Cavendish Street, London, W1G 8TB is a public limited company incorporated and domiciled in
England and is listed on the AIM market of the London Stock Exchange and on the Alternative
Exchange of the Johannesburg Stock Exchange Limited (“AltX”).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
African Eagle’s financial statements are presented in pounds sterling (£), which is also the functional
currency of the Company.
The Company disposed of all its subsidiaries on 8 August 2013 and only held minority investments at
31 December 2013. The 2013 financial statements are therefore prepared on a Company only basis
with comparatives provided for 2012 for the Company.
Going Concern
The financial statements have been prepared on a going concern basis the validity of which is based
on the continued support of the Directors. Were the Company to be unable to continue as a going
concern adjustments would have to be made to the statement of financial position to reduce the value
of the assets to their recoverable amounts and to provide for future liabilities.
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) and IFRIC interpretations issued by the International Accounting Standard Board
(IASB) as adopted by the European Union and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. The financial statements have been prepared under the historical
cost convention. The principal accounting policies adopted are set out below.
(b) Taxation
Current income tax assets and liabilities comprise those obligations to, including company estimates,
or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the
31 December. They are calculated according to the tax rates and tax laws applicable to the fiscal
periods to which they relate, based on the taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred
tax is generally provided on the difference between the carrying amounts of assets and liabilities and
their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the
initial recognition of an asset or liability unless the related transaction is a business combination or
affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries is not provided if
reversal of these temporary differences can be controlled by the Company and it is probable that
reversal will not occur in the foreseeable future. In addition tax losses available to be carried forward
as well as other income tax credits to the Company are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full. Deferred tax assets are recognised to the extent that it is
probable that the underlying deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are
expected to apply to their respective period of realisation, provided they are enacted or substantively
enacted at 31 December. Changes in deferred tax assets or liabilities are recognised as a component
of tax expense in the profit or loss, except where they relate to items that are charged or credited to
other comprehensive income or directly to equity in which case the related deferred tax is also
charged or credited to equity. The deferred tax asset in Note 9 has not been recognised. The deferred
tax asset will be recognised when it is more likely than not that it will be recoverable.
(c) Property, plant and equipment
Property, plant and equipment are held at historical cost net of depreciation and any provision for
impairment. Depreciation is calculated to write down the cost or valuation less estimated residual
value of all property, plant and equipment over their estimated useful economic lives. The useful
economic lives are assessed at least annually. The rates generally applicable are:
Motor vehicles 25%
Equipment 25%
Fixtures and fittings 20%
Material residual value estimates are updated as required, but at least annually, whether or not the
asset has been revalued. Where the carrying amount of an asset is greater than its estimated
recoverable amount, it is written down immediately to its recoverable amount.
(d) Share-based payments
All goods and services received in exchange for the grant of any share-based payment are measured
at their fair values. Where employees are rewarded using share-based payments, the fair values of
employees’ services are determined indirectly by reference to the fair value of the instrument granted
to the employee. This fair value is appraised at the grant date and excludes the impact of non-market
vesting conditions. Share options granted by the Company vest one year from the date of grant. All
equity-settled share-based payments are ultimately recognised as an expense in the statement of
comprehensive income with a corresponding credit to retained losses in the statement of financial
position. If vesting periods or other non-market vesting conditions apply, the expense is allocated over
the vesting period, based on the best available estimate of the number of share options expected to
vest. Estimates are revised subsequently if there is any indication that the number of share options
expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current year. No adjustment is made to any expense recognised in prior periods if
share options that have vested are not exercised. Upon exercise of share options, the proceeds
received net of attributable transaction costs are credited to share capital and, where appropriate,
share premium. The fair value has been arrived at using the Black-Scholes model. The key inputs to
these models include: exercise price; share price volatility; dividend yield (if any) and lapse rate.
(e) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial assets are recognised in the statement of
financial position at fair value on initial recognition and include cash and cash equivalents, other
receivables, and equity instruments of another enterprise. Cash and cash equivalents includes cash
in hand, deposits held at call with banks, and other short-term highly liquid investments with original
maturities of three months or less from acquisition.
Financial assets in the financial statements are divided into loans and receivables and available for
sale assets. Financial assets are assigned to the different categories by management on initial
recognition, depending on the purpose for which they were acquired. The designation of financial
assets is re-evaluated at every reporting date at which a choice of classification or accounting
treatment is available. Other receivables include non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial recognition these assets
are measured at amortised cost using the effective interest method less provision for impairment. Any
change in their value is recognised in the Statement of Comprehensive Income.
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the
Company becomes a party to the contractual provisions of the instrument. Financial liabilities
categorised at fair value through the profit or loss are recorded initially at fair value; all transaction
costs are recognised immediately in profit or loss. All other financial liabilities are recorded initially at
fair value, net of direct issue costs. Other payables are financial liabilities which are expected to be
settled within 12 months of 31 December.
Recognition occurs when a Company becomes a party to the contractual provisions of the instrument.
Most obligations are legally enforceable and arise under contractual arrangements. Accrued
expenses are liabilities to pay for goods or services that have been received or supplied but have not
been paid, invoiced or formally agreed with the supplier. The recognition of accrued expenses results
directly from the recognition of expenses for items of goods and services consumed during the year.
The initial measurement of other payables is usually at fair value. The Company has not entered into
any derivative financial instruments for hedging or any other purpose.
Interest receivable and payable is accrued and credited/charged to the statement of comprehensive
income in the year to which it relates.
(f) Investments
Investments are stated as cost less provision for any impairment in value
(g) Available for sale financial assets
Available for sale financial assets include non-derivative financial assets that are either designated as
such or do not qualify for inclusion in any of the other categories of financial assets. All financial
assets within this category are measured subsequently at fair value, with changes in value recognised
through other comprehensive income, through the Statement of Comprehensive Income. Gains and
losses arising from investments classified as available for sale are recognised in profit or loss when
they are sold or when the investment is impaired. In the case of impairment of available for sale
assets, any loss previously recognised through other comprehensive income is transferred from
equity reserve to profit and loss. Impairment losses recognised in the statement of comprehensive
income on equity instruments are not recognised through other comprehensive income. Impairment
losses recognised previously on debt securities are reversed through the profit or loss when the
increase can be related objectively to an event occurring after the impairment loss was recognised in
the statement of comprehensive income.
(h) Income and expense recognition
The Company’s only income is interest receivable from bank deposits. Operating expenses are
recognised in the statement of comprehensive income upon utilisation of the service or at the date of
their origin. Interest received is recognised upon receipt and any outstanding interest is accrued at the
end of the year. All other income and expenses are reported on an accrual basis.
(i) Foreign currency translation
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet
date are translated to sterling at the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income statement. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated to Sterling at foreign exchange rates
ruling at the dates the fair value was determined.
(j) Equity
Equity comprises the following:
- “Share capital” is the nominal value of equity shares.
- “Share premium account” represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
- “Available for sale revaluation reserve” represents the difference between the fair value of the
available for sale investments and the acquisition cost of those investments.
- “Retained losses” represents retained earnings.
(k) Operating lease agreements
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
lessee are classified as operating leases. Payments made under operating leases are charged to the
Statement of Comprehensive Income on a straight-line basis over the period of the lease.
(l) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash on hand and demand
deposits together with other short-term, highly liquid investments that are readily convertible into
known amounts of cash and which are subject to an insignificant risk of changes in value.
(m) New and amended standards adopted by the Company
The Company has adopted the following new and amended IFRS and IFRIC interpretations as of
1 January 2013:
- Amendment to IAS 1, “Presentation of financial statements – Presentation of items of other
comprehensive income” (Effective date 1 July 2012)
- IFRS 13, “Fair value measurement” (Effective date 1 January 2013)
- Annual improvements 2011 (Effective date 1 January 2013)
The impact of adopting the above amendments had no material impact on the financial statements
of the Company.
(n) Standards, interpretations and amendments to published standards that are not yet
effective
The following standards, amendments and interpretations applicable to the Company are in issue but
are not yet effective and have not been early adopted in these financial statements. They may result
in consequential changes to the accounting policies and other note disclosures. We do not expect the
impact of such changes on the financial statements to be material. These are outlined in the table
below:
Reference Title Summary Application date of Application
standard date of
Company
Amendment Amendments IFRS 2: clarifies definition Annual periods 1 July 2014
s to IFRS 2, resulting from of vesting conditions beginning on or
IFRS 3 Annual after 1 July 2014
Improvements IFRS 3: clarifies contingent
2010-12 Cycle consideration in a business
combination
IFRS 9 Financial Revised standard for Periods 1 January
Instruments accounting for financial commencing on or 2015
instruments after 1 January
2015
IAS 36 Impairment of Limited scope Periods 1 January
assets amendments to disclosure commencing on or 2014
requirements after 1 January
2014
The Directors anticipate that the adoption of these standards and the interpretations in future
periods will have no material impact on the financial statements of the Company.
(o) Segmental reporting
There are no reportable segments other than the company itself.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Company makes estimates and assumptions concerning the future. The resulting estimates will
by definition, seldom equal the actual results. Estimates and judgements are continually evaluated
and are based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. Many of the amounts included in the
financial statements involve the use of judgement and/or estimation. These judgements and estimates
are based on management’s best knowledge of the relevant facts and circumstances, having regard
to prior experience, but actual results may differ from the amounts included in the financial
statements. The most critical judgements as applied to these financial statements are as follows:
- Valuation of assets and reversal of impairment: the Company annually considers the carrying
value of its investments by reference to publically available information for similar investments
and the valuations implied therein, if available. If no public information is available the Company
will use the information that is available to form a judgement as to the valuation.
- Going concern: the Company determines whether it has sufficient resources in order to continue
its activities by reference to budgets together with current and forecast liquidity. This requires an
estimate of the availability of such funding which is critically dependent on the specific
circumstances of the Company and, to a lesser extent, macro-economic factors.
4 EMPLOYEE BENEFITS EXPENSE
2013 2012
£ £
Share-based payments 187,145 315,322
Salaries and employment taxes 308,384 1,320,625
Other - 13,704
495,529 1,649,651
The employee benefits expense above is expensed to the Statement of Comprehensive Income.
5 IMPAIRMENT
Note 2013 2012
£ £
Property plant and equipment 11 - 75,127
Available for sale investments 46,789 978,774
Loss on disposal of subsidiary - 7,415,757
Reversal of impairment (242,601) -
Other receivables – short term 14a - 95,214
(195,812) 8,564,872
6(a) OTHER EXPENSES
Other expenses included in the Statement of Comprehensive Income include the following items:
2013 2012
£ £
Loss on sale of property, plant and equipment 1,466 569
Profit on sale of assets (43,342) -
Operating lease costs: Land & Buildings 33,716 35,990
Equipment 7,200 6,774
Business and professional development 11,030 39,574
Legal & professional fees 726,720 722,403
Consultants 29,438 112,046
Insurance 35,822 30,822
Office costs 55,103 83,642
Travel & subsistence 40,996 108,457
6(b) AUDITORS’S REMUNERATION
During the year the Company obtained the following services from the auditor and its associates:
2013 2012
£ £
Fees payable to the company’s auditor and its associates for the audit 22,116 95,000
of the Company financial statements
Tax and other advisory services - 55,908
Total 22,116 150,908
Total fees for 2013 include £7,616 of additional fees for 2012 payable to PriceWaterhouseCoopers for
the audit of the financial statements for the year ended 31 December 2012 (2012 does not have any
additional fees for 2011).
7 OPERATING SEGMENTS
In the opinion of the Directors the Company’s turnover, loss before tax and net assets are not
attributable to classes of business or geographical segments which differ substantially from each
other.
8 DIRECTORS AND EMPLOYEES
Staff costs of the Company during the year were as follows:
2013 2012
£ £
Wages and salaries 257,983 1,219,217
Share-based payments 187,145 315,322
Social security costs 50,374 82,542
Other 27 32,570
495,529 1,649,651
The monthly average number of employees in the Company was 7 (2012:12).
The Directors constitute the only key management personnel of the Company.
Remuneration in respect of Directors was as follows:
2013 2012
£ £
Emoluments including share-based payments relating to 385,165 1,033,114
the Company
The Company does not contribute towards pension schemes in the UK or overseas.
Directors’ emoluments in respect of 2013 and 2012 are detailed below:
2013 Salary Fees Compensation Share Other Total
£ £ Options 2013
£ £ £
Christopher - 28,125 - 1,646 - 29,771
Pointon
Trevor Moss 77,015 - - 93,420 1,155 171,590
David Newbold 44,000 - - 46,710 678 91,388
Don Newport - 15,625 - - - 15,625
Paul Rupia - 15,717 - 1,646 - 17,363
Robert McLearon 59,308 - - - 120 59,428
180,323 59,467 - 143,422 1,953 385,165
In addition to the above, £136,000 was paid to HAWM Consulting, Inc a Company owned by Trevor
Moss and payable by Tanzania Nickel Holdings Limited, a subsidiary until disposal on 8 August 2013.
This figure comprised £36,000 in fees and £100,000 in compensation.
3
2012 Salary Fees Compensation Share Other Total
options 2012
£ £ £ £ £ £
Christopher Pointon - 36,250 - 1,250 - 37,500
1
Trevor Moss 150,000 107,035 - 33,170 1,057 291,262
David Newbold 88,000 - - 16,585 1,240 105,825
Don Newport - 23,301 - - - 23,301
Paul Rupia - 10,417 - 1,250 - 11,667
Robert McLearon 2,222 - - 8,308 137 10,667
Mark Parker 39,896 - 75,000 31,322 1,175 147,393
Christopher Davies 37,121 - 122,700 29,143 1,449 190,413
Andrew Robertson 90,500 - - 15,867 - 106,367
2
Euan Worthington - 20,162 101,000 16,342 - 137,504
Geoffrey Cooper - 10,217 58,500 9,533 - 78,250
407,739 207,382 357,200 162,770 5,058 1,140,149
1
This includes £107,035 paid to HAWM Consulting, Inc a Company owned by Trevor Moss and
payable by Tanzania Nickel Holdings Limited, a subsidiary until disposal on 8 August 2013.
2
This includes £2,500 paid to Mining Finance Solutions a Company owned by Euan Worthington.
3
The compensation to Directors is restated to reflect actual payments made during 2013. Any
adjustments have been accounted for in the 2013 accounts.
9 INCOME TAX EXPENSE
The tax on the Company’s profit before tax differs from the theoretical amount that would arise using
the weighted average tax rate applicable to profits of the company as follows:
2013 2012
£ £
Loss for year multiplied by standard rate of UK
corporation tax 23.25% (2012: 24.5%) (759,692) (8,512,637)
Expenses not deductible for tax purposes 556,713 7,798,842
Movement in un-recognised deferred tax asset 202,979 713,795
Unrealised foreign exchange losses/(gains) - -
Tax charge for the year - -
Unrecognised deferred tax asset:
UK tax losses 1,338,757 1,829,686
Short term temporary differences 506,544 487,928
Net property, plant and equipment temporary 3,321 (2,538)
differences
1,848,622 2,315,076
The deferred tax asset would be recoverable if taxable profits were generated. Deferred tax relating
to share-based payments is a short term temporary difference. The standard rate of corporation tax in
the UK changed from 24% to 23% with effect from 1 April 2013. Accordingly, the company’s profits for
this accounting period are taxed at an effective rate of 23.25%.
10 LOSS PER SHARE
Basic and diluted loss per share
The calculation of basic loss per share is based on the loss for the year divided by the weighted
average number of ordinary shares in issue during the year. In calculating the diluted loss per
ordinary share potential ordinary shares such as share options and warrants have not been included
as they would have the effect of decreasing the loss per share. Decreasing the loss per share would
be anti-dilutive. Details of share options and warrants in issue that could potentially dilute earnings per
share in the future are detailed in Note 17.
2013 2012
£ £
Loss for the year (3,267,492) (34,745,456)
Weighted average number of shares in issue 744,975,036 613,317,814
Basic and diluted loss per share (0.44p) (5.67p)
Headline loss per share
Headline loss per share has been calculated in accordance with the Institute of Investment
Management and Research’s (“IMR”) Statement of Investment Practice No.1 entitled ‘The Definition
of Headline Earnings’ and The South African Institute of Chartered Accountants Circular 2/2013
entitled ‘Headline Earnings’. The calculation of headline loss per share is based on the headline loss
for the year divided by the weighted average number of shares in issue during the year. No diluted
headline loss per share has been calculated as it would be anti-dilutive by reducing the headline loss
per share.
Headline loss 2013 2012
£ £
Loss for the year (3,267,492) (34,745,456)
Adjusted for:
Plus loss on disposal of property, plant and equipment - 569
Reversal of impairment of available for sale investment (242,601) -
Loan impairment 2,191,106 -
Impairment of assets 46,789 31,779,570
Headline loss for the year (1,272,198) (2,965,317)
Weighted average number of shares in issue 744,975,036 613,317,814
Basic headline loss per share (0.17p) (0.48p)
11 PROPERTY, PLANT AND EQUIPMENT
2013 Leasehold Fixtures Total
improvement and
£ fittings £
£
Cost:
At 1 January 2013 56,261 58,437 114,698
Additions 1,955 - 1,955
Disposals (58,216) - (58,216)
At 31 December 2013 - 58,437 58,437
Accumulated depreciation:
At 1 January 2013 56,261 58,437 114,698
Charge for the year 488 - 488
Disposals (56,749) - (56,749)
At 31 December 2013 - 58,437 58,437
Carrying amount at 31 December 2013 - - -
2012 Leasehold Fixtures Total
improvement and
£ fittings £
£
Cost:
At 1 January 2012 685 27,033 27,718
Additions 55,576 32,388 87,964
Disposals - (984) (984)
At 31 December 2012 56,261 58,437 114,698
Accumulated depreciation:
At 1 January 2012 685 24,661 25,346
Charge for the year 8,337 6,178 14,515
Disposals - (290) (290)
Impairments at the balance sheet date 47,239 27,888 75,127
At 31 December 2012 56,261 58,437 114,698
Carrying amount at 31 December 2012 - - -
All of the Company's property plant and equipment listed above are free of any mortgage and charge.
12 AVAILABLE FOR SALE INVESTMENTS
2013 2012
£ £
Investment in Kibo Mining plc
Cost:
At 1 January 68,000 160,000
Release of revaluation reserve during the year - (40,000)
Impairment (46,789) (52,000)
Proceeds from sale (21,211)
Carrying amount at 31 December - 68,000
Investment in Elephant Copper Limited
Cost:
At 1 January - -
Investments during the year - 847,167
Reversal of impairment/(impairment) 242,601 (847,167)
Carrying amount at 31 December 242,601 -
Investment in Blackdown Minerals Limited
Cost:
At 8 August - -
Revaluation during the period 655,022 -
Carrying amount at 31 December 655,022 -
Total carrying amount at 31 December 897,623 68,000
Kibo Mining plc
The Kibo investment was received in respect of compensation arising from the termination of a joint
venture between the Company and Sloane Developments Limited (a wholly owned subsidiary of Kibo
Mining). The Company held 533,333 shares in Kibo Mining following a 1 for 15 share consolidation.
The shares were sold for 4p each on 18 July 2013 raising gross proceeds of £21,333. At 31
December 2012 the holding was valued at £68,000.
Investment in Elephant Copper Limited
The shares in Elephant Copper Limited were valued at US$0.044 per share on the basis of available
information received from third party offers and the opinion of the Directors resulting in a carrying
value of £242,601 using the exchange rate at 31 December 2013. At 31 December 2012 the shares
were fully impaired.
Investment in Blackdown Minerals Limited
The Company has a 10% shareholding in Blackdown Minerals Limited, the holding company for the
Tanzanian companies that were disposed of by the Company in August 2013. The company valued
its investment by comparing the nickel deposit at Dutwa (the principal asset in Tanzania) to the
derived valuation of contained nickel in the ground to the following:
• a listed company at a similar stage of development
• a recently announced transaction by another similar company
• a similar listed company taken private
• ENK’s sale of its interest in another nickel company
• and a similar company that was delisted
A discount factor has then been applied to the average figure to take into account the following
factors:
1. The deposit is privately held – 25% discount
2. The minority stake – 25% discount
The total discount is therefore 50%.
The undiscounted value of 10% of the attributable tonnage at Dutwa of 739,000 Mt and valued at
US$29/metric tonne is therefore US$2.15 million. Applying the 50% discount gives a valuation of
US$1.08 million for African Eagle’s stake resulting in a carrying value of £655,022 using the exchange
rate at 31 December 2013.
13 SIGNIFICANT SUBSIDIARIES
The Company had no subsidiaries at 31 December 2013 following the disposal of 90% of the Group’s
assets on 8 August 2013.
14a OTHER RECEIVABLES – SHORT TERM
2013 2012
£ £
Other receivables 12,086 62,863
Prepayments & accrued income 63,471 109,369
Impairments - (95,214)
75,557 77,018
14b OTHER RECEIVABLES – LONG TERM
2013 2012
£ £
Amounts owed by group undertakings 2,191,106 23,214,698
Released during the year (2,191,106) (23,214,698)
- -
The Company's receivables are unsecured.
15 CASH AND CASH EQUIVALENTS
2013 2012
£ £
Cash at bank and in hand 176,997 3,590,516
176,997 3,590,516
16 OTHER PAYABLES
2013 2012
£ £
Other payables 47,498 27,261
Social security and other taxes 5,069 29,930
Accruals and deferred income 35,290 490,698
87,857 547,889
17 SHARE CAPITAL
2013 2012
£ £
Allotted, called up and fully paid
Ordinary shares
Balance brought forward 6,940,145 4,095,862
Additions 177,143 2,844,283
Ordinary shares of 0.1p (2012: 1p) each at 31 December 7,117,288 6,940,145
Deferred shares
Balance brought forward - -
Sub-division of shares 6,940,145 -
Deferred shares of 0.9p each at 31 December 6,940,145 -
On 24 June 2013 the company passed an ordinary resolution to subdivide each of the Ordinary
shares of £0.01 each in the capital of the Company in issue into one Ordinary share of £0.001, having
the same rights, being subject to the restrictions and ranking pari passu in all respects with the
existing Ordinary shares of £0.01 each in the capital of the Company, and one Deferred share of
£0.009 each in the capital of the Company.
Ordinary shares are equally eligible to receive dividends and the repayment of capital and entitle the
member to one vote per share at a shareholders’ meeting of the Company. Deferred shares do not
entitle holders to receive notice of or attend and vote at any general meeting of the Company or to
receive a dividend or other distribution or to participate in any return on capital on a winding up other
than the nominal amount paid on the shares following a distribution to the holders of Ordinary shares
of £100,000,000 in respect of each Ordinary share held by them respectively.
During the year the Company allotted Ordinary shares with an aggregate nominal value of £177,143
as follows:
Price per share Number Share Share Total
1
(pence) Capital premium
£ £ £
Placement proceeds 0.175p 177,142,854 177,143 132,857 310,000
1
Before share issue costs of £10,000.
Warrants
At 31 December 2013 the Company had in issue 22,754,785 warrants to subscribe for shares, (2012:
122,754,785), as follows:
- On 27 January 2012 the Company issued 22,754,785 unlisted share purchase warrants at an
exercise price of 6.8 pence per share and an exercise period of four years from the closing date,
27 January 2016. No warrants have been exercised to date.
Options
The Company has granted options to subscribe for shares as follows:
Exercise price At 1 January Granted Exercised Cancelled At 31
(pence) 2013 in the in the year in the year December
year 2013
Options 6.5 4,170,000 - - - 4,170,000
(14 May 2009 to
14 May 2014)
Options 6.5 3,314,964 - - - 3,314,964
(26 May 2010 to
26 May 2015)
Options 6.5 8,047,036 - - - 8,047,036
(04 Oct 2010 to
04 Oct 2015)
Options 10 4,526,000 - - (262,000) 4,264,000
(29 Jul 2011 to 29
Jul 2016)
Options 10 3,000,000 - - - 3,000,000
(05 Oct 2011 to
05 Oct 2016)
Options 3.36 10,000,000 - - - 10,000,000
(27 Jul 2012 to 27
Jul 2018)
Options 4 3,000,000 - - - 3,000,000
(27 Jul 2012 to
27 Jul 2018)
Options 3.36 300,000 - - - 300,000
(27 Jul 2012 to 27
Jul 2016)
36,358,000 - - (262,000) 36,096,000
All share options except those that were granted at an exercise price of 4 pence in 2012 were
exercisable at the year-end. The highest and lowest price of the Company’s ordinary shares during
the year was 3.5p and 0.12p respectively, and the share price at the year end was 0.28p.
18 SHARE-BASED PAYMENTS
The Company’s current share option scheme was adopted on 27 July 2012. Under this scheme no
share options shall be granted which would, at the date of grant, cause the aggregate number of
share options granted to exceed 10% of the issued ordinary share capital of the Company. At
December 31 2013 the number of share options granted as a percentage of the issued share capital
was 4.14%. Share options granted under the scheme may be made in tranches subject to separate
exercise periods. There are no performance conditions associated with the share options.
No share options were granted during 2013 and the unvested share options for the employees and
Directors who left during 2013 vested on termination resulting in an acceleration of the remaining
share based payment charge to the Statement of Comprehensive Income. Details of share options
granted in 2014 are included in note 22.
19 FINANCIAL INSTRUMENTS
The Company uses financial instruments, comprising short-term deposits, cash, liquid resources and
various items such as other receivables and other payables that arise directly from its operations. The
main purpose of these financial instruments is to manage the cash raised to finance operations. The
Company has not used derivatives, embedded derivatives or hedging as defined under IAS 39 during
the year. The main risks arising from the use of financial instruments are liquidity risk and currency
risk. The Directors review and agree policies for managing these risks and these are summarised
below:
Liquidity risk
The Company, at its present stage of development, have no sales revenues. Operations are financed
through the issue of equity share capital in order to ensure sufficient cash resources are maintained to
meet short-term liabilities. Management monitors the availability of funds in relation to budget
expenditures in order to ensure fund raising is planned in a timely fashion. Funds are raised in
discreet tranches to finance activities for limited periods. Funds surplus to immediate requirements
are placed in liquid, low risk investments. The ability to raise finance is subject to a number of factors
including but not limited to: the state of the world financial markets and attractiveness of the
Company’s projects.
Foreign currency risk
Foreign exchange transactions are settled at spot rate and the Company takes its profit or loss on
these transactions as they arise. The Directors review the policy on foreign currency risk on a regular
basis. The Company’s exposure to US dollars is detailed below and is expressed in pounds sterling.
Foreign currency monetary assets US$
2013 2012
Functional Currency £ £
Pounds Sterling 8,966 508,332
- A sensitivity analysis has been prepared on the basis that the components of financial
instruments in foreign currencies are all constant, as in place at 31 December 2013. As a
consequence, this sensitivity analysis relates to the position as at 31 December 2013. The
following assumption were made in calculating the sensitivity analysis:
o All Statement of Comprehensive Income sensitivities also impact equity.
- Using the above assumption, the following tables show the illustrative effect on the statement of
comprehensive income and equity that would result from possible changes in the foreign
currency:
2013 Company Projection:
Comprehensive Equity
income/(loss)
5% fall in value of GBP vs USD 448 448
5% increase in value of GBP vs USD (427) (427)
Market risk
- The Company’s financial instruments affected by market risk include bank deposits, other
receivables and other payables. The following analysis, required by IFRS 7, is intended to
illustrate the sensitivity of the Company’s financial instruments as at 31 December 2013 to
changes in market variables, being exchange rates and interest rates.
- A sensitivity analysis has been prepared on the basis that the components of financial
instruments in foreign currencies are all constant, as in place at 31 December. As a consequence,
this sensitivity analysis relates to the position as at 31 December. The following assumptions
were made in calculating the sensitivity analysis:
o All Statement of Comprehensive Income sensitivities also impact equity.
o The majority of debt and other deposits are carried at amortised cost and therefore
carrying value
does not change as interest rates move.
- Using the above assumptions, the following tables show the illustrative effect on the Statement of
Comprehensive Income and equity that would result from possible changes in interest rates:
2013 Company Projection:
Comprehensive Equity
Income/(loss)
5% fall in UK interest rates (961) (961)
5% increase in UK interest rates 1,009 1,009
At the 31 December 2013 there were no term deposits. The Company held the majority of its cash
and cash equivalents in instant access deposit accounts. The majority of zero interest rate funds are
held by our overseas affiliates to meet short term other creditor commitments.
Cash and cash equivalents
2013 2012
£ £
Floating interest rate (by reference to bank 126,851 2,829,759
base rate)
Zero interest rate 50,146 760,757
176,997 3,590,516
The Company’s credit risk exposure is solely in connection with the cash and cash equivalents held
with financial institutions. The Company manages its risk by holding surplus funds in high credit
worthy financial institution and maintains minimum balances with financial institutions in remote
locations.
2013 2012
£ £
Financial institution with Standard & Poor’s AA 176,997 3,590,516
– rating or higher
Financial institution un-rated or unknown rating -
176,997 3,590,516
Fair value of financial instruments
The fair values of the Company’s financial instruments at the 31 December 2013 and 2012 did not
differ materially from their carrying values.
The Company does not have any long term borrowings, nor does it hold any derivative financial
instruments.
20 COMMITMENTS UNDER OPERATING LEASES
At 31 December 2013 the Company had annual commitments under non-cancellable operating
leases in respect of land, buildings and equipment totalling £6,952 for 2014 and a total of £8,662 for
2015-2017 (2012: £41,203).
21 CAPITAL COMMITMENTS
The Company had no capital commitments at 31 December 2013 or 31 December 2012.
22 EVENTS AFTER BALANCE SHEET DATE
On 10 February 2014 share options over Ordinary Shares were awarded to Directors as follows:
Name Number of Exercise dates
options
granted
Julian McIntyre 10,000,000 Expire 10 February 2015
Venkat Siva 10,000,000 Expire 10 February 2015
Mark Thompson 10,000,000 Expire 10 February 2015
Paul Colucci 10,000,000 Expire 10 February 2015
Robert McLearon 5,000,000 Expire 10 February 2015
These options will only vest on completion of an acquisition or acquisitions which constitute a reverse
takeover under the AIM Rules for Companies or when the Company otherwise implements its
investing policy (which has been approved by shareholders) to the satisfaction of the London Stock
Exchange plc.
On 9 April 2014 the Company announced that Julian McIntyre, Mark Thompson and Paul Colucci sold
their shares in the Company and that therefore no Directors held shares in the Company.
On 8 May 2014 the Company announced that Mark Thompson and Paul Colucci had resigned with
immediate effect.
On 28 May 2014 the Company announced that Julian McIntyre and Venkat Siva had resigned with
immediate effect and surrendered their share options.
On 30 May 2014 the Company announced that Nick Clarke and Kola Karim had been appointed as
directors of the Company.
On 17 June 2014 the Company entered into a loan facility with Nick Clarke and Kola Karim whereby it
can draw down a maximum of £365,000 until 30 November 2015 paying interest on the sum drawn
down and any unpaid interest at 5% per annum.
23 RELATED PARTY TRANSACTIONS
There were no related party transactions during 2013 or 2012 for the Company other than the Directors’
remuneration as disclosed in Note 8. Directors’ remuneration includes £2,500 paid to Mining Finance
Solutions in 2012, a company owned by Euan Worthington and includes fees of £136,000 to HAWM
Consulting, Inc in 2013, (2012: £107,035) a company owned by Trevor Moss.
Enquiries:
African Eagle Resources plc Tel: +44 (0) 20 7002 5361
Robert McLearon, Finance Director
Beaumont Cornish Limited (Nominated Adviser) Tel: +44 (0) 207 628 3396
Roland Cornish
Emily Staples
Pareto Securities Limited (Broker) Tel: +44 (0) 20 7786 4370
Guy Wilkes
JSE Sponsor
Merchantec Capital
18 June 2014
About African Eagle
African Eagle Resources plc is quoted on the AIM Market of the London Stock Exchange (AFE) and
Johannesburg AltX (AEA) stock exchanges.
Date: 18/06/2014 05:09:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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