Wrap Text
Final Results for the Year Ended 30 June 2016
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company in the Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
Australian ISIN: AU000000WRL8
South African ISIN: AU000000FCR2
Ferrum Crescent Limited
("Ferrum Crescent", the "Company" or the "Group")
(ASX: FCR, AIM: FCR, JSE: FCR)
30 September 2016
Final Results for the Year Ended 30 June 2016
Ferrum Crescent Limited, the ASX, AIM and JSE quoted iron ore developer in Northern South Africa, today announces its final results for the year ended 30 June
2016. These will be posted to Shareholders in due course.
A pdf copy of the full Accounts is available as a link to this announcement and on the Company’s website (www.ferrumcrescent.com).
Commenting on the final results Justin Tooth, Executive Chairman said:
“2016 has been a key period for resetting Ferrum Crescent to be able to build real value for shareholders. The Company has seen a significant restructure in how it
is operated, costs have been cut back and new skills made available to the Group. After careful review an option was signed on a suite of lead zinc assets in Spain
that bring a significant pre-existing data package on projects in a strong performing commodity, in a politically stable region. I am also pleased with the work we
have done on Moonlight and I look forward to announcing more new to the market from both of our projects, following the Boards decision to exercise the Spanish
option and mobilisation to site about to begin.”
For further information on the Company, please visit www.ferrumcrescent.com or contact:
Ferrum Crescent Limited
Justin Tooth, Executive Chairman
Grant Button, Company Secretary
T: +61 8 9474 2995
UK enquiries:
Laurence Read (UK representative)
T: +44 7557 672 432
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
Beaufort Securities Limited (Broker)
Elliot Hance
T: +44 (0)20 7382 8300
Bravura Capital (Pty) Ltd (JSE Sponsor)
Doné Hattingh
T (direct): +27 11 459 5037
The directors accept full responsibility for the information contained in this announcement. The auditor’s unqualified report is available for inspection at the
Company’s registered office in Australia and at the Company’s office at Block B, Regent Hill Office Park, cnr Leslie & Turley Rds, Lonehill, 2062 for 28 business
days from release of this announcement.
Extracts from the Company’s Full, audited Report and Accounts are set out below:
Introduction to the Group
Ferrum Crescent Limited (“Ferrum”, “FCR” or the “Company”) is an Australian company listed on the Australian Securities Exchange (ASX: FCR) and on the JSE
Limited (JSE: FCR) and quoted on the AIM market of the London Stock Exchange plc (AIM: FCR).
Review of operations and activities
Ferrum seeks to capitalise on the future demand for high quality iron products worldwide by producing a premium material that can be used in the manufacture of
steel in electric arc furnaces.
The Moonlight Deposit (upon which the Moonlight Project is based) is a magnetite deposit located on the farms Moonlight, Gouda Fontein and Julietta in Limpopo
Province in the north of South Africa (see Figure 2) and is the main operational focus for the Company. Iron and Steel Industrial Corporation (South Africa) (“Iscor”),
which explored the Project in the 1980s and ‘90s, reported mineralisation, capable of producing a concentrate grading at 68.7% iron. At that time, Iscor concluded
that the deposit, which was described as comparable to the world's best, was easily mineable due to its low waste-to-ore ratio. The beneficiation attributes of
Moonlight ore are extremely impressive, with low-intensity magnetic separation considered suitable for optimum concentration.
Metallurgical tests on Moonlight material, undertaken since then by Ferrum, suggest that Iscor's results are conservative, that good metal recoveries can be
achieved, and that the resulting concentrates have a high iron content and only negligible impurities. Grind sizes of between 125 to 250 microns produces recoveries
of 42-45% and grades of 68-70% Fe. Importantly, the Moonlight material should be amenable to the manufacture of direct reduction (“DR”) grade iron pellets, which
are in high demand by modern steel manufacturers.
Various key components of a BFS have already been concluded on the Project with significant milestones achieved to date including:
- Definition and reporting of an independent JORC Code (2012) compliant Mineral Resource estimate of 307.7Mt at 26.9% Fe of which the Inferred category
is estimated to contain 172.1Mt at 25.3% Fe; the Indicated - 83Mt at 27.4% Fe and Measured - 52.6Mt at 31.3% Fe (May 2012)
- 30 year Mining Right granted
- Environmental licence (EIA) in place for the Moonlight Project mining area (approved 4 April 2013)
- Metallurgical test work indicates high quality product in excess of 69% iron and low deleterious elements possible
The Company is now seeking to progress the BFS work which will focus on the initial production of high grade magnetite concentrate in order to accelerate the
project’s production schedule.
As a potential producer of a high-grade iron ore product, the final assessment of Moonlight’s capability to operate and process ore at an industrial scale is all
important.
Metallurgists continue to work closely with geologists to identify key areas for representative sample selection for advanced metallurgical testing including a pilot test
work programme. Immediate test work will focus on optimising grind size vs iron recovery.
Future work will also focus on optimising the pelletising process including an assessment of temperature profiling and treatment times.
Work to date on mine planning has been based on a contract mining model for site development, overburden removal and general open pit mining activities. A low
stripping ratio is expected: 1:1.5 during the early years of operations (relatively shallow dips with occurrence of up to 4 magnetite-bearing zones).
Feasibility study requirements that still need to be completed include:
- geotechnical drilling (part complete), mine design, mine reserve estimation based on certain cut-off estimates and economic criteria and a final estimate of
mining costs from an adjudicated tender process for contract mining;
- finalising pipeline route for environmental impact study completion;
- optimising pipeline design and costing (finalising rheology / density and particle size distribution);
- finalising negotiations with Eskom (power) for capital costs and tariffs once mining/process demand/schedules are finalised for the anticipated 50-60MW
needed for concentrate production; and
- finalising negotiations with Transnet (rail and port) for planning and costing of loading / unloading facilities, wagon and locomotive requirements and port
handling and storage costs. Transnet will need to review the Project’s infrastructure requirements as part of the feasibility component and finalisation of
commercial arrangements and an appropriate area and connection at the port (Richards Bay) will need to be secured by the Company.
Moonlight Project Concept
Recognising that adding value within the country is a strategic preference for all mining operations within South Africa, Ferrum has consistently planned for
beneficiation and other value-adding processes to take place within the country. Project concepts have previously included the production of pig iron at or near the
Moonlight site. However, the Company now believes, that the initial development concept for the Project is likely to involve mining at site and the production of an
iron ore concentrate for transportation via a slurry pipeline to a dewatering and loading facility to be located in Thabazimbi. The high grade product would initially be
sold to the domestic market. To this end, Ferrum has received a Letter of Intent (“LOI”) for production offtake. Future studies will also assess the requirements for
the production of pellets and other agglomerated products for use in steel making.
Several future pelletiser sites and rail and port combinations have been considered, and the Company has continued to seek confirmation from infrastructure
providers (including rail, port and power suppliers) of an allocation of future capacity for the Company. During the 2012 financial year, the South African Government
announced that significant capital would be applied in upgrading the rail and port facilities that service the Waterberg Region, which is close to where the Moonlight
Deposit is situated. These planned upgrades are strategically necessary to unlock the value of the Waterberg Region, where the country’s most significant
remaining coal reserves are situated. Accordingly, rail, power, water and port facilities are all being upgraded as a matter of national priority.
Proposed Rail Upgrades to Waterberg Coal Sources
Figure 3 below contains a map showing the planned upgrades to the existing rail infrastructures considered to be the most likely to be used for the Moonlight
Project. The proposed loading facility would be situated near to the Thabazimbi railhead, and export product would be railed to Richards Bay for shipping to
customers in the Middle East and elsewhere.
During a recent meeting with Transnet, it was agreed to continue to hold regular meetings in order to monitor progress on the rail infrastructure expansion project
and for Ferrum to advise status of the proposed commencement of production at Moonlight.
Figure 3: Proposed Rail Upgrades to Waterberg Coal Sources (source: Transnet 2012)
Link:
In June 2011, the Company entered into an offtake agreement with Swiss based Duferco SA, a leading private company involved in the trading, mining, and end
use of iron and steel products and raw materials for the steel industry. Following due diligence on the mineral assets of the Company, Duferco concluded that the
Group should be able to produce direct reduction and/or blast furnace pellets equal to or better than current world class product.
The offtake agreement with Duferco covers up to 6 Mpta of anticipated future iron ore pellet production from the Project. Under the agreement, Ferrum will sell
Duferco all of its production available for export (in total 4.5 Mpta) and will give Duferco a right of first refusal over an additional 1.5 Mt per annum.
In June 2015, South Africa’s competition authorities approved, with certain conditions, a merger between China’s Hebei Iron and Steel Group Co. and Duferco
International Trading Holding, which has certain subsidiaries in South Africa. This transaction is not expected to affect the Company’s pre-existing offtake
agreement.
Environmental
EIAs are currently being prepared for certain aspects of the Project including pipeline route and a product handling facility at Thabazimbi. Environmental approvals
are already in place in respect of all mining activities.
Geology and Mineral Resources
The Mineral Resources are currently located entirely on the farm Moonlight 111LR, with significant potential for future expansion of the existing resource base within
the Project area once all current work streams have been financed and completed.
In 2014, Mineral Corporation Consultancy Pty Ltd (“The Mineral Corporation”) undertook an update of the Project’s Mineral Resource estimate to the requirements of
JORC (2012), having previously been reported in accordance with JORC (2004). It determined that the Mineral Resource classification criteria imposed in deriving
the previous estimate were still valid. Furthermore, the additional reporting requirements contained in JORC (2012) have been fully complied with in its updated
independent Mineral Resource estimate report.
Figure 4: Moonlight Deposit Geological Plan
Link:
The Project has been explored in the past by Kumba Iron Ore Limited (KIOL) and more recently by the Company. Drilling data from KIOL and three phases of
Ferrum exploration inform the estimate. The drilling comprised open-hole percussion, reverse circulation (RC) percussion and diamond core drilling and was all
drilled in a vertical orientation.
A total of 122 RC holes and 89 diamond core holes were employed in the Mineral Resource estimate.
The Mineral Resource estimate is provided in the table below and the Mineral Resource estimation criteria, as required in JORC (2012) and in Section 5.8.2 of the
ASX Listing Rules, are available on the following link: www.jorc/docs/JORC_code_2012.pdf.
Category Mineral Resource Gross Mineral Resource Net Mineral Resource Grade
(attributable to Ferrum
Crescent at 97%)
Tonne (Mt)* Contained Tonne (Mt)* Contained Fe (%) SiO2 Al2 O3
Fe (Mt)* Fe (Mt)* (%) (%)
Inferred 172.1 43.5 166.9 42.2 25.3 51.2 4.8
Indicated 83.0 22.7 80.5 22.1 27.4 50.1 4.0
Measured 52.6 16.5 51.0 16.0 31.3 47.3 2.5
Total 307.7 82.7 298.4 80.3 26.9 50.3 4.2
*Tonnes are rounded
The information above that relates to Exploration Targets, Exploration Results and Mineral Resources has been compiled by Stewart Nupen, a Competent Person who is a Fellow of
the Geological Society of South Africa and a registered Professional Natural Scientist with the South African Council for Natural Scientific Professionals. Stewart Nupen is employed
by The Mineral Corporation, an independent consulting firm to Ferrum.
Stewart Nupen has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Stewart Nupen consents to
the inclusion herein of the matters based on his information in the form and context in which it appears.
Valuation
As at 30 April 2014, The Mineral Corporation prepared an independent valuation for the Project. This independent valuation can be viewed by accessing the
following link and going to the disclosures for July 2014: http://www.ferrumcrescent.com/irm/archive/asx-announcements.aspx-RID=8.
2015 Drilling
During the 2015 reporting period, the Company completed a drilling programme that was designed to investigate the extent of Zone D and provide information to
inform the location of the proposed future mine. Its purpose was also to identify if, and the areas where, bulk sampling for the requisite levels of metallurgical
testwork should take place during the next stage of the Moonlight BFS.
The drill programme comprised 10 reverse circulation drill holes (for a cumulative total of 1,396m) and was completed in Q1 2015 ahead of time and below budget.
All holes intersected mineralised magnetic zones across various depths.
The Zone D drilling confirmed comparable grades to those previously identified within the Inferred Resource, and consequently enabled the Company to finalise its
plans for the BFS with respect to the location and design of the proposed open pit mine for the first 10 years of the mine’s life, within primary Zones A, B and C, due
to shallower intersections, higher grades and better stripping economics. A new zone of mineralisation, Zone E, was also identified representing future exploration
potential.
Further infill drilling is required to establish a JORC (2012) Ore Reserve and for advanced beneficiation work to be undertaken as part of the direct reduction iron
(DRI) plant design process. The success of such infill drilling will also determine whether bulk sampling is necessary to complete the full mine design and plant
costings.
Following the future completion of all mine plan, plant design and processing assessments, the final stage of the BFS can then be progressed, utilising the stand-
alone project economics to establish optimal infrastructure agreements with the relevant local government agencies.
Infrastructure
Ongoing planning discussions related to future infrastructure requirements which include rail facilities, power and water have continued between the Company and
South African infrastructure providers during the reporting period. An LOI has been concluded whereby the final product will be sold in Thabazimbi to a local
manufacturer which will greatly reduce the Company’s reliance on rail to Richards Bay.
Community
The Company has signed a Memorandum of Agreement with the Lephalale Local Municipality (“LLM”). The agreement defines the Company’s role in assisting the
local communities. The Company will assist in skills development, water scheme planning and developing select students to reach their full potential for future
employment at the mine. The Company will also participate in the Mayors Bursary scheme for 2016 school leavers. LLM in turn is assisting the Company in
obtaining historical geological information related to the Moonlight Project. LLM will also assist the Company with any talks with foreign investors and demonstrate
their commitment to the project as well as assisting the Company with all key stakeholders and service providers.
Meetings are held on a monthly basis with the Company’s neighbouring communities, the Ga Seleka and Ga Shonguane communities.
Project Schedule
The following are significant factors with respect to the advancement of the Moonlight Project:
- subject to funding, the BFS can be completed within approximately 18-24 months’ work-time;
- 30 to 36 month mine construction period currently envisaged;
- Project’s schedule coincides with the South African Government’s infrastructure development plans; and
- Completion of the BFS is currently expected to cost approximately AUD12 – 14M.
Corporate
On 16 July 2015, the Company announced an update in respect of the first funding payment due under the BFS financing agreement with Principle Monarchy
Investments (Proprietary) Limited (“PMI”) for the development of the Moonlight Iron Ore Project in Limpopo Province, South Africa. PMI advised the Company that it
had secured funds for the first R2M payment that was to be paid to the Company under the terms of the Memorandum of Understanding (“MOU”) signed on 5 May
2015.
On 21 July 2015, PMI advised the Company that PMI had concluded a financing agreement which would enable PMI to fulfil all of its immediate commitments under
the BFS financing agreement for the advancement of the project.
On 22 July 2015, the Company advised that an investing group had initially allocated funds to PMI in order to enable it to work with the Company over a 12 month
period. The Company emphasised to PMI that the scheduled first payment of R2M was still overdue and that the Company awaited access to the funding from PMI
in order to advance the work on the BFS. Operationally the Company announced that Hatch Goba had formally agreed to be engaged as the lead study consultant
once funding had been received from PMI.
On 14 October 2015, the Company announced that the previously announced MOU with PMI to provide financing for the BFS for up to a 39% interest in Ferrum Iron
Ore (Pty) Ltd (“FIO”) had been formally terminated with no scheduled payments having been received from PMI.
On 14 October 2015, the Company also announced that a BFS Farm-In Agreement had been concluded with Business Venture Investments No.1709 (Proprietary)
Limited (“BVI”) to form a joint venture for the completion of the bankable feasibility study (“BFS”) for the Moonlight Iron Ore Project. The comprehensive Farm-In
Agreement provides for the completion of all the requisite BFS workstreams to produce a full BFS on the project to a fixed timeline, to be funded by BVI in return for
up to a 43% equity interest in FIO the owner of the Moonlight Iron Ore Project. The Farm-In Agreement is to be undertaken in two phases.
Phase 1 will cover a study on the best short term business case model based upon technical, financial and committed domestic offtake details. BVI is responsible for
completing this study within 12 months. Upon satisfactory completion of Phase 1 BVI will be entitled to 14% equity in FIO. The Company may, however, elect (but is
not obligated) to contribute R8.3M to reduce the equity interest of BVI to 10%. A Shareholders Agreement is intended to be entered into and become effective after
the completion of Phase 1.
Phase 2 will commence upon satisfactory completion of Phase 1 and BVI will be afforded a total of 24 months in which to complete a full study on the best short
term business case defined during Phase 1. Phase 2 will be carried out to a standard, and include, all matters required by international project and equity financiers,
including without limitation certain detailed deliverables agreed with the Company. Upon satisfactory completion of Phase 2, BVI will earn a further 29% equity
interest in FIO. Should BVI not complete Phase 2, it will have earnt no further equity in FIO apart from that earnt in respect of completing Phase 1.
On 14 January 2016, the Company announced that it had agreed with BVI to extend the timeline for completion of Phase 1 of the BFS by 3 months to 12 January
2017. This extension was in order for BVI to finalise the appointment of an internationally reputable engineering firm to manage the BFS.
On 16 February 2016, the Company announced that it had entered into an exclusive option and sale agreement for a staged option fee of up to GBP22,500, with TH
Crestgate GmbH (“Crestgate”), a private Swiss-based company to potentially acquire 100 per cent. of its indirect wholly-owned subsidiary, GoldQuest Iberica, S.L.
(“GoldQuest”), a private company incorporated in Spain, which owns 100 percent of two lead-zinc exploration projects in the provinces of León and Galicia, in
historic Spanish mining areas (“the Iberian Projects”), to enable the Company to conduct due diligence on both GoldQuest and the Iberian Projects.. The exclusive
option, was valid until 31 July 2016, and if exercised the aggregate consideration payable for GoldQuest was approximately GBP465,000 to be satisfied partly in
cash (approximately GBP320,000) and partly by the issue of 100,000,000 new ordinary shares in the capital of the Company. The option was exercisable entirely at
the Company’s discretion (refer to note11 for the investment as at 30 June 2016).
On 25 February 2016, the Company announced that it had received applications to subscribe for 149,681,797 new ordinary shares of no par value each at a price of
GBP0.0012 per share to raise GBP 179,618 before expenses. Following admission the share capital of the Company comprised 772,985,191 ordinary shares.
On 31 March 2016, the Company announced a strategic update and corporate restructuring focused on generating value from the Group’s principal iron ore project
in northern South Africa and the development of its value-accretive business model, progressing initially with its option over the abovementioned Spanish lead-zinc
projects (via the potential acquisition of GoldQuest.
The following Board changes were implemented, Mr Justin Tooth assumed the role of Executive Chairman and Managing Director from his previous non-executive
role; Dr Evan Kirby joined the Board as a Non-Executive Director; Mr Merlin Marr-Johnson was appointed as an adviser to the Board to assist with the progression
of the potential Spanish lead-zinc projects; Mr Tom Revy, who was the Managing Director resigned; Mr Bob Hair who was the Company Secretary resigned and Mr
Grant Button, an existing Non-Executive Director assumed the duties of Company Secretary.
On 12 April 2016, the Company announced that its comprehensive due diligence investigations on GoldQuest and the Iberian Projects had been completed. The
licences in respect of the Iberian Projects had been renewed for a further period of twelve months by the Government of León further to the fulfilment of a basic work
programme at the two sites.
On 27 April 2016, the Company announced that it had conditionally raised, in aggregate, GBP650,000 before expenses through a placement, via Beaufort
Securities Limited (“Beaufort”), its agent, a total of 403,846,154 new ordinary shares of no par value each and a direct subscription of 96,153,846 new ordinary
shares, both at a price of 0.13 pence per new ordinary share.
As part of the placement and subscription, each investor was offered, options on the basis of one option for every share subscribed pursuant to the placement and
subscription. Each option entitles the holder to subscribe for a further new ordinary share at a price of 0.165 pence per share for an exercise period of two years
from the date of admission of the abovementioned placing and subscription shares.
In addition the Company announced that it was issuing, in aggregate, a further 9,807,692 new ordinary shares in settlement of certain fees, comprising 4,807,692
new ordinary shares to Beaufort at a deemed issue price of 0.13 pence per new ordinary share in settlement of Beaufort’s corporate brokering services of GBP6,250
and 5,000,000 new ordinary shares to Crestgate at a deemed issue price of 0.13 pence in connection with the extension of certain escrow arrangements under the
terms of the Company’s option and sale agreement in respect of GoldQuest. Following admission of a;; of the aforementioned new ordinary shares, the total issued
ordinary share capital of the Company was 1,282,791,883 ordinary shares.
On 15 June 2016, the Company announced a corporate and operational update stating, inter alia, that:
- the Board was actively evaluating engineering pathways for alternate production routes, based on existing technologies and modelled on current equipment
types which are in use at comparable mining operations, including examining lower cost capex development options with potential partners utilising
alternative methods for the transportation of concentrate rather than a pipeline;
- discussions were being held with new potential off-take partners for the supply of concentrate;
- the Company was seeking to recover certain third party historic geological data and core samples on both the Julietta and Moonlight licence areas;
- that a Memorandum of Agreement and co-operation framework (“MoA”) had been signed with the Mayor of the Lephalale Municipality situated in the
Waterberg District of the Limpopo Province which serves to secure the necessary consents from local stakeholders for progression of the project into future
development; and
- that the Company’s planned work programme, to determine the extent of the mineralisation on the Iberian Projects was expected to commence shortly after
the completion of the acquisition of GoldQuest.
Option over Lead-Zinc Exploration Projects, Spain
On 16th February 2016 Ferrum Crescent entered into an Option to potentially acquire 100 per cent. of GoldQuest Iberica, S.L. ("GoldQuest"). GoldQuest, a private
company incorporated in Spain, owns 100 per cent. of two lead-zinc exploration projects (Toral and Lago) in the provinces of Leon and Galicia, in historic Spanish
mining areas (the "Iberian Projects").
Further to an initial analysis of the Toral Project's assets, the Company secured the Option to acquire GoldQuest for the following principal reasons:
· The Board believes that analysis of the results from 42km of historic drilling, together with limited additional exploration work, can readily advance the Toral
Project.
· Establishment of enhanced resource estimate and process recovery is considered to be highly feasible.
· The Toral Project's asset is open to major reinterpretation. The Board believes that the scale of the asset has been substantially underestimated previously and
will seek to re-examine the geological model.
The Toral Project area has historically been assessed as containing a single, tabular zone of mineralisation at depths of 300-500m below surface. Such simplistic
historical modelling, however, excludes a large amount of normally critical data and, following its due diligence enquiries, the Company believes that the historic NI
43-101 resource estimate significantly under-estimates the mineral potential of the Toral Project. The Company further believes that an initial low cost exploration
work programme should be able to test the mineralisation in a series of parallel, sub-vertical structures running from depth up to surface.
Utilising the existing data and applying an exploration process that takes into account key structural controls and the characteristics of existing nearby mines will be
a key initial work programme priority. Ferrum Crescent's objective, following the recent exercise of its Option on 22 September 2016to seek to establish a JORC
compliant resource estimate at both the Toral Project and the Lago Project as well as re-examining the scale and continuity of mineralisation at the Toral Project.
Ferrum Crescent's ultimate objective is to potentially establish a credible mineral reserve in a cost effective manner for consideration by potential future acquirers or
development finance groups. During the reporting period, the Company carried out extensive geological and legal due diligence on GoldQuest and the Iberian
Projects.
In carrying out its operations during the reporting period, the Group has incurred a loss after income tax for the period from 1 July 2015 to 30 June 2016 of
$1,573,533 (2015: loss of $2,345,860). The Group had net assets of $718,659 (2015: $525,522) as set out in the Statement of Financial Position.
Significant changes in the Group’s state of affairs
There have been no significant changes in the state of affairs of the consolidated entity to the date of this report that have not otherwise been disclosed elsewhere in
the Annual Report.
Significant events after the reporting date
There are subsequent events to report, as follows:
Subsequent to the Company entering into an exclusive option to acquire 100 percent of GoldQuest, two nil-cost extensions were granted to Ferrum Crescent on 22
July 2016 and 31 August 2016 and on 22 September 2016 the option was exercised. Accordingly, Ferrum Crescent has now acquired 100 per cent. of the share
capital of GoldQuest. GoldQuest owns 100 per cent. of two lead-zinc exploration projects in the provinces of Leon and Galicia, in historic Spanish mining areas (the
“Iberian Projects”). The consideration comprised GBP326,500 in cash and the issue of 100 million new ordinary shares in the capital of Ferrum Crescent.
Planned work programme, to be overseen by the Company’s Senior Project Adviser, Merlin Marr-Johnson, to comprise:
- re-mapping of the main Toral Project area applying re-interpreted geological understanding of the regional controls on mineralisation;
- in-fill surveys over the main prospect area where detailed soil geochemistry has not previously been conducted;
- structural mapping of the existing adits, outcrop and the nearby mineralisation occurrences in order to gauge the balance between local (not fully tested)
and regional (well documented) controls on mineralisation;
- re-logging of historical drill-core and re-assaying of areas where incomplete assays were taken previously in order to seek to identify potential new shallow
high grade targets at the Toral Project;
- creation of a revised geological model incorporating existing and new geological data (geochemistry, structural interpretation, assays, logs, maps); and
- generation of a highly targeted drill plan, focused on high-grade near-surface ore shoots linking known surface occurrences and known high-grade
mineralisation at depth, for testing in 2017.
On 25 July 2016, the Company announced that it had conditionally raised in aggregate, GBP 374,453 before expenses through a placement via Beaufort Securities
Limited, as agent to the Company, of 187,226,485 new ordinary shares of no par value each in the capital of the Company at a price of 0.20 pence per new ordinary
share. As part of the placing, each investor was offered, subject to shareholder approval in accordance with the ASX Listing Rules, options on the basis of one
option for every share subscribed pursuant to the placing. Each option entitles the holder to subscribe for a further new ordinary share at a price of 0.30 pence per
share for an exercise period of two years following the date of admission of the placing shares to trading on AIM. In addition the Company agreed to grant a further
18,722,649 options to Beaufort Securities Limited on the same terms. Following admission, the total issued ordinary share capital of the Company was
1,470,018,368 ordinary shares.
On 28 July 2016, the Company announced that it was issuing 66,874,816 new ordinary shares of no par value each in the capital of the Company as a result of the
exercise of, in aggregate, 66,874,816 options exercisable at a price of 0.165 pence per share. Such options were granted in connection with the Company’s placing
and subscription announced on 27 April 2016. Following the issue of these option shares and the abovementioned placing shares, the total issued ordinary share
capital of the Company was 1,536,893,184 ordinary shares.
On 26 August 2016, the Company announced that it was issuing 44,797,543 new ordinary shares of no par value each in the capital of the Company as a result of
the exercise of, in aggregate, a further 44,797,543 options exercisable at a price of 0.165 pence per share. Such options were granted in connection with the
Company’s placing and subscription announced on 27 April 2016. Following the issue of these option shares, the total issued ordinary share capital of the Company
was 1,581,690,727 ordinary shares.
On 23 September 2016, the Company announced that it was issuing 5,381,907 new ordinary shares of no par value each in the capital of the Company as a result
of the exercise of, in aggregate, 5,381,907 options exercisable at a price of 0.165 pence per share Such options were granted in connection with the Company’s
placing and subscription announced on 27 April 2016. Following the issue of the option shares, the total issued ordinary share capital of the Company is
1,587,072,634 ordinary shares.
Likely developments and expected results
The Group will continue to carry out its business plans, by:
- Exploring, evaluating and, if technically and economically feasible, developing the Moonlight Project in Limpopo Province, South Africa;
- Conducting its planned initial zinc exploration work programme on the Iberian Projects in Spain;
- Seeking further strategic acquisition opportunities within the exploration and mining industry to enter potentially into additional advanced projects that will
add value to the Group; and
- Continuing to meet its statutory commitments relating to its exploration tenements and carrying out exploration of its exploration tenements in accordance with
its stated strategy, whilst carefully conserving the Group’s cash reserves in order to be able to take advantage of value adding opportunities.
There can be no guarantee either that further exploration of the Group’s tenements will result in exploration success or that any potential additional strategic
acquisition considered by the Directors to be likely to add value to the Group will become available to the Group.
Environmental regulation and performance
The Group’s activities are subject to South African and Spanish legislation relating to the protection of the environment. The Group is subject to significant
environmental legal regulations in respect to its exploration and evaluation activities. The relevant South African Act that we comply with is the (“MPRDA”) Mineral
and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002)
There have been no known breaches of these regulations and principles.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
2016 2015
Note $ $
Revenue from continuing operations
Revenue 3(a) 22,517 23,753
Other income 3(b) 490,850 -
Administration expenses 3(c) (1,416,748) (1,478,102)
Occupancy expenses (52,382) (66,218)
Exploration expenditure (188,506) (456,595)
Fair value adjustment of forward subscription
agreement 3(d) 46,868 (208,375)
Foreign exchange loss (395,816) (176,532)
Share based payments 20 (34,097) (90,851)
Fair value gain on disposal of available for sale
investments 649 137,597
Impairment of minority interest obligation 3(d) (46,868) -
Loss before taxation (1,573,333) (2,315,323)
Income tax benefit / (expense) 5 - (30,537)
Loss after income tax for the year (1,573,533) (2,345,860)
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss
Net exchange gain / (loss) on translation of foreign
225,175 (180,614)
operation
Net fair value gains on available-for-sale investment - 28,536
Income tax effect - (7,990)
Reclassification of net changes in fair value relating (137,597)
to the disposal of available for sale investments 649
Income tax effect (182) 38,527
Growth on investment unrealised 524 -
Other comprehensive income / (loss) for the
year, net of tax 226,166 (259,138)
Total comprehensive loss for the year (1,346,376) (2,604,998)
Net loss for the year attributable to:
Equity holders of the Parent (1,573,533) (2,345,860)
(1,573,533) (2,345,860)
Total comprehensive loss for the period attributable
to:
Equity holders of the Parent (1,346,376) (2,604,998)
(1,346,376) (2,604,998)
Loss per share Cents per share Cents per share
Basic loss for the year attributable to ordinary equity
holders of the Parent 7 (0.22) (0.50)
The above Consolidated Statement of Profit and Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes
Consolidated Statement of Financial Position
As at 30 June 2016
2016 2015
Note $ $
Assets
Current assets
Cash and short term deposits 8 743,264 1,028,468
Trade and other receivables 9 33,929 21,928
Other current financial assets 12 29,303 34,325
Prepayments 50,606 76,983
Total current assets 857,102 1,161,704
Non-current assets
Plant and equipment 10 13,533 29,645
Investments 11 243,331 -
Non-current financial assets 12 64,715 187,048
Total non-current assets 321,579 216,693
Total assets 1,178,681 1,378,397
Liabilities and equity
Current liabilities
Trade and other payables 13 263,827 168,713
Payments received in advance 14 175,722 629,325
Provisions 15 20,473 54,837
Total current liabilities 460,022 852,875
Total liabilities 460,022 852,875
Equity
Contributed equity 16 33,049,490 31,542,093
Accumulated losses 19 (24,424,297) (22,850,764)
Reserves 18 (7,906,534) (8,165,807)
Equity attributable to equity
holders of the Parent 718,659 525,522
Total equity 718,659 525,522
Total equity and liabilities 1,178,681 1,378,397
This Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
2016 2015
Note $ $
Cash flows from / (used in) operating activities
Interest received 3,191 10,635
Income from available for sale investment 5,242 13,118
Exploration and evaluation expenditure (183,483) (458,777)
Receipts from customers 14,084 -
Payments to suppliers and employees (1,416,784) (2,140,761)
Net cash flows (used in) operating activities 24 (1,578,750) (2,575,785)
Cash flows from / (used in) investing activities
Payments for plant and equipment - 456
Other financial assets (243,331) -
Purchase of available-for-sale financial assets (30,360) (154,110)
Sale of available-for-sale financial assets - 937,688
Proceeds from disposal of available-for-sale financial
assets 92,699 99,070
Net cash flows from / (used in) investing activities (180,992) 883,104
Cash flows from / (used in) financing activities
Proceeds from issue of shares 1,676,878 2,233,415
Transaction costs on issue of shares (169,481) (269,780)
Net cash flows from financing activities 1,507,397 1,963,635
Net increase / (decrease) in cash and cash equivalents
held (252,345) 270,954
Net foreign exchange difference (32,859) 19,169
Cash and cash equivalents at 1 July 1,028,468 738,345
Cash and cash equivalents at 30 June 8 743,264 1,028,468
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
Attributable to the equity holders of the Parent
Employee
share Foreign Available
Issued Accumulated incentive Option exchange for sale Equity Total equity
capital losses reserve reserve reserve reserve reserve $
$ $ $ $ $ $
$
At 1 July 2014 29,333,702 (20,504,904) 608,335 1,428,281 134,560 78,524 (10,126,072) 952,426
Loss for the period - (2,345,860) - - - - - (2,345,860)
Other Comprehensive Income (net of tax) - - - - (180,614) (78,524) - (259,138)
Total comprehensive loss (net of tax) - (2,345,860) - - (180,614) (78,524) - (2,604,998)
Transactions with owners in their capacity
as owners:
Shares issued during the year net of
transaction costs 2,037,244 - - - - - - 2,037,244
Shares issued to market previously on the
- - 54,389 - - - - 54,389
Employee Share Incentive Plan
Directors and KMP salary sacrifice for shares
issued 171,147 - (171,147) - - - - -
Options issued to Consultants and Brokers - - - 42,300 - - - 42,300
Options issued under Employee Option Plan - - - 44,161 - - - 44,161
At 1 July 2015 31,542,093 (22,850,764) 491,577 1,514,742 (46,054) - (10,126,072) 525,522
Loss for the period - (1,573,533) - - - - - (1,573,533)
Other Comprehensive Income (net of tax) - - - - 226,166 - - 226,166
Total comprehensive loss (net of tax) - (1,573,533) - - 226,166 - - (1,347,367)
Transactions with owners in their capacity
as owners:
Shares issued during the year net of transaction 1,507,39
costs 7 - - - - - - 1,507,397
Net Growth on Investment Portfolio - - - - (991) - - (991)
Options issued under Employee Option Plan - - - 34,098 - - - 34,098
At 30 June 2016 33,049,490 (24,424,297) 491,577 1,548,840 179,121 - (10,126,072) 718,659
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Note 1: Corporate information
The consolidated financial statements of Ferrum Crescent Limited and its subsidiaries (collectively, the Group) for the year ended 30 June 2016 were authorised for
issue in accordance with a resolution of directors on 30 September 2016.
Ferrum Crescent Limited, the parent, is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock
Exchange (ASX), the London Stock Exchange (AIM) and the JSE Limited (JSE).
Domicile:
Australia
Registered Office:
‘G South Mill Centre’ Suite 6, 9 Bowman Street, South Perth, WA, 6151
Note 2: Summary of significant accounting policies
(a) Basis of preparation
The Financial Report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards and Interpretations and complies with other requirements of Australian law.
The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the
consolidated entity consisting of Ferrum Crescent Limited and its subsidiaries.
The Financial Report has also been prepared on a historical cost basis, except for the forward subscription agreement and the available-for-sale (AFS) investments
which have been measured at fair value.
All amounts are presented in Australian dollars, unless otherwise stated.
(b) Statement of compliance
The Financial Report complies with Australian Accounting Standards, as issued by the Australian Accounting Standards Board, and complies with International
Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board.
(c) Adoption of new and revised standards
Ferrum Crescent Limited and its subsidiaries (‘the Group’) has adopted all new and amended Australian Standards and Interpretations mandatory for reporting
periods beginning on or after 1 July 2015, including:
- AASB 2015-3 Amendments to Australian Accounting Standards arising from the withdrawal of AASB1031 Materiality
- AASB 2015-5 Amendments to Australian Accounting Standards Investment Entities. Applying the Consolidation Exception
The adoption of these standards and interpretations did not have any material effect on the financial position or performance of the Group.
(g) Going concern
The Annual Report has been prepared on a going concern basis and this basis is predicated on a number of initiatives being undertaken by the Group with respect to
ongoing cost reductions and funding as set out below.
The Group incurred an operating loss after income tax of $1,573,533 for the year ended 30 June 2016 (2015: $2,345,860). In addition, the Group has net current assets of
$397,080 as at 30 June 2016 (2015: $308,829), which includes the forward subscription agreement, and shareholders’ equity of $718,659 (2015: $525,522).
The Group’s forecast cash flow requirements for the 15 months ending 30 September 2017 reflect cash outflows from operating and investing activities, which take into
account a combination of committed and uncommitted but currently planned expenditure. The ability of the Group to continue as a going concern is dependent on raising
additional funds to meet the Group’s ongoing working capital requirement when required.
These conditions indicate a material uncertainty which may cat significant doubt as to whether the Group will be able to meet its debts as and when they fall due and thus
continue as a going concern.
This Annual report has been compiled on a going concern basis. In arriving at this position the Directors are satisfied that the Group will have access to sufficient cash as
and when required to enable it to fund administrative and other committed expenditure. The Directors are satisfied that they will be able to raise additional funds by either
selling existing assets, through implementation of strategic joint ventures or via a form of debt and/or equity raising. In addition, the Directors have embarked on a strategy to
reduce costs.
Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business
and at amounts that differ from those stated in the financial statements.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts or classification of
liabilities that might be necessary should the Group not be able to continue as a going concern.
Note 3: Revenue and expenses
Revenue and expenses from continuing operations
2016 2015
Note $ $
(a) Revenue
Turnover 14,084 -
Interest received 8,433 23,753
22,517 23,753
(b) Other Income
Income from third party advance payment 490,850 -
490,850 -
(c) Profit or loss
Other expenses include the following:
Depreciation 11,638 18,580
Gain on disposal of plant and equipment (8,609) -
Consulting services 243,032 238,053
Employment related
- Directors fees 386,994 404,228
- Wages 182,207 171,623
- Superannuation 39,989 41,595
Corporate 276,747 271,287
Travel 27,868 62,691
Other 256,882 270,045
1,416,748 1,478,102
(d) Fair value (losses)/gains
Fair value (loss)/gain on financial instrument 46,868 (208,375)
Impairment of minority interest obligation (46,868)
- -
On 26 October 2010, various agreements were entered into in respect of the minority interest in the Moonlight Iron Project being managed by the company’s
subsidiary Ferrum Iron Ore (Pty) Ltd (“FIO”).
Ferrum South Africa Pty Ltd (“FSA”), a wholly owned subsidiary of the Ferrum Crescent Ltd (“FCL”), entered various agreements with Mkhombi Investments (Pty)
Ltd (“MI”) and its holding company, Mkhombi AmaMato (Pty) Ltd (“MA”) for MI to become FIO’s BEE partner. MA was to obtain 15.6% of the issued shares in FCL in
2 equal tranches of ZAR 7.5 million. The South African Department of Mineral Resources (“DMR”) expressed its support of this transaction. The first tranche was
completed on 30 November 2012 and FCL issued 7.8% of its issued shares to MA.
Upon completion of the first tranche, the Company legally owned, directly and indirectly through its wholly owned subsidiary, MI, 97% of FIO, with the remaining 3%
held by the GaSeleka Community.
Under the subscription agreement, second tranche, FCL will issue shares to MA equal to 7.8% of the issued share capital of the Company for ZAR 7.5 million. The
subscription agreement has been extended to 31 July 2019.
The above financial asset was fair valued as at 30 June 2016 to nil. The fair value was based on a probability weighted approach with the key assumptions being
Ferrum’s share price, foreign exchange rates and credit risk.
Note 4: Segment information
Identification of Reportable Segments
The Group has based its operating segment on the internal reports that are reviewed and used by the executive management team in assessing performance and in
determining the allocation of resources.
The Group currently does not have production and is only involved in exploration. As a consequence, activities in the operating segment are identified by management based
on the manner in which resources are allocated, the nature of the resources provided and the identity of the manager and country of expenditure. Information is reviewed on
a whole of entity basis.
Based on these criteria the Group has only one operating segment, being exploration, and the segment operations and results are reported internally based on the
accounting policies as described in Note 2 for the computation of the Group’s results presented in this set of financial statements.
Geographic Note Australia South Africa Consolidation
Information: 2016 2015 2016 2015 2016 2015
$ $ $ $ $ $
Revenue from external
customers - 15,727 14,084 8,026 14,084 23,753
10,11
Non - current assets & 12 361 401 321,218 216,292 321,579 216,693
Note 5: Income tax expense
2016 2015
$ $
Reconciliation of income tax expense to the pre-tax net loss
Loss before income tax 1,573,533 2,345,860
Income tax calculated at 30% (2015:30%) on loss before income tax (472,060) (703,758)
Add tax effect of: non-deductible expenses 128,072 104,724
Difference in tax rate of subsidiaries operating in other jurisdictions 8,617 (113,795)
Unused tax losses and temporary differences not brought to account 335,371 743,366
Income tax (profit) / expense - 30,537
Analysis of deferred tax balances 2016 2015
Deferred tax liabilities $ $
Assessable temporary differences
Prepayments (13,576) (17,635)
Financial asset - -
Deferred tax liabilities offset by deferred tax assets 13,576 17,635
Net deferred tax liabilities - -
Deferred tax assets
Share issue expenses 103,225 86,052
Legal expense amortised - 4,859
Payables and provisions 41,248 12,355
Other 363,091 -
Unused tax losses 5,213,707 2,830,409
5,721,271 2,848,905
Total unrecognised deferred tax assets (5,707,695) (2,831,270)
Deferred tax assets 13,576 17,635
Deferred tax assets offset by deferred tax liabilities (13,576) (17,635)
Net deferred tax assets - -
Unused tax losses set out above have not been recognised due to the uncertainty of future taxable profit streams.
Note 6: Auditors’ remuneration
2016 2015
$ $
Remuneration of the auditor of the Company for:
-auditing or reviewing the financial statements
Ernst & Young Australia - 28,000
Ernst & Young South Africa - 22,000
BDO Audit (WA) Pty Ltd 22,686 -
BDO South Africa Incorporated 11,501 -
Lancaster Mauritius 5,174 4,523
39,361 54,523
-other assurance related services
Ernst & Young Australia 1,803 -
41,164 54,523
Note 7: Earnings per share
2016 2015
$ $
Basic loss per share (cents per share) (0.22) (0.50)
Diluted loss per share (cents per share) (0.22) (0.50)
Loss used in calculating basic loss per share (1,573,533) (2,345,860)
Adjustments to basic loss used to calculate dilutive loss per share - -
Loss used in calculating dilutive loss per share (1,573,533) (2,345,860)
Number Number
Weighted average number of ordinary shares used in the
calculation of basic loss per share 714,611,971 468,894,041
Weighted average number of ordinary shares used in the
calculation of diluted loss per share 714,611,971 468,894,041
There have been no transactions involving ordinary shares or potential shares that would significantly change the number of ordinary shares or potential ordinary shares
outstanding between the reporting date and the date of completion of these financial statements.
Note 1 – 13,000,000 employee share options outstanding at 30 June 2016 (30 June 2015: 13,000,000) have not been included in the calculation of dilutive earnings per
share as these are anti-dilutive.
Note 2 – 29,954,525 potential shares to be issued under the BBBEE subscription agreement have not been included in the calculation of dilutive earnings per share as these
are anti-dilutive.
Note 8: Cash and cash equivalents
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to items in the statement of financial
position as follows:
2016 2015
$ $
Cash at bank 743,264 1,028,468
Note 9: Trade and other receivables
2016 2015
$ $
Current
Sundry debtors 18,475 2,513
GST / VAT 15,454 19,415
33,929 21,928
Non-trade debtors are non-interest bearing and are generally on 30-90 days credit terms. The carrying amounts of these receivables represent fair value and are not
considered to be impaired.
Note 10: Plant and equipment
Furniture, fittings Motor Leasehold
and equipment vehicles improvements Total
$ $ $ $
Year ended 30 June 2016
Opening net carrying value 7,474 8,302 13,869 29,645
Disposals (274) 457 - 183
Depreciation charge for the year (3,724) (7,166) (748) (11,638)
Exchange differences (1,028) (1,592) (2,036) (4,657)
Closing net carrying amount 2,448 1 11,085 13,533
At 30 June 2016
Cost 39,447 24,575 14,780 78,801
Accumulated depreciation (36,999) (24,574) (3,695) (65,268)
Net carrying value 2,448 1 11,085 13,533
Furniture, fittings Motor Leasehold
and equipment vehicles improvements Total
Year ended 30 June 2015 $ $ $ $
Opening net carrying value 11,957 21,195 13,829 46,981
Additions 450 - - 450
Depreciation charge for the year (5,620) (14,088) (855) (20,563)
Exchange differences 687 1,195 895 2,777
Closing net carrying amount 7,474 8,302 13,869 29,645
At 30 June 2015
Cost 49,428 71,396 17,336 138,160
Accumulated depreciation (41,954) (63,094) (3,467) (108,515)
Net carrying value 7,474 8,302 13,869 29,645
Note 11: Investments
2016 2015
$ $
Option to acquire GoldQuest Iberica, S.L. 243,331 -
243,331 -
On 15 February 2016, the Company entered into an exclusive option and sale agreement for a staged option fee of up to GBP22,500, with TH Crestgate GmbH
(“Crestgate”), a private Swiss-based company to potentially acquire 100 per cent. of its indirectly wholly-owned subsidiary, GoldQuest Iberica, S.L. (“GoldQuest”), a private
company incorporated in Spain, which owns 100 per cent. of two lead-zinc exploration projects in the provinces of León and Galicia, in historic Spanish mining areas (“the
Iberian Projects”), to enable the Company to conduct due diligence on GoldQuest and the Iberian Projects.
Subsequent to the Company entering into an exclusive option to acquire 100 percent of GoldQuest, two nil-cost extensions were granted to the Company on 22 July 2016
and 31 August 2016. Subsequently,on 22 September 2016 the option was exercised. Accordingly, the Company has now acquired 100 per cent. of the share capital of
GoldQuest. The consideration comprised GBP326,500 in cash and the issue of 100 million new ordinary shares in the capital of the Company.
The carrying amount of the financial asset is carried at cost as its fair value cannot be reliably measured at year end as the Company does not have a quoted market price.
Note 12: Other financial assets
2016 2015
$ $
Current assets
Rental and Other Deposits 5,121 5,960
Rehabilitation Trust 24,182 28,365
29,303 34,325
Non- current assets
Available for sale investments (at fair value) (refer to note (a) below) 64,715 187,048
64,715 187,048
Note (a): Available for sale investments
On 30 October 2014, Guardrisk issued a financial guarantee for the rehabilitation of land to be disturbed by mining to the DMR for the sum of R7,517,000.
On 1 November 2014, Ferrum Iron Ore (Pty) Ltd, a subsidiary of the Company, signed a policy of insurance where-by an initial lump sum of R1,500,000 (approx. AUD
149,250 at the then prevailing AUD:ZAR exchange rate of 10.0503) and a monthly contribution of R100,000 (approx. AUD9,950 at the same exchange rate) would be paid
for a fixed period from 1 November 2014 to 31 October 2017 to cover the environmental guarantee.
On 18 November 2015 the policy was renegotiated and a lump sum of R1,104,878 (approx. AUD 92,699 at the then prevailing AUD:ZAR exchange rate of 11.9190) was paid
out to the Company as working capital and the monthly contributions were amended to be paid up, on condition that the Company advise Guardrisk of any intention to do
further explorative work. The policy is due to be renegotiated in October 2017 when the environment guarantee expires.
Note 12: Other financial assets (continued)
Note (a): Available for sale investments(continued)
There is a provision in the policy to the effect that, at the end of the policy period or cancellation (and where applicable), should there be a positive balance sitting in the
policy after taking into account all expenditure (including claims), Guardrisk will declare a performance bonus back to the Company. There is no prior entitlement to this
performance bonus.
Note 13: Trade and other payables
2016 2015
$ $
Current
Trade payables and other payables 263,827 168,713
263,827 168,713
Trade and other payables are non-interest bearing and are normally settled on 30-day terms.
Note 14: Provision for payments received in advance
2016 2015
$ $
Current
Provision for Anvwar Asian Investments 175,722 629,325
175,722 629,325
During the 2014 reporting period, the Company entered into a legally binding heads of agreement with Anvwar Asian Investment (“AAI”), an entity based in Oman, whereby
AAI was to purchase a 35% interest in Ferrum Iron Ore (Pty) Ltd (“FIO”), the Group Company that holds the Moonlight Project. Following a number of term variations of this
letter of intent, the Company entered into a new agreement with AAI in March 2014, whereby AAI agreed to pay US$1 million, by way of two tranches of US$500,000, one
payable by the end of March 2014 and the second payable by the end of April 2014, thereby earning the right, subject to the requisite approvals of the South African Reserve
Bank, to be issued with FIO shares equalling 35% of that company, being partly paid, subject to the right to pay an additional US$9 million to become fully paid or be
converted into 3.5% of FIO fully paid. The additional US$9 million had to be paid by the earlier of 31 December 2015 and completion of the Moonlight BFS.
However the second tranche of US$500,000 was not received by the Company within the time frame stipulated under the agreement. The Company therefore informed AAI
of its default; and AAI remains in default as at the date of this report. Accordingly, the first tranche of US$500,000 was initially recorded as a current liability.
On 14 March 2015, the Company terminated the investment agreement between itself and AAI as a result of AAI’s breach of a material term of the agreement.
On 22 July 2015, AAI’s lawyers, Trowers & Hamlins, issued a letter to the Company, requesting that the first tranche be returned to AAI within 14 days from the date of issue.
They advised that AAI will commence legal proceedings for the recovery of the first tranche plus any interest and costs incurred by AAI.
On 30 June 2016 after no further correspondence between AAI, its lawyers and the Company, the Company derecognised an amount of US$364,448, leaving a provision of
US$135,552 for payments received in advance. Refer to note 22 for the contingent liability with respect to this matter.
Note 15: Provisions
2016 2015
$ $
Employee benefits 20,473 54,837
Note 16: Contributed Equity
2016 2015 2016 2015
No. of shares No. of shares $ $
(a) Share Capital
Ordinary Shares
Ordinary shares fully paid 1,282,791,883 618,787,353 33,314,792 31,807,395
Employee share
incentive plan shares (2,300,000) (2,300,000) (265,302) (265,302)
1,280,491,883 616,487,353 33,049,490 31,542,093
Capital management
When managing capital (which is defined as the Company’s total equity), management’s objective is to ensure the entity continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to
the entity. As the equity market is constantly changing management may issue new shares to provide for future exploration and development activity. The Company is not
subject to any externally imposed capital requirements.
During the year ended 30 June 2016, nil (2015: 4,295,000) shares were issued back to the market from the Employee Incentive Share Plan.
(b) Movements in ordinary share capital
Number of
Date Details shares $
30 June 2014 Closing Balance 380,602,777 29,843,607
10 November 2014 Allotment issue 49,065,642 392,525
13 November 2014 Underwritten issue 58,434,358 467,475
12 December 2014 Private placement 21,525,819 173,077
12 December 2014 Salary sacrifice share scheme issue 9,158,757 171,147
22 May 2015 Private placement 48,000,000 465,600
29 May 2015 Private placement 52,000,000 504,400
29 May 2015 Share plan shares sold on market (c) 59,344
Costs associated with share issues (269,780)
30 June 2015 Closing Balance 618,787,353 31,807,395
17 February 2016 Subscription Shares 4,515,041 13,046
29 February 2016 Subscription Shares 149,681,797 359,236
27 April 2016 Placing and Subscription Shares 500,000,000 1,279,499
27 April 2016 Fee Shares 4,807,692 12,303
27 April 2016 Shares – TH Crestgate GmbH 5,000,000 12,795
Costs associated with share issues (169,476)
30 June 2016 Closing Balance 1,282,791,883 33,314,792
Employee share plan shares on issue (2,300,000) (265,302)
1,280,491,883 33,049,490
If, at any time during the exercise period, an employee ceases to be an employee, all share options held by that employee will lapse one month after their employment end
date. Therefore, employee shares above are only recognised in issued capital when issued to the employees concerned.
(c) Movements in employee share plan shares issued with limited recourse employee loans
Number of
Date Details shares $
01 July 2014 Opening balance 6,595,000 (509,905)
Cancelled during 2015 (4,295,000) 244,603
Issued during 2015 - -
30 June 2015 Closing balance 2,300,000 (265,302)
Cancelled during 2016 - -
Issued during 2016 - -
30 June 2016 Closing balance 2,300,000 (265,302)
The table below summarises the model inputs (post consolidation) for employee share plan shares granted during periods prior to 30 June 2016:
Shares granted for consideration 2,150,000
Exercise price 0.198
Interest rate 0%
Issue date 7 December 2010
Expiry date 30 November 2014
Underlying security spot price at grant date (GBP) 0.198
Expected life 4
Shares granted for consideration 150,000
Exercise price 0.100
Interest rate 0%
Issue date 24 February 2012
Expiry date 24 February 2016
Underlying security spot price at grant date (GBP) 0.100
Expected life 4
No employee share plan shares were issued in 2016 (2015: Nil).
This account is used to record the value of shares issued under the Executive Share Incentive Plan (ESIP). The ESIP is accounted for as an “in-substance” option plan due
to the limited recourse nature of the loan between employees and the Company to finance the purchase of ordinary shares. The total fair value of the “in substance” options
issued under the plan is recognised as a share-based payment expense over the vesting period, with a corresponding increase in equity.
Note 17: Listed Options
2016 2015
No. of Options No. of Options
Options
At year end the following options were on issue:
- 21 November 2016 Options exercisable at 3 cents per share 500,000 500,000
- 19 February 2017 Options exercisable at 8 cents per share 2,500,000 2,500,000
- 2 February 2018 Options exercisable at GBP0.0075 per share 2,000,000 2,000,000
- 2 February 2018 Options exercisable at GBP0.02 per share 3,000,000 3,000,000
- 1 March 2018 Options exercisable at GBP0.0075 per share 2,000,000 2,000,000
- 1 March 2018 Options exercisable at GBP0.02 per share 3,000,000 3,000,000
- 12 May 2016 Unlisted options issued to investors 500,000,000 -
513,000,000 13,000,000
2016 2015
Movements in 21 November 2016 Options No. of Options No. of Options
Beginning of the financial year 500,000 500,000
Options issued during the year - -
Options cancelled during the year - -
End of the financial year 500,000 500,000
Movements in 19 February 2017 Options
Beginning of the financial year 2,500,000 2,500,000
Options issued during the year - -
Options cancelled during the year - -
End of the financial year 2,500,000 2,500,000
Movements in 2 February 2018 Options
Beginning of the financial year 5,000,000 -
Options issued during the year - 5,000,000
Options cancelled during the year - -
End of the financial year 5,000,000 5,000,000
Movements in 1 March 2018 Options
Beginning of the financial year 5,000,000 -
Options issued during the year - 5,000,000
Options cancelled during the year - -
End of the financial year 5,000,000 5,000,000
Movement in 12 May 2018 unlisted options issued to
investors
Beginning of the financial year - -
Options issued during the year 500,000,000 -
Options cancelled during the year - -
End of the financial year 500,000,000 -
The table below summarises the model inputs (post consolidation) for investor options granted during the year ended 30 June 2016:
Options granted for consideration 500,000,000
Exercise price (GBP) 0.00165
Issue date 12 May 2016
Expiry date 12 May 2018
Underlying security spot price at grant date (GBP) 0.00165
Expected life 2
Movements after 30 June 2016
On 29 July 2016, 66,874,816 of the options issued on 12 May 2016 were exercised at a price of GBP 0.0165 pence per share. In addition on 29 July 2016, 187,226,485
ordinary shares were issued at a price of GBP 0.020 pence per share along with an option of 187,226,485 options of GBP0.030 pence per share that are exercisable over a
period of 2 years subject to the receipt of shareholder approval.
On 26 August 2016, 44,797,543 of the options issued on 12 May 2016 were exercised at a price of GBP 0.0165 pence per share.
On 28 September 2016, 5,381,907 of the options issued on 12 May 2016 were exercised at a price of GBP 0.0165 pence per share.
Note 18: Reserves
Employee
share Foreign Available
incentive Options exchange Equity for sale
reserve reserve reserve reserve reserve Total
$ $ $ $ $ $
At 1 July 2014 608,335 1,428,281 134,560 (10,126,072) 78,524 (7,876,372)
Currency translation
differences - - (180,614) - - (180,614)
Options issued - 86,461 - - - 86,461
Shares issued to KMPs
on the Salary Sacrifice
Scheme 54,389 - - - - 54,389
Directors and KMP salary
sacrifice for shares
issued (171,147) - - - - (171,147)
Growth in investment
portfolio - - - - 20,546 20,546
Reclassification
adjustment for gains
included in the income
statement (net of tax
effect) - - - - (99,070) (99,070)
At 30 June 2015 491,577 1,514,742 (46,054) (10,126,072) - (8,165,807)
Options issued under
Employee Option plan - 34,098 - - - 34,098
Net growth on Investment
Portfolio - - (991) - - (991)
Currency translation - - 226,166 - - 226,166
differences
At 30 June 2016 491,577 1,548,840 179,121 (10,126,072) - (7,906,534)
^
This amount includes remuneration to KMPs and Directors that was accrued and will ultimately be settled in shares under the Company’s salary sacrifice scheme.
Nature and purpose of reserves
Employee share incentive reserve
This reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of their remuneration under the Executive Share Incentive
Plan.
Options reserve
This reserve is used to record the value of options issued, other than share-based payments to directors, employees and consultants as part of their remuneration.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
Equity reserve
The Equity reserve is used to record the acquisition of the non-controlling interest by the Group and to record differences between the carrying value of non-controlling
interests and the consideration paid / received, where there has been a transaction involving non-controlling interests that do not result in a loss of control.
The reserve is attributable to the equity of the parent.
Available-for-sale reserve
Used to record changes in the fair value of the Group’s available-for-sale financial assets.
Note 19: Accumulated losses
2016 2015
$ $
Accumulated losses at the beginning of the financial year (22,850,764) (20,504,904)
Net loss for the year (1,573,533) (2,345,860)
Accumulated losses at the end of the financial year (24,424,297) (22,850,764)
Note 20: Share based payments
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year were as follows:
2016 2015
$ $
Options issued in consideration for services
34,097 90,851
34,097 90,851
Options issued in consideration for services
Fair value of options granted
The fair value at the grant date of options issued is determined using a binomial option pricing model that takes into account the exercise price, the term of the option, the
impact of dilution, the non-tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the
risk-free interest rate for the term of the option.
1. The tables below summarise the model inputs (post consolidation) for options granted prior to the year ended 30 June 2015:
Options granted for no consideration 500,000
Exercise price (AUD cents) 0.03
Issue date 21 November 2013
Expiry date 21 November 2016
Underlying security spot price at grant date (AUD cents) 0.03
Expected price volatility of the Company’s shares 100%
Expected dividend yield 0%
Expected life 3
Risk-free interest rate 3.08%
Binomial model valuation per option (AUD cents per share) 1.65
Options granted for no consideration 2,500,000
Exercise price (AUD cents) 0.08
Issue date 19 February 2014
Expiry date 19 February 2017
Underlying security spot price at grant date (AUD cents) 0.06
Expected price volatility of the Company’s shares 100%
Expected dividend yield 0%
Expected life 3
Risk-free interest rate 2.97%
Binomial model valuation per option (AUD cents per share) 4.12
Options granted for no consideration 2,000,000
Exercise price (GBP) 0.0075
Issue date 2 February 2015
Expiry date 2 February 2018
Underlying security spot price at grant date (GBP) 0.0075
Expected price volatility of the Company’s shares 100%
Expected dividend yield 0%
Expected life 3
Risk-free interest rate 0.64%
Binomial model valuation per option (AUD cents per share) 0.50
Options granted for no consideration 3,000,000
Exercise price (GBP) 0.02
Issue date 2 February 2015
Expiry date 2 February 2018
Underlying security spot price at grant date (GBP) 0.02
Expected price volatility of the Company’s shares 100%
Expected dividend yield 0%
Expected life 3
Risk-free interest rate 0.64%
Binomial model valuation per option (AUD cents per share) 0.34
Options granted for no consideration 2,000,000
Exercise price (GBP) 0.0075
Issue date 1 March 2015
Expiry date 1 March 2018
Underlying security spot price at grant date (GBP) 0.0075
Expected price volatility of the Company’s shares 100%
Expected dividend yield 0%
Expected life 3
Risk-free interest rate 0.90%
Binomial model valuation per option (AUD cents per share) 0.55
Options granted for no consideration 3,000,000
Exercise price (GBP) 0.02
Issue date 1 March 2015
Expiry date 1 March 2018
Underlying security spot price at grant date (GBP) 0.02
Expected price volatility of the Company’s shares 100%
Expected dividend yield 0%
Expected life 3
Risk-free interest rate 0.90%
Binomial model valuation per option (AUD cents per share) 0.37
Movements
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:
2016 2016 2015 2015
Number WAEP Number WAEP
Outstanding at 1 July 13,000,000 1.32 3,400,000 3.46
Issued during the year - - 10,000,000 0.94
Cancelled during the year - (400,000) 10.00
Outstanding at 30 June 13,000,000 0.92 13,000,000 1.32
Exercisable at 30 June 11,500,000 1.04 10,000,000 0.94
Note 21: Commitments
(i) At this stage the Company has no minimum obligations with respect to tenement expenditure requirements.
(ii) Operating lease commitments are as follows:
2016 2015
$ $
Within 1 year 25,107 28,039
2 to 3 years - -
Total 25,107 28,039
The Company disposed of its Australian tenements during 2011 and whilst the Company still holds tenements in South Africa, expenditure commitments in relation to such
tenements have been met. The Company has converted its South African prospecting rights into mining rights and applied for new prospecting rights over adjacent land.
A subsidiary of the Group entered into a 36 month commercial office lease on 1 April 2012, with an 8% annual escalation to the fixed portion of the lease, for their head office
in Johannesburg, South Africa. The value of the lease was annualised over the life of the Lease agreement. This lease reached the end of its term on 31 March 2015, and
had a renewal period for a further 3 years commencing 1 April 2015 but was only renewed for a period of 1 year until 31 March 2016. During February 2016 the lease was
renewed for a further period of 12 months until 31 March 2017.
Note 22: Contingent liabilities
The Company received USD500,000 from AAI during March 2014 as part of AAI’s advanced payment for a percentage ownership of the Company’s subsidiary FIO. The
transaction was never formaly finalised and on 30 June 2016, the Company transferred the amount of USD364,448 from provision for payments received in advance to
sundry income to cover expenses incurred by the Company subsequent to AAI’s default, leaving a value of US$135,552 in provision for payments received in advance.
The matter is contingent liability as the likelihood of probable outflow is not considered remote at this point in time and the Company may be exposed to repay the investment
amount of USD 500,000 or part thereof, subject to the Company’s ability to prove its loss and damages suffered as a result of AAI’s breach of contract.
Note 23: Related party transactions
Compensation of Key Management Personnel
2016 2015
$ $
Short-term employee benefits 716,803 828,463
Post-employment benefits 26,849 37,539
Share based payments 34,097 85,675
Termination benefits - -
777,749 951,678
Transactions between related parties are on normal commercial terms and conditions and no more favourable than those available to other parties unless otherwise stated.
Subsidiaries
The consolidated financial statements include the financial statements of Ferrum Crescent Limited and the subsidiaries listed in the following table.
% Beneficial Equity
Interest
Name Country of Incorporation 2016 2015
Ferrum Metals Pty Ltd Australia 100 100
Batavia Ltd Mauritius 100 100
Ferrum South Africa (Pty) Ltd (“FIO”) South Africa 100 100
Ferrum Iron Ore (Pty) Ltd South Africa 97.14 97.14
Mkhombi Investments (Pty) Ltd (“MI”) South Africa 88.46 88.46
Ferrum Crescent Limited is the ultimate Australian parent entity and the ultimate parent of the Group. Transactions between Ferrum Crescent Limited and its controlled
entities during the year consisted of loan advances by Ferrum Crescent Limited. All intergroup transactions and balances are eliminated on consolidation.
The Baphuting Bo Seleka Community Trust (“Trust”) has a 3% indirect interest in FIO, the project Company, via its investment in MI. Until such time as FIO commences
mining no expenses or investments have been carried over to the Trust.
Trade receivable
2016 2015
$ $
Trade receivable 15,454 -
Less provision for bad debts (15,454)
- -
On 14 October 2015, the Company announced that a BFS Farm-In Agreement had been concluded with Business Venture Investments No.1709 (Proprietary) Limited (“BVI”)
to form a joint venture for the completion of the bankable feasibility study (“BFS”). The comprehensive Farm-In Agreement provides for the completion of all the requisite BFS
workstreams to produce a full BFS on the project to a fixed timeline, to be funded by BVI in return for up to a 43% equity interest in Ferrum Iron Ore (Pty) Ltd (“FIO”) the
owner of the Moonlight Iron Ore Project. As at 30 June 2016 BVI had not paid the Company for any of the expenses that the Company had incurred on behalf of BVI and a
bad debt provision has been created.
Trade payable
Income Expenditure Amounts Amounts
from to Related Owed by Owed to
Related Parties Related Related
Parties Parties at Parties at
year end year end
$ $ $ $
Magnum Mining and Exploration Ltd (i) 2016 - 87,582 - 29,382
2015 - 106,138 - 12,296
(i) Mr G Button, a non-executive director and company secretary for the Company, is also a director of Magnum Mining and Exploration Ltd. During the year, Magnum Mining
and Exploration Ltd received the above fees for office rental, office running costs and staffing expenses. These fees are based on normal commercial terms and conditions.
Loans to / (from) related parties
The following transactions were undertaken between the Company, executive officers and director-related entities during 2016 and 2015.
2016 2015
$ $
Consulting fees were paid or accrued to Camcove Pty Ltd, a company
of which Robert Hair is a director and shareholder 60,000 60,000
Consulting fees were paid or accrued to Tavistock Communications
Limited, a company of which Merlin Mar-Johnson is an Employee 15,672 -
Directors fees were paid or accrued to Metallurgical Management
Services Pty Ltd, a company of which Dr Evan Kirby is a director 7,500 -
83,172 60,000
Note 24: Cash flow information
2016 2015
$ $
Reconciliation of cash flow from operations with loss from ordinary
activities after income tax
Loss from ordinary activities after income tax (1,573,533) (2,345,860)
Depreciation 11,638 18,580
Loss / (profit) on sale of plant and equipment (8,609) -
Profit on sale of available for sale financial assets (649) (137,597)
Fair value adjustment of forward subscription agreement - 208,375
Share based payment compensation 34,097 90,851
Net foreign exchange differences 368,404 (54,155)
Movement of Bad debts 16,056 -
Proceeds from third party funding (490,850) -
Changes in assets and liabilities
(Increase) / decrease in receivables (12,001) (174,766)
(Increase) / decrease in other operating assets 31,399 (24,758)
Increase / (decrease) in payables and provisions 45,298 (194,914)
Cash flows used in operations (1,578,750) (2,575,785)
Note 25: Financial risk management objectives and policies
The Group’s principal financial instruments comprise cash, short term deposits, held-for-trading and derivative instruments.
The main purpose of the financial instruments is to finance the Group’s operations. The Company also has other financial instruments such as trade debtors and creditors
which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The board reviews and agrees policies
for managing each of these risks and they are summarised below:
(a) Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates, and the effective
weighted average interest rate for each class of financial assets and financial liabilities, is set out in the following table. Also included is the effect on profit and equity after tax
if interest rates at that date had been 10% higher or lower with all other variables held constant as a sensitivity analysis.
The Group has not entered into any hedging activities to manage interest rate risk. In regard to its interest rate risk, the Group continuously analyses its exposure. W ithin this
analysis, consideration is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable interest rates.
Interest Rate
Weighted Floating Fixed Non Risk Sensitivity
Average
Effective Interest Interest Interest
-10% +10%
Interest Rate Rate Rate Bearing Total Profit Equity Profit Equity
% $ $ $ $ $ $ $ $
2016
Financial Assets
Cash 0.05% 730,546 - 12,718 743,264 (319) - 319 -
Trust deposits 0.00% 75 - 29,229 29,303 - - - -
Receivables 0.00% - - 33,929 33,929 - - - -
Investments 1.12% 64,715 - - 64,715 (524) - 524 -
Financial asset 0.00% - - - - - - - -
Total Financial Assets 795,336 - 75,876 871,211
Financial Liabilities
Trade and other payables - - 439,549 439,549 - - - -
Total Financial Liabilities - - 439,549 439,549
2015
Financial Assets
Cash 0.35% 868,354 136,490 23,624 1,028,468 (1,064) - 1,064 -
Trust deposits 0.00% 163 - 34,162 34,325 - - - -
Receivables 0.00% - - 21,928 21,928 - - - -
Investments 1.12% 187,048 - - 187,048 (1,312) - 1,312 -
Financial asset 0.00% - - - - - - - -
Total Financial Assets 1,055,565 136,490 79,714 1,271,769
Financial Liabilities
Trade and other payables - - 803,892 803,892 - - - -
Total Financial Liabilities - - 803,892 803,892
A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short term and long term Australian dollar interest rates. A -10%
sensitivity would move short term interest rates at 30 June 2016 from around 2% to 1.8% representing a 20 basis point downwards shift (14.00 basis points net of tax).
Based on the sensitivity analysis, mainly interest revenue from variable rate deposits, cash balances and investment is impacted resulting in a decrease or increase in overall
income.
(b) Liquidity Risk
The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities required to meet the current exploration and administration commitments,
through the continuous monitoring of actual cash flows.
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management
of the Group’s short, medium and long term funding and liquidity management requirements.
Less 1 – 3 months 3 months 1–5 5+ years Total
than 1 – 1 year years
month
% $ $ $ $ $
2016
Financial assets:
Cash 743,264 - - - - 743,264
Trust deposits - - - 29,303 - 29,303
Receivables - 33,929 - - - 33,929
Investments - - - 64,715 - 64,715
743,264 33,929 - 94,018 - 871,211
Financial liabilities:
Non-interest bearing - (439,549) - - - (439,549)
- (439,549) - - - (439,549)
Net cash inflow /
743,264 (405,620) - 94,018 - 431,662
(outflow)
2015
Financial assets:
Cash 1,028,468 - - - - 1,028,468
Trust deposits - - - 34,325 - 34,325
Receivables - 21,928 - - - 21,928
Investments - - - 187,048 - 187,048
1,028,468 21,928 - 221,373 - 1,271,769
Financial liabilities:
Non-interest bearing - (803,892) - - - (803,892)
- (803,892) - - - (803,892)
Net cash inflow /
1,028,468 (781,965) - 221,373 - 467,876
(outflow)
(c) Credit Risk
Credit risk arises in the event that counterparty will not meet its obligations under a financial instrument leading to financial losses. The Company is exposed to credit risk
from its operating activities and, financing activities including deposits with banks and investments with insurance companies. The credit risk control procedures adopted by
the Company is to assess the credit quality of the institution with whom funds are deposited or invested, taking into account its financial position and past experiences.
The maximum exposure to credit risk on financial assets of the Company which have been recognised on the statement of financial position is generally limited to the
carrying amount.
Cash is maintained with National Australia Bank and the Standard Bank of South Africa.
The investment in mining rehabilitation insurance policy is invested by Guardrisk in the following investments,
Type of Investment Type of interest
Unit trust – monthly contributing Floating interest rate
Unit trust – fixed investment (paid out during FY2016) Floating interest rate
Money market Floating interest rate
Current account Non-interest bearing
(d) Foreign Exchange Risk
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The carrying amount of the Group’s
foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows,
Liabilities Assets
2016 2015 2016 2015
$ $ $ $
Great British Pounds (GBP) (631,013) (653,422) 621,213 670,765
South African Rand (ZAR) (179) (16,208) 179 16,208
United States Dollars (USD) 15,094 64,679 - -
Foreign currency sensitivity analysis
The Group is exposed to Great British Pound (GBP), United States Dollar (USD) and South African Rand (ZAR) currency fluctuations.
The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian Dollar (AUD) against the relevant currencies. 10% is the sensitivity rate
used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in
foreign currency rates.
The sensitivity analysis includes cash balances held in GBP, ZAR and USD which give rise to a foreign currency gain or loss on revaluation. A positive number indicates an
increase in profit and other equity where the AUD strengthens against the ZAR. In relation to cash balances held in GBP a positive number indicates an increase in profit and
other equity where the Australian Dollar strengthens against the respective currency. For a weakening Australian Dollar against the respective currency there would be an
equal and opposite impact on the profit and other equity and the balances below would be negative.
2016 2015
Equity increase Equity increase /
Profit / (loss) / (decrease) Profit / (loss) (decrease)
$ $ $ $
-
AUD strengthens - ZAR (18) 18 (1,621) 1,621
10% - GBP (63,101) 63,101 (65,342) 65,342
- USD 2,890 (2,890) 12,268 (12,268)
AUD weakens - ZAR 18 (18) 1,621 (1,621)
10% - GBP 63,101 (63,101) 65,342 (65,342)
- USD (2,890) 2,890 (12,268) 12,268
(e) Fair value
The fair values of cash, trade and other receivables and trade and other payables approximate their carrying values, as a result of their short maturity or because they carry
floating rates.
(i) Fair value of financial instruments measured at fair value
For financial instruments carried at fair value the Group adopts various methods in estimating fair value. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in an active market
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
Jun 2016 Jun 2015
AUD AUD
Level 2
Available for sale financial assets 64,715 187,048
For financial instruments not quoted in active markets, the Group uses valuation techniques such as other relevant models used by market participants which may include
inputs derived from quoted prices in an active market (Level 2). These valuation techniques use both observable and unobservable market inputs.
Note 26: Parent Entity Information
2016 2015
$ $
Current assets 742,467 934,073
Total assets 986,159 934,474
Current liabilities 216,061 129,863
Total liabilities 216,061 129,863
Issued capital 37,362,411 35,855,014
Accumulated Losses (32,278,633) (30,702,626)
Reserves 4,313,679 4,347,776
Total shareholders’ equity 770,099 804,612
Profit / (loss) of the parent entity (1,576,006) (2,466,304)
Total comprehensive (loss) / income (1,347,367) (2,725,442)
On 30 November 2009, Ferrum Crescent Limited (formerly Washington Resources Ltd) (“FCR”) completed the legal acquisition of Ferrum Metals Limited (formerly Ferrum
Crescent Limited) (“FML”). Under the terms of AASB 3 Business Combinations (Revised), FML was deemed to be the accounting acquirer in the business combination. The
transaction was therefore accounted for as a reverse acquisition. The Parent entity therefore had issued capital of $25,620,916 as opposed to the Group’s consolidated
issued capital of $28,366,383. For further details please refer to the disclosures contained within the 30 June 2010 Annual Report.
There have been no guarantees entered into by the parent entity in relation to any debts of its subsidiaries.
The parent entity has no contingent liabilities as at 30 June 2016 (2015: Nil).
Note 27: Subsequent events
Subsequent to the Company entering into an exclusive option to acquire 100 percent of GoldQuest, two nil-cost extensions were granted to Ferrum Crescent and on
22 September 2016 the option was exercised. Accordingly, the Company has acquired 100 per cent. of the share capital of GoldQuest Iberica, S.L. (“GoldQuest”).
GoldQuest owns 100 per cent. of two lead-zinc exploration projects in the provinces of Leon and Galicia, in historic Spanish mining areas (the “Iberian Projects”).
Consideration comprised GBP326,500 in cash and the issue of 100 million new ordinary shares in the capital of Ferrum Crescent.
On 25 July 2016, the Company announced that it had conditionally raised in aggregate, GBP 374,453 (AU$655,034) before expenses through a placement via
Beaufort Securities Limited, as agent to the Company, of 187,226,485 new ordinary shares of no par value each in the capital of the Company at a price of 0.20
pence per new ordinary share. As part of the placing, each investor was offered, subject to shareholder approval in accordance with the ASX Listing Rules, options
on the basis of one option for every share subscribed pursuant to the placing. Each option will entitle the holder to subscribe for a further new ordinary share at a
price of 0.30 pence per share for an exercise period of two years following the date of admission of the placing shares trading on AIM. In addition the Company has
agreed to grant further 18,722,649 options to Beaufort Securities Limited on the same terms. Following admission, the total issued ordinary share capital of the
Company was 1,470,018,368 ordinary shares.
On 28 July 2016, the Company announced that it was issuing 66,874,816 new ordinary shares of no par value each in the capital of the Company as a result of the
exercise of, in aggregate 66,874,816 options exercisable at a price of 0.165 pence per share, raising AUD 193,025 before expenses. Such options were granted in
connection with the Company’s placing and subscription announced on 27 April 2016. Following the issue of the option shares and the abovementioned placing
shares, the total issued ordinary share capital of the Company was 1,536,893,184 ordinary shares.
On 26 August 2016, the Company announced that it was issuing 44,797,543 new ordinary shares of no par value each in the capital of the Company as a result of
the exercise of, in aggregate, a further 44,797,543 options exercisable at a price of 0.165 pence per share, raising AUD 128,184 before expenses. Such options
were granted in connection with the Company’s placing and subscription announced on 27 April 2016. Following the issue of these option shares, the total issued
ordinary share capital of the Company was 1,581,690,727 ordinary shares.
On 23 September 2016, the Company announced that was issuing 5,381,907 new ordinary shares of no par value each in the capital of the Company as a result of
the exercise of, in aggregate, 5,381,907 options exercisable at a price of 0.165 pence per share Such options were granted in connection with the Company’s
placing and subscription announced on 27 April 2016. Following the issue of these further option shares, the total issued ordinary share capital of the Company is
1,587,072,634 ordinary shares.
On 29 September 2016, the Company announced the following proxy results of the General Meeting of Shareholders held on said date in respect of the resolutions
set out in the Notice of General Meeting dated 23 August 2016. Resolution 1,2 and 3 were passed on a show of hands.
Resolution 1: Ratification of prior issue of Shares
Resolution 2: Approval of grant of Placement Options
Resolution 3: Approval of grant of Broker Options
Also on 29 September 2016, the Company also announced that it was issuing 100,000,000 new ordinary shares of no par value each in the capital of the Company
th
to GoldQuest Mining (Spain) Corp on 30 September 2016. These shares will be issued in settlement of the share element of the consideration for the acquisition of
100 per cent. of the issued share capital of GoldQuest Iberica, S.L. The shares will be fully paid and rank pari passu in all respects with the Company’s existing
ordinary shares. Following the issue of the shares, the total issued ordinary share capital of the Company is 1,687,072,634 ordinary shares.
ASX Requirements
Distribution schedules of shareholders and statements of voting rights are set out in Table 1, whilst the Company’s top twenty shareholders are shown in Table 2.
Substantial shareholder notices that have been received by the Company are set out in Table 3 and the tenement schedule as at 30 June 2016 is set out in Table 4.
Table 1
Shareholder spread
Ordinary shares, with right to attend meetings and vote personally or by proxy, through show
of hands and, if required, by ballot (one vote for each share held)
1-1,000 73
1,001-5,000 107
5,001-10,000 91
10,001-100,000 248
100,001 - and over 225
Total holders of ordinary shares 744
Total number of ordinary shares 1,282,791,883
Options, with no right to attend meetings or vote personally or by proxy
1-1,000 -
1,001-5,000 -
5,001-10,000 -
10,001-100,000 -
100,001 - and over 26
Total holders of options 26
Total number of options 513,000,000
Table 2
Top twenty shareholders
Shareholder Number of shares Percentage
Hargreaves Lansdown (Nominees) Limited 135,556,381 10.57%
Barclayshare Nominees Limited 131,190,328 10.23%
TD Direct Investing Nominees (Europe) Limited 110,415,308 8.61%
HSDL Nominees Limited 89,981,899 7.02%
Redmayne (Nominees) Limited 87,434,315 6.82%
The Bank of New York (Nominees) Limited 42,764,600 3.34%
Investor Nominees Limited 41,961,925 3.27%
Rathbone Nominees Limited 34,638,909 2.70%
Mr E F G Nealon 26,484,421 2.02%
Mkhombi Amamato (Pty) Ltd 25,281,620 1.97%
W B Nominees Limited 24,624,206 1.92%
Citicorp Nominees Pty Ltd 23,269,017 1.81%
HSBC Client Holdings Nominee (UK) Limited 22,498,050 1.75%
IG Markets Limited 22,407,431 1.75%
Lawshare Nominees Limited 22,170,630 1.73%
JIM Nominees Limited 20,714,889 1.62%
Wealth Nominees Limited 20,265,279 1.58%
Vidacos Nominees Limited 17,596,041 1.37%
Pershing Nominees Limited 16,313,425 1.27%
Share Nominees Ltd 15,232,852 1.19%
Table 3
Substantial shareholders
Shareholder Number of shares Percentage
Hargreaves Lansdown (Nominees) Limited 135,556,381 10.57%
Barclayshare Nominees Limited 131,190,328 10.23%
TD Direct Investing Nominees (Europe) Limited 110,415,308 8.61%
Voting Rights
The voting rights attached to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Table 4
Tenement schedule as at 30 June 2016:
Project Tenement Number Tenement Status Holder Percentage
Interest
Moonlight 30/5/1/2/2/201 MR Mining Right Ferrum Iron Ore 97%
Granted (Pty) Ltd
Moonlight LP30/6/1/1/2/11868PR Prospecting Ferrum Iron Ore 97%
Application (Pty) Ltd
JSE Limited Requirements
Headline earnings reconciliation 2016 2015
$ $
Loss attributable to ordinary equity holders of the parent
entity (1,573,533) (2,345,860)
Add back IAS 16 loss on the disposal of plant and equipment (8,609) -
Less profit on sale of available for sale investments 649 (137,597)
Total tax effects of adjustments (182) 38,527
Headline loss (1,581,675) (2,444,930)
Basic loss per share (1,573,533) (2,345,860)
Weighted average shares in issue 714,611,971 468,894,041
Basic loss per share (cents) (0.22) (0.50)
Headline loss (1,581,675) (2,444,930)
Weighted average shares in issue 714,611,971 468,894,041
Headline loss per share (cents) (0.22) (0.52)
Date: 30/09/2016 11:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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