AIM Release
12 June 2009
Minerva Resources plc (AIM:MVA)
('Minerva Resources' or 'the Company')
Final Results 2008
Minerva Resources is pleased to announce its audited financial
results for the year ended 30 September 2008. The annual report and
accounts will be published, posted to shareholders today and
available on the Company's website www.minervaresources.com
Highlights
* Net loss of £1,251,013 (£0.0103 per share), reflecting ongoing
exploration and overhead budgeted expenditures and revenues from
the sale of Palladex KR.
* £181,254 held in cash and cash equivalent as at 30 September 2008
* Resource delineation drilling programmes at the Tulu Kapi Gold
Project.
* The discovery of what is considered to be a gold province in the
area near the Tulu Kapi Gold Project, with three gold prospects,
Guji, Gudeya-Guji and Dina established to date.
* Initial petrographic studies undertaken, which indicate
significant percentages of gravity gold and high recoveries from
conventional processing techniques.
* Agreement reached to increase the Company's holding in Yubdo
Platinum and Gold Development PLC, Ethiopia from 51% to 72%
through the completion of a Feasibility Study.
* Sale of Palladex KR LLC, which held two gold exploration licences
in the Kyrgyz Republic, for US$2,000,000.
* Provision of contract drilling services on three exploration
properties in the Kyrgyz Republic.
* Commissioning of pilot gravity recovery plant at Yubdo, Ethiopia.
* Increase in authorised share capital.
* Appointment of General Manager - Exploration.
Activities subsequent to the end of the Financial Year were:
* Issue of shares raising of £607,500 (before expenses) and
conversion of Ambrian Capital loan to equity
* Issue of 39,749,200 shares to meet subscriptions and cost of
transactions
* Issue of 2,802,298 shares as per the terms of the agreement to
move from 51% to 72% in Yubdo Platinum and Gold Development PLC
* Completion of a Sale and Purchase Agreement for the sale of
Palladex Limited (Western Samoa) and its subsidiary company
* Resolution to enter into a Company Voluntary Arrangement and
subsequent suspension of trading
* Agreement with Dwyka Resources Ltd for a period of exclusive due
diligence, providing loans enabling the company to lift the CVA
and continue trading.
* Reorganisation of the share capital, with the nominal value of a
share adjusted to 0.25p.
* Resolution to withdraw from entry into a Company Voluntary
Arrangement.
Corporate
The Company completed an agreement, in March 2008, to acquire a
further 22% interest in Yubdo Platinum and Gold Development PLC from
Ato Benti Tasissa Negewo, who holds 47% of the company, for a maximum
consideration of US$5 million, depending upon the results of stages
in the project, upon the completion of a feasibility study into the
viability of a mining and processing operation to produce a minimum
of 50,000 ounces of platinum per annum.
In April 2008, Palladex KR LLC, a wholly owned exploration company
based in the Kyrgyz Republic, was sold to Linxi Ltd Investment
Company, Urumqi, China for US$2,000,000.
A new office was opened in Addis Ababa for the Company by Mr.
Alemayehu Tegenu, the Ethiopian Minister of Mines and Energy in April
2008. Establishing this office is a further demonstration of our
commitment to the country. Our Country Manager, Dr. Kebede Hailu
Belete, and his team now manage all the Company's activities in
Ethiopia from this office.
Mr. Merlin Marr-Johnson resigned on the 1st January 2008 from the
Board and the Company, due to a change in personal circumstances, and
Mr. Robert Edwards resigned as a Non-Executive Director of the
Company on the 21st April 2008, due to a change in personal
circumstances. Gary Vermaak resigned from the position of Chief
Financial Officer in December 2008 to return to South Africa.
Mr. Tim Craske joined the Company as General Manager-Exploration and
Mr. Mark James joined as Financial Controller in September 2008.
Authorised share capital in the Company increased from £5,000,000 to
£10,000,000 due to the creation of an additional 200,000,000 Ordinary
Shares. The Directors were authorised to allot unissued Ordinary
Share capital up to an aggregate nominal value of £4,100,000, in
anticipation of seeking funding to continue the development of its
assets and to provide additional working capital, at a General
Meeting held on the 28th August, 2008.
Subsequent to the end of the financial year, on the 2nd October 2008,
the Company issued shares raising £607,500 (before expenses) through
the issue of 24,300,000 Placing Units. Each Placing Unit consists of
one new Ordinary Share with one warrant to subscribe for an Ordinary
share at 4p per share. The Company issued a further 13,379,200
Placing Units to capitalise the entire balance of a loan, £334,480,
made by Ambrian Capital plc to the Company. In addition, 13,860,000
Placing Units were issued in part settlement of the transaction
costs.
On the 23 October 2008, the Company issued 2,802,298 new Ordinary
Shares to Ato Benti Tasissa Negewo at an issue price of 4.25 pence
per share, in accordance with the conditions of the agreement entered
into in March 2008 to acquire a further 22% of Yubdo Platinum and
Gold Development PLC
A Sale and Purchase Agreement for the disposal of the wholly owned
subsidiary Palladex Limited (Western Samoa) and its subsidiaries
Palladex Geotechservice LLC, Kyrgyzstan, and the representative
office of Palladex Limited (Western Samoa) in Azerbaijan to their
management for the consideration of US$79,208 and the repayment of
loans to the value of US$420,792, was entered into in January 2009
and completed in April 2009. The Company agreed to write off the
outstanding loan amount of US$853,494 in conjunction with the above
transactions.
In January 2009, given the very difficult climate for small
exploration companies to raise money on the equity market, the
Directors resolved to enter into a Company Voluntary Arrangement
(CVA), which was approved at a General Meeting held on Wednesday 25
February 2009, to enable a longer timeframe to seek the necessary
additional funding required to continue operating the Company as a
going concern. The request for a temporary suspension of its shares
from trading pending clarification of the Company's ongoing financial
position came into effect at 1.00pm on the 30th January 2009.
At the time of writing, you will have seen that we have announced
that we now have agreed with Dwyka Resources Ltd ("Dwyka") to give
them a period of exclusive due diligence with a view to making a
possible offer for all or part of the Company's business or indeed
the Company itself. While Dwyka has provided us with loans that has
enabled us to lift the CVA and continue trading, the Company's shares
remain suspended until the ongoing discussions reach a conclusion.
All exploration activities have been minimised, to conserve funds,
while the data from the inferred resource drilling programme at Tulu
Kapi is compiled, assessed and a resource calculation undertaken.
The sale of Palladex Limited (Samoa), the entry into the CVA, the
adoption of new Articles of Association of the Company in accordance
with the Companies Act 2006 and the subdivision of share capital to
bring the nominal value of the Ordinary Share to 0.25 pence were
approved at a General Meeting held on Wednesday 25th February, 2009.
The Company announced on the 30th March 2009 that the audited report
and accounts for the year ended 30 September 2008 would not be
published by the end of March 2009, due to a number of delays arising
from the preparation requirements for the initiation of the CVA and
the clarification of the Creditors' positions in the CVA.
Chairman's Statement
Little did we all know when I wrote this comment on your Company's
position last year, that we would see such a major upheaval in the
world's business and financial sectors.
What began with an increasing number of defaults in highly geared
mortgages in the housing sector in the United States, rapidly
escalated into the biggest upheaval in global markets since the
1930's and possibly ever.
For the first part of the 2007/2008 year, work in Ethiopia in
particular, progressed very well and we made exciting advances on our
gold tenements in and around the Tulu Kapi prospect.
However, as we all know, as we moved into 2008 the global financial
situation began to deteriorate and I do not need to tell you what
happened to the world's stock markets during the second half of the
year. Although we managed to complete a small capital raising
immediately after the end of the financial year, it is fair to say
that, by the end of 2008, investment funds that would usually be
directed towards exploration and development companies like Minerva
Resources, had all but completely dried up.
The deterioration in the global business sector, particularly during
the December quarter of 2008, forced us to cut back on our work
programmes in Ethiopia. This despite the fact that our main asset is
the very exciting gold prospect at Tulu Kapi and that at the same
time the world gold price was testing new highs in a number of
currencies.
Fortunately, the decision that the Board made last year to dispose of
its geotechnical and drilling business in Kyrgyzstan eventually
provided us with sufficient funds to keep our business alive,
although in early 2009 the Board had to decide to enter the company
into a Company Voluntary Arrangement ("CVA"). This move, which was
accompanied by a necessary suspension of our stock on AIM, gave us
some time to pursue alternatives for the business.
At the time of writing, you will have seen that we have announced
that we now have agreed with Dwyka Resources Ltd ("Dwyka") to give
them a period of exclusive due diligence with a view to making a
possible offer for all or part of the Company's business or indeed
the Company itself. While Dwyka has provided us with loans that has
enabled us to lift the CVA and continue trading, the Company's shares
remain suspended until the ongoing discussions reach a conclusion.
As you will have seen from the announcements over the year, the Tulu
Kapi gold prospect in particular and the surrounding region more
generally, has we believe, the potential to develop ultimately into a
major mining development. Therefore, it is somewhat disappointing
position for the Management and the Board to have arrived at the
position we are in. After all of the hard work of the last couple of
years, I know we would have liked to have been able to pursue the
development of the company's gold and platinum assets in Ethiopia
more directly.
So, although at this point in time, I am unable to say specifically
what the future for the company will be, I can assure you that, in
these most difficult market conditions, the current Board and
Management continue to work to preserve and maximise the value of the
Company and its assets,.
With that in mind I would like to thank my fellow Directors and
Senior Management of the Company for their support and efforts over
the year and particularly during the period since the end of the
financial year.
Andrew E Daley
Non-executive Chairman
For further information contact:
Terry Ward
Managing Director
Minerva Resources plc
Tel: +44 (0)20 73795012
E-mail: terry.ward@minervaresources.com
James Joyce/Sarang Shah
W. H. Ireland
Tel: +44 (0)20 7220 1666
E-mail: james.joyce@wh-ireland.co.uk
Nick Rome
Bishopsgate Communications Ltd
Tel: +44 (0)20 75623350
E-mail: nick@bishopsgatecommunications.com
MINERVA RESOURCES PLC
Consolidated income statement for the year ended 30 September 2008
Restated
Year ended Year ended
30 September 2008 30 September 2007
Note £ £
Revenue 96,220 56,633
Cost of sales (43,746) (41,702)
Gross Profit 52,474 14,931
Other income 4 - 963,060
Administrative expenses (1,224,857) (1,443,554)
Loss from operations 4 (1,172,383) (465,563)
Financial expense 6 (30,856) (9,437)
Financial income 6 24,120 62,657
Loss before taxation (1,179,119) (412,343)
Taxation 7 - (12,165)
Loss for the year from
continuing operations (1,179,119) (424,508)
(Loss) / profit for the year
from discontinued operations 3 (71,894) 164,202
Loss for the year (1,251,013) (260,306)
Attributable to:
Equity holders of the parent (1,155,148) (240,165)
Minority interest (95,865) (20,141)
Loss per Ordinary Share (£)
attributable to equity
holders of the parent:
Basic and diluted 8 (0.0103) (0.0032)
Continuing operations
Basic and diluted 8 0.0097 0.0054
MINERVA RESOURCES PLC
Consolidated statement of changes in equity for the year ended 30th September 2008
Resta- Re-
ted Restated Restated stated Restated
Share Share Shares Mer- Revalu- For- Re- Total Mino- Total
Capital Pre- to be ger ation eign tained attrib- rity Equity
mium Issued Re- Reserve Cur- Loss- utable Inter-
Re- serve rency es to est
serve Trans- Equity
lation Holders
Re- of the
serve Parent
£ £ £ £ £ £ £ £ £ £
Ba-
lance
as at
1 Octo-
ber 2006 1,543,574 4,290,765 - - 720,000 - (2,659,249) 3,895,090 - 3,895,090
Trans-
fer to
Income
on sale
of avail-
able
for sale
invest-
ment - - - (720,000) - - (720,000) (720,000)
Ex-
change
differ-
ences
ari-
sing on
transla-
tion of
foreign
opera-
tions - - - - 39,594 - 39,594 - 39,594
Net in-
come
recog-
nised
direct-
ly in
equity - - - - (720,000) 39,594 - (680,406) - (680,406)
Loss
for
the
year - - - - - - (240,165) (240,165) (20,141) (260,306)
Total
recog-
nised
income
and ex-
pense
for
the
year - - - - (720,000) 39,594 (240,165) (920,571) (20,141) (940,712)
Issue
of
shares 1,250,000 - - - - - - 1,250,000 - 1,250,000
Share
based
pay-
ment - - - - - - 21,882 21,882 - 21,882
Reserve
created
on acqui-
sition
of sub-
sidiaries - - - 1,000,000 - - - 1,000,000 - 1,000,000
Issue
costs - - - (50,287) - - - (50,287) - (50,287)
Mino-
rity in-
terest
due to
acqui-
sition
of sub-
sidiaries - - - - - - - - 154,185 154,185
Balance
as at
30 Sep-
tember
2007
as re-
stated 2,793,574 4,290,765 - 949,713 - 39,594 (2,877,532) 5,196,114 134,044 5,330,158
Ex-
change
differ-
ences
ari-
sing
on
trans-
lation
of
foreign
opera-
tions - - - - - 30,731 - 30,731 - 30,731
Net
income
recog-
nised
direct-
ly in
equity - - - - - 30,731 - 30,731 - 30,731
Loss
for
the
year (1,155,148) (1,155,148) (95,865) (1,251,013)
Total
recog-
nised
in-
come
and
expense
for
the
year - - - - - 30,731 (1,155,148) (1,124,417) (95,865) (1,220,282)
Shares
to be
issued - - 1,112,827 - - - - 1,112,827 - 1,112,827
Issue
costs - (109,300) - - - - - (109,300) - (109,300)
Consid-
eration
for
option
to ac-
quire
22%
of
Yubdo
(note 25) - - - - - - (276,396) (276,396) - (276,396)
Share
based
pay-
ment - - - - - - 25,848 25,848 - 25,848
Ba-
lance
as at
30 Sep-
tember
2008 2,793,574 4,181,465 1,112,827 949,713 - 70,325 (4,283,228) 4,824,676 38,179 4,862,855
MINERVA RESOURCES PLC
Consolidated balance sheet at 30th September 2008
2008 2007
Restated
Note £ £
Assets:
Non-current assets
Intangible assets 9 3,611,082 3,381,495
Property, plant and equipment 10 211,446 380,049
Total non-current assets 3,822,528 3,761,544
Current assets
Inventories 12 53,378 47,418
Trade and other receivables 13 808,715 376,365
Cash and cash equivalents 181,254 1,361,897
Non-current assets classified as held for
sale 3 1,016,485 412,484
Total current assets 2,059,832 2,198,164
Total assets 5,882,360 5,959,708
Liabilities:
Non-current liabilities
Borrowings 15 - (5,849)
Deferred tax liability 14 - (3,075)
Total non-current liabilities - (8,924)
Current liabilities
Trade payables 15 (183,833) (88,070)
Accruals and deferred income 15 (99,700) (186,375)
Borrowings 15 - (334,480)
Liabilities directly associated with
non-current assets 3 (735,972) (11,701)
classified as held for sale
Total current liabilities (1,019,505) (620,626)
Total liabilities (1,019,505) (629,550)
Total net assets 4,862,855 5,330,158
MINERVA RESOURCES PLC
Consolidated balance sheet at 30th
September 2008 (Continued)
2008 2007
Restated
Note £ £
Equity attributable to equity holders
of the company
Called up share capital 16,17 2,793,574 2,793,574
Share premium account 17 4,181,465 4,290,765
Shares to be issued 17 1,112,827 -
Merger reserve 17 949,713 949,713
Foreign currency translation reserve 17 70,325 39,594
Retained losses 17 (4,283,228) (2,877,532)
Equity attributable to equity holders
of the company 4,824,676 5,196,114
Minority interest 38,179 134,044
Total equity 4,862,855 5,330,158
MINERVA RESOURCES PLC
Consolidated cash flow statement for the year ended 30th September
2008
Restated
2008 2007
Note £ £
Cash flows from operating activities
Loss for the year (1,251,013) (260,306)
Adjustments for:
Depreciation 10 117,952 75,757
Impairment loss on measurement to fair
value 3 476,101 -
Share based payments 25,848 21,882
Profit on sale of investment 4 - (955,200)
Profit on sale of Palladex KR LLC 3 (586,329) -
Income tax (credit) / expense (14,180) 15,240
Provision against deferred exploration
expenditure in Ethiopia 9 47,133 79,610
Finance income 6 (24,120) (62,657)
Finance expense 6 30,856 9,437
Exchange (gains)/loss (126,814) (3,935)
Cash flows from operating activities
before changes in
working capital and provisions (1,304,566) (1,080,172)
Increase in inventory (5,960) (41,860)
Decrease in trade and other receivables 175,150 16,316
Increase / (decrease) in trade and other
payables 9,088 (518,344)
Cash flows from operating activities (1,126,288) (1,624,060)
Income taxes paid 7 - (12,165)
Net cash flows from operating activities (1,126,288) (1,636,225)
Investing activities
Finance income 6 24,120 62,657
Proceeds from disposal of tangible
assets 4,585 159,017
Purchase of property, plant and
equipment (91,404) (292,066)
Sale of Saddleback Shares 4 - 955,200
Sale of Palladex KR LLC 3 998,813 -
Cash held in disposal group (89,652) -
Acquisition of ERL cash acquired 22 - 13,499
Payments for intangible assets (869,961) (90,882)
Cash flows from investing activities (23,499) 807,425
Financing activities
Interest expense 6 (30,856) (9,437)
Draw down of loan - 430,000
Loan repayments - (95,520)
Issue of ordinary share capital (net of
issue costs) - (50,287)
Cash flows from financing activities (30,856) 274,756
(Decrease) / Increase in cash (1,180,643) (554,044)
Cash and cash equivalents at beginning
of the year 20 1,361,897 1,891,610
Foreign exchange movements - 24,331
Cash and cash equivalents at end of the
year 20 181,254 1,361,897
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
1 Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of the
financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated. These financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS's and IFRIC
interpretations) issued by the International Accounting Standards
Board (IASB) and as adopted by the European Union and with those
parts of the Companies Act 1985 applicable to companies preparing
their accounts under IFRS's. The financial statements have been
prepared using sterling as this is the functional currency of the
Group.
The Directors have restated comparatives on the consolidated balance
sheet, consolidated statement of changes in equity and consolidated
cash flow statement as a result of finalising the provisional fair
values of the assets and liabilities acquired on the acquisition of
GPMC. Refer to note 22 for further details. The Directors have also
restated comparatives on the consolidated balance sheet, consolidated
statement of changes in equity and consolidated cash flow statement
to correct presentation as at 30 September 2007. The effect of the
restatement on the consolidated balance sheet is as follows:
* retained losses are £20,141 lower;
* foreign currency translation reserve is £16,123 higher;
* intangible assets are £359,771 higher; and
* non-current assets classified as held for sale are £359,771
lower.
There has been no change in the loss from operations, net loss before
and after tax in the respective periods as a result of the
restatement.
Going concern
As announced on 30 January 2009, the Group needs to raise further
funds to continue to operate. Given the current very difficult
climate for small exploration companies to raise money on the equity
market, the Directors resolved to enter into a Company Voluntary
Arrangement ('CVA') to enable a longer timeframe to seek the
necessary additional funding required to continue operating the Group
as a going concern. Subsequently, the Group announced on 5 May 2009
that an agreement was reached with a third party to give them a
period of exclusive due diligence with a view to making a possible
offer for all or part of the Group's business or indeed the Group
itself. Whilst this party has provided the Group with loans that has
enabled the Group to lift the CVA and continue trading, the Company's
shares remain suspended until the ongoing discussions reach a
conclusion. The Directors and management are continuing to look at
all avenues for future funding arrangements or other strategic
options. These financial statements have been prepared on a going
concern basis as the Directors are confident that the Group will be
able to raise the required funds, but clearly there can be no
certainty of this given current market conditions. These conditions
indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going
concern. The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going concern.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
New standards and interpretations.
The IFRS financial information has been drawn up on the basis of
accounting policies consistent with those applied in the financial
statements for the year to 30 September 2007. The following
standards, interpretations and amendments to existing standards have
been adopted for the first time in 2008:
International Accounting Standards
(IAS/IFRS)
* IFRS7 - Financial Instruments: disclosures and a complementary
amendment to IAS1 - Presentation of Financial Statement - Capital
disclosures.
* IAS39 & IFRS7- Amendment - Reclassification of Financial
Instruments
International Financial Reporting Interpretations (IFRIC)
* IFRIC 11 - (IFRS 2) Group and treasury share transactions
* IFRIC 13 - Customer loyalty programmes
* IFRIC 14 - IAS 19 - The limit on a defined benefit asset, minimum
funding requirements and their interaction
IFRS 7 introduces new requirements aimed at improving the disclosure
of information about financial instruments. It requires the
disclosure of qualitative and quantitative information about exposure
to risks arising from financial instruments, including specified
minimum disclosures about credit risk, liquidity risk and market
risk. Where those risks are deemed to be material to the group it
requires disclosures based on the information used by key management.
It replaces the disclosure requirements in IAS 32 'Financial
Instruments: disclosure and presentation'. It is applicable to all
entities that report under IFRS.
The amendment to IAS 1 introduces disclosures about the level and
management of an entity's capital.
The Group has applied IFRS 7 and the amendment to IAS 1 to the
accounts for the period beginning on 1 October 2007.
The adoption of these standards, interpretations and amendments did
not affect the Group results of operations or financial positions.
The IASB and IFRIC have issued the following standards and
interpretations which are effective for reporting periods beginning
after the date of these financial statements:
International Accounting Standards
(IAS/IFRS)
* IAS 1 - Amendment - Presentation of financial statements: a
revised presentation
* IFRS 8 - Operating segments
* IAS 23 - Amendment - Borrowing costs
* IFRS 2 - Amendment - Share based payment: vesting conditions and
cancellations
* IAS 27* - Amendment - Consolidated and separate financial
statements
* IFRS 3* - Revised - Business combinations
* IFRS 1* - Revised - First time adoption of IFRS
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
* IAS32 & IAS1* - Amendment - Puttable financial instrument and
obligations arising on liquidation
* Improvements to IFRSs*
* IFRS1 & IAS27* - Amendment - Cost of an investment in a
subsidiary, jointly-controlled entity or associate
* IAS39* - Amendment - Financial Instruments: recognition and
measurement: eligible hedged Items
* IAS39* - Amendment -Reclassification of financial assets:
effective date and transition
* IFRS7* - Amendment - improving disclosures about financial
instruments
International Financial Reporting Interpretations
(IFRIC)
* IFRIC 12 Service concession arrangements
* IFRIC 15 * Agreements for the construction of real estate
* IFRIC 16 * Hedges of a net investment in a foreign operation
* IFRIC 17 * Distributions of non-cash assets to owners
* IFRIC 18 * Transfers of assets from customers
* These have not been endorsed by the EU.
The group is evaluating the impact of the above pronouncements but
they are not expected to be material to the Group's earnings or to
shareholders' funds.
Basis of Consolidation
Where the Company has the power, either directly or indirectly, to
govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Company and its subsidiaries ("the Group")
as if they formed a single entity. Intercompany transactions and
balances between Group companies are therefore eliminated in
full.
Business combinations
The consolidated financial statements incorporate the results of the
business combinations using the acquisition method of accounting.
In the consolidated balance sheet, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values he acquisition date. The results of
acquired operations are included in the consolidated income statement
from the date on which control is
obtained.
Associates
Where the Group has the power to participate in (but not control) the
financial and operating policy decisions of another entity, it is
classified as an associate. Associates are initially recognised in
the consolidated balance sheet at cost. The Group's share of
post-acquisition profits and losses is recognised in the consolidated
income statement.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Profits and losses arising on transactions between the Group and its
associates are recognised only to the extent of unrelated investors'
interests in the associate. The investor's share in the associate's
profits and losses resulting from these transactions is eliminated
against the carrying value of the
associate.
Joint ventures
Jointly controlled entities are included in the financial statements
using proportionate consolidation. The share of each of the jointly
controlled entity's assets, liabilities, income and expenses are
combined on a line-by-line basis with those of the Group.
Profits and losses arising on transactions between the Group and
jointly controlled entities are recognised only to the extent of
unrelated investors' interests in the entity. The investor's share in
the jointly controlled entity's profits and losses resulting from
these transactions is eliminated against the asset or liability of
the JCE arising on the transaction.
Foreign currency
Transactions entered into by Group entities in a currency other than
the currency of the primary economic environment in which it operates
(the "functional currency") are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and liabilities
are translated at the rates ruling at the balance sheet date.
Exchange differences arising on the retranslation of unsettled
monetary assets and liabilities are similarly recognized immediately
in the income statement.
On consolidation, the results of overseas operations are translated
into sterling at rates approximating to those when the transactions
took place. All assets and liabilities of overseas operations,
including any goodwill arising on the acquisition of those
operations, are translated at the rate ruling at the balance sheet
date.
Exchange differences arising on translating the opening net assets at
opening rate and the results of overseas operations at actual rate
are recognized directly in equity (the "foreign currency translation
reserve"). Exchange differences recognized in the income statement of
Group entities' separate financial statements on the translation of
long-term monetary items forming part of the Group's net investment
in the overseas operation concerned are reclassified to the foreign
currency translation reserve.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign currency translation reserve
relating to that operation up to the date of disposal are transferred
to the income statement as part of the profit or loss on disposal.
The Group uses Sterling as its presentation currency as this is
considered to be the functional currency of the parent
Company.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Shares to be issued
Where the Group has a legal obligation to issue a fixed number of
shares at year end but has not yet issued the shares, the amount of
the share capital and premium attributable to the shares to be issued
is recognised as a separate component of equity in a shares to be
issued reserve.
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held for
sale when:
* they are available for immediate sale;
* management is committed to a plan to sell;
* it is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn;
* an active programme to locate a buyer has been initiated;
* the asset or disposal group is being marketed at a reasonable
price in relation to its fair value; and
* a sale is expected to complete within 12 months from the date of
classification.
Non-current assets and disposal groups classified as held for sale
are measured at the lower of:
* their carrying amount immediately prior to being classified as
held for sale in accordance with the group's accounting policy;
and
* fair value less costs to sell.
Following their classification as held for sale, non-current assets
(including those in a disposal group) are not depreciated. The
results of operations disposed during the year are included in the
consolidated income statement up to the date of disposal. A
discontinued operation is a component of the Group's business that
represents a separate major line of business or geographical area of
operations or its subsidiary acquired exclusively with a view to
resale, that has been disposed of, has been abandoned or that meets
the criteria to be classified as held for sale.
Discontinued operations are presented in the income statement
(including the comparative period) as a single line which comprises
the post tax profit or loss of the discontinued operation and the
post-tax gain or loss recognised on the re-measurement to fair value
less costs to sell or on disposal of the assets/disposal groups
constituting discontinued operations.
Revenue
Revenue is derived from drilling services to third party customers
and sales of platinum concentrate. Sales of platinum concentrate are
recognised at the time of delivery of the product to the purchaser.
Revenue is measured at the fair value of the consideration received,
excluding discounts, rebates and other sales tax or duty.
Share-based payments
Where share options are awarded to employees, the fair value of the
options at the date of grant is charged to the income statement on a
straight-line basis over the vesting
period.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Non-market vesting conditions are taken into account by adjusting the
number of equity instruments expected to vest at each balance sheet
date so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually
vest. Market vesting conditions are factored into the fair value of
the options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they
vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to the
income statement over the remaining vesting
period.
The expense recognised for share option awards that lapse or are
cancelled before vesting except where they carry market vesting
conditions is accelerated into the period in which the lapse or
cancellation occurs.
Where equity instruments are granted to persons other than employees,
the income statement is charged with the fair value of goods and
services received.
Tax
Income tax on the profit or loss from ordinary activities includes
current and deferred tax.
Current tax is based on the profit or loss from ordinary activities
adjusted for items that are non-assessable and is calculated using
tax rates that have been enacted or substantively enacted by the
balance sheet date.
Deferred tax assets and liabilities are recognised where the carrying
amount of an asset or liability in the balance sheet differs to its
tax base, except for differences arising on the initial recognition
of goodwill, for which amortisation is not tax deductible, the
initial recognition of an asset or liability in a transaction which
is not a business combination and at the time of the transaction
affects neither accounting or taxable profit, investments in
subsidiaries and jointly controlled entities where the Group is able
to control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those instances
where it is probable that taxable profit will be available against
which the difference can be utilised. The amount of the asset or
liability is determined using tax rates that have been enacted or
substantially enacted by the balance sheet date and are expected to
apply when the deferred tax liabilities/ (assets) are settled/
(recovered).
Deferred tax assets and liabilities are offset when the Group has a
legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either the same taxable
Group Company or different Group entities which intend either to
settle current tax assets and liabilities on a net basis or to
realise the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets or
liabilities are expected to be settled or recovered.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Intangible assets - Deferred exploration expenditure
The Group applies the full cost method of accounting, having regard
to the requirements of IFRS 6 'Exploration for and Evaluation of
Mineral Resources'. Under the full cost method of accounting, all
costs associated with exploration for and evaluation of mining are
capitalised in geographical pools pending determination of the
feasibility of each project. Such cost pools are based on geographic
areas and are not larger than a segment.
Costs which are capitalised include costs of licence acquisition,
technical services and studies, exploration drilling and testing and
appropriate technical and administrative expenses but do not include
general overheads or costs incurred prior to having obtained the
legal rights to explore an area, which are expensed directly to the
income statement as they occur.
When the technical and commercial feasibility of a mining project has
been determined, the related expenditures will be transferred to
property, plant and equipment as proved properties. Where a licence
is relinquished, a project is abandoned, or is considered to be of no
further commercial value to the Company, the related costs will be
written off to the income statement and is shown within
administrative expenses.
Deferred exploration costs are assessed at each period end and where
there are indications of impairment. Any amount by which carrying
costs exceed recoverable amounts will be written off. The
recoverability of deferred exploration costs is dependent upon the
discovery of economically recoverable reserves, the ability of the
Group to obtain necessary financing to complete the development of
reserves and future profitable production or proceeds from the
disposition of recoverable reserves.
The deferred exploration assets are considered to have a finite life
based on relevant reserves. The assets will be depreciated on a unit
of production basis following the transfer and the respective
depreciation will be included with in operating costs within the
income statement.
Goodwill
Goodwill represents the excess of the cost of a business combination
over the interest in the fair value of identifiable assets,
liabilities and contingent liabilities acquired. Cost comprises the
fair values of assets given, liabilities assumed and equity
instruments issued, plus any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any impairment in
carrying value being charged to the consolidated income statement.
Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to the consolidated income statement
on the acquisition date. Goodwill is tested for impairment at year
end or when any such indication exists.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Property, plant and equipment
Depletion, depreciation and amortisation of proved mining properties
is provided over the estimated commercial life of each property and
computed using the units of production method based on proved
reserves as determined annually by management. Depletion,
depreciation and amortisation are included within operating expenses
within the income statement.
Items of property, plant and equipment are initially recognised at
cost. As well as the purchase price, cost includes directly
attributable costs and the estimated present value of any future
costs of dismantling and removing items. The corresponding liability
is recognised within provisions. Depreciation is provided on all
items of property and equipment to write off the carrying value of
items over their expected useful economic lives. It is applied at the
following rates:
Freehold property 50 years
Motor vehicles 4 years
Furniture, fixtures and fittings 4 years
Plant and equipment 4 years
Freehold land is not depreciated.
Impairment of property, plant and equipment
Property, plant and equipment are subject to impairment tests
whenever events or changes in circumstances indicate that their
carrying amount may not be recoverable. Where the carrying value of
an asset exceeds its recoverable amount (i.e. the higher of value in
use and fair value less costs to sell), the asset is written down
accordingly. Where it is not possible to estimate the recoverable
amount of an individual asset, the impairment test is carried out on
the asset's cash-generating unit (i.e. the lowest Group of assets in
which the asset belongs for which there are separately identifiable
cash flows).
Any impairment charge is included in the administrative expenses line
item in the income statement, except to the extent they reverse gains
previously recognised in the statement of recognised income and
expense.
Inventories
Inventories are initially recognised at cost, and subsequently at the
lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing
the inventories to their present location and condition. Weighted
average cost is used to determine the cost of ordinarily
interchangeable items.
Provision for abandonment costs
Provision for abandonment costs are recognised at the commencement of
production. The amount recognised is the present value of the
estimated future expenditure determined in accordance with local
conditions and requirements. A corresponding tangible fixed asset of
an amount equivalent to the provision is also created. This is
subsequently depreciated as part of the capital costs of production.
Any change in the present value of the estimated expenditure is
reflected as an adjustment to the provision and the fixed
assets.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Financial Assets
The Group classifies its financial assets into one of the following
categories, depending on the purpose for which the asset was
acquired. The Group's accounting policy for each category is as
follows:
Loans and receivables: These assets are non-derivative financial
assets with fixed or determinable payments that are not quoted in an
active market. They incorporate various types of contractual monetary
assets, such as advances made to affiliated entities and the
provision of good and services to customers which give rise to trade
receivables. They are initially recognised at fair value plus
transaction costs that are directly attributable to the acquisition
or issue and subsequently carried at amortised cost using the
effective interest method. Trade receivables are not discounted where
payment is not deferred significantly.
Cash and cash equivalents
Cash comprises bank and cash deposits at variable interest rates. Any
interest earned is accrued monthly and classified as interest income.
Cash equivalents comprise short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Available for sale: Non-derivative financial assets not included in
the above category are classified as available-for-sale and comprise
principally the Group's strategic investments in entities not
qualifying as subsidiaries, associates or jointly controlled
entities. They are carried at fair value with changes in fair value
recognised directly in a separate component of equity (revaluation
reserve). Where there is a significant or prolonged decline in the
fair value of an available for sale financial asset (which
constitutes objective evidence of impairment), the full amount of the
impairment, including any amount previously charged to equity, is
recognised in the income statement. Purchases and sales of available
for sale financial assets are recognised on settlement date with any
change in fair value between trade date and settlement date being
recognised in the available for sale reserve. On sale, the amount
held in the available for sale reserve associated with that asset is
removed from equity and recognised in the income statement.
An option that gives the counterparty a right to buy a fixed number
of the Group's shares for a fixed price is treated as an equity
instrument. This includes options acquired by the Group to acquire
its own shares. Any purchased option to acquire the Group's own
shares is accounted for as a deduction directly from equity
Financial liabilities
Financial liabilities held at amortised cost:
Borrowings are initially recognised at fair value net of any
transaction costs directly attributable to issue. Such interest
bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest
expense over the period to repayment is at a constant rate on the
balance of the liability carried in the balance sheet.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Trade payables and other short-term monetary liabilities, which are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method. Trade payables
are not discounted where payment is not deferred significantly.
Leased Assets
Where assets are financed by leasing agreements that do not give
rights approximating ownership, these are treated as operating
leases. The annual rentals are charged to the income statement on a
straight line basis over the term of the
lease.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on
historical experiences and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may deviate from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial
year are as follows:
Fair value of exploration and appraisal assets
The fair value of exploration and appraisal assets was based on
Competent Person's Reports, further discounted to reflect future
risks such as higher interest rates, smaller than expected reserves
and variation to other critical assumptions. While conducting an
impairment review of its assets, the Group makes certain judgements
in making assumptions about the future prices, reserve levels, and
future development and production costs. Changes in the estimates
used can result in significant charges to the income statement.
Recoverability of exploration and evaluation costs
Under the full cost method of accounting for exploration and
appraisal costs, such costs are capitalised as intangible assets by
reference to appropriate cost pools, and are assessed for impairment
when circumstances suggest that the carrying amount may exceed its
recoverable value. This assessment involves judgement as to (i) the
likely future commerciality of the asset and when such commerciality
should be determined, and (ii) future revenues and costs pertaining
to any wider cost pool with which the asset in question is
associated, and the discount rate to be applied to such revenues and
costs for the purpose of deriving a recoverable
value.
Legal proceedings and commercial disputes
In accordance with IFRS, the Group only recognises a provision where
there is a present obligation from a past event, a transfer of
economic benefit is probable and the amount of cost of the transfer
can be estimated reliably. In instances where the criteria are not
met, a contingent liability may be disclosed in the notes to the
financial statements. Realisation of any contingent liabilities not
currently recognised or disclosed in the financial statements could
have a material effect on the Group's financial position.
Application of this accounting principle requires the management to
make determinations about various factual and legal matters beyond
their control. Among the factors considered in making decisions on
provisions are the nature of the disputes and litigations, the
progress of the cases, the opinions of legal advisers, experience of
similar cases and any decision of the Group's management as to how it
will respond to any such claim or litigation.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Inherent uncertainties in tax legislation
The tax system and tax legislation in Ethiopia have been in force for
only a relatively short time and are subject to changes and varying
interpretations. Any changes or developments to the tax system and
tax legislation could have a material adverse effect on the Group's
financial position and results of operations. Such uncertainties may
in particular relate to the determination of taxable bases on the
Group's assets and liabilities.
Currently the Group believes that no deferred tax arises on its
assets or liabilities. However, due to the reasons set out above, the
risk remains that the relevant Government authorities may make
changes to the interpretation of contractual provisions or tax
legislation. The resulting effect of this matter is that significant
tax adjustments or liabilities may arise. However, due to the
uncertainties described above in assessing any adjustments or
potential additional tax liabilities, it is not practicable for the
Directors to estimate the financial effect, if any, for the
Group.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
2 Segmental analysis
The Group operated in three business segments, the exploration and
development of gold and platinum projects in Africa (Ethiopia and
Sierra Leone), the provision of geotechnical drilling services to
other exploration companies in the Kyrgyz Republic, which ceased on
the sale of the company in early 2009, and the import, processing and
sale of precious and base metals in the UK. Ethiopia is the Group's
major focus area. The Group holds licences in Sierra Leone, which are
being managed by the joint venture partners and of which the only
costs incurred to date are in respect of licence fees, which are
recognised in deferred exploration expenditure in the balance sheet.
The Group's primary format for reporting segmental information is
geographic
segments.
Kyrgyz
2008 Ethiopia Rep. UK Corporate Total
£ £ £ £ £
Revenue Total
segment
revenue 52,778 350,101 52,778 43,442
Inter
segment
revenue (52,778) - - -
Revenue Continuing
activities - - 52,778 43,442 96,220
Discontinued
activities - 350,101 - - 350,101
Profit / Continuing
(loss) after activities
taxation (242,775) - 10,406 (946,750) (1,179,119)
Discontinued
activities - (71,894) - - (71,894)
Total assets 4,005,757 1,016,485 136,220 723,898 5,882,360
Total
liabilities (80,659) (735,972) - (202,874) (1,019,505)
Other segment items
included in the group
statements are as
follows:
Capital
Expenditure 959,611 - - 1,754 961,365
Depreciation (81,663) - - (36,289) (117,952)
Impairment
of assets (47,133) (476,101) - - (523,234)
Share based
payments - - - (25,848) (25,848)
Restated
2007 - Kyrgyz
Restated Ethiopia Rep. UK Corporate Total
£ £ £ £ £
Revenue Total
segment
revenue 56,633 600,058 56,633 -
Inter
segment
revenue (56,633) - - -
Revenue Continuing
activities - - 56,633 - 56,633
Discontinued
activities - 600,058 - - 600,058
Profit / Continuing
(Loss) after activities
taxation (226,696) - (35,157) (162,655) (424,508)
Discontinued
activities - 164,202 - - 164,202
Total assets 3,061,189 1,152,215 5,066 1,741,238 5,959,708
Total
liabilities (43,853) (36,389) (43,233) (506,075) (629,550)
Other segment items included in the group statements are as follows:
Capital
Expenditure 831,086 - - 1,545 832,631
Depreciation (37,077) (12,485) - (26,195) (75,757)
Impairment
of assets 79,610 - - - 79,610
Share based
payments - - - (21,882) (21,882)
Segment assets comprise intangible assets, property, plant and
equipment, inventories, cash and cash equivalents, assets held for
sale, trade and other receivables as well as prepayments and
receivable from shares to be issued.
Segment liabilities comprise trade and other payables, loans,
liabilities directly associated with assets held for sale as well as
accruals and deferred income.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
The Group's secondary reporting format for reporting segment information is
business segments.
2008 Import
Exploration Drilling and sale Corporate Total
£ £ £ £ £
Revenue Total
segment
revenue 52,778 350,101 52,778 43,442
Inter
segment
revenue (52,778) - - -
Revenue Continuing
activities - - 52,778 43,442 96,220
Discontinued
activities - 350,101 - - 350,101
Profit / Continuing
(loss) after activities
taxation (242,775) - 10,406 (946,750) (1,179,119)
Discontinued
activities - (71,894) - - (71,894)
Total assets 4,005,757 1,016,485 136,220 723,898 5,882,360
Total
liabilities (80,659) (735,972) - (202,874) (1,019,505)
Other segment items included in the group statements are as follows:
Capital
Expenditure 959,611 - - 1,754 961,365
Depreciation (81,663) - - (36,289) (117,952)
Impairment
of assets (47,133) (476,101) - - (523,234)
Share based
payments - - - (25,848) (25,848)
Restated
2007 - Import
Restated Exploration Drilling and sale Corporate Total
£ £ £ £ £
Revenue Total
segment
revenue 56,633 600,058 56,633 -
Inter
segment
revenue (56,633) - - -
Revenue Continuing
activities - - 56,633 - 56,633
Discontinued
activities - 600,058 - - 600,058
Profit / Continuing
(Loss) after activities
taxation (226,696) - (35,157) (162,655) (424,508)
Discontinued
activities - 164,202 - - 164,202
Total assets 3,061,189 1,152,215 5,066 1,741,238 5,959,708
Total
liabilities (43,853) (36,389) (43,233) (506,075) (629,550)
Other segment items included in the group statements are as follows:
Capital
Expenditure 831,086 - - 1,545 832,631
Depreciation (37,077) (12,485) - (26,195) (75,757)
Impairment
of assets 79,610 - - - 79,610
Share based
payments - - - (21,882) (21,882)
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
3 Discontinued activities
During the year the Group sold Palladex KR LLC, which held its
exploration activities in the Kyrgyz Republic, following
the discontinuation of exploration activities in 2007. The Group also
entered into a Sale and Purchase Agreement in January 2009 for the
disposal of the wholly owned subsidiary Palladex Limited (Samoa),
refer to note 24. Accordingly the income, expenses, assets and
liabilities relating to these assets have been reclassified and shown
as discontinued. The following table details the impact on the income
statement and balance sheet of the reclassification.
Restated
2008 2007
Income statement £ £
Revenue 350,101 600,058
Cost of Sales (410,413) (348,009)
Administrative expenses (135,990) (84,772)
Loss on measurement to fair value of
discontinued activities (476,101) -
Gain on Sale of Palladex KR LLC 586,329 -
(Loss) / profit before taxation (86,074) 167,277
Taxation 14,180 (3,075)
(Loss) / profit before and after taxation (71,894) 164,202
Basic earnings/(loss) per share (pence) (0.0006) 0.0022
Diluted earnings/(loss) per share (pence) (0.0006) 0.0020
Restated
2008 2007
Balance sheet £ £
Deferred exploration expenditure 97,140 390,229
Property, plant and equipment 137,470 -
Inventories 167,231 -
Trade and other receivables 524,992 22,255
Cash and cash equivalents 89,652 -
Total assets 1,016,485 412,484
Trade and other payables (735,972) (11,701)
Total liabilities (735,972) (11,701)
The gain on sale of Palladex KR LLC was
determined as follows:
£
Consideration received 998,813
Net assets disposed
Deferred exploration expenditure 390,229
Trade and other receivables 22,255
Net assets disposed 412,484
Gain on disposal 586,329
Cash flows from discontinued activities 2008 2007
£ £
Cash flow from operating activities 328,801 85,957
Cash flow from investing activities 909,161 (114,195)
Cash flow from financing activities - -
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
4 Loss from operations
Year ended Year ended
30 September 30 September
2008 2007
£ £
Loss from operations has been arrived at
after charging:
Fees payable to the Company's Auditor for
the audit of the Company's annual
accounts 7,800 51,750
Fees payable to the Company's Auditor for
the audit of the Groups's annual
accounts 31,200 -
Fees payable to the Company's Auditor for
services relating to corporate
finance transactions entered into or
proposed to be entered into by or on behalf
of the Company or any of its Associates - 67,600
Fees payable to the Company's Auditor for
tax compliance services 5,500 5,300
Fees payable to the Company's Auditor for
valuation services 10,000 -
Directors' remuneration 91,580 267,339
Employee salaries and other benefits 245,501 99,042
Share based payments 25,848 21,882
Costs relating to corporate finance
transactions entered into by the Company
including AIM readmission costs - 266,596
Impairment loss on measurement to fair
value of discontinued activities 476,101 -
Provision against deferred exploration
expenditure in Ethiopia 47,133 79,610
Depreciation and amortisation 117,952 75,757
Operating lease rentals - land and building 74,609 15,055
Other income:
Sale of Saddleback Corporation Limited
shares - 955,200
Miscellaneous Income - 7,860
5 Salaries
Year ended 30 Year ended 30
September 2008 September 2007
Total Total
£ £
Gross salaries and fees (including
directors) 326,788 349,589
Employee Benefits and social security
costs 10,563 16,792
Share based payments 25,848 21,882
363,199 388,263
Average number of employees (including
directors) during the year 102 50
Included within share based payments is £27,068 (2007: £19,862)
relating to directors, £6,187 (2007: £2,020) relating to employees,
and £7,407 (2007: £nil) previously charged to the income statement
and reversed within the current year upon employee resignation.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Directors' emoluments
Share
Based Year Ended Year Ended
Option September September
Salary Fees Expense 2008 2007
£ £ £ £ £
A Daley - 26,562 7,734 34,296 9,119
S Village (resigned
20/12/06) - - - - 3,167
T Ward 9,919 - 11,600 21,519 24,612
M Marr-Johnson (resigned
1/1/08) 20,000 - - 20,000 112,191
R Jaboev (resigned
1/6/07) - - - - 100,089
J M Bottomley - 10,000 3,867 13,867 13,985
J O'Leary (resigned
10/7/07) - - - - 14,294
R W J Edwards (resigned
21/4/08) - 9,634 - 9,634 18,450
R Clegg - 15,735 3,867 19,602 5,641
29,919 61,931 27,068 118,918 301,548
The highest paid director was paid £34,296 (2007: £112,191) in the
year.
The Company provides limited Directors & Officers Liability
Insurance, at a cost of approximately £13,521 (2007:
£13,591).
During the year the Group paid £103,843 (2007: £Nil) to Ward
International Consultants Pty Ltd in connection with management
services provided to the Group by T Ward who is an employee of that
firm.
In 2008 and 2007 key management personnel is considered to be
directors only.
6 Financial income and expenses
Year ended
Year ended 30 September
30 September 2008 2007
£ £
Financial expenses
Interest payable on borrowings (30,856) (9,437)
Financial income
Interest receivable from bank deposit 24,120 62,657
Net financial (expense)/income
recognised in income statement (6,736) 53,220
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
7 Taxation
The tax assessed for the year is different to the standard rate of
corporation tax in the UK.
The differences are explained below:
2008 2007
£ £
Current tax expense
Income tax of overseas operations on
profits for the year - (12,165)
Adjustment for over provision in prior
periods 11,105 -
Deferred tax expense
Origination and reversal of temporary
differences - (3,075)
Income tax credit from discontinued
operations 3,075 -
Total tax credit / (expense) 14,180 (15,240)
Analysed between:
Total tax credit / (expense) from
continuing activities - 12,165
Total tax credit / (expense) from
discontinued activities 14,180 (3,075)
The reasons for the difference between the actual tax charge for the
year and the standard rate of
corporation tax in the United Kingdom applied to losses for the year
are as follows:
Restated
Tax Expense 2008 2007
£ £
Group loss for the year (1,251,013) (260,306)
Expected tax charge based on the
standard rate of
Corporation tax in the UK of 29% (2007 -
30%) (362,794) (78,092)
Expenses not deductible for tax purposes 8,416 27,110
Income not subject to tax - (286,560)
Temporary difference on fixed assets 71,316 19,647
Losses in year not relieved against
current tax 122,737 318,986
Different tax rates applied in overseas
jurisdictions 160,325 11,074
Deferred tax (credit) / expenses (3,075) 3,075
Over provision in prior period (11,105) -
Total tax (credit) / expense (14,180) 15,240
The rate of UK corporation tax changed from 30% to 28% with effect
from 1 April 2008. The average rate applicable rate for the period is
therefore 29% (2007: 30%).
Factors that may affect future tax charges
At 30 September 2008, the Company had UK tax losses of £2,970,282
(2007: £1,230,457) carried forward which will be utilised against
future profits. However these losses are only recoverable against
future profits, the timing of which is uncertain and as a as a result
no deferred tax asset is being recognised in relation to these
losses. Tax losses can be carried forward and applied against future
profits when they are realised.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
The total of unprovided deferred tax assets which have not been
provided in the financial statements amount to £831,678 (2007:
£648,929), of which £831,678 (2007: £608,304) relates to unprovided
losses. Due to current market conditions the exercise price of the
options in existence at the balance sheet date exceeded the market
value of the company's shares at that date. Accordingly, the
unrecognised deferred tax asset on these options at 30 September 2008
is reduced to £nil in the current year (2007: £40,625).
8 Loss per share
Loss per Ordinary Share has been calculated using the weighted
average number of shares in issue during the relevant financial
periods. The weighted average number of equity shares in issue for
the period is 111,742,960 (2007: 74,242,960).
Losses for the Group attributable to the equity holders of the
Company for the year are £1,155,148 (2007: £240,165). Losses for the
Group from continuing operations excluding minority interest are
£1,083,254 (2007: £404,367). In 2008 and 2007, the effect of the
share options in issue under the option schemes are anti-dilutive and
therefore diluted earnings per share has not been calculated. See
note 16 for further details of share options in issue. As the average
market price of ordinary shares during the period was lower than the
exercise price of the options, there were nil (2007: nil) potentially
dilutive shares at year end.
Losses for the Group attributable to discontinued activities for the
year are £71,894 (2007: Profit of £164,202). In 2008 the effect of
the share options in issue under the share option schemes are
anti-dilutive and therefore diluted earnings per share has not been
calculated. See note 16 for further details of share options in
issue. In 2007, the denominator used in the calculation of diluted
earnings per share was 111,742,960 (2007:
80,742,960).
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
9 Intangible assets
Deferred
exploration Restated
expenditure Goodwill Total
£ £ £
Cost
At 1 October 2006 1,179,050 - 1,179,050
Additions 540,565 - 540,565
Acquisitions 2,331,330 229,439 2,560,769
Transferred to assets held for sale (750,000) - (750,000)
At 30 September 2007 3,300,945 229,439 3,530,384
At 1 October 2007 3,300,945 229,439 3,530,384
Additions 869,961 - 869,961
Transferred to assets held for sale (403,617) - (403,617)
Effect of foreign exchange movements (258,903) - (258,903)
At 30 September 2008 3,508,386 229,439 3,737,825
Amortisation
At 1 October 2006 429,050 - 429,050
Provision for impairment 79,610 - 79,610
Transferred to assets held for sale (359,771) - (359,771)
At 30 September 2007 148,889 - 148,889
At 1 October 2007 148,889 - 148,889
Provision for impairment 309,764 - 309,764
Transferred to assets held for sale (306,477) - (306,477)
Effect of foreign exchange movements (25,433) - (25,433)
At 30 September 2008 126,743 - 126,743
Net book value
At 30 September 2006 750,000 - 750,000
At 30 September 2007 3,152,056 229,439 3,381,495
At 30 September 2008 3,381,643 229,439 3,611,082
The impairment of deferred exploration costs relates to the Tulu
Dimtu exploration area for which the licence has been relinquished
post year end and a provision against costs relating to the Kyrgystan
asset to write the carrying values down to their fair value less cost
to sell.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
2008 Deferred exploration by region
Sierra Leone Ethiopia Kyrgyzstan Total
£ £ £ £
Cost 33,288 2,838,607 1,179,050 4,050,945
Additions during the year - 869,961 - 869,961
Total accumulated
provision for impairment - (126,743) (691,681) (818,424)
Total accumulated
transfers to assets held
for sale - - (487,369) (487,369)
Effect of foreign
exchange movements - (233,470) - (233,470)
Net book value 33,288 3,348,355 - 3,381,643
2007 Deferred exploration
by region
Sierra Leone Ethiopia Kyrgyzstan Restated
Total
£ £ £ £
Cost - - 1,179,050 1,179,050
Acquisitions during the
year - 2,331,330 - 2,331,330
Additions during the year 33,288 507,277 - 540,565
Total accumulated
provision for impairment - (79,610) (429,050) (508,660)
Total accumulated
transfers to assets held
for sale - - (390,229) (390,229)
Net book value 33,288 2,758,997 359,771 3,152,056
Goodwill is allocated to the cash generating unit in respect of
Ethiopian Resources Limited ("ERL"), which was formed to organise the
importation of the platinum concentrate and gold dore from Ethiopia
to the UK, the refining of the platinum concentrate and gold dore,
as well as the sale of the refined platinum and other precious
metals, from both Yubdo and future Group operations. The carrying
value of ERL is based on value in use as it will be recovered
through the current production levels of 130 Oz of platinum per year
and the estimated potential future increase in platinum production at
Yubdo as well as the potential gold output of the Tulu Kapi and
surrounding exploration areas.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
10 Property, plant and equipment
Plant & Motor Freehold Fixtures, Total
Equipment Vehicles Property Furnitures
& Fittings
£ £ £ £ £
Cost
At 1 October 2006 395,105 44,454 8,655 27,862 476,076
Additions 213,590 52,899 - 25,577 292,066
Acquisitions 1,347 - - - 1,347
Disposals (133,733) - (1,509) (26,394) (161,636)
At 30 September 2007 476,309 97,353 7,146 27,045 607,853
At 1 October 2007 476,309 97,353 7,146 27,045 607,853
Additions 45,709 29,879 - 15,816 91,404
Disposals (169,814) (18,040) (4,885) - (192,739)
Transferred to
assets held for sale (105,917) (37,739) (2,261) (416) (146,333)
At 30 September 2008 246,287 71,453 - 42,445 360,185
Depreciation
At 1 October 2006 117,600 25,325 829 10,912 154,666
Charge for the year 68,868 6,889 - - 75,757
Disposals - - (355) (2,264) (2,619)
At 30 September 2007 186,468 32,214 474 8,648 227,804
At 1 October 2007 186,468 32,214 474 8,648 227,804
Charge for the year 98,378 14,835 98 4,641 117,952
Disposals (169,636) (18,040) (478) - (188,154)
Transferred to
assets held for sale (3,276) (5,476) (94) (17) (8,863)
At 30 September 2008 111,934 23,533 - 13,272 148,739
Net book value
At 30 September 2006 277,505 19,129 7,826 16,950 321,410
At 30 September 2007 289,841 65,139 6,672 18,397 380,049
At 30 September 2008 134,353 47,920 - 29,173 211,446
11 Available for sale investments
2008 2007
£ £
Cost
At 1 October - 720,000
Revaluation - -
Disposals - (720,000)
At 30 September - -
In 2007 the Group disposed of the 2,400,000 shares in Sadddleback
Corporation Limited during the year for £955,200, which is equal to
the profit included in other income.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
12 Inventories
2008 2007
At cost: £ £
Stock of Concentrate 53,378 27,775
Materials and supplies - 19,643
Total 53,378 47,418
Inventory recognised as an expense during the year. 43,746 155,360
There are no material differences between the carrying values of
inventories and their net realisable value.
13 Trade and other receivables
2008 2007
£ £
Trade receivables 103,750 117,058
Other receivables 60,394 203,641
Receivable from shares to be issued 607,500 -
Amounts due from employees 3,586 19,382
Prepayments 33,485 36,284
808,715 376,365
Included within other receivables in 2007 are amounts relating to
recoverable VAT and amounts in respect of expenditure on future
projects. All amounts shown under receivables fall due for payment
within one year.
14 Deferred Taxation
2008 2007
£ £
Balance bought forward 1 October (3,075) -
(Charge) / credit for the year (see note 7) - (3,075)
Disposal 3,075 -
Balance carried forward 30 September - (3,075)
Deferred taxation relates to temporary differences on plant and
equipment. The assets have been disposed of as part of the sale of
Palladex Limited.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
15 Liabilities
Current Liabilities: Amounts falling due within one
year 2008 2007
£ £
Trade payables 183,833 88,070
Accruals and deferred income 99,700 186,375
Loans - 334,480
283,533 608,925
In September 2008, the company agreed to repay the £334,480 loan by
issuing 13,379,200 Ordinary Shares at 2.5p per share. The amount is
reflected in shares to be issued reserve at 30 September
2008.
16 Share Capital
Allotted, called up and fully paid Ordinary shares of 2.5p each
Number £
At 1 October 2006 61,742,960 1,543,574
Additions 50,000,000 1,250,000
At 30 September 2007
and 2008 111,742,960 2,793,574
Allotted, Share Share
Authorised called capital premium
up and fully
Ordinary Shares paid
Ordinary
of 2.5p each Shares
of 2.5p each
Number Number £ £
At 1 October 2007 200,000,000 111,742,960 2,793,574 4,290,765
At 30 September 2008 400,000,000 111,742,960 2,793,574 4,181,465
On 2 October 2008, 39,749,200 shares were issued at 2.5p, total value
of £993,730. Refer to note 24 for further details.
On 23 October 2008, 2,802,298 shares were issued at 4.25p in
accordance with the conditions of the agreement entered into in March
2008 to acquire a further 22% of Yubdo Platinum and Gold Development
Private Limited Company.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Share based options scheme
At 30 September 2007, the following share options were outstanding in
respect of the ordinary shares:
Exercise Number of
Price options
Final
Outstanding Granted Lapsed / Outstanding Exercise
at 1 during expired at Date
during the
October 2006 the year year 30 September
2007
20p 6,856,865 - (6,856,865) - January 2009
6.5p - 6,500,000 - 6,500,000 July 2010
6,856,865 6,500,000 (6,856,865) 6,500,000
At 30 September 2008, the following share options were outstanding in
respect of the ordinary shares:
Exercise Number of
Price options
Final
Outstanding Granted Lapsed / Outstanding Exercise
at 1 during expired at Date
during the
October 2006 the year year 30 September
2007
20p 6,856,865 - (6,856,865) - January 2009
6.5p - 6,500,000 - 6,500,000 July 2010
6,856,865 6,500,000 (6,856,865) 6,500,000
The weighted average exercise price of share options was 6.5p at 30
September 2008 and 6.5p at 30 September 2007. The weighted average
remaining contractual life of options outstanding at the end of the
year was 1 years 10 months (2007: 2 years 9 months).
The weighted average fair value of each option granted during the
year was £nil (2007: 0.7p).
In order to motivate the Group's Directors and employees, the Group
has adopted an unapproved share option scheme. Directors and
employees who were granted the options above must remain in the
employment of the Group for 1 year before the options become fully
exercisable.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Fair Value of options
Inputs to the Valuation model:
The fair values of awards granted under the option schemes of prior
periods has been calculated using the Black Scholes pricing model
that takes into account factors specific to share incentive plans
such as the vesting periods of the Plan, the expected dividend yield
on the Company's shares and expected early exercise of share options.
The following table list the inputs to the model used to calculate
the fair values of the outstanding options. No new options were
granted in the year ended 30 September 2008.
Grant date 11 June 2007
Share price at date of grant (p) 4.12
Exercise price (p) 6.50
Volatility (%) 25.00
Option Life (Years) 3.00
Dividend yield (%) 0.00
Risk-free investment rate (%) 5.75
Fair value (p) 1.11
Volatility was based on the annualised volatility of the Company's
shares since its flotation on the AIM market. The charge to the
income statement for share based payments during the year was £25,848
(2007: £21,882).
Warrants
On 17 September 2008, the Group granted W.H.Ireland Limited a warrant
to subscribe for 600,000 ordinary shares in the company. The warrant
is exercisable at 2.5p per ordinary share at any time up to 2 October
2010.
A further 39,749,200 warrants were granted in October 2008, refer to
note 24 for details.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
17 Reserves
The following describes the nature and purpose of each reserve within
owners' equity
+-------------------------------------------------------------------+
| Reserve | Description and purpose |
|---------------------+---------------------------------------------|
| Share premium | Amount subscribed for share capital in |
| | excess of nominal value. |
|---------------------+---------------------------------------------|
| Revaluation reserve | Gains/losses arising on financial assets |
| | classified as available for |
| | sale. |
|---------------------+---------------------------------------------|
| Foreign currency | Gains/losses arising on retranslating the |
| translation | net assets of overseas |
| reserve | operations into sterling. |
|---------------------+---------------------------------------------|
| Retained losses | Cumulative net gains and losses recognised |
| | in the consolidated |
| | income statement. |
|---------------------+---------------------------------------------|
| Merger reserve | Reserve created on issue of shares for the |
| | acquisition of |
| | subsidiaries (see note 22 for further |
| | details). |
|---------------------+---------------------------------------------|
| Shares to be issued | Amount for shares that the company is |
| reserve | obligated to issue at year |
| | end. |
+-------------------------------------------------------------------+
18 Commitments
At 30 September 2008, the Group had committed £1,165,000 (2007:
£2,355,000) in operational and exploration expenditure for Ethiopian
exploration as per the licence agreements with the Ethiopian Ministry
of Mines and Energy. It is expected that these commitments will be
expensed by 31 March 2010.
The Directors are confident that the Group will be able to raise the
required funds to meet its commitments, and are looking at all
avenues for future funding arrangements or other strategic options.
But clearly there can be no certainty of this given current market
conditions. Refer to note 1 for further details on going concern.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
19 Financial Commitments
Minimum lease payments under non-cancellable operating leases are as
follows:
Land and Land and
Building Building
2008 2007
£ £
Not later than one year 72,600 15,000
72,600 15,000
20 Cash flow notes
2008 2007
£ £
Cash and Cash equivalents comprises:
Cash available on demand 181,254 364,459
Short term deposits - 997,438
181,254 1,361,897
Significant non-cash transactions are as follows:
2008 2007
Financing activities £ £
Shares to be issued for cash 607,500 -
Shares to be issued to repay loan 334,480 -
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
21 Financial instruments
Significant accounting policies
Details of the significant accounting policies in respect of
financial instruments are disclosed in note 1 to the financial
statements.
Principal financial instruments used by the Group from which
financial risk arises, are as follows:
Group 2008 2007
£ £
Loans and receivables at amortised Cost
Trade and other receivables (excluding prepayments) 775,230 340,081
Cash and cash equivalents 181,254 1,361,897
Financial Liabilities held at amortised cost
Trade and other payables 183,833 88,070
Borrowings - 340,329
Accruals and deferred income 99,700 186,375
Financial risk management
The board seeks to minimise its exposure to financial risk by
reviewing and agreeing policies for managing each financial risk and
monitoring them on a regular basis. No formal policies have been put
in place in order to hedge the Group's and Company's activities to
the exposure to currency risk or interest rate risk, however as the
Group enters commercial production this may be considered. No
derivatives or hedges were entered into during the period.
The Group is exposed through its operations to the following
financial risks:
* Credit risk
* Liquidity risk
* Interest rate risk
* Foreign currency risk
The policy for each of the above risks is described in more detail
below
Credit risk
The credit risk on liquid funds is limited because the counterparties
are banks with high credit-ratings assigned by international
credit-rating agencies. In the current economic environment, it is
the Group's policy to hold it's cash funds in different banks to
mitigate bank failure risk.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Trade and Other Receivables
The following table illustrates the concentrations of credit risk
within the Group as at the balance sheet date. The Group's trade and
other receivables in respect of not discharging its obligation in
respect of this. The group maximum exposure to credit risk is the
carrying value of receivables.
Total Current Over 30 Days
£ £ £
Trade receivables 103,750 103,750 -
Other receivables 60,394 60,394 -
Receivable from shares to be issued 607,500 607,500 -
Amounts due from employees 3,586 3,586 -
Liquidity risk
The liquidity risk of each of each Group entity is managed centrally
by the Group treasury function. The investment budgets and work plans
are set locally and agreed by the board annually in advance, enabling
the Group's cash requirements to be anticipated.
Maturity Analysis
2008 Total < 1 month 1-6 months 6-12 months
£ £ £ £
Trade payables 183,833 183,833 - -
Accruals and deferred income 99,700 99,700 - -
2007 Total < 1 month 1-6 months 6-12 months
£ £ £ £
Trade payables 88,070 88,070 - -
Accruals and deferred income 186,375 186,375 - -
Loans 334,480 - - 334,480
Interest Rate Risk
The group received £24,120 interest on its bank deposits. Cash is
primarily held in the UK. The average bank balance during the year
was £588,832, yielding an average interest rate of 4.10%. If the
interest rate had on average been 1% less at 3.10%, the interest
earned would have been reduced by £5,866. If it had been 1% higher at
5.10%, the interest earned would have been increased by £5,910.
The Group manages its interest rate risk associated with the Group
cash assets by ensuring that interest rates are as favourable as
possible, through the use of bank treasury deposits, whilst managing
the access the Group requires to the funds for working capital
purposes.
There is no material difference between the book value and fair value
of the Group's cash.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Foreign currency risk
The Group had seven overseas subsidiaries during the year, two of
which operate in Ethiopia and The Kyrgyz Republic and whose expenses
are mainly denominated in Birr and Som respectively. The other
overseas subsidiaries transactions are mainly denominated in US$.
Foreign exchange risk is inherent in the Group's activities and is
accepted as such.
The average rate between the British Pound to the Kyrgyz Som during
the year was Som 70.31 = £1. If this rate increased by 5% to 73.83,
the Group loss would have been reduced by £17,901. If the rate
reduced by 5% to 66.79 the Group's loss would have increased by
£17,901.
The average rate between the British Pound to the Ethiopian Birr
during the year was Birr 18.034 = £1. If this rate increased by 5 %
to 18.93, the Group loss would have been reduced by £9,258. If this
rate reduced by 5% to 17.132, the Group loss would have been
increased by £9,258.
At the year end the Group had a cash balance of £181,254 (2007
£1,361,897) which was made up as follows.
2008 2007
£ £
British Pounds 95,815 737,462
US Dollars - 559,468
Kyrgz Rep. Som - 58,523
Ethiopian Birr 85,439 6,444
181,254 1,361,897
On 2 October 2008 £607,500 was received from the issue of shares.
Refer to note 24 for further details.
Capital
The Group considers its capital to comprise its ordinary share
capital, share premium and accumulated retained earnings as its
capital reserves. In managing its capital, the Group's primary
objective is to ensure its continued ability to provide a consistent
return for its equity shareholders through capital growth. In order
to achieve this objective, the Group seeks to maintain a gearing
ratio that balances risk and returns at an acceptable level and also
to maintain a sufficient funding base to enable the Group to meet its
working capital and strategic investment needs. In making decisions
to adjust its capital structure to achieve these aims, either through
new share issues or the reduction of debt, the Group considers not
only its short-term position but also its long-term operational and
strategic objectives.
There have been no other significant changes to the Group's capital
management objectives, policies and processes in the year nor has
there been any change in what the Group considers to be its capital.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
22 Prior Period Acquisitions
On 9 July 2007 the Company acquired 100% of the voting equity
instruments in Ethiopian Resources Limited (ERL) and GPMC Limited
(GPMC). Costs of £334,196 were incurred in completing the
transaction.
ERL
In consideration for the acquisition of ERL the Company issued a
total of 5,500,000 Ordinary Shares valued at 4.5p each totalling
£247,500 (the fair value of the shares issued was determined by
reference to their quoted market price of 4.5p at the date of
acquisition).
Book value Fair value Fair
adjustments values
ERL £ £ £
Property, plant and equipment 1,347 - 1,347
Trade and other receivables 72,097 - 72,097
Cash and cash equivalents 13,499 - 13,499
Trade payables (68,882) - (68,882)
18,061 - 18,061
Consideration paid 247,500
Goodwill (see note 9) 229,439
The goodwill amount recognised is attributed to economic benefits to
be obtained from the refining and marketing by ERL of the Group's
current and future gold and platinum production. No impairment has
been made for the year based upon the Director's review of the
underlying Group exploration projects after giving consideration to
the estimated resources and project
economics.
GPMC
In consideration for the acquisition of GPMC the Company issued a
total of 44,500,000 Ordinary Shares of 4.5p each in the Company
totalling £2,002,500 (the fair value of the shares issued was
determined by reference to their quoted market price of 4.5p at the
date of acquisition).
Book value Fair value Restated
adjustments Fair values
GPMC £ £ £
Deferred exploration expenditure 3,767,741 (1,436,411) 2,331,330
Trade and other receivables 338,050 - 338,050
Trade payables (512,695) - (512,695)
3,593,096 (1,436,411) 2,156,685
Less Minority Interest (49% of
Yubdo) (154,185)
Net identified assets Acquired 2,002,500
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
As disclosed in last year's financial statements, the identifiable
net assets of GPMC acquired had only been determined on a provisional
basis as the directors were still in the process of attributing fair
values to the assets and liabilities acquired. Had the values been
finalised the 2007 financial statements would have differed to those
previously reported as follows:
* the cost of deferred exploration expenditure on acquisition would
have been £403,830 higher;
* trade and other receivables on acquisition would have been
£263,050 higher;
* trade payables on acquisition would have been £512,695 higher;
and
* minority interest on acquisition would have been £154,185 higher.
In accordance with IFRS 3 'Business Combinations', the comparatives
for 2007 have been restated to reflect the above adjustments.
The downward fair value adjustment made in the 2007 financial
statement was based upon the Director's review of the underlying
exploration projects after giving consideration to the estimated
resources and project economics.
GPMC holds a 51% investment in Yubdo Platinum and Gold Development
PLC ("YPGD"). Therefore a 49% minority interest in YPGD arises in the
Group on acquisition of GPMC.
The Group has taken advantage of section 131 of the Companies Act
1985 and taken the premium on shares issued in the acquisitions to
the merger reserve.
The loss attributable to ERL and GPMC since their acquisition date
and included within the Group loss for the year ended 30th September
2007 was £6,747 and £177,298 respectively.
If the results for ERL and GPMC had been included in the results of
the Group for the entire 2007 financial period the Group loss for the
year to 30 September 2007 would have been £ 725,347.
23 Related party transactions
During the year the Group paid £53,080 (2007: £36,953) to Sprecher
Grier Halberstam LLP in connection with professional services,
including those of non-executive director, provided to the Group by J
Bottomley who is an employee of that
firm.
During the year the Group paid £103,843 (2007: £Nil) to Ward
International Consultants Pty Ltd in connection with management
services provided to the Group by T Ward who is an employee of that
firm.
During the year the Group also paid £16,275 (2007: £15,055) to
Marr-Johnson Stevens LLP in respect of office rent. Mr Merlin
Marr-Johnson's brother is a partner in the firm Marr-Johnson Stevens
LLP.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
On 2 October 2008, the group issued 13,379,200 Ordinary Shares at
2.5p per share to Ambrian Capital PLC to repay the loan of £334,480.
The shares were issued together with 13,379,200 warrants for shares
in the company exercisable at 4p per share. Ambrian Capital PLC holds
38.2% of the share capital of the Company and R Clegg is also a
director.
For details of Director's remuneration and key management personnel,
see note 5.
24 Post balance sheet events
GPMC relinquished the Tulu Dimtu exploration licence on 20 December
2008. The Company has spent a total of £126,743 (2007: £79,610) on
this licence area and an impairment has been made against these
deferred exploration costs in the
accounts.
As at 30 September 2008, the group had legally agreed the terms and
conditions for a placing of 24,300,000 new ordinary shares ("The
Placing Shares"). On 2 October 2008 the Company issued the new
ordinary shares of 2.5p each at 2.5p per ordinary share raising
£607,500 gross of expenses. In addition, Ambrian Capital PLC
("Ambrian") agreed to capitalise the outstanding loan made by Ambrian
to the Company, amounting to £334,480, by subscribing for 13,379,200
new ordinary shares ("Ambrian Shares") at 2.5p per ordinary share.
The Placing Shares and Ambrian Shares were issued together with one
warrant entitling the holder to subscribe for one ordinary share in
the Company at 4 pence per ordinary share (the "Warrants"). The
Warrants are exercisable at any time up to 18 months from the date of
admission of the Placing Shares to trading on AIM. Wills & Co
Corporate Ltd ("Wills"), received 2,070,000 new ordinary shares
and 2,070,000 warrants, entitling the holder to subscribe for one
ordinary share in the Company at 4p per ordinary Share, in lieu of
fees for a commission on the value of the shares placed by Wills, the
production of an initial research note and a corporate finance fee of
£51,750.
The following summarises the above.
Share Holder Price Number of Proceeds
per share Shares £
Investors 2.5p 24,300,000 607,500
Ambrian Capital plc 2.5p 13,379,200 334,480
Wills & Co 2.5p 2,070,000 51,750
39,749,200 993,730
On 23 October 2008 2,802,298 shares were issued at 4.25p in
accordance with the conditions of the agreement entered into in March
2008 to acquire a further 22% of Yubdo Platinum and Gold Development
Private Limited Company.
Company Voluntary Arrangement (CVA) and the subsequent suspension of
trading
Given the current difficult climate for junior exploration and
development companies to raise money on the equity market, the
Company resolved to enter in to a CVA to enable a longer timeframe to
seek the necessary additional funding and to gain protection from
creditors during this process. This resulted in suspension from
AIM.
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
Reorganisation of the share capital, with the nominal value of a
share adjusted to 0.25p
The closing mid market price for an Ordinary Share in the Company as
at the time of suspension from AIM on 30th January 2009 was 0.7p. The
Company's share price was therefore below the nominal value of an
Ordinary Share. The Company therefore reorganised it's share
capital, so that one Ordinary Share held by a shareholder was issued
with one New Ordinary Share of 0.25p and one Deferred Share with a
nominal value of 2.25p.
A Sale and Purchase Agreement for the disposal of the wholly owned
subsidiary Palladex Limited (Western Samoa) and its subsidiary
Palladex Geotechservice LLC, Kyrgyzstan, to their management for the
consideration of US$79,208 (£44,438) and the repayment of loans to
the value of US$420,792 (£236,075) was entered into in January 2009
and completed April 2009.
The assets and liabilities that relate to this have been classified
as follows as at 30 September 2008.
£
Non-current assets classified as held for sale 1,016,485
Liabilities associated with assets held for sale (735,972)
280,513
25 Subsidiaries
The principal subsidiaries of Minerva Resources PLC, all of which
have been included in the consolidated financial statements are
listed below:
Proportion of
Name Country of ownership /
interest at 30
incorporation September
2008 2007
Palladex Limited Western Samoa 100% 100%
Palladex
Geotechservice LLC Kyrgyz Republic 100% 100%
Ethiopian Resources
Limited England and Wales 100% 100%
Golden Prospect Mining Company
Limited Bermuda 100% 100%
Golden Prospect Mining Company
Limited England and Wales 100% 100%
Yubdo Platinum and Gold
Development PLC Ethiopia 51% 51%
Resource Securities British Virgin
Limited Islands 100% 100%
Mercia Corpoation
Limited Bermuda 100% 100%
In addition the Company through its subsidiaries has entered
into agreements relating to the following joint ventures in
Sierra Leone:
Join Venture Project Subsidiary Joint %
Venture Interest
Partner(s)
Lake Sonfon Gold GPMC (Bermuda) Golden Leo 24.50%
(Mano
River),
Golden Star
Resources
Lake Sonfon Diamond GPMC (Bermuda) Golden Leo 50%
(Mano
River),
York Platinum Resource Securities Ltd Jubilee 80%
Platinum PLC
MINERVA RESOURCES PLC
Notes forming part of the financial statements for the year ended
30th September 2008
During the year the group spent £nil (2007: £33,288) on the joint
venture projects in Sierra Leone. These amounts have been recognised
in deferred exploration expenditure in the Group's balance sheet, and
are the only assets from joint ventures recognised in the
consolidated financial statements. There were no other liabilities,
income or expenses associated with the joint ventures in the 2008 or
2007.
GPMC has entered into an agreement, concluded in March 2008 for an
option to acquire a further 22% interest in YPGD from Ato Benti
Tasissa Negewo, who holds 47% of YPGD, upon the completion of a
feasibility study into the viability of a mining and processing
operation to produce a minimum of 50,000 oz of platinum per annum.
The option was acquired for consideration of US$500,000 (£276,397)
and this amount has been deducted directly from equity in accordance
with the treatment of a purchased option to acquire the Group's own
shares prescribed by IAS 32. GPMC could potentially pay a maximum of
US$5 million based on the successful attainment of positive
milestones. Progression to such a point is at the discretion of
GPMC.
Potential payments to Ato Benti Tasissa Negewo under the agreement
are as follows:
* A payment of US$1,750,000 upon the completion of a bankable
feasibility study for a project development with a minimum 50,000
ounces of platinum production per annum
* A payment of US$1,750,000 upon the completion of agreements to
finance the construction of the operational facilities for the
project, and
* A payment of US$1,000,000 upon the completion of the
commissioning of the project operational facilities, including
the consistent attainment of the production of platinum at the
project designed output level
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