RNS Number : 7587P
Bluejay Mining PLC
31 May 2018
 

Bluejay Mining plc / EPIC: JAY / Market: AIM / Sector: Mining

31 May 2018

 

Bluejay Mining plc ('Bluejay' or the 'Company')

Final Results and Notice of AGM

 

Bluejay Mining plc, the AIM and FSE listed company with projects in Greenland and Finland, is pleased to announce its final results for the year ended 31 December 2017.  The Company also gives notice that its Annual General Meeting ('AGM') will be held on 28 June 2018 at 1:00 p.m. at The Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE.  Copies of the Notice of AGM, together with the Form of Proxy and Annual Report have been posted to shareholders and will be available to view on the Company's website.

 

Highlights

·    Due to commence production at the world's highest-grade ilmenite project in 2019

·    Post-period-end delivered a 400% JORC resource increase for the Dundas Ilmenite Project ("Dundas" or the "Project"), defining 96 million tonnes at 6.9% ilmenite in-situ and a further exploration target of between 20-60 million tonnes at between 6% and 10% ilmenite

·    Significant further upside remains - particularly at Iterlak, which was the surprise discovery of 2017 and has the potential to surpass deposit discoveries to-date

·    Opportunity to upgrade the already high in-situ ilmenite grade by up to 30% via a simple oversize separation, further enhancing run of mine (ROM) grade and project economics

·    Simple and streamlined processing means the Project is expected to be in the lowest quartile of ilmenite production costs globally

·    Strategic Greenland location enables product to be sold to both European and North American markets

·    Finalising offtake discussions with a bulk sample to be taken in coming 2018 field season to supply final product parcels to customers

·    Preliminary Feasibility Study ("PFS") due in the coming months, which will then feed into the final feasibility report that is due to be completed later this year

·    Exploitation licence application is due for lodgement in the coming months, with final approval expected this year

·    Strong government support - awarded "Prospector and Developer of the Year 2017" by the Government of Greenland in March 2018

·    Significant further upside available from the Disko Nickel, Copper, Cobalt & Platinum Project in West Greenland, which has geological similarities to the world's largest nickel/copper sulphide mine, Norilsk-Talnakh

·    As a result of strong 2017 exploration results have significantly increased licence size and focus is now on refining drill targets

·    Current cash position of >£15m - bolstered following a £17m placing in February 2018

 

Chairman's Statement

Bluejay's change of financial year end meant that this is my first opportunity to comment as Chairman and I am delighted to be able to present these results at such an exciting time in our development.

 

Bluejay is set to bring into production the world's highest-grade ilmenite project in 2019, being the Dundas Ilmenite Project ('Dundas' or 'the Project') in north-west Greenland.  Not only does this Project distinguish itself by grade, scale, legal jurisdiction; and strategic location It looks set to be in the lowest quartile for production costs, making it commercially very attractive.  Having acquired an initial majority stake in the Project in December 2015, this has undoubtedly been a rapid rate of development, which is a testament to the commitment and skill set of our team along with the quality of our Project.  With multiple value triggers due in the coming year, we remain committed to maintaining this pace of progress to realise production and deliver revenues for our shareholders in the near term.  

 

We have strong confidence that, our product will be highly sought after thanks to a number of key attributes.  First being the grade and size of the deposit.  Post-period-end in April 2018 we delivered a 400% increase in the Project's resource, defining 96 million tonnes at 6.9% ilmenite in-situ and a further exploration target of between 20-60 million tonnes at between 6% and 10% ilmenite.  Of this, an Indicated Mineral Resource equal to 81 million tonnes at 6.1% ilmenite in-situ was defined at Moriusaq, which was the target area where the incumbent resource had been identified the year before, in April 2017.  These results matched our internal expectations of size and grade for the Moriusaq target area, marking a great success.  What we did not expect, from both the 2017 field work and the resultant resource upgrade, was the discovery of Iterlak.  This deposit appears to host mineralisation of a similar size to Moriusaq but with much higher grades; initial sampling in 2017 of the active beaches here showed extensive areas of up to 80% ilmenite in-situ.  This is incredibly significant, given that with Moriusaq alone we have already proven Dundas to be the world's highest-grade ilmenite deposit; with Iterlak, we have the potential to surpass this record, and our own expectations, highlighting just how exceptional our Project is and the further upside opportunity.

 

The second defining factor that makes our Project attractive to end-users is the relatively simple and streamlined processing required.  To refer to Dundas as a "mining" play is arguably not representative of the methods that will be employed to extract the high-grade ilmenite.  Given that mineralisation is visible to the naked eye, only a very simple extraction and processing method will be required, which aside from the positive cost implications, ensures low environmental impact.  Furthermore, the resource is chemically homogenous with low impurities, which means that wet gravity and dry magnetic circuits can produce two homogeneous and consistent grade ilmenite ores suitable for sulphate pigment as well as for sulphate and chloride slag, giving it multi-market application - something which we confirmed through the production of a bulk sample in 2017.  We have also identified an opportunity to upgrade the already high in-situ ilmenite grade by up to 30% via a simple oversize separation step prior to processing, further enhancing run of mine ('ROM') grade and project economics.  It is thanks to this simple processing method that we believe our Project will be in the lowest quartile of production costs, further adding to its commercial value and appeal.

 

Another aspect that will positively impact production costs is our location.  Greenland is located such that it provides us with an ability to sell to both European and North American markets, both of which show strong demand for ilmenite.  This accessible and strategic location means Bluejay's ilmenite is set to be much cheaper to ship than the majority of current ilmenite producers which are based in Africa, giving us significant competitive advantage.

 

In support of securing an offtake partner, in September 2017 ROM, heavy mineral concentrates, standard ilmenite and premium ilmenite samples and specifications were shipped to prospective customers.  Since then we have increased our resource size and grade even further and our focus is now on securing final commercial agreements.  To this end, we are engaged in a number of positive discussions and another bulk sample will be taken from the active beaches at Moriusaq in 2018, where the current resource has been defined to supply final product parcels to customers. 

 

The results of feasibility work currently underway will also be valuable in supporting these discussions as they will give a clearer indication of the Project's economics.  The results of the preliminary feasibility study are due in the coming months, which will then feed into the final feasibility report that is due to be completed later this year.  We have appointed a number of leading mining consultants to undertake these studies for us, including SRK Consulting ('SRK'), who will prepare the mining schedule and assess water management aspects as well as review the study as a whole; IHC Robbins who will complete the process plant engineering & design study; Royal IHC who will finalise a dredging study, and; Amec Foster Wheeler Americas Ltd who will undertake the infrastructure and services elements.

 

Aside from project economics, the final feasibility report will also form a part of the exploitation licence application that is due for lodgement with the Government of Greenland ('Government') in the coming months and which is expected to be approved this year.  As part of this licencing application we have already successfully finalised the "Terms of Reference" for both the Environmental Impact Assessment ('EIA') and Social Impact Assessment ('SIA') and completed a White Paper, which encompasses the stakeholder consultation response period.  I am pleased to report that we have had all documents accepted and approved by the Greenland Government and the relevant licencing bodies so far, along with a high degree of support from the local community.  We enjoy a positive working relationship with and strong support from the Government of Greenland - as evidenced by our award of "Prospector and Developer of the Year 2017" by the Government of Greenland in March 2018 - and we look forward to continuing to work closely with them and all of the relevant national and local authorities as we finalise our licencing applications.

 

The Government has defined a new five year 'Mineral and Oil Strategy 2018', which feeds into a long-standing target of opening five large scale mines in the near term, with the first opening last year and now producing gemstones, and Bluejay vying to be the next off the block. 

 

With additional bulk sampling for offtake as well as various civil and site works anticipated to be completed during 2018 we anticipate the completion of the various studies currently underway to allow for an exploitation licence to be lodged at the end of this field season. We continue to focus on the commencement of mining during 2019, which after just three years since the Project was acquired will be a fantastic achievement.

 

We intend to focus on the active and raised beach targets first, where we have defined the current resource and exploration target which alone has demonstrated ability to support a large and long-life mining operation.  Further expansion potential exists both onshore and offshore, with an assessment of the shallow marine area due to be undertaken by SRK to evaluate the additional resources available in this environment.  This will form part of our 2018 field work season commencing in July 2018.  Much of this field work will focus on the Iterlak Delta and surrounding area, with drilling, resource definition, and marine bathymetric surveys to be undertaken to help build upon the area's 20-60Mt exploration target. We are confident that significant potential exists here and believe that the Iterlak Delta, at 2.65 million sq m, is a primary sediment (and thus ilmenite) source for the broader licence area. The entire sediment package comprising the delta has been estimated at 78-145Mt.

 

Alongside Dundas, the Company is simultaneously advancing the Disko Nickel, Copper, Cobalt & Platinum Project in West Greenland ('Disko'), which is of significant interest due to its geological similarities to Norilsk-Talnakh, the world's largest nickel/copper sulphide mine in northern Russia ("Norilsk").  Both Disko and Norilsk contain nickel-copper-cobalt-platinum rich Magmatic Massive Sulphides ('MMS'), with one 28-tonne boulder recovered from Disko being so significant that it is now displayed in the foyer of the Danish Geological Museum in Copenhagen.  Exploration at this asset is still early stage, but results received from the 2017 field programme are overwhelmingly positive.  

 

In Area 1 - The Kugg Project, located on the southern peninsular.

Surface sampling confirmed a working sulphide system with initial chemical assays in oxidised surface material returning 2.02% nickel, 0.8% copper and 0.2% cobalt.   Alongside this, handheld XRF sampling on fresh, polished material returned values averaging between 4.6%-9.3% nickel and 1.5-2.8% copper, whilst a Moving Loop, High Powered Electro-Magnetic survey tested a number of low resistivity targets that had been identified by previous licensee holders.

 

In Area 2 - The Illug Project, located on the northern peninsular.

Data compilation and interpretation has identified numerous prospective targets and confirmed the presence of historically identified anomalies.  These results are very encouraging and are being used to structure our 2018 work programme, which is focussed on developing drill targets.  To support our exploration efforts, we have several parties interested in partnering with us and we will carefully evaluate these to determine the best way forward.  Thankfully, due to the project's relatively close proximity to Dundas, we are able to undertake work at both projects cost-effectively.

 

As a result of the strong results we have received to date and our understanding of Disko and its potential, in May 2018 we acquired an additional 1,616km 2 to increase the project's licence size to 2,586km2.  To put this into perspective, this now means the Disko project area is approximately the same size as Luxembourg.  We believe this asset's scale and potential is yet to be reflected in our share price and accordingly believe Disko provides us with significant upside potential.

 

Looking at our wider portfolio, we continue to hold the Kangerluarsuk SedEx:
Lead-Zinc-Silver Project in Greenland ('Kangerluarsuk') and three high-grade, multi-element base metal deposits in southern Finland.  We believe Kangerluarsuk offers a good development opportunity in the future.  In Finland, our assets are cost sustainable for the long term whilst we assess the best ways in which to realise value.   To help us best determine this, a low cost work programme has been put in place for the Outokumpu licence areas, which will include diamond drilling and ground geophysical surveys. The main objective of this work programme to target the "Kuusjärvi depression zone", which is a ~6km long section of the Outokumpu belt.  Work will be conducted in two stages, with the first consisting of approximately 1,800m of drilling and ground geophysical surveys that will last approximately 2-3 months, whilst stage 2 will consist of approximately 2,000m of drilling and DHEM surveys, again lasting 2-3 months.

 

Financial Review

The loss before taxation of the Group for the 18-month period ended 31 December 2017 amounted to £2,680,708 (12 months to 30 June 2016: £620,059).

 

The Group's cash position at 31 December 2017 was £2,901,922 (30 June 2016: £425,046).

 

In February 2018 the group raised £17m by issuing 77,272,728 new ordinary shares of 0.01 pence at a price of 22 pence per share. The funds raised is to primarily support the rapid advancement of the Dundas project and fast track into production and commercialisation. This will include completing an Environmental Impact Assessment and Social Impact Assessment, commencing procurement of long lead items to support mine plant construction and supporting infrastructure, finalising the pre-feasibility study, completing the exploitation application and lodgement and facilitating the offtake as well as other general activities. Additionally, the raise will help fund the 2018 work programme at Disko and other interests in the wider project portfolio.

 

Outlook

We have a world class asset with numerous advantages. We anticipate meaningful news flow as we get closer to exploitation licence approval and production at Dundas., Alongside this, our Disko project offers significant upside that could further transform the value of our Company.  Indeed, I believe we are in an incredibly strong position to have not one but two incredible assets.  Our focus is to commence mining at Dundas in 2019 and establish Bluejay as a highly profitable production company whilst unlocking the value potential of Disko. 

 

To be in the position we are today, is the result of a great deal of hard work and skill shown, by all our employees, consultants and partners. Their experience and focus has and is contributing to Bluejay creating a world class portfolio which has positioned us for strong, long-term growth.  I would like to thank our shareholders for their long-term support, we are lucky to have a strong and supportive base of investors and we hope that the coming months and years will continue to be value accretive for all our stakeholders.

FINANCIAL RESULTS

 

STATEMENTS OF FINANCIAL POSITION

As at 31 December 2017

 

 

 

Group

Company

 

Note

31 December 2017

£

30 June

2016

£

31 December 2017

£

30 June

2016

£

Non-Current Assets

 

 

 

 

 

Property, plant and equipment

6

631,054

16,883

8,333

4,577

Intangible assets

7

17,971,795

12,627,680

-

-

Investment in subsidiaries

8

-

-

19,717,873

13,505,274

 

 

18,602,849

12,644,563

19,726,206

13,509,851

Current Assets

 

 

 

 

 

Trade and other receivables

9

642,870

175,685

620,891

111,176

Cash and cash equivalents

10

2,901,922

425,046

2,820,884

371,485

 

 

3,544,792

600,731

3,441,775

482,661

Total Assets

 

22,147,641

13,245,294

23,167,981

13,992,512

 

 

 

 

 

 

Non-Current Liabilities

 

 

 

 

 

Deferred Tax Liabilities

12

496,045

373,343

-

-

 

 

496,045

373,343

-

-

Current Liabilities

 

 

 

 

 

Trade and other payables

11

564,471

392,754

358,306

368,403

Total Liabilities

 

1,060,516

766,097

358,306

368,403

 

 

 

 

 

 

Net Assets

 

21,087,125

12,479,197

22,809,675

13,624,109

Equity attributable to owners of the Parent

 

 

 

 

 

Share capital

13

5,967,268

5,938,572

5,967,268

5,938,572

Share premium

13

27,220,576

16,183,675

27,220,576

16,183,675

Deferred shares

 

1,825,104

1,825,104

1,825,104

1,825,104

Reverse acquisition reserve

 

(8,071,001)

(8,071,001)

-

-

Other reserves

15

1,121,097

470,700

312,045

355,809

Retained losses

 

(6,975,919)

(4,458,414)

(12,515,318)

(10,679,051)

Total equity attributable to owners of the Parent

 

21,087,125

11,888,636

22,809,675

13,624,109

Non-controlling interest

 

-

590,561

-

-

Total Equity

 

21,087,125

12,479,197

22,809,675

13,624,109

 

The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement and Statement of Comprehensive Income. The loss for the Company for the period ended 31 December 2017 was £1,999,470 (year ended 30 June 2016: £10,247).

 

The Financial Statements were approved and authorised for issue by the Board of Directors on 30 May 2018 and were signed on its behalf by:

 

Greg Kuenzel

Director

 

 

CONSOLIDATED INCOME STATEMENT

For the period ended 31 December 2017

 

 

Continued operations

Note

Period ended 31 December

2017

£

Year ended 30 June

2016

£

Revenue

 

-

-

Cost of sales

 

-

-

Gross profit

 

-

-

Administrative expenses

21

(2,111,312)

(629,046)

Foreign exchange

 

70,953

8,737

Operating Loss

 

(2,040,359)

(620,309)

Impairments

7

(643,168)

-

Finance income

18

1,717

250

Other income

 

1,102

-

Loss before Income Tax

 

(2,680,708)

(620,059)

Income tax expense

19

-

-

Loss for the Period

 

(2,680,708)

(620,059)

Loss attributable to

 

 

 

-     Owners of the Parent

 

(2,680,708)

(613,849)

-     Non-Controlling interests

 

-

(6,210)

Loss for the Period

 

(2,680,708)

(620,059)

Basic and Diluted Earnings Per Share attributable to owners of the parent during the period (expressed in pence per share)

20

(0.408) p

(0.172) p

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 31 December 2017

 

 

 

Period ended 31 December 2017

£

Year ended 30 June

2016

£

Loss for the period

 

(2,680,708)

(620,059)

Other Comprehensive Income:

 

 

 

Items that may be subsequently reclassified to profit or loss

 

 

 

Currency translation differences

 

694,161

1,487,405

Other comprehensive income for the period, net of tax

 

(1,986,547)

867,346

Total Comprehensive Income for the Period Attributable to

 

 

 

-     Owners of the Parent

 

(1,986,547)

873,556

-     Non-Controlling interests

 

-

(6,210)

Total Comprehensive Income

 

(1,986,547)

867,346

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 December 2017

 

 

 

Attributable to owners of the Parent

 

 

 

Note

Share capital

£

Share premium

£

Deferred shares

£

Other reserves

£

Retained losses

£

Total

£

Non-controlling interest

£

Total equity

£

 

Balance as at 1 July 2015

 

5,919,731

14,274,528

1,825,104

(9,045,505)

(3,916,223)

9,057,635

-

9,057,635

 

Loss for the period

 

-

-

-

-

(613,849)

(613,849)

(6,210)

(620,059)

 

Other comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

Currency translation differences

 

-

-

-

1,487,405

-

1,487,405

-

1,487,405

 

Total comprehensive income for the period

 

-

-

-

1,487,405

(613,849)

873,556

(6,210)

867,346

 

Proceeds from share issues

13

5,807

1,155,537

-

-

-

1,161,344

-

1,161,344

 

Issue costs

13

-

(44,108)

-

-

-

(44,108)

-

(44,108)

 

Share based payments

 

13,034

797,718

-

-

-

810,752

-

810,752

 

Issued options

 

-

-

-

29,457

-

29,457

-

29,457

 

Expired options

 

-

-

-

(71,658)

71,658

-

-

-

 

Non-controlling interest arising on business combination

 

-

-

-

-

-

-

596,771

596,771

 

Total transactions with owners, recognised directly in equity

 

18,841

1,909,147

-

(42,201)

71,658

1,957,445

596,771

2,554,216

 

Balance as at 30 June 2016

 

5,938,572

16,183,675

1,825,104

(7,600,301)

(4,458,414)

11,888,636

590,561

12,479,197

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at 1 July 2016

 

5,938,572

16,183,675

1,825,104

(7,600,301)

(4,458,414)

11,888,636

590,561

12,479,197

 

Loss for the period

 

-

-

-

-

(2,680,708)

(2,680,708)

-

(2,680,708)

 

Other comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

Currency translation differences

 

-

-

-

694,161

-

694,161

-

694,161

 

Total comprehensive income for the period

 

-

-

-

694,161

(2,680,708)

(1,986,547)

-

(1,986,547)

 

Proceeds from share issues

13

28,596

11,645,757

-

-

-

11,674,353

-

11,674,353

 

Issue costs

13

-

(678,756)

-

-

-

(678,756)

-

(678,756)

 

Share based payments

14

100

69,900

-

-

-

70,000

-

70,000

 

Issued options

14

-

-

-

119,439

-

119,439

-

119,439

 

Exercised options

14

-

-

-

(163,203)

163,203

-

-

-

 

Acquisition of non-controlling interest on business combination

24

-

-

-

-

-

-

(590,561)

(590,561)

 

Total transactions with owners, recognised directly in equity

 

28,696

11,036,901

-

(43,764)

163,203

11,185,036

(590,561)

10,594,475

 

Balance as at 31 December 2017

 

5,967,268

27,220,576

1,825,104

(6,949,904)

(6,975,919)

21,087,125

-

21,087,125

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

For the period ended 31 December 2017

 

 

Attributable to equity shareholders

 

Note

Share capital

£

Share premium

£

Deferred shares

£

Other reserves

£

Retained losses

£

Total equity

£

 

Balance as at 1 July 2015

 

5,919,731

14,274,528

1,825,104

398,010

(10,740,462)

11,676,911

 

Loss for the period

 

-

-

-

-

(10,247)

(10,247)

 

Total comprehensive income for the period

 

-

-

-

-

(10,247)

(10,247)

 

Proceeds from share issues

13

5,807

1,155,537

-

-

-

1,161,344

 

Issue costs

13

-

(44,108)

-

-

-

(44,108)

 

Share based payments

 

13,034

797,718

-

-

-

810,752

 

Issued options

 

-

-

-

29,457

 

29,457

 

Expired options

 

-

-

-

(71,658)

71,658

-

 

Total transactions with owners, recognised directly in equity

 

18,841

1,909,147

-

(42,201)

71,658

1,957,445

 

Balance as at 30 June 2016

 

5,938,572

16,183,675

1,825,104

355,809

(10,679,051)

13,624,109

 

 

 

 

 

 

 

 

 

 

Balance as at 1 July 2016

 

5,938,572

16,183,675

1,825,104

355,809

(10,679,051)

13,624,109

 

Loss for the period

 

-

-

-

-

(1,999,470)

(1,999,470)

 

Total comprehensive income for the period

 

-

-

-

-

(1,999,470)

(1,999,470)

 

Proceeds from share issues

13

28,596

11,645,757

-

-

-

11,674,353

 

Issue costs

13

-

(678,756)

-

-

-

(678,756)

 

Share based payments

14

100

69,900

-

-

-

70,000

 

Issued options

14

-

-

-

119,439

-

119,439

 

Exercised options

14

-

-

-

(163,203)

163,203

-

 

Total transactions with owners, recognised directly in equity

 

28,696

11,036,901

-

(43,764)

163,203

11,185,036

 

Balance as at 31 December 2017

 

5,967,268

27,220,576

1,825,104

312,045

(12,515,318)

22,809,675

 

                   

 

 

STATEMENTS OF CASH FLOWS

For the period ended 31 December 2017

 

 

Group

 

Company

 

Note

Period ended

31 December 2017

£

Year ended

30 June 2016

£

 

Period ended 31 December 2017

£

Year ended

30 June 2016

£

Cash flows from operating activities

 

 

 

 

 

 

Loss before income tax

 

(2,680,708)

(620,059)

 

(1,999,470)

(10,247)

Adjustments for:

 

 

 

 

 

 

Depreciation

6

46,868

5,037

 

9,504

1,547

Share options expense

14

119,439

29,457

 

119,439

29,457

Share based payments

14

70,000

129,302

 

70,000

129,302

Intercompany management fees

 

-

-

 

(280,628)

(120,855)

Impairment on Assets

 

643,168

-

 

646,319

-

Foreign exchange

 

(70,953)

(2,541)

 

(15,915)

(522,341)

Changes in working capital:

 

 

 

 

 

 

Increase in trade and other receivables

9

(145,345)

(99,323)

 

(82,277)

(72,652)

Increase/(Decrease) in trade and other payables

11

127,963

(25,000)

 

4,142

94,583

Net cash used in operating activities

 

(1,889,568)

(583,127)

 

(1,528,886)

(471,206)

Cash flows from investing activities

 

 

 

 

 

 

Cash consideration for subsidiaries net of cash

 

-

4,182

 

-

-

Purchase of property plant and equipment

6

(653,568)

(2,307)

 

(5,909)

-

Purchase of software

6

(7,352)

(5,312)

 

(7,352)

(5,312)

Loans granted to subsidiary undertakings

 

-

-

 

(5,631,501)

(984,816)

Loans granted to third parties

 

(54,000)

-

 

(54,000)

-

Repayment of borrowings

 

-

-

 

-

-

Purchase of intangible assets

7

(4,600,044)

(845,261)

 

-

-

Net cash used in investing activities

 

(5,314,964)

(848,698)

 

(5,698,762)

(990,128)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issue of share capital

13

10,355,803

1,161,344

 

10,355,803

1,161,344

Transaction costs of share issue

13

(678,756)

(44,108)

 

(678,756)

(44,108)

Repayment of borrowings

 

-

(62,500)

 

-

-

Net cash generated from financing activities

 

9,677,047

1,054,736

 

9,677,047

1,117,236

Net decrease/(increase) in cash and cash equivalents

 

2,472,515

(377,089)

 

2,449,399

(344,098)

Cash and cash equivalents at beginning of period

 

425,046

795,368

 

371,485

715,583

Exchange gain on cash and cash equivalents

 

4,361

6,767

 

-

-

Cash and cash equivalents at end of period

10

2,901,922

425,046

 

2,820,884

371,485

 

Major non-cash transactions

During the year, the Group entered into the following major non-cash transactions:

 

·    The acquisition of Avannaa Resources Limited for consideration of £500,000 which was settled wholly by issuing shares in the Parent Company; and

·    The acquisition of the non-controlling interest in Bluejay Mining Limited for £594,393 which was settled wholly by issuing shares in the Parent Company.

·    The deferred consideration due on the acquisition of Bluejay Mining Limited in the prior year for £224,157 which was settled wholly by issuing shares in the Parent Company.

 

Further details on these acquisitions can be found in Note 2 4 to the Financial Statements.

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the period ended 31 December 2017

 

1.    General information

The principal activity of Bluejay Mining plc (the 'Company') and its subsidiaries (together the 'Group') is the exploration and development of precious and base metals. The Company's shares are listed on the AIM of the London Stock Exchange and the Frankfurt Stock Exchange. The Company is incorporated and domiciled in England.

 

The address of its registered office is 7-9 Swallow Street, London, W1B 4DE.

 

The group has revised their accounting period to be based on a calendar year (1 January to 31 December). As a result of this, the 2017 financial year is extended to an 18-month period from 1 July 2016 to 31 December 2017.

 

2.    Summary of Significant Accounting Policies

The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.

 

2.1. Basis of Preparation of Financial Statements

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRS Interpretations Committee ('IFRS IC') as adopted by the European Union, the Companies Act 2006 that applies to companies reporting under IFRS and IFRS IC interpretations. The Consolidated Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on business combination.

 

The Financial Statements are presented in Pound Sterling rounded to the nearest pound.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed in Note 4 .

 

2.2.           New and Amended Standards

(a) New and amended standards mandatory for the first time for the financial periods beginning on or after 1 July 2016

 

The following IFRSs or IFRIC interpretations were effective for the first time for financial periods beginning on or after 1 July 2016. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

 

Standard  

Impact on initial application

Effective date

IAS 1

Amendments to Disclosure Initiative

1 January 2016

IFRS 12

Annual Improvements 2012 -2014 cycle

1 January 2016

 

 

(b) New standards, amendments and Interpretations in issue but not yet effective or not yet endorsed and not early adopted

 

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:

 

Standard  

Impact on initial application

Effective date

IFRS 9                

Financial Instruments

1 January 2018

IFRS 15

Revenue from Contracts with Customers

1 January 2018

IFRS 16

Leases

*1 January 2019

IFRS 2 (Amendments)

Share-based payments - classification and measurement

1 January 2018

Annual Improvements

2014-2016 Cycle

1 January 2018

IFRIC Interpretation 22

Foreign currency transactions and advanced

consideration

*1 January 2018

IFRIC 23

Uncertainty over Income tax treatments     

*1 January 2018

 

* Subject to EU endorsement

 

The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group's results or shareholders' funds.

 

2.3.           Basis of Consolidation

The Consolidated Financial Statements consolidate the financial statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

 

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

·    The contractual arrangement with the other vote holders of the investee;

·    Rights arising from other contractual arrangements; and

·    The Group's voting rights and potential voting rights

 

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

 

Investments in subsidiaries are accounted for at cost less impairment within the parent company financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.

 

2.4.           Going Concern

The Group's business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman's Report. In addition, Note 3 to the Consolidated Financial Statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to market, credit and liquidity risk.

 

The Consolidated Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating revenues and an operating loss has been reported, the Directors are of the view that the Group has sufficient funds to undertake its operating activities over the next 12 months from the date these financial statements are approved including any additional payments required in relation to its current exploration projects. The Group has financial resources which the Directors consider will be sufficient to fund the Group's committed expenditure both operationally and on various exploration projects for this time period. However, in order to complete other exploration work over the life of existing projects and as additional projects are identified, additional funding will be required. The amount of funding cannot be forecast with any certainty at the point of approval of these Financial Statements and the Group will be required to raise additional funds either via an issue of equity or through the issuance of debt. The Directors are reasonably confident that funds will be forthcoming if and when they are required. Should additional funding not be forthcoming the Directors have agreed, if circumstances require, to defer payment of their fees until such time as adequate funding is received and if necessary scale back exploration activity.

 

The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Group and Company Financial Statements.

 

2.5. Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

 

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

 

2.6.           Foreign Currencies

(a) Functional and presentation currency

Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the UK parent entity and UK subsidiary is Pound Sterling, the functional currency of the Finnish and Austrian subsidiaries is Euros and the functional currency of the Greenlandic subsidiaries is Danish Krone. The Financial Statements are presented in Pounds Sterling which is the Company's functional and Group's presentation currency.

 

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

           

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

·    assets and liabilities for each period end date presented are translated at the period-end closing rate;

 

·    income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

 

·    all resulting exchange differences are recognised in other comprehensive income.

 

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Income Statement as part of the gain or loss on sale.

 

2.7.      Intangible assets

Exploration and evaluation assets

The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.

 

Exploration and evaluation assets are recorded and held at cost

Exploration and evaluation assets are not subject to amortisation, but are assessed annually for impairment. The assessment is carried out by allocating exploration and evaluation assets to cash generating units ("CGU's"), which are based on specific projects or geographical areas. The CGU's are then assessed for impairment using a variety of methods including those specified in IFRS 6.

 

Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Income Statement.

 

Exploration and evaluation assets recorded at fair-value on business combination

Exploration assets which are acquired as part of a business combination are recognised at fair value in accordance with IFRS 3. When a business combination results in the acquisition of an entity whose only significant assets are its exploration asset and/or rights to explore, the Directors consider that the fair value of the exploration assets is equal to the consideration. Any excess of the consideration over the capitalised exploration asset is attributed to the fair value of the exploration asset.

 

2.8.      Investments in subsidiaries

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

 

2.9.      Property, Plant and Equipment

Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:

 

Office Equipment - 20% straight line

Machinery and Equipment - 10% straight line

Software - 50% straight line

 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

 

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Income Statement.

 

2.10.   Impairment of non-financial assets

Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

 

2.11.   Financial Assets

(a) Classification

The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents.

 

(b) Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Group commits to purchasing or selling the asset. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership . Loans and receivables are subsequently carried at amortised cost using the effective interest method.

 

(c) Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.

 

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

·    significant financial difficulty of the issuer or obligor;

·    a breach of contract, such as a default or delinquency in interest or principal repayments;

·    the disappearance of an active market for that financial asset because of financial difficulties;

·    observable data indicating that there is a measureable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio;

 

For loans and receivables, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the Income Statement.

 

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the Income Statement.

 

2.12.   Financial Liabilities

Financial liabilities comprise trade and other payables in the Statement of Financial Position and are held at amortised cost.

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

 

Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

 

2.13.   Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and in hand.

 

2.14.   Equity

Equity comprises the following:

·    "Share capital" represents the nominal value of the Ordinary shares;

·    "Share Premium" represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares;

·    "Other reserves" represents the merger reserve, foreign currency translation reserve, redemption reserve and share option reserve where;

o "Merger reserve" represents the difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange;

o "Foreign currency translation reserve" represents the translation differences arising from translating the financial statement items from functional currency to presentational currency;

o "Redemption reserve" represents a non-distributable reserve made up of share capital;

o "Share option reserve" represents share options awarded by the group;

·    "Retained earnings" represents retained losses.

 

2.15.   Share capital, share premium and deferred shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of tax, from the proceeds provided there is sufficient premium available. Should sufficient premium not be available placing costs are recognised in the Income Statement.

 

Deferred shares are classified as equity. Deferred shares have no rights to receive dividends, or to attend or vote at general meetings of the Company and are only entitled to a return of capital after payment to holders of new ordinary shares of £100,000 per each share held.

 

2.16.   Share Based Payments

The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers' services received in exchange for the grant of the options is recognised as an expense in the Income Statement or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Income Statement and its value is determined by reference to the fair value of the options granted:

 

·    including any market performance conditions;

·    excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and

·    including the impact of any non-vesting conditions (for example, the requirement for employees to save).

 

The fair value of the share options and warrants are determined using the Black Scholes valuation model.

 

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.

 

When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

 

2.17.   Taxation

No current tax is yet payable in view of the losses to date.

 

Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

 

In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

 

Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled.

 

Deferred tax assets and liabilities are not discounted.

 

 

3.         Financial Risk Management

3.1.      Financial Risk Factors

The Group's activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. None of these risks are hedged.

           

Risk management is carried out by the London based management team under policies approved by the Board of Directors.

           

Market Risk

(a) Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro, Danish Krone and the British Pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

 

The Group negotiates all material contracts for activities in relation to its subsidiaries in either British Pounds, Euros or Danish Krone. The Group does not hedge against the risks of fluctuations in exchange rates. The volume of transactions is not deemed sufficient to enter into forward contracts as most of the foreign exchange movements result from the retranslation of inter company loans. The Group has not sensitised the figures for fluctuations in foreign exchange rates as the Directors are of the opinion that these fluctuations, apart from the retranslation of intercompany loans at the closing rate, would not have a significant impact on the financial statements of the Group. However, the Directors acknowledge that, at the present time, the foreign exchange retranslations have resulted in rather higher than normal fluctuations which are separately disclosed, and is predominantly due to the exceptional nature of the Euro exchange rate in the last two years in the current economic climate. The Directors will continue to assess the effect of movements in exchange rates on the Group's financial operations and initiate suitable risk management measures where necessary.

 

(b) Price risk

The Group is not exposed to commodity price risk as a result of its operations, which are still in the exploration phase. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.

 

The Group has no exposure to equity securities price risk, as it has no listed or unlisted equity investments other than investments in wholly owned subsidiaries.

 

Credit Risk

Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables. The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.

 

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

 

Liquidity Risk

In keeping with similar sized mineral exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.

 

With exception to deferred taxation, financial liabilities are all due within one year.

 

3.2.      Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.

 

At 31 December 2017 the Group had borrowings of £nil (30 June 2016: £nil) and defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time.

 

Given the Group's level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial.

 

3.3.      Sensitivity Analysis

On the assumption that all other variables were held constant, and in respect of the Group and the Company's expenses the potential impact of a 10% increase/decrease in the UK Sterling:Euro and UK Sterling:DKK Foreign exchange rates on the Group's loss for the period and on equity is as follows:

 

Potential impact on euro expenses: 2017

Effect on loss before tax for the period ended

Effect on equity before tax for the year ended

 

Group

Company

Group

Company

Increase/(decrease) in foreign exchange rate

£

£

£

£

10%

(2,752,612)

(2,680,708)

22,427,782

13,624,108

-10%

(2,608,804)

(2,680,708)

19,746,470

13,624,108

 

Potential impact on DKK expenses: 2017

Effect on loss before tax for the period ended

Effect on equity before tax for the year ended

 

Group

Company

Group

Company

Increase/(decrease) in foreign exchange rate

£

£

£

£

10%

(2,709,050)

(2,680,708)

21,092,538

13,624,108

-10%

(2,652,366)

(2,680,708)

21,081,714

13,624,108

 

 

4.    Critical Accounting Estimates and Judgements

The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period. Actual results may vary from the estimates used to produce these Financial Statements.

 

Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Items subject to such 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 years, include but are not limited to:

 

Impairment of intangible assets - exploration and evaluation costs

Exploration and evaluation costs have a carrying value at 31 December 2017 of £17,971,795 (2016: £12,627,681). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests for impairment annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7 . Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the period warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration; an impairment charge will then be recognised in the Income Statement. The Directors have reviewed the estimated value of each project prepared by management and have concluded that the Austrian exploration asset be impaired in full.

 

Share based payment transactions

The Group has made awards of options and warrants over its unissued share capital to certain Directors as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and suppliers for various services received.

 

The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 14 .

 

VAT receivable

At 31 December 2017, the Group and Company have recognised an amount of £287,731 within trade and other receivables which relates to VAT receivable. The amount is subject to an on-going dispute with HMRC, further details of which can be found in note 23. The Directors believe that the amount will be recovered in full and therefore have not recognised any impairment to the carrying value of this amount.

 

 

5.    Segment Information

Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the period the Group had interests in four geographical segments; the United Kingdom, Greenland, Austria, and Finland. Activities in the UK are mainly administrative in nature whilst the activities in Austria and Finland relate to exploration and evaluation work.

 

The Group had no turnover during the period.

 

2017

Greenland

£

Austria

£

Finland

£

UK

£

Total

£

Revenue

-

-

-

-

-

 

Administrative expenses

27,846

(13,317)

(97,633)

(2,028,208)

(2,111,312)

Foreign Exchange

1,791

71,421

(8)

(2,251)

70,953

Finance Income

-

-

15

1,702

1,717

Other Income

1,102

-

-

-

1,102

Impairment on intangible asset

-

(643,168)

-

-

(643,168)

Loss before tax per reportable segment

30,739

(585,064)

(97,626)

(2,028,757)

(2,680,708)

Additions to PP&E

647,660

-

-

13,260

660,920

Additions to intangible asset

3,986,730

-

2,000,553

-

5,987,283

Reportable segment assets

6,982,095

11,666

11,867,293

3,286,587

22,147,641

Reportable segment liabilities

713,940

4,194

147,594

194,787

1,060,515

 

 

2016

Greenland

£

Austria

£

Finland

£

UK

£

Total

£

Revenue

-

-

-

-

-

Administrative expenses

(3,629)

(69,858)

(34,630)

(520,929)

(629,046)

Foreign Exchange

196

(394)

9690

(755)

8,737

Finance Income

-

-

11

239

250

 

Other Income

-

-

-

-

1,102

Loss before tax per reportable segment

(3,433)

(70,252)

(24,929)

(521,445)

(620,059)

Additions to PP&E

993

-

-

3,563

4,556

Additions to intangible asset

2,265,857

93,313

1,836,448

-

4,195,618

Reportable segment assets

2,302,853

612,887

9,812,573

473,790

13,202,103

Reportable segment liabilities

1094

2,116

21,140

741,747

766,097

               

 

 

6.    Property, Plant and Equipment

Group

 

 

 

Software

£

Machinery & equipment

£

Office equipment

£

Total

£

Cost

 

 

 

 

As at 1 July 2015

-

18,567

3,124

21,691

Exchange differences

-

3,183

-

3,183

Additions

5,312

-

2,307

7,619

As at 30 June 2016

5,312

21,750

5,431

32,493

As at 1 July 2016

5,312

21,750

5,431

32,493

Exchange Differences

-

1,602

-

1,602

Additions

7,352

647,659

5,909

660,920

As at 31 December 2017

12,664

671,011

11,340

695,015

Depreciation

 

 

 

 

As at 1 July 2015

-

7,052

2,312

9,364

Charge for the year

734

2,177

2,126

5,037

Exchange differences

-

1,209

-

1,209

As at 30 June 2016

734

10,438

4,438

15,610

As at 1 July 2016

734

10,438

4,438

15,610

Charge for the period

7,379

36,371

3,118

46,868

Exchange differences

-

1,483

-

1,483

As at 31 December 2017

8,113

48,292

7,556

63,961

Net book value as at 30 June 2016

4,578

11,312

993

16,883

Net book value as at 31 December 2017

4,551

622,719

3,784

631,054

 

Depreciation expense of £46,868 (30 June 2016: £5,037) for the Group has been charged in administration expenses.

 

 

Company

 

 

 

 

Software

£

Office equipment

£

Total

£

Cost

 

 

 

 

As at 1 July 2015

 

-

3,124

3,124

Additions

 

5,312

-

5,312

As at 30 June 2016

 

5,312

3,124

8,436

As at 1 July 2016

 

5,312

3,124

8,436

Additions

 

7,352

5,909

13,260

As at 31 December 2017

 

12,664

9,033

21,697

Depreciation

 

 

 

 

As at 1 July 2015

 

-

2,311

2,311

Charge for the year

 

734

813

1,547

As at 30 June 2016

 

734

3,124

3,858

As at 1 July 2016

 

734

3,124

3,858

Charge for the period

 

7,379

2,126

9,505

As at 31 December 2017

 

8,113

5,250

13,363

Net book value as at 30 June 2016

 

4,577

-

4,577

Net book value as at 31 December 2017

 

4,550

3,783

8,333

 

Depreciation expense of £9,505 (30 June 2016: £1,547) for the Company has been charged in administration expenses.

 

7.    Intangible Assets

Intangible assets comprise exploration and evaluation costs. Exploration and evaluation assets are all internally generated.

 

Group

Exploration & Evaluation Assets - Cost and Net Book Value

31 December

2017

£

30 June

2016

£

As at 1 July

12,627,680

8,432,062

Additions

4,600,044

842,281

Acquired through acquisition (at fair value) (Note 24)

622,702

1,912,886

Exchange differences

764,537

1,440,451

Impairments

(643,168)

-

As at end of period

17,971,795

12,627,680

 

Exploration projects in Finland and Greenland are at an early stage of development and there are JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates are available to enable value in use calculations to be prepared. The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:

 

·    The Group's right to explore in an area has expired, or will expire in the near future without renewal;

·    No further exploration or evaluation is planned or budgeted for;

·    A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; or

·    Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.

 

Following their assessment the Directors concluded that impairment charge of £643,168 was necessary for the period ended 31 December 2017 as the asset was not leading to the discovery of commercially viable quantities of mineral resources.

 

 

8.    Investments in Subsidiary Undertakings

 

Company

 

31 December

2017

£

30 June

2016

£

Shares in Group Undertakings

 

 

At beginning of period

8,605,609

7,700,002

Additions in period (see note 24)

1,094,393

905,607

At end of period

9,700,002

8,605,609

Loans to Group undertakings

10,017,871

4,899,665

Total

19,717,873

13,505,274

 

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

 

Subsidiaries

Name of subsidiary

Registered office address

Country of incorporation and place of business

Proportion of ordinary shares held by parent (%)

Proportion of ordinary shares held by the Group (%)

Nature of business

Centurion Mining Limited

2nd Floor 7-9 Swallow Street, London, England, W1B 4DE

United Kingdom

100%

100%

Dormant

Centurion Universal Limited

2nd Floor 7-9 Swallow Street, London, England, W1B 4DE

United Kingdom

100%

100%

Holding

Centurion Resources GmbH

Schottenring 14 /525

1010 Vienna, Austria

Austria

Nil

100%

Exploration

Finland Investments Limited

2nd Floor 7-9 Swallow Street, London, England, W1B 4DE

United Kingdom

100%

100%

Holding

FinnAust Mining Finland Oy

Kummunkatu 23,
FI-83500 Outokumpu, Finland

Finland

Nil

100%

Exploration

FinnAust Mining Northern Oy

Kummunkatu 23,
FI-83500 Outokumpu, Finland

Finland

Nil

100%

Exploration

BJ Mining Limited

2nd Floor 7-9 Swallow Street, London, England, W1B 4DE

BVI

100%

100%

Exploration

Disko Exploration Limited

2nd Floor 7-9 Swallow Street, London, England, W1B 4DE

United Kingdom

100%

100%

Exploration

Dundas Titanium A/S

c/o Nuna Advokater ApS, Qullilerfik 2, 6, Postboks 59, Nuuk 3900, Greenland

Greenland

Nil

100%

Exploration

 

All subsidiary undertakings are included in the consolidation.

 

The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held.

 

 

9.    Trade and Other Receivables

 

Group

 

Company

Current

31 December

2017

£

30 June

2016

£

 

31 December

2017

£

30 June

2016

£

Trade receivables

30,614

-

 

30,614

-

Amounts owed by Group undertakings

-

-

 

163,519

-

Amounts owed by Directors (see note 25)

41,623

-

 

41,623

-

Prepayments

55,587

72,510

 

43,404

33,362

VAT receivable (See note 23)

346,274

78,142

 

287,731

77,814

Other receivables

168,772

25,033

 

54,000

-

Total

642,870

175,685

 

620,891

111,176

 

The fair value of all receivables is the same as their carrying values stated above.

 

At 31 December 2017 all trade and other receivables were fully performing. No ageing analysis is considered necessary as the Group has no significant trade receivable receivables which would require such an analysis to be disclosed under the requirements of IFRS 7.

 

The carrying amounts of the Group and Company's trade and other receivables are denominated in the following currencies:

 

 

Group

Company

 

31 December

2017

£

30 June

2016

£

31 December

2017

£

30 June

2016

£

UK Pounds

463,315

140,666

620,891

111,176

Euros

82,615

35,019

-

-

Danish Krone

96,940

-

-

-

 

642,870

175,685

620,891

111,176

 

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.

 

 

10.  Cash and Cash Equivalents

 

Group

Company

 

31 December

2017

£

30 June

2016

£

31 December

2017

£

30 June

2016

£

Cash at bank and in hand

2,901,922

425,046

2,820,884

371,485

 

All of the UK entities cash at bank is held with institutions with an AA- credit rating. The Finland & Greenland entities cash at bank is held with institutions whose credit rating is unknown.

 

The carrying amounts of the Group and Company's cash and cash equivalents are denominated in the following currencies:

 

 

Group

 

Company

 

31 December

2017

£

30 June

2016

£

 

31 December

2017

£

30 June

2016

£

UK Pounds

2,820,998

377,998

 

2,820,884

371,485

Euros

68,491

47,048

 

-

-

Danish Krone

12,433

 

 

-

-

 

2,901,922

425,046

 

2,820,884

371,485

             

 

 

11.  Trade and Other Payables

 

Group

 

Company

 

31 December

2017

£

30 June

2016

£

 

31 December

2017

£

30 June

2016

£

Trade payables

424,372

136,559

 

297,504

124,786

Other creditors

76,422

229,361

 

8,657

224,159

Accrued expenses

63,677

26,834

 

52,145

19,458

 

564,471

392,754

 

358,306

368,403

             

 

Trade payables include amounts due of £322,716 in relation to exploration and evaluation activities.

 

 

12.  Deferred Tax

An analysis of deferred tax liabilities is set out below.

 

Group

Company

 

 

2017

£

2016

£

2017

£

2016

£

Deferred tax liabilities

 

 

 

 

- Deferred tax liability after more than 12 months

496,045

373,343

-

-

Deferred tax liabilities

496,045

373,343

-

-

 

The movement in the deferred tax account is as follows:

 

Group

Company

 

 

2017

£

2016

£

2017

£

2016

£

At 1 June 2016

373,343

-

-

-

Acquisition of subsidiary (Note 23)

122,702

373,343

-

-

As at 31 December

496,045

373,343

-

-

 

The Group has additional capital losses of approximately £643,168 (2016: £nil) and other losses of approximately £5,728,559 (2016: £4,752,742) available to carry forward against future taxable profits. No deferred tax asset has been recognised in respect of these tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset.

 

     

13.  Share capital and premium

Group and Company

 

Issued and fully paid

Number of shares

Ordinary shares

£

Share premium

£

Total

£

At 30 June 2016

484,400,804

5,938,572

Issue of new shares - 13 July 2016 (1)

10,000,000

1,000

479,100

480,100

Issue of new shares - 8 December 2016 (2 & 3)

117,184,457

11,719

5,228,092

5,239,811

Issue of new shares - 4 January 2017 (4)

7,584,238

758

499,242

500,000

Exercise of Options - 22 February 2017

1,000,000

100

19,900

20,000

Exercise of Options - 27 February 2017

2,000,000

200

144,800

145,000

Issue of new shares - 13 March 2017 (5)

108,071,388

10,807

583,586

594,393

Exercise of Options - 31 March 2017

1,333,333

133

99,867

100,000

Exercise of Options - 4 April 2017

1,625,000

163

52,338

52,501

Exercise of Options - 20 April 2017

2,766,667

277

228,473

228,749

Exercise of Options - 8 May 2017

250,000

25

18,725

18,750

Exercise of Options - 24 May 2017

1,500,000

150

112,350

112,500

Issue of new shares - 9 June 2017 (6)

29,166,667

2,917

3,172,574

3,175,490

Exercise of Options - 28 July 2017

1,550,000

155

154,845

155,000

Exercise of Options - 31 October 2017

1,284,366

128

128,308

128,436

Exercise of Warrants - 1 November 2017

1,000,000

100

69,900

70,000

Exercise of Warrants - 18 December 2017

640,946

64

As at 31 December 2017

771,357,866

5,967,268

27,220,576

33,187,843

(1)  Includes issue costs of £19,900

(2)  Issue of shares for deferred cash consideration for BJ Mining Limited.

(3)  Includes issue costs of £334,347

(4)  Issue of shares for acquisition of Avannaa Exploration Limited

(5)  Issue of shares for remaining ownership in BJ Mining Limited

(6)  Includes issue costs of £324,509

 

On 13 July 2016 the Company raised £500,000 via the issue and allotment of 10,000,000 new ordinary shares of 0.01 pence each fully paid ('Ordinary Shares') at a price of 5 pence per share.

 

On 8 December 2016 the Company issued and allotted 40,755,885 new Ordinary Shares at a price of 0.55 pence per share as deferred consideration for a business acquisition. On the same date the Company raised £5,350,000 via the issue and allotment of 76,428,572 new Ordinary Shares at a price of 7 pence per share.

 

On 4 January 2017 the Company issued and allotted 7,584,238 new Ordinary Shares at a price of 6.59 pence per share as consideration for a business acquisition.

 

On 22 February 2017 the Company issued and allotted 1,000,000 new Ordinary Shares at a price of 2 pence per share as an exercise of options.

 

On 27 February 2017 the Company issued and allotted 1,000,000 new Ordinary Shares at a price of 7.5 pence per share as an exercise of options. On the same date the Company issued and allotted 1,000,000 via the issue and allotment of 10,000,000 new Ordinary Shares at a price of 7 pence per share.

 

On 13 March 2017 the Company issued and allotted 108,071,388 new Ordinary Shares at a price of 0.55 pence per share as consideration for business acquisition.

 

On 31 March 2017 the Company issued and allotted 1,333,333 new Ordinary Shares at a price of 7.5 pence per share as an exercise of options.

 

On 4 April 2017 the Company issued and allotted 625,000 new Ordinary Shares at a price of 2 pence per share as an exercise of options. On the same date the Company issued and allotted 1,000,000 new Ordinary Shares at a price of 4 pence per share as an exercise of options.

 

On 20 April 2017 the Company issued and allotted 1,916,667 new Ordinary Shares at a price of 7.5 pence per share as an exercise of options. On the same date the Company issued and allotted 850,000 new Ordinary Shares at a price of 10 pence per share as consideration for services provided

 

On 8 May 2017 the Company issued and allotted 250,000 new Ordinary Shares at a price of 7.5 pence per share as an exercise of options.

 

On 24 May 2017 the Company issued and allotted 1,500,000, new Ordinary Shares at a price of 7.5 pence per share as consideration for services provided

 

On 9 June 2017 the Company raised £3,175,490 via the issue and allotment of 29,166,667 new Ordinary Shares at a price of 12 pence per share.

 

On 28 July 2017 the Company issued and allotted 1,550,000 new Ordinary Shares at a price of 10 pence per share as an exercise of options.

 

On 31 October 2017 the Company issued and allotted 1,284,366 new Ordinary Shares at a price of 10 pence per share as an exercise of options.

 

On 1 November 2017 the Company issued and allotted 1,000,000 new Ordinary Shares at a price of 7 pence per share as an exercise of warrants.

 

On 18 December 2017 the Company issued and allotted 640,946 new Ordinary Shares at a price of 7 pence per share as an exercise of warrants.

 

 

14.  Share Based Payments

Shares issued to employees

On 27 February 2017 the company issued and allotted 1,000,000 Ordinary Shares to employees at a price of 7 pence per share.

 

Share options

Share options and warrants outstanding and exercisable at the end of the period have the following expiry dates and exercise prices:

 

 

 

Options & Warrants

Grant Date

Expiry Date

Exercise price in £ per share

31 December 2017

30 June

2016

29 November 2013

29 May 2017

0.075

-

6,000,000

12 November 2012

12 November 2017

0.10

-

3,684,366

29 November 2013

29 May 2019

0.10

6,000,000

6,000,000

4 March 2016

3 March 2017

0.02

-

1,000,000

4 March 2016

3 March 2018

0.04

-

1,000,000

4 March 2016

3 March 2019

0.06

1,000,000

1,000,000

15 April 2016

14 April 2021

0.02

-

625,000

17 December 2016

17 December 2021

0.07

2,689,768

-

9 June 2017

9 June 2022

0.165

1,025,000

-

17 October 2017

17 October 2020

0.20

5,350,000

-

17 October 2017

17 October 2020

0.25

5,350,000

-

17 October 2017

17 October 2020

0.30

5,350,000

-

 

 

 

26,764,768

19,309,366

 

The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash.

 

The fair value of the share options and warrants was determined using the Black Scholes valuation model. The parameters used are detailed below:

 

2013 Options

2016 Options

2016 Options

2017 Options

Granted on:

29/11/2013

4/3/2016

17/12/2016

9/6/2017

Life (years)

5.5 years

3 years

5 years

5 years

Share price (pence per share)

5.7p

3.03p

7p

15.5p

Risk free rate

2.25%

0.81%

0.81%

0.56%

Expected volatility

26.41%

48.40%

17.64%

31.83%

Expected dividend yield

-

-

-

-

Marketability discount

20%

20%

20%

20%

Total fair value (£000)

4

3

17

34

 

 

2017 Options

2017 Options

2017 Options

Granted on:

17/10/2017

17/10/2017

17/10/2017

Life (years)

3 years

3 years

3 years

Share price (pence per share)

17.75p

17.75p

17.75p

Risk free rate

0.5%

0.5%

0.5%

Expected volatility

13.85%

13.85%

13.85%

Expected dividend yield

-

-

-

Marketability discount

20%

20%

20%

Total fair value (£000)

42

8

1

 

The expected volatility of the 2013, 2016 and 2017 options is based on historical volatility for the six months prior to the date of granting.

 

The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life.

 

A reconciliation of options and warrants granted over the period to 31 December 2017 is shown below:

 

 

2017

 

2016

 

Number

Weighted average exercise price (£)

 

Number

Weighted average exercise price (£)

Outstanding at beginning of period

19,309,366

0.1347

 

17,366,296

0.1237

Expired

-

-

 

(1,681,930)

0.0043

Exercised

(13,950,312)

0.1347

 

-

-

Granted

21,405,714

0.2210

 

3,625,000

0.0366

Outstanding as at period end

26,764,768

0.1900

 

19,309,366

0.1347

Exercisable at period end

26,764,768

0.1900

 

19,309,366

0.1347

 

 

 

2017

2016

Range of exercise prices (£)

Weighted average exercise price (£)

Number of shares

Weighted average remaining life expected (years)

Weighted average remaining life contracted (years)

Weighted average exercise price (£)

Number of shares

Weighted average remaining life expected (years)

Weighted average remaining life contracted (years)

 

0 - 0.05

-

-

-

-

0.37

3,625,000

2.20

2.20

 

0.05 - 2.00

0.1900

26,764,768

2.61

2.61

0.15

15,684,366

1.78

1.78

 

 

During the period there was a charge of £119,439 (2016: £29,457) in respect of share options. 

 

 

15.  Other Reserves

 

 

Group

 

Merger reserve

£

Foreign currency translation reserve

£

Redemption reserve

£

Share option reserve

£

Total

£

At 30 June 2016

166,000

114,891

36,463

153,346

470,700

Currency translation differences

-

694,161

-

-

694,161

Issued options

-

-

-

119,439

119,439

Exercised options

-

-

-

(163,203)

(163,203)

At 31 December 2017

166,000

809,052

36,463

109,582

1,121,097

 

 

 

Company

 

Merger reserve

£

Redemption reserve

£

Share option reserve

£

Total

£

 

At 30 June 2016

166,000

36,463

153,346

355,809

 

Issued options

-

-

119,439

119,439

 

Exercised options

-

-

(163,203)

(163,203)

 

At 31 December 2017

166,000

36,463

109,582

312,045

 

 

16.  Employee benefit expense

 

Group

Company

Staff costs (excluding Directors)

Period ended

31 December

2017

£

Year ended

30 June

2016

£

Period ended

31 December

2017

£

Year ended

30 June

2016

£

Salaries and wages

242,059

134,781

216,984

19,831

Social security costs

18,656

3,679

16,476

-

Retirement benefit costs

700

40,018

700

-

 

261,415

178,478

234,160

19,831

 

The average monthly number of employees for the Group during the period was 11 (30 June 2016: 6) and the average monthly number of employees for the Company was 6 (30 June 2016: 3).

 

Of the above Group staff costs, £135,513 (30 June 2016: £169,846) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the period.

 

 

17.  Directors' Remuneration

 

Period ended 31 December 2017

 

 

Short-term benefits

Post-employment benefits

Share based payments

Total

 

£

£

£

£

Executive Directors

 

 

 

 

Roderick McIllree

34,524

106

-

34,630

Non-executive Directors

 

 

 

 

Greg Kuenzel

49,328

109

-

49,437

Graham Marshall (1)

-

-

-

-

Peter Waugh

12,328

94

6,278

18,700

Michael Hutchinson

8,334

-

5,795

14,129

 

104,514

309

12,073

116,896

               

 

Of the above Group Directors Remuneration, £18,075 (30 June 2016: £19,865) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the period.

 

 

 

Year ended 30 June 2016

 

Short-term benefits

Post-employment benefits

Share based payments

Total

 

£

£

£

£

Executive Directors

 

 

 

 

Roderick McIllree

11,370

-

-

11,370

Non-executive Directors

 

 

 

 

Greg Kuenzel

12,000

-

-

12,000

Graham Marshall (1)

-

-

-

-

Peter Waugh

-

-

-

-

Michael Hutchinson

-

-

-

-

 

23,370

-

-

23,370

 (1) Graham Marshall resigned on 16 October 2017

 

Details of fees paid to Companies and Partnerships of which the Directors detailed above are Directors and Partners have been disclosed in Note 25 .

 

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

 

 

18.  Finance Income

 

Group

 

Period ended

31 December 2017

£

Year ended

30 June 2016

£

Interest received from cash and cash equivalents

1,717

250

Finance Income

1,717

250

 

 

19.  Income Tax Expense

No charge to taxation arises due to the losses incurred.

 

The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows:

 

Group

 

Period ended

31 December 2017

£

Year ended

30 June 2016

£

Loss before tax

(2,680,708)

(620,059)

Tax at the applicable rate of 21.82% (2016: 19.20% )

(584,943)

(119,065)

Effects of:

 

 

Expenditure not deductible for tax purposes

5,120

1,401

Depreciation in excess of/(less than) capital allowances

(593)

967

Net tax effect of losses carried forward

580,416

116,696

Tax charge

-

-

 

The weighted average applicable tax rate of 21.82% (2016: 19.20%) used is a combination of the 19% standard rate of corporation tax in the UK, 20% Finnish corporation tax, 25% Austrian corporation tax and 30% Greenlandic corporation tax.

 

The Group has a potential deferred income tax asset of approximately £2,079,073 (2016: £1,498,657) due to tax losses available to carry forward against future taxable profits. The Company has tax losses of approximately £5,067,761 (2016: £4,752,742) available to carry forward against future taxable profits. No deferred tax asset has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against which the losses may be offset.

           

 

20.  Earnings per Share

Group

The calculation of the total basic earnings per share of (0.408) pence (30 June 2016: (0.172) pence) is based on the loss attributable to equity holders of the parent company of £ 2,680,708 (30 June 2016: £ 613,849) and on the weighted average number of ordinary shares of 656,936,094 (30 June 2016: 357,925,047) in issue during the period.

 

In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of share options would be to decrease the earnings per share.

 

Details of share options that could potentially dilute earnings per share in future periods are set out in Note 14 .

 

21.  Expenses by nature

 

Group

 

Period ended

31 December 2017

£

Year ended

30 June 2016

£

 

 

 

Directors' fees

81,914

3,505

Employee salaries

211,175

8,632

AIM related costs (including Public Relations)

461,770

164,811

Establishment expenses

111,308

30,000

Auditor remuneration

57,981

16,000

Auditor fees for other services

127,096

1,000

Travel & subsistence

160,549

60,787

Professional & consultancy fees

496,622

253,783

Insurance

57,102

17,238

Depreciation

46,868

5,037

Share Option expense

119,439

-

Other expenses

179,488

68,253

Total administrative expenses

2,111,312

629,046

 

 

Services provided by the Company's auditor and its associates

During the period, the Group (including overseas subsidiaries) obtained the following services from the Company's auditors and its associates:

 

Group

 

Period ended 31 December

2017

£

Year ended

30 June

2016

£

Fees payable to the Company's auditor and its associates for the audit of the Parent Company and Consolidated Financial Statements

44,500

16,000

Fees payable to the Company's auditor for tax compliance & other services

92,235

1,000

 

 

22.  Commitments

(a) Royalty agreements

As part of the contractual arrangement with Magnus Minerals Limited ('Magnus') the Group has agreed to pay royalties on revenue from mineral sales arising from mines developed by the Group. Under the terms of the respective Royalty Agreements between Magnus and the Company, the Group shall pay the following:

 

·    0.5% of net smelter returns over mineral production from the Kainuu Schist Belt tenements;

·    1.0% of net smelter returns over mineral production from the Outokumpu Savonara Mine Belt tenements;

·    1.5% of net smelter returns over mineral production from the Enonoski Area tenements; and

·    2.5% of net smelter returns over mineral production from the Hammaslahti Area tenements.

 

The Enonoski and Hammaslahti Royalty Agreements further provide that royalty entitlements may be extended to future rights with the respective areas of influence defined with the agreements.

           

Additionally, under the terms of the Kainuu Schist Belt Royalty Agreement and the Outokumpu Savonara Mine Belt Royalty Agreement the Group is obligated to pay SES Finland Limited a 0.5% net smelter royalty in respect of production from the associated tenements and Western Areas Limited ("Western Areas") 0.5% of net smelter returns over mineral production of the tenements using a biological leaching technology owned by Western Areas.

 

(b) License commitments

Bluejay now owns 4 mineral exploration licenses in Greenland. Licence 2015/08 was acquired via the acquisition of BJ Mining Limited in 2016. On 4 January 2017, via the acquisition of Disko Exploration Limited, the Group acquired another 2 mineral exploration licenses, 2011/31 and 2012/29 in Greenland. These licences include commitments to pay annual licence fees and minimum spend requirements.

 

As at 31 December 2017 these are as follows:

 

 

Group

Group

License fees

£

Minimum spend requirement

£

Total

£

Not later than one year

114,792

334,438

449,230

Later than one year and no later than five years

271,910

2,637,800

2,909,710

 

 (c) Operating lease commitments

The Group leases office premises under a non-cancellable operating lease agreement. The lease is on an initial fixed term of two years from 31 July 2017. The lease expenditure charged to the Income Statement during the period is disclosed in Note 21 and is included within establishment expenses.

 

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

 

 

Group

 

31 December

2017

£

30 June

2016

£

 

 

 

Not later than one year

60,000

36,000

Later than one year but not later than five years

35,000

-

Total lease commitment

95,000

36,000

 

 

23.  Contingent liabilities

The Directors are in the process of appealing an assessment made by HMRC which relates to the Company's ability to claim input VAT because, in the view of HMRC, the Company does not technically constitute a business for the purposes of VAT and is not eligible to make such claims in connection with services it supplied to the Company's subsidiaries. The initial assessment raised by HMRC is for an amount of £255,492 and relates to input VAT claimed and repaid by HMRC between 2012-2015. At the point the assessment was raised, HMRC ceased to repay any further claims for input VAT made by the Company. The Company has continued to submit the appropriate returns to HMRC and as a result, the Company has a receivable from HMRC of £287,731 at 31 December 2017 which is included within trade and other receivables. HMRC has made a further protective assessment for this amount, bringing the total amount of the dispute at 31 December 2017 to £543,223.

 

The Directors strongly refute the view of HMRC that the Company does not constitute a business for VAT purposes. The case is proceeding to Tribunal and resolution is not expected any earlier than Q4 2018. The Company has engaged professional services of legal counsel who will be representing it before the Tribunal. Counsel confirms the Company has a strong case.

 

Accordingly, the Directors believe that the amount of £543,223 will be recovered in full and therefore have not recognised any impairment to the carrying value of this amount.

 

 

24.  Business Combinations

 

i)         Disko Exploration Limited (formerly Avannaa Exploration Limited)

 

On 4 January 2017, the Group acquired 100% of the share capital of Disko Exploration Limited ('Disko') for £500,000. Disko is registered in United Kingdom and holds 3 mineral exploration licences in Greenland. As a result of this acquisition the Group is expected to increase its presence in this market and commodity.

 

The following tables summarise the nature of the acquisition, the consideration paid for Disko and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.

 

Disko was acquired so as to continue the expansion of the Group's operations in the exploration of mineral assets in Greenland.

 

Consideration at 4 January 2017

 

£

Equity instruments (76,428,572 ordinary shares at 6.59262 pence per share)

 

500,000

Total consideration

 

500,000

 

Acquisition related costs amounting to £88,642 have been excluded from the consideration transferred and have been recognised in profit or loss in the current period.

 

 

 

 

Recognised amounts of identifiable assets acquired and liabilities assumed

Book value

FV adj.

Total

 

 

 

£

Cash and cash equivalents

-

-

-

Exploration assets (included within Intangible Assets) (Note 7 )

9,193

613,509

622,702

Other identifiable assets and liabilities

-

-

-

Deferred tax liability

-

(122,702)

(122,702)

Total identifiable net assets

9,193

490,807

500,000

Goodwill

 

 

-

Total consideration

 

 

500,000

 

The fair value of the 76,428,572 Ordinary Shares for the Company was based on the agreed price of 6.59262 pence and 0.001 pence per Ordinary Share respectively.

 

The fair value of the exploration assets of £500,000 was estimated by applying a number of valuation metrics which include; geological upside potential, mineralogy, market benchmarks and the application of local market factors. In the Directors' opinion, the value of the consideration paid to effect the acquisition related primarily to the value of the exploration licences and upside potential representing a price agreed between willing and knowledgeable parties on an arm's length basis. Therefore, the fair value of the consideration transferred, after consideration of tax implications and the removal of the fair value of other identifiable assets acquired, has been used as a basis for valuing the exploration assets acquired

 

Since 4 January 2017 Disko contributed a loss of £132,301. No revenue was recognised in the consolidated statement of comprehensive income in respect of Disko.

 

Had Disko been consolidated from 1 July 2016, the consolidated statement of income would show a loss of £187,310 and revenue would remain unchanged.

 

ii)        BJ Mining Limited (formerly Bluejay Mining Limited)

 

a)   Initial acquisition in the year ended 30 June 2016

 

On 8 March 2016, the Group acquired 60.37% of the share capital of BJ Mining LImited ('BJM') for £905,607 (the 'BJM Acquisition'). BJM is registered in the British Virgin Islands and held a 126km sq. mineral exploration licence in Greenland. As a result of this acquisition the Group increased its presence in this market and commodity.

 

Gregory Kuenzel and Roderick McIllree were both shareholders in BJM and received consideration shares resulting from the BJM Acquisition. Refer to Note 25 for more details.

 

The following table summarises the consideration paid for BJM and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.

 

Consideration at 8 March 2016

£

Deferred Equity Consideration (40,755,885 ordinary shares at 0.55 pence per share)

224,157

Equity instruments (123,900,000 ordinary shares at 0.55 pence per share)

681,450

Total consideration

905,607

 

 

 

 

 

Recognised amounts of identifiable assets acquired and liabilities assumed

Book value

FV adj.

Total

 

 

 

£

Cash and cash equivalents

-

-

-

Exploration assets (included within Intangible Assets)

46,171

1,866,715

1,912,886

Other identifiable assets and liabilities

(37,165)

-

(37,165)

Deferred tax liability

-

(373,343)

(373,343)

Total identifiable net assets

9,006

1,493,372

1,502,378

Goodwill

 

 

-

Non-controlling interest

 

 

(596,771)

Total consideration

 

 

905,607

 

The fair value of the 40,755,885 Ordinary Shares and 123,900,000 Ordinary shares issued as consideration for Bluejay was based on the agreed price of 0.55 pence and 0.0055 pence per Ordinary Share respectively.

 

The fair value of the exploration assets of £1,912,886 was estimated by applying a number of valuation metrics which include; geological upside potential, mineralogy, market benchmarks and the application of local market factors. In the Directors' opinion, the value of the consideration paid to effect the acquisition related primarily to the value of the exploration licences and upside potential representing a price agreed between willing and knowledgeable parties on an arm's length basis. Therefore, the fair value of the consideration transferred, after consideration of tax implications and the removal of the fair value of other identifiable assets acquired, has been used as a basis for valuing the exploration assets acquired.

 

b)   Acquisition of NCI in the period ended 31 December 2017

 

On 10 March 2017, the Group acquired the remaining non-controlling interest ('NCI') in BJM (being 39.63% of the total shares in the Company). As a result the Group now owns 100% of the interest of BJM, consolidating its already controlling interest.

 

Consideration at 10 March 2017

£

Cash

-

Equity instruments (108,071,388 ordinary shares at 0.55 pence per share)

594,393

Total consideration

594,393

 

The consideration equalled the value of the NCI held at the date of acquisition.

 

 

25.  Related Party Transactions

Loans to Group undertakings

Amounts receivable as a result of loans granted to subsidiary undertakings are as follows:

 

 

Company

 

31 December

2017

£

30 June

2016

£

Centurion Universal Limited

-

564,300

Centurion Resources GmbH

-

85,155

Finland Investments Ltd

310,452

289,153

FinnAust Mining Finland Oy

5,087,869

3,515,060

Centurion Mining Limited

195

195

BJ Mining Limited

1,155,963

445,802

Dundas Titanium A/S

3,256,326

-

Disko Exploration Limited

207,067

-

At 31 December (Note 8 )

10,017,871

4,899,665

 

The loans due from Centrurian Universal Limited and Centurian Resources GmbH were impaired during the period in line with the impairment to the Austrian exploration assets following the Directors impairment assessment.

 

Loans granted to subsidiaries have increased during the period due to additional loans being granted to the subsidiaries, and foreign exchange losses of £338,674, given that no loans were repaid during the period.

 

These amounts are unsecured, interest free and repayable in Euros when sufficient cash resources are available in the subsidiaries.

 

All intra Group transactions are eliminated on consolidation.

 

Other Transactions

The Group defines its key management personnel as the Directors of the Company as disclosed in the Directors' Report.

 

Heytesbury Corporate LLP, a limited liability partnership of which Gregory Kuenzel is a partner, was paid a fee of £126,000 for the 18 month period ended 31 December 2017 (12 months to 30 June 2016: £84,000) for the provision of corporate management, accounting and consulting services to the Company. There was no balance outstanding at the period-end.

 

RM Corporate Limited (formerly Tabasco Consulting Limited), a limited company of which Roderick McIllree is a director, was paid a fee of £97,500 for the 18 month period ended 31 December 2017 (12 months to 30 June 2016: £55,930) for the provision of corporate management and consulting services to the Company. There was no balance outstanding at the period-end.

 

Greenland Gas & Oil Limited, a limited company of which Roderick McIllree and Gregory Kuenzel are directors,   was paid a fee of £45,400 for the 18 month period ended 31 December 2017 (12 months to 30 June 2016: £9,300) for geological information systems consulting services to the Company. There was no balance outstanding at the period-end.

 

JW Geological Limited, a limited company of which Jeremy Whybrow,is a director,   was paid a fee of £63,988 for the 18 month period ended 31 December 2017 (12 months to 30 June 2016: £20,000) for consulting services to the Company. Jeremy Whybrow is a substantial shareholder of the Company. There was no balance outstanding at the period-end.

 

Gregory Kuenzel, had a balance of £41,662 outstanding to the Company (2016: £nil) for exercise of option funds in the 2017 period which was paid subsequent to year end.

 

 

26.  Ultimate Controlling Party

The Directors believe there is no ultimate controlling party.

 

27.  Events after the Reporting Date

On 1 February 2018 the Company raised £17,000,000 via the issue and allotment of 77,272,728 new ordinary shares of 0.0001 pence each fully paid at a price of 22 pence per share.

 

 

Market Abuse Regulation (MAR) Disclosure

 

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

**ENDS**

Further Information

 

For further information on Bluejay Mining plc please visit http://www.titanium.gl or contact one of the following:

 

Roderick McIllree

Bluejay Mining plc

+44 (0) 20 7907 9326

Ewan Leggat

SP Angel Corporate Finance LLP

+44 (0) 20 3470 0470

Soltan Tagiev

SP Angel Corporate Finance LLP

+44 (0) 20 3470 0470

Ingo Hofmaier

Hannam & Partners (Advisory) LLP

+44 (0) 20 7907 8500

Andrew Chubb

Hannam & Partners (Advisory) LLP

+44 (0) 20 7907 8500

Charlotte Page

St Brides Partners Ltd

+44 (0) 20 7236 1177

Susie Geliher

St Brides Partners Ltd

+44 (0) 20 7236 1177

 

 

Notes

 

Bluejay is dual listed on the London AIM market and Frankfurt Stock Exchange and primarily focussed on advancing the Dundas Ilmenite Project in Greenland into production in the near term.  Dundas has been proven to be the highest-grade mineral sand ilmenite project globally, with a JORC Compliant Resource of 96 million tonnes at 6.9% ilmenite (in situ) and an Exploration Target over the Iterlak Delta of between 20 million tonnes and 60 million tonnes at between 6% and 10% ilmenite (in-situ) (see full Mineral Resource Statement below).

 

The Company's strategy is focused on securing an offtake partner and commencing commercial production at Dundas in the near term in order to create a company capable of self-funding exploration on current projects and future acquisitions.

 

Bluejay holds two additional projects in Greenland - the 2,586 sq km Disko-Nuussuaq ('Disko') Magmatic Massive Sulphide ('MMS') nickel-copper-platinum project ('Ni-Cu-PGM'), which  has shown its potential to host mineralisation similar to the world's largest nickel/copper sulphide mine Norilsk-Talnakh, and the 107sq km Kangerluarsuk Sed-Ex lead-zinc-silver project ('Kangerluarsuk'), where historical work has recovered grades of 41% zinc, 9.3% lead and 596 g/t silver and identified four large-scale drill ready targets.

 

The Company also has a 100% interest in a portfolio of copper, zinc and nickel projects in Finland.  This multi-commodity portfolio has been restructured to be cost-sustainable whilst determining the best plan for future development.

 

The Dundas Mineral Resource Statement has been reported at a 0% cut-off grade using the terminology and guidelines set out in the JORC 2012 Code.

 

 

Classification

Location

Tonnes (Mt)

Density (T/m3)

>5mm (%)

>2mm (%)

<63?m (%)

In-Situ Total Heavy Minerals (%)

In-Situ TiO2 (%)

Indicated

Moriusaq

81.0

2.12

27.8

36.6

4.6

23.8

2.9

Inferred

Moriusaq

7.0

2.12

15.4

23.3

5.7

34.1

4.4

Iterlak West

1.0

23.8

30.5

6

25.2

2.9

Iterlak East

7.0

14.6

23.1

5.6

39.4

5.8

Total Inferred

15.0

2.12

15.7

23.8

5.7

35.7

4.9

TOTAL RESOURCES

96,0

2.12

25.8

34.5

4.8

25.7

3.3

 

 

 

 

 

 

 

 

 

 

 

·    In situ TiO2 conversion to in situ ilmenite is calculated by dividing the TiO2 by 0.4765

·    Heavy Minerals have been separated from a -2 mm +63 µm size fraction using heavy liquid separation at a density of 2.95 g/cm3

·    Mineralogical assessments indicate that ilmenite is the only mineral of value in the assemblage.  The remainder of the heavy minerals is dominated by pyroxene and amphibole.

·    % TiO2 in-situ assumes that all recoverable TiO2 is in the heavy mineral component of the -2 mm +63 µm size fraction

·    % Ilmenite In-situ assumes that all TiO2 is within ilmenite and that the ilmenite contains 47.65% TiO2, based on historical exploration data

 

Qualified Persons

 

The information in this announcement that relates to Exploration Target or Mineral Resource is based on information compiled by Jeremy Whybrow, Chief Geologist of the Company and who is a Member of the Australian Institute of Geoscientists.

 

Mr Whybrow has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity which the Company is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and a qualified person as defined in the Note for Mining and Oil & Gas Companies which form part of the AIM Rules for Companies. Mr Whybrow has reviewed this announcement and consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

 

Technical Glossary

 

"Indicated Mineral Resource"

A part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

"Inferred Mineral Resource"

A part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability. mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

"Exploration Target"

An Exploration Target is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade (or quality), relates to mineralisation for which there has been insufficient exploration to estimate a Mineral Resource.

"JORC Code"

The code for reporting of the Australasian Joint Ore Reserves Committee, which is sponsored by the Australian mining industry and its professional organisations. The code is widely accepted as a standard for professional reporting purposes for reporting of mineral resources and ore reserves.

"m"

Metre, a unit of length as per the International System of Units.

"Mineral Resource"

A concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

"Mineralisation"

The process or processes by which a mineral is introduced into a rock, resulting in a valuable or potentially valuable deposit. It is a general term, incorporating various types; e.g., fissure filling, impregnation, and replacement.

 

 

 


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