TIDMBMR
RNS Number : 3264J
BMR Group PLC
29 March 2018
BMR Group PLC
("BMR" or the "Company")
Interim results for the six months ended 31 December 2017
Chairman's statement
I present below the unaudited interim results of the Company for
the six months ended 31 December 2017.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Kabwe mining licence
The Company has recently committed significant time and
resources to dealing with unwarranted issues leading to the
withdrawal of the Small Scale Licence 7081-HQ-SML ("Small Scale
Mining Licence") in Zambia, held since 22 March 2011 by the
Company's subsidiary Enviro Processing Ltd ("EPL"). The Company
regards this action as unwarranted, and is making extensive efforts
in Zambia to achieve rescission of the withdrawal, in tandem with
pursuing a formal appeal. The Company continues to receive positive
feed-back from its representatives in Zambia, in ongoing direct
contact with the relevant Zambian authorities, that the unfortunate
circumstances the Company unwittingly finds itself in are nearing
resolution.
The Small Scale Mining Licence was granted for a period of 10
years from 20 October 2010, and renewable thereafter. Under that
licence BMR holds the stockpiles of tailings at Kabwe, Zambia. In
addition, BMR has the surface rights over 703 hectares of
contiguous land held under the Large Scale Licence 6990-HQ-LML to
November 2021, and renewable thereafter.
The tailings comprise 6.4 million tonnes dry tonnage of which
2.65 million tonnes are JORC-compliant resources. Under the current
management team, these stockpiles of tailings have become an
increasingly valuable asset for the Company. First, BMR developed
in 2015 its proprietary acid/brine leach processing methodology for
their conversion into lead sponge, zinc cathodes and zinc sulphate
heptahydrate as well as vanadium pentoxide, subject to further
approval of the Zambia Environmental Management Agency ("ZEMA").
Secondly, BMR received confirmation from ZEMA in 2016 that its
Environmental Social Impact Assessment, in respect of the
processing of the tailings and the construction of its planned
treatment plants, had been approved.
EPL has an established operation at Kabwe employing a number of
local personnel, working closely with local authorities and
government bodies, including the Ministry of Mines and Mineral
Development and ZEMA. In addition, EPL has complied with Zambia's
statutory requirement for mining companies to report annually on
the past 12 months' activities and has regularly updated the
Ministry on future plans. Such plans include investment by EPL in
the local economy and regeneration of the polluted land at Kabwe
leading to a healthy environment, as supported by the independent
activities of the World Bank in this area.
Against this background, the Zambian Government has commenced
action aimed at filtering out those companies with dormant mining
licences in the country and make way for overseas mining companies
to invest in Zambia. In January 2017, Zambia's Mines and Mineral
Development Minister announced the commencement of the revocation
of more than 600 dormant mining licences. It is my understanding
that reviews of this nature are not infrequent in mineral rich
African countries and, from time to time following a change of
Government, or appointment of a new Minister, are used to
reinvigorate their mining sectors and prevent stagnation.
Shareholders should be comforted to know that BMR has complied
with Zambia's mining laws (emphasised in the recent appeal letter
submitted by the Company) and has also expended an aggregate $8
million to date in Zambia in relation to its mining licences.
Accordingly, BMR management, in consultation with its in-country
team and legal advisers, concluded that the review process
initiated by the Government was a blanket approach (my
understanding is that all holders of mining licences benefitting
from overseas investment received the same notice) and was not
targeted specifically at BMR's operations. Similarly, BMR
determined in consultation with its local team and legal advisers
that there was no justification for the notice by letter dated 24
August 2017 ("Default Notice") from Zambia's Director of Mines (for
unexplained reasons not delivered to EPL until 26 September, 2017),
claiming failure by EPL to commence mining operations in accordance
with the approved plan. EPL consequently submitted a comprehensive
response to the Default Notice detailing its past, current and
future operations, and planned processing of its stockpiles of
tailings.
BMR has recently received unwelcome comment in relation to its
dealings on these matters. The Directors believe that comment to be
mis-placed. BMR's independent director has formally reviewed the
actions of the executive management and concluded that actions
taken on and following 26 September 2017 were reasonable, with the
knowledge and advice the executive management then had.
Thereafter, BMR has come to understand that rogue factors within
the Zambian mining sector had colluded, leading the Mining
Licencing Committee to terminate the Small Scale Mining Licence by
letter dated 19 December 2017. This letter was initially not
delivered (mirroring the unexplained situation with the Default
Notice referred to above) and was not received until the occasion
of a meeting requested by EPL at the Mining Cadastre on 6 February
2018. The letter was immediately discussed with BMR's advisers, and
announced in accordance with the AIM Rules for Companies, leading
to the temporary suspension of the Company's share trading on
AIM.
As a significant measure of the potential success of the Kabwe
plant construction and of its zinc and lead processing capability,
BMR was able to reach agreement with Jubilee Metals Group plc
("Jubilee"), announced on 23 October 2017, which is expected to
lead to the conclusion of a formal joint venture agreement upon
resolution of the current licence issues. The conclusion of that
joint venture agreement will secure further investment into Kabwe
with up to GBP2.3 million of conditional debt finance for the
construction of the plant.
We have lodged our appeal against the licence cancellation and
are now lobbying extensively in Zambia, with significant support
from Jubilee, for right to prevail and for the consequential return
of the licence. BMR's representatives in Zambia have brought to the
Government's attention procedural errors and unexplained reasons
for the cancellation of EPL's licence. We made a full presentation
to representatives from the President's Office earlier this week
and a senior engineer from the office of the Minister of Mines has
carried out a site inspection at Kabwe to confirm our significant
investment and operations to date. As a result, we are confident
that our position will be properly recognised and that the licence
will therefore be restored shortly.
African Compass International Limited ("ACI")
We continue to be severely disappointed with the lack of
performance by ACI under the terms of the facility agreement it
entered into with BMR on 23 September 2016. At the same time, we
continue in discussions with ACI as we believe there still remains
a prospect that ACI will comply with the requirements. As a result,
and while we are in discussions for the return of the licence, we
have decided not at the present time to terminate the facility
agreement and the off-take agreement with ACI. That position
remains under constant review.
BMR's intention is that, in the event ACI continues not to
comply with the terms of the facility agreement at the time the
licence is returned, we will terminate the agreements with ACI and
seek recovery of the fee of $109,800 paid to ACI.
BMR reserves all rights against ACI for its significant breach
of the terms of the facility agreement.
Jubilee Metals Group plc ("Jubilee")
We entered into agreements with Jubilee for up to GBP2.3 million
conditional debt funding for the construction of the plant at
Kabwe, a subscription of GBP500,000 into BMR and a share for share
exchange resulting in Jubilee holding 29% of BMR and BMR holding
4.83% in Jubilee. The detailed terms of the operating and joint
venture agreements with Jubilee and their debt funding facility are
being negotiated and can only be concluded once the EPL licence has
been returned.
We believe that Jubilee's positive involvement with BMR
substantiates and adds credibility to the potential at Kabwe as
well as bringing a high degree of technical, operational and
managerial experience to the project.
Star Zinc and Galileo Resources Plc ("Galileo")
We have completed the acquisition of Large Scale Prospecting
Licence 19653 - HQ - LPL ("Star Zinc") together with agreements
over financing from Galileo and now hold a 15% interest in the
project. We are in discussions with Galileo for an off-take
agreement for the processing of ore from Star Zinc at Kabwe, which
has the potential to enhance the zinc head grade to the plant and
quantity of zinc products to be produced at BMR's own Kabwe
plant.
Board changes
We have previously stated that, for good corporate governance,
we would look to appoint an additional non-executive director and
to split the roles of Chairman and CEO. We also recognise the
importance of satisfying the corporate governance requirements
under which AIM companies will have to operate with effect from 28
September 2018. While BMR has been evolving through a phase of
relatively high risk until its platform for plant construction and
revenue generation can be realised which is now expected later this
year, it has been difficult to attract good candidates as the
Company has not been in a position to allocate its scarce cash
resources to appointing new directors.
As entitled under the terms of its investment in BMR, Jubilee
has proposed the appointment of Colin Bird, Jubilee's non-executive
chairman, to the BMR board, whilst its interests in the Company
exceed 15%. Colin is a seasoned mining engineer who has developed
and managed a number of listed mining companies involved in diverse
countries and commodities. We believe his experience will be of
significant benefit to the Company in developing our asset base and
assisting us in enhancing value for shareholders. We look forward
to Colin joining the Board, subject to completion of the necessary
due diligence.
We are also in discussion with a number of other excellent
candidates and expect to be able to satisfy the required level of
corporate governance in advance of 28 September 2018, including the
separation of the roles of Chairman and CEO.
Shareholders
I am warmly encouraged by significant support from our
shareholders and, in particular, from a small group who have
expressed interest to invest further in the Company.
Litigation pursuit and VAT appeal
We continue to pursue the legacy issues from the former
management. These issues include the claims against certain
entities arising from the investigation into financial
irregularities and from our appeal against the decision of HMRC to
de-register the Company for VAT with an assessment for back
VAT.
Interim results
The loss before taxation for the six months ended 31 December
2017 before exchange translation differences was GBP539,000 (2016:
GBP702,000). The loss for the period includes administrative
expenses which amounted to GBP530,000 (2016: GBP617,000). Loss per
ordinary share was 0.26p (2016: 0.40p). Total net assets at 31
December 2017 amounted to GBP10.17 million (2016: GBP11.03
million).
Outlook
The return of the licence at Kabwe is critical to the Company
and our key focus is on achieving this in the near future. We
believe that the reasons purportedly behind the cancellation, which
was outside our control, are false.
We believe that Jubilee has added a significant strong dimension
to the Company and welcome their involvement to secure the Kabwe
plant construction
We are optimistic about the Company's prospects once we secure
the return of the licence.
Alex Borrelli
Chairman
BMR GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 31 December 2017
Unaudited Unaudited Audited
Period ended Period ended Year ended
31 December 31 December 30 June
2017 2016 2017
GBP GBP GBP
------------------------------ -------------- -------------- -------------
Continuing operations
------------------------------ -------------- -------------- -------------
Administrative expenses (530,433) (616,693) (1,515,868)
------------------------------- -------------- -------------- -------------
Total administrative
expenses (530,433) (616,693) (1,515,618)
------------------------------- -------------- -------------- -------------
Finance expense (8,697) (85,789) (86,753)
------------------------------- -------------- -------------- -------------
Finance income 8 425 430
------------------------------- -------------- -------------- -------------
Loss before tax (539,122) (702,057) (1,602,191)
------------------------------- -------------- -------------- -------------
Taxation - - -
------------------------------ -------------- -------------- -------------
Loss for the period
after taxation attributable
to equity holders
of the parent company (539,122) (702,057) (1,602,191)
------------------------------- -------------- -------------- -------------
Other comprehensive
loss:
------------------------------ -------------- -------------- -------------
Exchange translation
differences on foreign
operations (273,946) 786,303 158,061
------------------------------- -------------- -------------- -------------
Total comprehensive
income/(loss) for
the period attributable
to equity holders
of the parent company (813,068) 84,246 (1,444,130)
------------------------------- -------------- -------------- -------------
Loss per ordinary
share
------------------------------ -------------- -------------- -------------
Basic and diluted
(pence) (0.26p) (0.40p) (0.88p)
------------------------------- -------------- -------------- -------------
The comparative figures are for the six month period ended 31
December 2016 and the year ended 30 June 2017.
BMR GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
GBP GBP GBP
------------------------------ ------------ ------------ ------------
Assets
------------------------------ ------------ ------------ ------------
Non-current assets
------------------------------ ------------ ------------ ------------
Intangible assets 1,309,030 13,270,528 1,390,267
------------------------------- ------------ ------------ ------------
Development assets 11,100,785 - 11,003,391
------------------------------- ------------ ------------ ------------
Property, plant and
equipment 506,313 524,282 491,553
------------------------------- ------------ ------------ ------------
12,916,128 13,794,810 12,885,211
------------------------------ ------------ ------------ ------------
Current assets
------------------------------ ------------ ------------ ------------
Trade and other receivables 42,921 44,189 417,078
------------------------------- ------------ ------------ ------------
Cash and cash equivalents 179,131 230,679 154,969
------------------------------- ------------ ------------ ------------
222,052 274,868 572,047
------------------------------ ------------ ------------ ------------
Total assets 13,138,180 14,069,678 13,457,258
------------------------------- ------------ ------------ ------------
Liabilities
------------------------------ ------------ ------------ ------------
Current liabilities
------------------------------ ------------ ------------ ------------
Trade and other payables 763,530 628,073 947,860
------------------------------- ------------ ------------ ------------
Total current liabilities 763,530 628,073 947,860
------------------------------- ------------ ------------ ------------
Non current liabilities
------------------------------ ------------ ------------ ------------
Deferred tax 2,209,534 2,416,230 2,275,314
------------------------------- ------------ ------------ ------------
Total non current liabilities 2,209,534 2,416,230 2,275,314
------------------------------- ------------ ------------ ------------
Total liabilities 2,973,064 3,044,303 3,223,174
------------------------------- ------------ ------------ ------------
Net assets 10,165,116 11,025,375 10,234,084
------------------------------- ------------ ------------ ------------
Equity
------------------------------ ------------ ------------ ------------
Share capital 21,956,030 21,403,488 21,556,030
------------------------------- ------------ ------------ ------------
Share premium 23,185,109 22,256,466 22,841,009
------------------------------- ------------ ------------ ------------
Share based payment
reserve 84,500 84,500 84,500
------------------------------- ------------ ------------ ------------
Merger reserve 1,824,000 1,824,000 1,824,000
------------------------------- ------------ ------------ ------------
Translation reserve 1,383,302 2,285,490 1,657,248
------------------------------- ------------ ------------ ------------
Retained earnings (38,267,825) (36,828,569) (37,728,703)
------------------------------- ------------ ------------ ------------
Total equity 10,165,116 11,025,375 10,234,084
------------------------------- ------------ ------------ ------------
BMR GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six month period ended 31 December 2017
Share Share Share Merger Translation Retained Total
capital premium based reserve reserve earnings equity
payment
reserve
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
GBP GBP GBP GBP GBP GBP GBP
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
As at 30 June
2016 21,310,951 21,759,953 84,500 1,824,000 1,499,187 (36,126,512) 10,352,079
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
Total comprehensive
income for
the period - - - - 786,303 (702,057) 84,246
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
Issue of shares 92,537 527,463 - - - - 620,000
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
Share issue
costs - (30,950) - - - - (30,950)
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
As at 31 December
2016 21,403,488 22,256,466 84,500 1,824,000 2,285,490 (36,828,569) 11,025,375
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
As at 30 June
2017 21,556,030 22,841,009 84,500 1,824,000 1,657,248 (37,728,703) 10,234,084
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
Total comprehensive
Loss for the
period - - - - (273,946) (539,122) (813,068)
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
Issue of shares 400,000 400,000 - - - - 800,000
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
Share issue
costs - (55,900) - - - - (55,900)
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
As at 31 December
2017 21,956,030 23,185,109 84,500 1,824,000 1,383,302 (38,267,825) 10,165,116
-------------------- ---------- ---------- -------- ----------- ----------- -------------- ----------
BMR GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
for the six month period ended 31 December 2017
Unaudited Unaudited
Period ended Period
31 December ended
2017 31 December
GBP 2016
GBP
------------------------------------ -------------- -------------
Cash flows from operating
activities
------------------------------------ -------------- -------------
Loss before tax (539,122) (702,057)
------------------------------------- -------------- -------------
Adjustments to reconcile net
losses to cash utilised :
------------------------------------ -------------- -------------
Amortisation of exploration
and evaluation assets 49,677 50,922
------------------------------------- -------------- -------------
Depreciation of property,
plant and equipment 13,887 21,517
------------------------------------- -------------- -------------
Finance income (8) (425)
------------------------------------- -------------- -------------
Operating cash outflows before
movements in working capital (475,566) (630,043)
------------------------------------- -------------- -------------
Changes in:
------------------------------------ -------------- -------------
Trade and other receivables 375,189 148,242
------------------------------------- -------------- -------------
Trade and other payables (183,840) 92,005
------------------------------------- -------------- -------------
Net cash outflow from operating
activities (284,217) (389,796)
------------------------------------- -------------- -------------
Investing activities
------------------------------------ -------------- -------------
Interest received 8 425
------------------------------------- -------------- -------------
Purchase of property, plant
and equipment (33,507) (464,657)
------------------------------------- -------------- -------------
Purchase of intangible exploration (52,928) -
and evaluation assets
------------------------------------ -------------- -------------
Purchase of development assets (350,217) (504,810)
------------------------------------- -------------- -------------
Net cash outflow from investing
activities: (436,644) (969,042)
------------------------------------- -------------- -------------
Financing activities
------------------------------------ -------------- -------------
Proceeds from issue of shares 800,000 620,000
------------------------------------- -------------- -------------
Share issue costs (55,900) (30,950)
------------------------------------- -------------- -------------
Net cash generated from financing
activities 744,100 589,050
------------------------------------- -------------- -------------
Net increase/(decrease) in
cash and cash equivalents 23,239 (769,788)
------------------------------------- -------------- -------------
Effect of foreign exchange
rate changes 923 (13,887)
------------------------------------- -------------- -------------
Cash and cash equivalents
at beginning of period 154,969 1,014,354
------------------------------------- -------------- -------------
Cash and cash equivalents
at end of period 179,131 230,679
------------------------------------- -------------- -------------
Notes to the interim results:
1. General information and accounting policies
This announcement is for the unaudited interim results for the
period ended 31 December 2017. The Registered Office of the Company
is at 35 Piccadilly, London W1J 0DW.
2. Basis of preparation
The consolidated interim financial information has been prepared
using policies based on International Financial Reporting Standards
issued by the International Accounting Standards Board ("IASB") as
adopted by the European Union, which are expected to be applied in
the Group's financial statements for the year ending 30 June 2018
and are materially consistent with the accounting policies applied
in respect of the year ended 30 June 2017.
The consolidated interim results for the period 1 July 2017 to
31 December 2017 is unaudited, does not include all the information
required for full financial statements and should be read in
conjunction with the Group's consolidated financial statements for
the year ended 30 June 2017. In the opinion of the Directors, the
consolidated financial information for the period represents fairly
the financial position, results from operations and cash flows for
the period in conformity with generally accepted accounting
principles consistently applied.
The annual financial statements of BMR Group PLC are prepared in
accordance with International Financial Reporting Standards
('IFRSs') as issued by the International Accounting Standards Board
('IASB') and as adopted by the European Union. The Group's
consolidated annual financial statements for the year ended 30 June
2017, have been filed with the Registrar of Companies and are
available on the Company's website www.bmrplc.com.
As permitted, the Group has chosen not to adopt IAS 34 "Interim
Financial Reporting". The Financial Statements are presented in GBP
Sterling. For the reference period end, the exchange rate from GBP
to US$ was GBP1.00: $1.349 (2016: GBP1.00: $1.2336).
3. Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company will achieve restoration of the EPL
licence in Zambia and complete the operating and joint venture
agreements with Jubilee to secure the GBP2.3 million debt funding.
However, the Group's ability to continue as a going concern is
reliant upon successfully obtaining funds as it moves towards
production and to finance its ongoing working capital requirements.
The Directors have therefore considered this to be an uncertainty
which may cast doubt about the Group's ability to continue as a
going concern.
4. Share capital and warrants
On 20 November 2017, the Company issued 40,000,000 ordinary
shares of 1p each at a price of 2p per share raising GBP800,000
before expenses.
As at 31 December 2017, the Company had in issue 238,339,566
ordinary shares and no warrants.
5. Intangible assets
Additions of intangible assets amounted to GBP52,000 for the six
month period ended 31 December 2017 incorporating the expenditure
on the exploration and testing programme for the Ester Project.
6. Development assets
Additions of development assets amounted to GBP350,000
incorporating the Kabwe project (GBP122,000) and the investment in
Star Zinc (GBP228,000). Impairment was considered in relation to
the operating licence issues but no impairment has been made at
this stage as the Directors consider that the licence is expected
to be reinstated.
7. Loss per share
The loss per share of 0.26 pence (2016: loss 0.40 pence) has
been calculated on the basis of the loss of GBP539,000 (2016: loss
GBP702,000) and on 205,078,695 (2016: 177,050,416) ordinary shares,
being the weighted average number of ordinary shares in issue
during the period ended 31 December 2017.
8. Events after the reporting date
On 19 January 2018, the Company has issued 25,000,000 ordinary
shares of 1p each at a price of 2p per share to Jubilee Metals
Group Plc raising approximately GBP500,000 before expenses and in
addition 72,371,298 of subscription shares were issued in exchange
for 63,166,969 new ordinary shares of 1p each in the capital of
Jubilee.
Ends
For further information:
BMR Group PLC 020 7734 7282
Alex Borrelli, Chairman
WH Ireland Limited 020 7220 1666
NOMAD and Joint Broker
Chris Fielding, Head of Corporate Finance
Peterhouse Corporate Finance 020 7469 0930
Joint Broker
Lucy Williams/ Duncan Vasey/ Heena Karani
For further information, please see the Company's website at
http://www.bmrplc.com
The Directors of BMR Group PLC accept responsibility for this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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