TIDMKGLD
RNS Number : 9932R
Kolar Gold Limited
14 November 2011
14(th) November 2011
Kolar Gold Ltd
Final results for year ended 30 June 2011
Notice of Annual General Meeting
Kolar Gold Limited ("Kolar Gold" or "KGL" or the "Company"), the
Indian focussed gold exploration and mine development company,
announces its audited results for the year ended 30 June 2011.
HIGHLIGHTS
Corporate and Operational:
-- Successful admission to trading on AIM.
-- Entered into agreements with Geomysore Services India Pvt
("GMSI") to secure tenement rights to the Kolar Gold Projects.
-- Entered into partnership with SUN Mining, part of the SUN
Group, an Indian-based investor in a number of sectors including
mining, for assistance in dealing with the Government regarding the
Kolar Gold Projects and the possible acquisition of mining assets
from BGML.
-- Commencement of drilling and evaluation at South Kolar Licence area.
-- Completion of a 40 line km IP survey along full length of the South Kolar Licence.
-- Appointment of four experienced board members pre-IPO.
Post Period Corporate and Operational:
-- Development of all planned site offices and workshop [at South Kolar].
-- Commencement of exploration activities as part of a two-rig
drill programme at South Kolar.
-- First set of assay results received from the first 13 holes
at the Chigargunta NE deposit, South Kolar were very
encouraging.
Financial:
-- Raised GBP12 million before expenses through IPO in June.
-- Strong cash position at 30 June 2011 of GBP11.54m (2010: GBP0.740m)
-- GBP4.5m to be used primarily to fund tenement rights to gold
assets and GBP3.3m on associated exploration at South, North and
East Kolar up to December 2012.
Nick Spencer, Chief Executive Officer of Kolar Gold Limited,
comments:
"It has been a successful year for Kolar Gold and good progress
has been made since we successfully listed on AIM in June. Kolar is
now well capitalised and we anticipate an increasing level of
operational activity in the coming quarters as we drill South Kolar
and a second drill rig commences by end November. The initial
drilling results have been very encouraging showing multiple high
grade narrow veins close to surface. Upon receipt of the
Prospecting Licence for North Kolar an additional two drill rigs
will then begin exploration work as we seek to execute our medium
term target of delineating 1-2Moz of gold.
"Management, with the assistance of SUN, continues to pursue the
acquisition and development of the BGML mine assets jointly with
our partner, the combined BGML ex-employee unions. The Supreme
Court is expected to confirm the sale process soon. I look forward
to updating the market on these developments."
About Kolar Gold Limited
Kolar Gold Limited is an Indian gold exploration and development
company, listed on AIM London (KGLD), that has an experienced
international board and strong local partners. KGL has rights to
explore and develop one prospecting licence and 13 further licence
applications in the Kolar Gold Belt, an 80 kilometre long Archaean
Greenstone Belt, in Southern India. The Kolar Gold Belt is one of
the most prospective underdeveloped Archaean Greenstone Belts in
the world and is regarded by Mining Associates Pty Limited, the
Competent Person, as comparable to the Archaean Greenstone Belts of
South Africa, Canada and Western Australia which have similar
geology, structure and style of mineralisation. This project area
includes 32 known mineralised prospects and covers 568 square
kilometres in the southern states of Andhra Pradesh, Karnataka and
Tamil Nadu. KGL commenced exploration on the first Prospecting
Licence in South Kolar in February 2011. KGL is also jointly
pursuing, with the mine employee unions, the acquisition and
revival of the neighbouring historic Kolar Gold Fields which has
produced 25 million ounces of gold at 15.9 grams per tonne over 120
years until closure in 2001.
Notice of AGM
The First Annual General Meeting of Shareholders of the Company
will be held at Frances House, Sir William Place, St Peter Port,
Guernsey on Thursday 8 December 2011 at 3.00 pm. Notice of the AGM
will be dispatched to shareholders along with the Group's report
and accounts.
Copies of the 2011 Annual Report will be posted to shareholders
on Monday 14(th) November following which they may be obtained from
the date of posting for one month free of charge from the
registered office of the Company, Frances House, Sir William Place,
St Peter Port, Guernsey, as well as from the Company's web site
www.kolargold.com.au
For further information:
Kolar Gold Limited
Nick Spencer +617 3846 0211
Cenkos Securities plc
Nomad and Joint Broker
+44 20 7397 8900/+44
Beth McKiernan/Ken Fleming 131 220 6939
Ocean Equities Limited
Joint Broker
Will Slack +44 20 7786 4370
Tavistock Communications
Ed Portman / Lydia Eades +44 20 7920 3150
Chairman's Report
Dear Shareholder,
I am pleased to present my first Chairman's Report to the
shareholders of Kolar Gold Limited. I take this opportunity to
thank all of our loyal, long-standing shareholders for their
support and welcome those new shareholders who have recently joined
us on our successful admission to trading on the AIM market in June
of this year. I also welcome our newly appointed directors to the
Board and look forward to working with them and the Group's
management and staff towards building a substantial gold company in
India as our longer term goal.
Gold and India
Gold is an integral part of Indian culture and society and India
remains one of the largest consumers of the metal. The strong
growth in the Indian economy combined with the strong cultural
affinity for owning gold ensures India's position as a cornerstone
for any future demand.
India's geology has endowed the country with some very promising
gold prospects, especially the Archaean greenstone belts across
Southern India. Within this, the Kolar belt is an important area in
terms of historic production grades and deposit size and is
considered a world class province. It was the location of a
significant producer of gold until production ceased at the BGML
mine in 2001. Today, India is a very modest producer by world
standards. Limited modern exploration and feasibility studies
within a restrictive mining regime, have curtailed the development
of the Kolar region and the gold mining industry generally in
India. Using modern exploration techniques and programmes, however,
the Kolar belt has considerable potential for developing existing
prospects and new discoveries.
On the regulatory front in India, reform to the current mining
regulations is currently underway with a new Mines and Minerals
Development Bill having been recently drafted and approved by
Cabinet. The Bill is expected to go before parliament in December
2011, and it is understood that it will include the following
features:
-- the establishment of a National Mineral Tribunal;
-- increased maximum area allowable per company, per state, for
Prospecting Licences ("PL"s) and Mining Leases ("ML"s);
-- reduced and specified time limits for the grant of
Reconnaissance Permits ("RP"s), Prospecting Licenses, and Mining
Leases; and
-- simplified process for transferring licences.
The passing of this Bill is a crucial step forward in the
development of the gold mining industry in India.
The Indian government is now also striving to increase
transparency and curtail illegal mining activities. This, together
with the proposed new mining policy, gives us confidence that India
is indeed heading towards a more developed mining regime resulting
in improved prospects for the gold mining industry in
particular.
In its activities, Kolar Gold has adopted internationally
accepted best practices and standards. By adopting these benchmarks
we hope to create a culture of excellence for not only Kolar Gold
but also the emerging gold mining industry in India.
Key achievements
The Group achieved a number of significant milestones during the
year, namely:
-- successful completion of our Initial Public Offering and
admitted to trading on the AIM Market, raising gross proceeds of
GBP12 million;
-- securing the tenement rights to the Kolar Gold Projects in India;
-- entering into a strategic relationship with SUN Mining; and
-- commencement of exploration activities at South Kolar.
The Kolar Gold Group ("the Group") underwent a major restructure
in early 2011 and the shares of Kolar Gold Limited were admitted to
trading on AIM on 17(th) June, 2011, when we raised gross proceeds
of GBP12 million of new equity in a difficult and volatile
market.
The Group negotiated the securing of the tenement rights to the
Kolar Gold Projects with GMSI in November 2010. The Kolar Gold
Projects comprise one granted Prospecting Licence ("South Kolar"),
and applications for six further Prospecting Licences, four Mining
Leases and three Reconnaissance Permits. The rights should secure
the Group's strategic position in the region.
The Kolar Gold Projects are situated in the Kolar Gold Belt, a
80km long and 3 to 6km wide Archaean greenstone belt in Southern
India. This area includes the now dormant Central Kolar Mines
operated in the past by Bharat Gold Mines Limited (BGML).
Kolar Gold's rights to exploit the potential value of the Kolar
Gold Projects are derived from these agreements. These agreements
entitle Kolar Gold, in partnership with GMSI, to conduct
exploration activities in the Kolar Gold Projects as and when each
license area is granted by the government.
Following the GBP12 million placing and Admission to AIM, the
Group is now well positioned to exploit its tenement rights and
establish itself as a significant entity in the Indian gold mining
sector.
Relationship with SUN Mining
SUN Mining is part of the SUN Group, an Indian-based global
investor with a diverse portfolio in several industry sectors,
including mining and oil and gas. SUN Mining is a shareholder in
GMSI and has interests in the gold exploration and development
potential of India. It also owns two gold mines in Kazakhstan and
Siberia.
Kolar Gold has issued shares and warrants to SUN Mining in
exchange for the provision of past and future services. These
services include assisting the Group in its dealings with the
Government of India, local government and other interested parties
in managing and exploiting the Kolar Gold Projects, and dealing
with the possible acquisition of the BGML assets.
SUN Mining is a valued partner and I believe it will be a key
contributor to the Group's success in India.
Commencing exploration activities
The Company commenced drilling in the Chigargunta NE tenements
at South Kolar at the beginning of this financial year and results
to date have been encouraging, validating the historical results
from earlier work carried out by the Geological Survey of
India.
We have now commenced drilling at Mallapakonda, also at South
Kolar. The Group expects to spend a total of over GBP3 million in
exploration and evaluation activities by December 2012.
We recently announced the completion of 40 line kilometres of
detailed Induced Polarisation ("IP") Surveys to delineate
conductive zones favourable for sulphide mineralisation that have
potential for associated gold mineralisation.
Further details of our exploration activities to date are set
out in your Chief Executive Officer's Report.
Outlook and strategy
The successful capital raising, coupled with the agreements with
GMSI and SUN Mining, has put the Group on a sound footing to
explore the Kolar Gold Projects, acquire further licences and
pursue the potential acquisition of the BGML Assets. The inherent
synergies in pursuing these goals will greatly contribute to your
Company's future success. Depending on results and the rate of
progress, it is likely that the Group will need to raise additional
finance by December 2012 in order to continue to build value.
Thank you for your support.
Harvinder Hungin
Chairman
Kolar Gold Limited
Chief Executive Officer's Report
I am pleased to report that this has been a year of significant
achievements for Kolar Gold. In the last 12 months we have secured
rights to the Kolar Gold Projects in Southern India, established
Kolar Gold in Karnataka, South India and started drilling on our
first licensed area, South Kolar in February. We underwent a
corporate restructure; established a new board and then
successfully raised GBP12m and the Company's shares were admitted
to trading on AIM on 17(th) June 2011. Despite the turbulent
markets, we have funding for our exploration programme, with highly
prospective gold exploration assets and a clear execution plan -
and we believe 2012 should be an exciting year for Kolar Gold.
Kolar Gold Projects
A significant milestone was achieved in November 2010 when we
finalised agreements with GMSI, a Bangalore based exploration group
that gives us the exclusive option to acquire the economic interest
and title of the Kolar Gold Projects. These projects consist of one
granted Prospecting Licence and applications for six further
Prospecting Licences, four Mining Leases and three Reconnaissance
Permits in the states of Andhra Pradesh, Karnataka and Tamil Nadu.
These Projects cover 568km(2) across the highly prospective Kolar
Greenstone belt and together they encircle the historic BGML mine
which has produced more than 25 million ounces of gold. The first
granted Prospecting Licence is South Kolar which extends on strike
20 kilometres south of the BGML mine and includes two known
deposits and twelve mineralised prospects ready for drilling.
Kolar Gold is working closely with GMSI and their key geologists
successfully on drilling and exploration work at South Kolar. Our
Chief Operating Officer Richard Johnson is now based in Bangalore
as he establishes our operations, initially at South Kolar. Our
collective efforts also focus on progressing priority licence
applications through the government process.
Exploration Programme
We plan to have a second drill rig on the granted South Kolar
licence area by the end of November 2011 and two further drill rigs
at North Kolar in 2012 upon granting of this second Prospecting
Licence. We have budgeted GBP3.3million for exploration and
drilling up to December 2012. Diamond core drilling started at
South Kolar in February 2011 to better understand the geology and
mineralisation and to validate gold resources of the Chigargunta NE
deposit, which could potentially be a repetition of the
neighbouring historic BGML Chigargunta mine. We have recently set
up offices and a workshop in the area and have been employing
approximately 30 local people on this drill programme. The latest
drilling update issued on 15(th) August 2011 reported some
significant mineralised intersections.
Chigargunta NE and Eastern Lodes
Gold mineralisation is localised along shear zones,
characterised by strong mylonitic fabric, profuse quartz veining
and hydrothermal alteration. The current Chigargunta NE JORC
compliant resource is 13,182 ounces of gold due to limited drilling
under the previous Reconnaissance Permit.
Currently, in Chigargunta NE, we have completed thirteen Diamond
drill holes, with all holes intersecting mineralised zones.
Logging, sampling and further assays are underway and a full review
of data and geological modelling is being carried out.
The Chigargunta Eastern Lodes are mapped and identified on
surface. An access road was cut and a small causeway built for the
core rig and drilling commenced there in October 2011. There are an
initial twelve target holes planned.
Bisanatham
New Bisanatham is an area with ancient workings and underground
development about 2km to the north west of the old Bisanatham Mine
of BGML. Three diamond drill holes were completed on the southerly
extension of the main Bisanatham lode. This lode extension was
confirmed and the holes are being logged to prepare for
sampling.
Mallapakonda
The mineralisation here occurs as sulphidic zones associated
with banded iron formation within mafic units. Several substantial
ancient workings are seen at surface. Of the 800m strike length of
mineralisation at the end of the prominent Mallapakonda Hill, only
150m has been evaluated with drilling. Historically there have been
three levels of underground development. Mallapakonda has an
initial JORC compliant resource of 61,527 ounces of gold.
IP Survey
An IP Survey was commenced ahead of schedule in May 2011. This
survey is now complete over the full 20 kilometre extent of the
South Kolar Licence. Close line spacing at Chigargunta has helped
with the drill hole placements and also identified several
anomalies along strike to the north. This data confirms three long
anomalies possibly associated with sulphidic mineralisation. A
Reverse Circulation ("RC") drill rig will start to step out along
the licence area at these identified targets in November 2011.
BGML Acquisition
Kolar Gold, with the assistance of SUN Mining, continues to
pursue the acquisition and development of the BGML mine assets
jointly with our partner, the combined BGML ex-employee unions. The
matter has been passed to the Supreme Court for final direction on
the sale process. We believe that exploration and development of
the Kolar Gold Projects, which surround the historic BGML mines,
will demonstrate our commitment to gold exploration in this region
and should assist this process. Any acquisition would require
additional funding from the market.
The next 12 months should be a very exciting time for Kolar Gold
as we embark on establishing a strong presence in India and pursue
the exploration of these potentially world class gold assets. We
look forward to executing our acquisition and exploration plans and
delivering to you positive results.
Many thanks for your ongoing support.
Nick Spencer
Chief Executive Officer
Kolar Gold Limited
Kolar Gold Limited and its controlled entities
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2011
Group
Note 2011 2010
GBP GBP
SUN Mining warrants issued
for services 16 (547,006) -
Broker warrants issued
for services 16 (492,510) -
Shares and options issued
by Kolar Gold plc to employees
and consultants 16 (294,241) -
Options to Directors 16 (374,975) (79,696)
Salaries and wages (697,008) (290,444)
Other administrative expenses (818,127) (439,080)
Loss from operating activities (3,223,867) (809,220)
------------ ----------
Finance income 5 530 12,713
Finance costs 5 (32,953) (2,786)
Net financing (expense)/income (32,423) 9,927
------------ ----------
Loss before tax (3,256,290) (799,293)
Income tax expense 6 - -
------------ ----------
Loss for the year (3,256,290) (799,293)
Other comprehensive loss
Foreign exchange translation
variances 142,231 (70,271)
------------ ----------
Total comprehensive loss
for the year (3,114,059) (869,564)
============ ==========
Basic loss per share (p) 18 5.69 1.80
Diluted loss per share
(p) 18 5.69 1.80
All results are derived from continuing
activities.
Kolar Gold Limited and its controlled entities
Consolidated Statement of Financial Position
as at 30 June 2011
Group
2011 2010
Note GBP GBP
Non-current assets
Plant and equipment 7 21,859 16,085
Exploration and evaluation
assets 9 4,496,933 -
Investments 8 - 984,046
Total non-current assets 4,518,792 1,000,131
----------------- -----------------
Current assets
Prepayments and other assets 10 37,751 42,711
Trade and other receivables 11 59,642 35,502
Cash and cash equivalents 12 11,544,630 739,410
Total current assets 11,642,023 817,623
----------------- -----------------
Total assets 16,160,815 1,817,754
----------------- -----------------
Current liabilities
Trade and other payables 13 1,085,852 1,015,900
Employee benefits 15 113,416 54,735
Loans and borrowings 14 - 911,255
----------------- -----------------
Total current liabilities 1,199,268 1,981,890
----------------- -----------------
Non-current liabilities
Employee benefits 43,457 22,714
----------------- -----------------
Total non-current liabilities 43,457 22,714
----------------- -----------------
Total liabilities 1,242,725 2,004,604
----------------- -----------------
Net assets/(liabilities) 14,918,090 (186,850)
================= =================
Equity
Share capital 7,001,696 3,544,336
Share premium 15,663,226 3,715,557
Reserves 3,577,195 620,994
Accumulated losses (11,324,027) (8,067,737)
----------------- -----------------
Total equity 14,918,090 (186,850)
================= =================
Kolar Gold Limited and its controlled entities
Consolidated Statement of Changes in Equity
for year ended 30 June 2011
Share Share Share Foreign Accumulated Total
capital premium based exchange losses equity
payment translation
reserves reserve
GBP GBP GBP GBP GBP GBP
Balance at 1
July 2009 3,298,907 3,154,088 616,625 (5,056) (7,268,444) (203,880)
Total comprehensive
loss for the
year
Loss for the
period - - - - (799,293) (799,293)
Other comprehensive
income - foreign
exchange translation
variances - - - (70,271) - (70,271)
---------- ------------ ---------- ------------- ------------- ------------
Total comprehensive
loss for the
year - - - (70,271) (799,293) (869,564)
---------- ------------ ---------- ------------- ------------- ------------
Equity-settled
transactions
for the year - - 79,696 - - 79,696
Issue of ordinary
shares 245,429 629,586 - - - 875,015
Share issue
costs - (68,117) - - - (68,117)
---------- ------------ ---------- ------------- ------------- ------------
Total contributions
by and distributions
to owners 245,429 561,469 79,696 - - 886,594
---------- ------------ ---------- ------------- ------------- ------------
Balance at 1
July 2010 3,544,336 3,715,557 696,321 (75,327) (8,067,737) (186,850)
Total comprehensive
loss for the
year
Loss for the
year - - - - (3,256,290) (3,256,290)
Other comprehensive
loss - foreign
exchange translation
variances - - - 142,231 - 142,231
---------- ------------ ---------- ------------- ------------- ------------
Total comprehensive
loss for the
year - - - 142,231 (3,256,290) (3,114,059)
---------- ------------ ---------- ------------- ------------- ------------
Issue of ordinary
shares 3,735,150 13,816,568 - - - 17,551,718
Cancellation
of shares (note
7) (277,790) 277,790 - - - -
Share issue
costs - (2,146,689) - - - (2,146,689)
Equity-settled
transactions - - 2,813,970 - - 2,813,970
Total contributions
by and distributions
to owners 3,457,360 11,947,669 2,813,970 - - 18,218,999
---------- ------------ ---------- ------------- ------------- ------------
Balance at 30
June 2011 7,001,696 15,663,226 3,510,291 66,904 (11,324,027) 14,918,090
========== ============ ========== ============= ============= ============
Kolar Gold Limited and its controlled entities
Consolidated Statement of Cash Flows
For the year ended 30 June 2011
Note 2011 2010
GBP GBP
Cash flows from operating
activities
Loss for the year (3,256,290) (799,293)
Adjustments for:
Depreciation 4,439 3,456
Net financing expense 1,945 2,775
Foreign exchange variances (60,846) (12,760)
Equity-settled transactions 16 1,708,732 183,628
Operating loss before changes
in working capital and
provisions (1,602,020) (622,194)
Change in trade and other
receivables (24,140) (918)
Change in other current
assets (33,099) (45,622)
Change in trade and other
payables 794,308 (26,757)
Change in employee benefits 79,424 10,029
------------ ----------
Cash used in operating
activities (785,527) (685,462)
Interest and finance costs
paid (2,475) (2,775)
Net cash used in operating
activities (788,002) (688,237)
------------ ----------
Cash flows from investing
activities
Interest received 530 11
Payments for investments - (310,293)
Payments for tenement rights (2,189,930) -
Payments for plant and
equipment (7,577) (1,435)
Net cash used in investing
activities (2,196,977) (311,717)
------------ ----------
Cash flows from financing
activities
Proceeds from the issue
of convertible notes 250,000 895,677
Proceeds from issues of
equity securities per Initial
Public Offering 12,000,000 -
Proceeds from other share
issues 3,645,000 724,503
Payment of share issue
costs (2,108,630) (31,515)
------------ ----------
Net cash from financing
activities 13,786,370 1,588,665
------------ ----------
Net increase in cash and
cash equivalents 10,801,391 588,711
Foreign exchange gain on
opening cash balances 3,829 33,329
Cash and cash equivalents
at 1 July 739,410 117,370
------------ ----------
Cash and cash equivalents
at 30 June 12 11,544,630 739,410
============ ==========
The notes which follow are an integral part of the consolidated
financial statements.
1. Accounting policies
1.1 Reporting entity
The group financial statements consolidate those of the Kolar
Gold Limited and its controlled entities (together referred to as
the "Group"). During the year, the Group underwent a restructure
which resulted in Kolar Gold Limited, a new entity incorporated in
Guernsey, becoming the new parent entity, as explained below.
On 8 April 2011 the Company completed a share swap with the
shareholders of Kolar Gold plc, whereby the Company acquired all of
the 1,543,267 'A' class shares and 60,768,681 'B' class shares in
Kolar Gold plc from its shareholders as at 28 February 2011 and
issued 1,543,267 'A' class shares and 60,768,681 'B' class shares.
On 8 April 2011 the Company reorganised its share capital into one
class of ordinary shares of 7p each and deferred shares of 18p
each. The deferred shares were cancelled immediately thereafter by
Board Resolution, leaving the Company with 62,311,950 ordinary
shares of 7p each.
As a result of the restructure, Kolar Gold Limited became the
legal parent company of the Kolar Gold Group and the majority
shareholders of Kolar Gold plc remain the majority shareholders of
the Kolar Gold Group.
The Company's consolidated financial statements are presented as
a continuation of the consolidated Kolar Gold plc financial
statements. The comparative information presented is consistent
with the disclosures made in the consolidated financial statements
of Kolar Gold plc for the year ended 30 June 2010. Comparative loss
per share calculations were not affected as a result of the
restructure.
Following the share swap, the Group has undertaken a
reorganisation to simplify the Group structure and reporting lines.
As at 30 June 2011, the wholly owned subsidiaries of the Company
are:
-- Kolar Gold Resources Limited (Mauritius);
-- Kolar Gold Resources (India) Private Limited;
-- Kolar Gold Pty Limited; and
-- Kolar Gold plc.
The group financial statements have been prepared and approved
by the directors in accordance with International Financial
Reporting Standards as adopted by the EU ("Adopted IFRSs"). The
financial statements comply with the Companies (Guernsey) Law, 2008
and give a true and fair view of the state of affairs of the
Company.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
1.2 Measurement convention
The financial statements are prepared on the historical cost
basis and are presented in Great British Pounds (GBP).
1.3 Going concern
These financial statements have been prepared on the basis of
accounting principles applicable to a "going concern" which assumes
the Group will continue in operation for the foreseeable future and
will be able to realise its assets and discharge its liabilities in
the normal course of operations.
The Group currently has no source of operating cash inflows,
other than interest income, and has incurred net operating cash
outflows for the year ended 30 June 2011 of GBP788,002 (2010:
GBP688,237). The Group successfully completed an Initial Public
Offering during the year and the Company's shares were admitted to
trading on AIM in London in June 2011, raising gross funds of GBP12
million. At 30 June 2011 the Group had cash balances of
GBP11,544,630 (2010: GBP739,410) and a surplus in net working
capital (current assets less current liabilities) of GBP10,442,755
(2010: deficiency of GBP1,164,267).
The funds raised from the Initial Public Offering are being
applied to acquire further mineral exploration rights in India and
conduct an exploration programme with respect to these mining
tenements. These outlays will only be incurred when the licences
have been approved for exploration by the Government of India.
The directors have prepared cash flow forecasts that indicate
that the Group will have sufficient cash to continue meeting its
current operating expenditure (e.g. staff costs, administrative
costs, exploration costs, lease commitments) until at least
December 2012. In order to continue to operate beyond December
2012, in line with current cash flow forecasts, it is likely that
the Group will need to raise additional finance by December
2012.
The Group commenced an exploration programme in respect of its
Indian mining tenements in January 2011, engaging a drilling
contractor to operate one drilling rig on the South Kolar
tenements. These exploration activities are being expanded during
the 2011-12 financial year, with a second drilling rig commencing
operations since year end.
The Group's forecasts include cash outflows to acquire further
mineral exploration rights and subsequent exploration activities.
These outlays will only proceed if and when the mineral exploration
rights have been granted ready for drilling. When the Government of
India grants all of the mineral exploration rights specified in the
Group's agreement with Geomysore Mining Services India (Private)
Limited (GMSI), the Group is entitled to acquire the remaining
tenement rights for approximately GBP4.4 million and the Group has
budgeted for additional exploration expenditure of GBP3.3 million
over the next 18 months, subject to availability of funds.
The Directors are confident that these licences will be granted
and all matters can be resolved satisfactorily, and consequently,
the Directors consider that the Group has adequate resources to
continue in operational existence for at least the next 12 months,
and if the licences are not granted for some reason, the Group will
have additional funds available, thus they continue to adopt the
going concern basis in preparing the financial statements.
In the longer term, the development of economically recoverable
mineral deposits on the Group's existing or future exploration
properties depends on the ability of the Group to obtain further
financing through equity financing, debt financing or other means.
If the Group's exploration programmes are ultimately successful,
additional funds will be required to develop the Group's properties
and to place them into commercial production. The only sources of
future funds presently available to the Group are through the
exercise of outstanding share options, the raising of equity
capital by the Company or the sale of an interest in mineral
exploration rights either in whole or in part. The ability of the
Group to arrange such funding in the future will depend in part
upon the prevailing market conditions as well as the business
performance of the Group. There can be no guarantee that the Group
will be successful in its efforts to arrange additional financing,
if needed, on terms satisfactory to the Group. If adequate
financing is not available, the Group may be required to delay,
reduce the scope of, eliminate its current or future exploration
activities, or relinquish rights to certain parts of its
interests.
1.4 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group.
Control exists when the Group has the power to govern the financial
and operating policies of an entity so as to obtain benefits from
its activities. In assessing control, the Group takes into
consideration potential voting rights that are currently
exercisable. The acquisition date is the date on which control is
transferred to the acquirer. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control
ceases.
All entities were 100% owned and controlled by the parent
entity, Kolar Gold Limited during the period they were members of
the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
1.5 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet date are retranslated to the functional currency at
the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction.
Foreign operations
The assets and liabilities of foreign operations are translated
to the Group's presentation currency, at foreign exchange rates
ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated at an average rate for the year
where this rate approximates to the foreign exchange rates ruling
at the dates of the transactions. Exchange differences arising from
this translation of foreign operations are reported as an item of
other comprehensive income and accumulated in the translation
reserve. When a foreign operation is disposed of, such that control
is lost, the entire accumulated amount in the translation reserve,
is recycled to profit or loss as part of the gain or loss on
disposal. When the Group disposes of only part of its interest in a
subsidiary that includes a foreign operation while still retaining
control, the relevant proportion of the accumulated amount is
reattributed to non-controlling interests.
Exchange differences arising from a monetary item receivable
from or payable to a foreign operation, the settlement of which is
neither planned nor likely in the foreseeable future, are
considered to form part of a net investment in a foreign operation
and are recognised directly in equity in the translation
reserve.
1.6 Classification of financial instruments issued by the Group
Following the adoption of IAS 32, financial instruments issued
by the Group are treated as equity only to the extent that they
meet the following two conditions:
(a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company's exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Company's own shares, the
amounts presented in these financial statements for called up share
capital and share premium account exclude amounts in relation to
those shares.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above
policy.
1.7 Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowings, and
trade and other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
Loans and borrowings
Loans and borrowings are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial
recognition, these loans and borrowings are measured at amortised
cost using the effective interest method.
1.8 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is charged to the income statement on a
straight-line basis over the estimateduseful lives of each part of
an item of property, plant and equipment. Land is not depreciated.
The estimated useful lives are as follows:
-- plant and equipment 2.5 to 5 years; and
-- fixtures and fittings 2.5 to 10 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
1.9 Exploration and evaluation expenditure
Exploration and evaluation costs, including the costs of
acquiring licences, are capitalised as exploration and evaluation
assets on an area of interest basis. Costs incurred before the
Group has obtained the legal rights to explore an area are
recognised in the profit or loss.
Exploration and evaluation assets are only recognised if the
rights of the area of interest are current and either:
-- the expenditures are expected to be recouped through
successful development and exploitation of the area of interest;
or
-- activities in the area of interest have not at the reporting
date, reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves and
active and significant operations in, or in relation to, the area
of interest are continuing.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount
exceeds the recoverable amount. For the purposes of impairment
testing, exploration and evaluation assets are allocated to
cash-generating units to which the exploration activity related.
The cash-generating unit shall not be larger than the area of
interest.
Once the technical feasibility and commercial viability of the
extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to
that area of interest are first tested for impairment and then
reclassified from intangible assets to mining property and
development assets within property, plant and development.
1.10 Impairment
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate.
Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes the
amount of impairment loss to decrease, the decrease in impairment
loss is reversed through profit or loss.
The carrying amounts of the Group's non-financial assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For the purpose of impairment
testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the
"cash-generating unit").
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash generated units are
allocated first to reduce the carrying amount of any goodwill
allocated to the units, and then to reduce the carrying amounts of
the other assets in the unit (group of units) on a pro rata
basis.
Impairment losses recognised in prior periods are assessed at
each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
1.11 Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided.
Long-term benefits
The Group's net obligation in respect of long-term employee
benefits is the amount of the future benefit that employees have
earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value,
and the fair value of the related assets is deducted. The discount
rate is the yield at the reporting date on government bonds that
have maturity dates approximating the terms of the Group's
obligations and that are denominated in the same currency in which
the benefit is expected to be paid.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
profit or loss in the periods during which services are rendered by
employees.
Share-based payment transactions
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Group.
Share-based transactions, other than those with employees, are
measured at the value of goods or services received where this can
be reliably measured. Where this is not the case the value of goods
or services received is determined by reference to the grant date
fair value of the equity instruments provided. The expense is
recognised in profit or loss (or capitalised as part of an asset)
when the goods are received or as services are provided, with a
corresponding increase in equity.
Share-based payment transactions (cont'd)
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the
related service and non-market vesting conditions are expected to
be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured to reflect
such conditions and there is no true-up for differences between
expected and actual outcomes.
Share-based payment transactions in which the Group receives
goods or services by incurring a liability to transfer cash or
other assets that is based on the price of the Group's equity
instruments are accounted for as cash-settled share-based payments.
The fair value of the amount payable to recipients is recognised as
an expense, with a corresponding increase in liabilities, over the
period in which the recipients become unconditionally entitled to
payment. The liability is re-measured at each balance sheet date
and at settlement date. Any changes in the fair value of the
liability are recognised in profit or loss.
1.12 Expenses
Operating lease payments
Payments made under operating leases are recognised in profit or
loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised in profit or loss as an integral
part of the total lease expense.
Financing income and expenses
Financing expenses comprise interest payable and finance charges
on shares classified as liabilities recognised in profit or loss
using the effective interest method, unwinding of the discount on
provisions, and net foreign exchange losses that are recognised in
the income statement (see foreign currency accounting policy note
1.5). Financing income comprise interest receivable on funds
invested, dividend income, and net foreign exchange gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method. Foreign
currency gains and losses are reported on a net basis.
1.13 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
1.14 Earnings per share
The Group presents basic and diluted earnings or loss per share
data for its ordinary shares. Basic earnings/loss per share is
calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period, adjusted for own
shares held. Diluted earnings/loss per share is determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding,
adjusted for own shares held, for the effects of all dilutive
potential ordinary shares, which comprise convertible notes and
share options and warrants granted.
1.15 Operating segments
Segment results that are reported to the Chief Executive Officer
include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items
comprise mainly corporate assets, head office expenses, and income
tax assets and liabilities.
Segment capital expenditure is the total cost incurred during
the period to acquire property, plant and equipment, and intangible
assets other than goodwill.
1.16 Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
In particular, information about assumptions and estimation
uncertainties that have a significant risk of resulting in a
material adjustment within the next financial year are described in
the following notes:
-- measurement of share-based payments (note 16);
-- capitalisation of exploration and evaluation expenditure (note 1.9 and note 9); and
-- going concern (note 1.3).
1.17 Adopted IFRS not yet applied
The following Adopted IFRSs have been issued but have not been
applied by the Group in these financial statements. Their adoption
is not expected to have a material effect on the financial
statements.
-- Revised IAS 24 'Related Party Disclosure';
-- IFRS 9 'Financial Instruments';
-- IFRS 10 'Consolidated Financial Statements'; and
-- IFRS 13 'Fair Value Measurement'.
2. Risk management
Overview
The Group has exposure to the following risks:
-- Credit risk;
-- Liquidity risk;
-- Tax risk;
-- Currency risk;
-- Market risk; and
-- Operational risk
This note presents information about the Group's exposure to
each of the above risks, its objectives, policies and processes for
measuring and managing risk, and its management of capital. Further
quantitative disclosures are included throughout these consolidated
financial statements.
Risk management framework
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework and
developing and monitoring the Group's risk management policies. Key
risk areas have been identified and the Group's risk management
policies and systems will be reviewed regularly to reflect changes
in market conditions and the Group's activities.
The Audit Committee has been established and it will oversee how
management monitors compliance with the Group's risk management
policies and procedures and reviews the adequacy of the risk
management framework in relation to the risks faced by the
Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's bank deposits and receivables from taxation authorities.
The risk of non-collection is considered to be low.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
Tax risk
Guernsey and India are in the process of reaching agreement to
enter into a specific Tax Information Exchange Agreement (TIEA)
between the two countries. This is expected to be completed
shortly. Without a TIEA it is possible that the Indian Tax
authorities could reclassify the Group's capital investment in
India as income subject to Indian company taxation. Such a
treatment is dependent upon Guernsey being considered as an
unfavourable tax jurisdiction by the Indian authorities, which
would be in contrast to the recognition that Guernsey has from
2009, being placed on the OECD white list of countries that have
implemented internationally agreed tax standards.
Currency risk
The Group is exposed to currency risk on cash and cash
equivalents, receivables and payables that are denominated in a
currency other than the functional currency of the each of the
Group entities. Each entity has sufficient funds in its functional
currency to cover its expected future outgoings for several months
to reduce currency risk. The Group does not use derivatives to
hedge its foreign currency exposures.
Market risk
The Group's future revenues from product sales will be affected
by changes in the market price of gold and could also be subject to
exchange controls or similar restrictions.
Operational risk
The Group's business is at an early stage and is subject to
several operational risks. These risks include exploration and
mining risks, actual resources differing from estimates,
operational delays and the availability of equipment, personnel and
infrastructure.
The Group is also dependent on key personnel and subject to the
actions of third parties, including staff of GMSI and other
contractors and suppliers.
The Group's operations are also subject to government laws and
regulations, particularly environmental regulation.
Capital management
In June 2011 the Company successfully completed the admission of
its shares to trading on AIM in London, raising gross proceeds of
GBP12m, netting approximately GBP11.3m. The Group has no loans or
borrowings and these proceeds are expected to meet the Group's
requirements until late calendar year 2012.
The Group manages its capital through the preparation of
detailed forecasts, and tracks actual receipts and outlays against
the forecasts on a regular basis, to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity comprising, capital, reserves and
accumulated losses.
3. Operating segments
The Group has one reportable segment, being Indian Exploration -
Gold exploration activities and administration in the Kolar Gold
Fields region in Karnataka State, India.
The Group also has corporate administrative functions in
Guernsey and Australia.
The Group's Board and Chief Executive Officer review internal
management reports for this segment on a monthly basis.
Information regarding the results of the reportable segment is
included below. The Group has no revenue at this stage of its
development and performance is measured based on expenses incurred
in each segment and exploration activity levels in the Indian
segment.
The Group had one reporting segment during the year ended 30
June 2010, being the Administration office in Brisbane,
Australia
Indian Exploration Corporate Total
2011 2010 2011 2010 2011 2010
GBP GBP GBP GBP GBP GBP
Depreciation
and amortisation 207 - 4,232 3, 456 4,439 3,456
------------- ------ --------------- ------------ ------------ ------------
Share -based
payments - - 1,708,732 79,696 1,708,732 79,696
------------- ------ --------------- ------------ ------------ ------------
Other reportable
segment expenses 21,405 - 1,489,291 726,068 1,510,696 726,068
------------- ------ --------------- ------------ ------------ ------------
Segment result
before tax (21,370) - (3,234,920) (799,293) (3,256,290) (799,293)
------------- ------ --------------- ------------ ------------ ------------
Reportable
segment assets 4,514,676 - 11,646,139 1,817,754 16,160,815 1,817,754
------------- ------ --------------- ------------ ------------ ------------
Exploration
and evaluation
expenditure
capitalised 4,496,933 - - - 4,496,933 -
------------- ------ --------------- ------------ ------------ ------------
Other capital
expenditure 3,064 - 4,513 1,459 7,577 1,459
------------- ------ --------------- ------------ ------------ ------------
Reportable
segment liabilities (101,775) - (1,140,950) (2,004,604) (1,242,725) (2,004,604)
------------- ------ --------------- ------------ ------------ ------------
4.
Expenses
and
auditors'
remuneration
2011 2010
GBP GBP
Included
in
loss
for
the
year
are
the
following:
Depreciation
charge 4,439 3,456
============ ============
Operating
lease
expense 26,300 20,041
============ ============
Auditors'
remuneration
-
audit
and
review
of
financial
statements 118,666 32,415
============ ============
5.
Finance
income
and
finance
costs
Interest
income
on
bank
deposits 530 11
Interest
expense
on
financial
liabilities (2,475) (2,786)
Net
foreignexchange
gains
/
(losses) (30,478) 12,702
Net
financing
income/
(expense)
recognised
in
profit
or
loss (32,423) 9,927
============ ============
6. Income tax expense
Current tax expense
Current year - -
========= ==========
Deferred tax expense
Origination and reversal of -
temporary differences -
--------- ----------
- -
- -
--------- ----------
Tax expense in income statement - -
2011 2011 2010 2010
Reconciliation of effective
tax rate % GBP % GBP
Loss for the year (3,256,290) (799,293)
Total income tax for
the year - -
------------ ----------
Loss excluding income
tax (3,256,290) (799,293)
------------ ----------
Income tax using the
Company's domestic rate (0.0) - (28.00) (223,802)
Effect of tax rates in
foreign jurisdictions (521,515)
Non-deductible expenses 97,426 35,179
Current year losses for
which no deferred tax
asset was recognised 424,089 188,623
Total current tax benefit - - - -
------ ------------ --------- ----------
A deferred tax asset of GBP2,930,648 (2010: GBP2,114,489) has
not been recognised in respect of losses, as there is currently
uncertainty surrounding the recoverability of such assets.
7. Plant and equipment
Plant Fixtures
and equipment and fittings Total
GBP GBP GBP
Cost
Balance at 1 July 2009 15,284 16,239 31,523
Foreign exchange variance 2,572 2,712 5,284
Additions 1,234 201 1,435
--------------- -------------- --------
Balance at 30 June
2010 19,090 19,152 38,242
--------------- -------------- --------
Balance at 1 July 2010 19,090 19,152 38,242
Foreign exchange variance 3,338 3,075 6,413
Additions 6,587 990 7,577
Disposals - (1,859) (1,859)
--------------- -------------- --------
Balance at 30 June
2011 29,015 21,358 50,373
--------------- -------------- --------
Depreciation and impairment
losses
Balance at 1 July 2009 10,476 5,551 16,027
Foreign exchange variance 1,748 926 2,674
Depreciation for the
year 2,144 1,312 3,456
--------------- -------------- --------
Balance at 30 June
2010 14,368 7,789 22,157
--------------- -------------- --------
Balance at 1 July 2010 14,368 7,789 22,157
Foreign exchange variance 2,472 1,305 3,777
Depreciation for the
year 2,094 2,345 4,439
Disposals - (1,859) (1,859)
--------------- -------------- --------
Balance at 30 June
2011 18,934 9,580 28,514
--------------- -------------- --------
Carrying amounts
At 1 July 2009 4,808 10,688 15,496
--------------- -------------- --------
At 30 June 2010 4,722 11,363 16,085
--------------- -------------- --------
At 1 July 2010 4,722 11,363 16,085
--------------- -------------- --------
At 30 June 2011 10,081 11,778 21,859
--------------- -------------- --------
8. Investments
2011 2010
GBP GBP
Deposit to acquire
interests in mining
tenements - 984,046
------ --------
Total investments - 984,046
------ --------
At 30 June 2010 the Group had entered an agreement to acquire
interests in mining tenements in the Kolar region in India from
Geomysore Services India (Private) Limited (GMSI). Under the terms
of the agreement, at 30 June 2010 the Group had paid deposits
totalling GBP984,046 and it was intended that the Group and GMSI
would establish a joint venture to conduct exploration and
evaluation of the mining tenements.
During the year ended 30 June 2011 the agreement with GMSI was
renegotiated and new agreements were entered into. Under the terms
of the new agreements the Group has acquired mining tenements from
GMSI. These tenements have been accounted for in accordance with
the Group's accounting policy for exploration and evaluation
expenditure which is set out in Note 1.9.
2011 2010
GBP GBP
Movement in investments
Cost at beginning of year 984,046 -
Additions - 984,046
Transferred to exploration
and evaluation expenditure (984,046) -
----------- --------
Cost at end of year - 984,046
=========== ========
2011 2010
GBP GBP
Exploration and evaluation
9. expenditure
Balance at beginning of
year - -
Transferred from investments 984,046 -
Acquisition of tenement
rights 1,217,596 -
Payment to SUN Mining by
the issue of shares * 1,749,936
Driiling expenses captialised 163,693 -
Other expenses capitalised 140,285 -
Foreign exchange variances 241,377 -
----------- --------
Balance at end of year 4,496,933 -
=========== ========
* On 8 April 2011 SUN Mining were issued 5,833,119
shares as payment for services with respect
to securing the tenement right through completion
of the agreements with GMSI. These shares
were valued at 30p per share, a total cost
of GBP1,749,936.
The recoverability of the carrying amounts
of exploration and evaluation assets is dependent
on the succcessful development and commercial
exploitation or sale of the respective area
of interest.
10. Prepayments and other
current assets
2011 2010
GBP GBP
Prepayments 37,751 4,652
Costs carried forward in
relation to planned initial
public offering - 38,059
37,751 42,711
=========== ==========
2011 2010
GBP GBP
11. Trade and other receivables
Other receivables 59,642 35,502
59,642 35,502
=========== ==========
2011 2010
GBP GBP
12. Cash and cash equivalents
11,544,630 739,410
----------- ----------
Cash at bank and on hand 11,544,630 739,410
=========== ==========
2011 2010
GBP GBP
13 Trade and other payables
Trade and other payables
due to
related parties 479,354 127,006
Other trade payables 447,050 34,154
Non-trade payables and accrued
expenses 159,448 854,740
----------- ----------
1,085,852 1,015,900
=========== ==========
2011 2010
GBP GBP
14. Loans and borrowings
----------- ----------
Convertible loan notes -
at fair value - 911,255
=========== ==========
On 16 June 2010 and 30 June 2010 the Group
issued convertible loan notes for total proceeds
of GBP911,255. The notes are denominated in
GBP, are non-interest bearing and have an
aggregate face value of GBP 916,000. A further
GBP250,000 was received in July 2010. The
notes were convertible in to 4,664,000 "B"
Class Ordinary Shares of 7p nominal value.
The notes were all converted on or before
31 December 2010.
15. Employee benefits
2011 2010
GBP GBP
Current
Liability for annual leave 74,433 34,469
Liability for long service leave 38,983 20,266
------------ -----------------
113,416 54,735
Non-current
Liability for long service leave 43,457 22,714
------------ -----------------
156,873 77,449
============ =================
16. Share-based payments
a) Options
Kolar Gold Plc and Kolar Gold Limited have
issued options to directors, employees and
long-term consultants to compensate them for
services rendered and incentivise them to add
value to the Group's longer term share value.
They comprise Reward Options in exchange for
the provision of services and Bonus Options,
which are only receivable upon the Company's
shares being admitted to trading on a stock
exchange. The following unexpired options existed
as at 30 June 2011.
Name Date of Ordinary Expiry Exercise
Grant Shares under Date Price
option GBP
Norman Coldham-Fussell
(1) 01.12.05 500,000 01.12.11 0.20
Norman Coldham-Fussell
(1) 20.06.08 500,000 01.12.11 0.25
Nicholas Taylor
Spencer (1) 01.12.05 650,000 01.12.11 0.20
Nicholas Taylor
Spencer (1) 20.06.08 1,000,000 01.12.11 0.25
Nicholas Taylor
Spencer (2) 01.12.10 500,000 01.12.13 0.30
Richard Johnson
(1) 27.02.09 250,000 01.12.11 0.25
Richard Johnson
(2) 01.12.10 500,000 01.12.11 0.30
Bill Lyne (1) 01.12.05 200,000 01.12.11 0.20
SG Hambros
Trust Company
(Channel Islands)
Limited* 20.06.08 200,000 01.12.11 0.25
Non-Directors
(1) 1.12.05 300,000 01.12.11 0.20
Non-Directors
(1) 8.9.06 250,000 01.12.11 0.20
Non-Directors
(1) 27.2.09 500,000 01.12.11 0.25
Non-Directors
(1) 5.5.10 150,000 05.05.13 0.30
Non-Directors
(2) 1.12.10 350,000 01.12.13 0.30
Norman Coldham-Fussell
(3) 17.6.11 675,000 17.06.14 0.40
Nicholas Taylor
Spencer (3) 17.6.11 1,350,000 17.06.14 0.40
Richard Johnson
(3) 17.6.11 675,000 17.06.14 0.40
Harvinder Hungin
(4) 10.6.11 450,000 10.06.16 0.40
Stephen Coe
(4) 10.6.11 350,000 10.06.16 0.40
Stephen Oke
(4) 10.6.11 350,000 10.06.16 0.40
----------------
9,700,000
================
* SG Hambros Trust Company (Channel Islands)
Limited holds 200,000 options, as trustee of
the Carlyle Settlement, in which Harvinder
Hungin and his family have an interest.
Each option entitles the holder to subscribe
for one ordinary share in the Company. Options
do not confer any voting rights on the holder.
1. These share-based payment arrangements existed
as at 30 June 2010 in relation to options issued
by Kolar Gold plc and each option confers a
right to one "B" class ordinary share at exercise
prices of GBP0.20 to GBP0.30.
Reward Options
Grant date/personnel Number Vesting Contractual
entitled of instruments conditions life of options
Issued on 1 December 1,150,000 None 6 years*
2005 to directors
Issued on 1 December 500,000 None 6 years*
2005 to employees and
consultants
Issued on 8 September 250,000 None 5 years 2.7
2006 to a director months*
Issued on 20 June 2008 1,500,000 None 3 years 5.3
to directors months
Issued on 20 June 2008 200,000 None 3 years 5.3
to a broker as placement months
fees
Issued on 1 January 250,000 None 2 years 11
2009 to a director months
Issued on 27 February 500,000 None 2 years 9
2009 to a consultant months
Issued on 5 May 2010 150,000 None 3 years
to employees
----------------
4,500,000
================
* extended by three years in June 2008
2. On 1 December 2010, Kolar Gold plc issued 1,350,000 options
to directors, employees and consultants. Each option confers a
right to one "B" class ordinary share at an exercisable price of
GBP0.30 and a term of three years. There are no vesting conditions
and the options vest immediately.
On 8 April 2011 all of the above options were released by the
optionholders and Kolar Gold Limited issued new options to or for
the benefit of employees, directors or former employees or
directors of the Group in respect of 5,850,000 Ordinary Shares in
aggregate as set out in the table at the end of this paragraph.
These options replaced the original options on identical terms
granted to the same persons by Kolar Gold plc. The new options have
vested and may be exercised at any time before the date of lapse
set out in the following table. They are transferable, and on an
alteration of the ordinary share capital of the Company by
capitalisation or rights issue, consolidation, sub-division or
reduction or other alteration, the number of ordinary shares
subject to the Existing Options or the option price may be adjusted
by the Board.
Bonus Options
The directors and Shareholders of Kolar Gold plc had previously
resolved to grant options subject to completion of a successful
Initial Public Offering to Norman Coldham-Fussell, Nicholas Spencer
and Richard Johnson (Bonus Options) and a consultant, but the
options had not been formally granted. No performance conditions
were to be imposed on the Bonus Options.
On 30 June 2010 the following Bonus Options were
outstanding:
No. Exerciseable Term
Based on 1 December 1,500,000 Successful 3 years from
2005 to directors IPO IPO
Issued on 27 February 1,000,000 Successful 3 years from
2009 to a director and IPO IPO
a consultant
3. On admission of the Company's shares to trading
on AIM on 17 June 2011 the above options were released,
and in fulfilment of previous resolutions, the Company
granted options in respect of 2,700,000 Ordinary
Shares in aggregate at the Placing Price, under
the Share Option Plan, to the directors of Kolar
Gold plc as set out below.
Name Ordinary Expiry Exercise
shares under date price
Option GBP
Norman Coldham-Fussell 675,000 17.6.14 0.40
Nicholas Taylor Spencer 1,350,000 17.6.14 0.40
Richard Johnson 675,000 17.6.14 0.40
--------------
2,700,000
==============
No vesting conditions have been imposed on these options
Options issued by Kolar Gold Limited
4. The following options were granted by Kolar Gold Limited on
10 June 2011 to directors. The options vested on grant date.
Date Ordinary
of Grant shares Exercise
under Expiry price
Issued to Option date GBP
Harvinder Hungin 10.6.11 450,000 10.6.16 0.40
Stephen Coe 10.6.11 350,000 10.6.16 0.40
Stephen Oke 10.6.11 350,000 10.6.16 0.40
----------
1,150,000
==========
The number and weighted average exercise price of the options
are as follows:
Weighted Weighted
average average
exercise exercise
price Number price Number
GBP of options GBP of options
2011 2011 2010 2010
Reward Option issued
by Kolar Gold plcs
Outstanding at the
beginning of the
year 0.231 4,500,000 0.228 4,350,000
Granted during the
year 0.300 1,350,000 0.30 150,000
Cancelled and re-issued
by Kolar Gold Limited
during the year 0.247 (5,850,000) - -
---------- ------------ ---------- ------------
Outstanding at the
end of the year - - 0.231 4,500,000
========== ============ ========== ============
Bonus options issued
by Kolar Gold plc
Outstanding at the
beginning of the
year 0.30 2,500,000 0.30 2,500,000
Forfeited during
the year 0.30 (500,000) - -
Cancelled and re-issued
by Kolar Gold Limited
during the year 0.30 (2,000,000) - -
------ ------------ ----- ----------
Outstanding at the
end of the year - - 0.30 2,500,000
====== ============ ===== ==========
Options issued by
Kolar Gold Limited
Outstanding at the
beginning of the
year - - - -
Granted during the
year 0.307 9,700,000 - -
------ ------------ ----- ----------
0.307 9,700,000 - -
====== ============ ===== ==========
Inputs for measurement of grant date fair values
The grant date fair values of all other options
issued was measured based on the Black-Scholes
formula. Expected volatility is estimated by
considering historic average share price volatility.
The inputs used in the measurement of the fair
values at grant date of the share-based payment
plans are the following:
Additional Kolar Reward Bonus
options Gold plc options Options
Kolar Gold Options
Ltd December
June 2011 2010
2011 2011 2010 2010
GBP GBP GBP GBP
Fair value
at grant date 0.246 1.787 0.059 0.034
Share price
at grant date 0.40 0.25 0.25 0.25
Exercise price 0.40 0.29 0.25 0.030
Expected volatility 74.1% 25% 25% 25%
Option life 3.0 years 4.3 years 3 years IPO +
3 years
Expected dividend nil nil nil nil
b) Warrants
The following unexercised warrants existed as at 30 June
2011:
Name Date Ordinary Expiry Exercise
of Grant Shares Date Price
under GBP
option
Investor warrants
(1) 30.6.10 3,664,000 1.3.12 0.30
Investor warrants
(2) 20.7.10 1,000,000 1.3.12 0.30
Broker warrants
Series 1 (3) 5.5.11 1,300,000 17.6.14 0.40
Broker warrants
Series 2 (4) 17.6.11 1,500,000 17.6.14 0.60
SUN Mining initial 24.2.11 2,916,559 24.2.12 Nil
warrants Series
1 (5)
SUN Mining initial 24.2.11 2,916,559 24.2.13 Nil
warrants Series
2 (5)
SUN Mining initial 24.2.11 3,499,871 24.2.13 VWAP (5)
additional warrants
(5)
-----------
16,796,989
===========
Each warrant entitles the holder to subscribe for one ordinary
share in the Company. Warrants do not confer any voting rights on
the holder.
1. On 30 June 2010, there were 3,664,000 warrants in issue.
2. In July 2010, a further 1,000,000 warrants were issued. Each
warrant gives the holder the option to acquire one ordinary "B"
class share in Kolar Gold plc at any time on or before 31 December
2011 at a price of 30 pence. The warrants were issued for no
consideration in connection with the convertible loan notes issued
in June and July 2010. Refer note 14.
On 8 April 2011, all 4,664,000 warrants in Kolar Gold plc were
released, and identical warrants were issued by the Company. The
warrants have an exercise price of 30 pence per share and expire on
31 December 2011.
3. On 5 May 2011 the Company issued 1,000,000 warrants to Cenkos
Securities plc and 300,000 warrants to Ocean Equities Limited in
consideration for historical services provided by them as brokers
to Kolar Gold plc. These warrants have an exercise price of 40
pence per share and expire on 17 June 2014.
4. On 17 June 2011 the Company's shares listed for trading on
AIM, entitling Cenkos Securities plc and Ocean Equities Limited to
750,000 warrants each. These warrants have an exercise price of 60
pence and expire on 17 June 2014.
5. On 24 February 2011 the Company issued warrants to SUN
Mining, pursuant to the following agreement:
Under the terms of this agreement, subject to satisfaction of
the conditions necessary to give effect to the share swap and
restructure:
(a) Kolar Gold Limited agreed to issue to SUN Mining 5,833,119
Ordinary Shares, in consideration for SUN Mining providing services
with respect to securing the tenement rights in the Kolar Gold
Field through the agreements with GMSI. These shares were valued at
30 pence and the total cost of GBP1,749,936 has been capitalised as
exploration expenditure (see Note 9);
(b) Kolar Gold Limited has agreed to issue the following
Ordinary Shares (such agreement being reflected by the grant to SUN
Mining of warrants):
(i) 2,916,559 Shares, subject to SUN performing certain ongoing
services for 12 months; and
(ii) a further 2,916,559 Shares, subject to SUN:
A) performing such ongoing services for 24 months; and
B) assisting Kolar Gold Limited to acquire the BGML Assets;
(c) Kolar Gold agreed to grant SUN the Additional Warrant, being:
(i) a right by SUN to subscribe for 3,499,871 Ordinary Shares in
cash;
(ii) at the subscription price equal to the VWAP for the 3
months prior to exercising the option; and with an expiry date of 2
years from the date of the agreement.
Inputs for measurement of grant date fair values
The grant date fair values of warrants issued were measured
based on the Black-Scholes formula, or in the case of the SUN
Mining Additional Warrants, the Monte Carlo simulation method was
used.
Expected volatility is estimated by considering historic average
share price volatility. The inputs used in the measurement of the
fair values at grant date of the share-based payment plans are the
following:
SUN Mining SUN Mining Broker Broker SUN Mining
Initial Initial warrants warrants additional
warrants warrants Series Series warrants
Series Series 1 2 GBP
1 2 GBP GBP
GBP GBP
Fair value
at grant date 0.30 0.30 0.199 0.155 0.027
Share price
at grant date 0.30 0.30 0.40 0.40 0.300
3 months
Exercise price nil nil 0.40 0.60 VWAP*
Expected volatility 74.1% 74.1% 74.1% 74.1% 74.1%
Warrant life 2 years 3 years 3.1 years 3 years 2 years
Expected dividend nil nil nil nil nil
* Volume weighted average price
c) Share-based payment expense recognised in the income statement
GBP
SUN Mining Initial warrants
Series 1 302,044
SUN Mining Initial warrants
Series 2 150,815
SUN Mining Additional warrants 94,147
Brokers Warrants Series
1 258,960
Brokers Warrants Series
2 233,550
Bonus options (reissued)
to directors 92,650
Options issued to non-executive
directors 282,325
Reward options (reissued) -
Investor warrants (previously
attached to convertible
notes) -
Shares and options issued
by Kolar Gold plc during
the period 1 July 2010
to 31 December 2010 294,241
----------
Total share-based payment
expense - 2011 1,708,732
==========
Total share-based payment
expense - 2010 79,696
==========
17. Capital and reserves
As set out in Note 1.1, during the year ended 30 June 2011 the
Group undertook a restructure on 8 April 2011. The details of
changes in issued capital set out below reflect the movements in
the issued capital of Kolar Gold plc during the period to 8 April
2011 and then the movements in issued capital of Kolar Gold Limited
during the period 8 April 2011 to 30 June 2011.
Kolar Gold plc was the parent entity of the Group up until 8
April 2011. Following the completion of the restructure on 8 April
2011, Kolar Gold Limited is the parent entity of the Group and
Kolar Gold plc is a wholly owned entity in the Group.
a) Issued capital - Kolar Gold plc
"A" class "B" class
Ordinary shares Ordinary shares
(25p each) (7p each)
2011 2010 2011 2010
'000 '000 '000 '000
Authorised capital 400,000 400,000 400,000 400,000
========= ======== ========= ========
Issued and fully
paid up 1,543 1,543 60,769 45,122
========= ======== ========= ========
"A" class "B" class
Ordinary shares Ordinary shares
(25p each) (7p each)
2011 2010 2011 2010
'000 '000 '000 '000
Movement in issued
and fully paid share
capital:
In issue 1 July 2010 1,543 1,543 45,122 41,616
Issued for cash 10,000 3,030
Issued on conversion
of convertible loan
notes - - 4,664 -
Issued to staff and
consultants for services - - 983 -
Issued as settlement
of debt - - - 476
In issue at 30 June
2011 * 1,543 1,543 60,769 45,122
========= ======== ========= ========
* At 30 June 2011 all of the issued shares of Kolar Gold plc are
held by Kolar Gold Resources (India) Private Limited.
b) Issued capital - Kolar Gold Limited
"A" class "B" class
Ordinary Deferred Ordinary Ordinary
Shares Shares shares shares
(18p (25p
(7p each) each) each) (7p each)
2011 2011 2011 2011
Movement in issued
and fully paid
share capital: Note '000 '000 '000 '000
Shares issued (i)
incorporation - - - -
Issued under Share
Exchange Agreement
with shareholders
of Kolar Gold
plc on 8 April
2011 - - 1,543 60,769
Reorganisation
of share capital
approved by shareholders
and completed
on 8 April 2011 (ii) 62,312 1,543 (1,543) (60,769)
Cancellation of (ii)
Deferred Shares - (1,543) - -
Issued to staff
and consultants
for services 7,712 - - -
Issued for cash (iii) 30,000 - - -
----------- --------- ---------- -----------
In issue at 30 (iv)
June 2011 100,024 - - -
=========== ========= ========== ===========
c) Reconciliation to cash flows statement
No.
'000 GBP '000
Shares issued by Kolar Gold plc
prior to Group restructure at 30p
per share 10,000,000 3,000,000
Shares issued by Kolar Gold plc
on conversion of convertible notes 4,664,000 -
Shares issued by Kolar Gold plc
to staff and directors at 25p per
share 850,000 -
Shares issued by Kolar Gold plc
to external advisor at 30p per share 133,000 -
Shares issued by Kolar Gold Limited
in lieu of cash for provision of
services at 40p per share 1,612,500 645,000
Shares issued by Kolar Gold Limited
to SUN Mining per SUN Agreements 5,833,119 -
Shares issued by Kolar Gold Limited
for settlement of placement fees
from prior years at 21p per share 266,667 -
Shares issued per Initial Public
Offering at 40p per share 30,000,000 12,000,000
----------- -----------
53,359,286 15,645,000
=========== ===========
Notes: (i) On incorporation Kolar Gold Limited issued one "A"
Class Ordinary Share for 25p and one "B" Class Ordinary Share for
7p.
(ii) On 8 April 2011, Kolar Gold Limited, by special resolution
of its shareholders, reorganised its share capital into one class
of Ordinary Shares of 7p each and Deferred Shares of 18p each. The
Deferred Shares were cancelled immediately thereafter by resolution
of the Board in accordance with the Articles of Association.
(iii) On 17 June 2011 Kolar Gold Limited completed a share
placement and subsequently its shares were admitted to trading on
AIM.
(iv) All shares issued by the Company are 'ordinary' shares and
rank equally in all respects, including for dividends, shareholder
attendance and voter rights at meetings, on a return of capital and
in a winding-up.
d) Reserves
Share premium reserve
The share premium reserve comprises the excess of consideration
received over the par value of the shares issued.
Options reserve
The options reserve comprises the equity value of share based
payments issued by the Group.
Translation reserve
The translation reserve contains all foreign currency
differences arising from the translation of the financial
statements of foreign operations.
18. Loss per share
The calculation of basic loss per share at 30 June 2011 was
based on the loss of GBP3,256,290 (2010: GBP799,293), and a
weighted average number of ordinary shares outstanding of
57,184,802 (2010: 44,490,936), calculated as follows:
2011 2010
GBP GBP
Loss attributable to ordinary
shareholders 3,256,290 799,293
========== ========
Weighted average number of
ordinary shares
'000 '000
Issued ordinary shares at
1 July 46,665 43,159
Effect of shares issued during
the year 10,520 1,332
---------- --------
Weighted average number of
shares at 30 June 57,185 44,491
========== ========
Diluted loss per share
Options and warrants granted to the Directors, staff and
external consultants are considered to be potential ordinary shares
and have not been included in the determination of diluted loss per
share because they are not considered to be dilutive. The options
have not been included in the determination of the basic loss per
share.
2010
2011 pence pence
per share per share
Basic loss per share 5.69 1.80
Diluted loss per share 5.69 1.80
19. Financial instruments
(a) Fair values of financial instruments
The fair values of all financial assets and financial
liabilities are equal to their carrying amounts shown in the
statement of financial position.
Trade and other receivables
The fair value of trade and other receivables is estimated as
the present value of future cash flows, discounted at the market
rate of interest at the balance sheet date if the effect is
material.
Trade and other payables
The fair value of trade and other payables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date if the effect is
material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its
carrying amount where the cash is repayable on demand. Where it is
not repayable on demand then the fair value is estimated at the
present value of future cash flows, discounted at the market rate
of interest at the balance sheet date.
(b) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from taxation authorities and cash and cash
equivalents. The carrying amount of cash and cash equivalents
represents the maximum credit exposure on those assets. The cash
and cash equivalents are held with bank and financial institution
counterparties which are rated 'A' to 'AAA', based on rating agency
Standard and Poor's ratings.
Exposure to credit risk
The carrying amount of financial assets represents the maximum
credit exposure. Therefore, the maximum exposure to credit risk at
the reporting date was GBP11,604,272 (2010: GBP774,912), being the
total of the carrying amount of financial assets, shown in the
statement of financial position.
The maximum exposure to credit risk for trade and other
receivables at the balance sheet date was:
2011 2010
GBP GBP
The maximum exposure to credit
risk for receivables at the reporting
date by geographic region was:
Australia 48,996 8,896
United Kingdom 4,311 3,705
India 6,335 22,901
------- -------
59,642 35,502
======= =======
The maximum exposure to credit
risk for receivables at the reporting
date by type of counterparty
was:
UK government 4,311 3,705
Australian government 31,969 8,896
Other parties 23,362 22,901
------- -------
59,642 35,502
======= =======
No impairment losses have been recognised in 2010 and 2011.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the impact of netting agreements.
Financial Carrying Contractual 6 months 6-12 1 -2
liabilities amount cash flows or less months years
GBP GBP GBP GBP GBP
30 June 2011
Trade and
other payables 1,085,852 1,085,852 1,085,852 - -
========== ============ ========== ======== =======
30 June 2010
Convertible
notes 911,255 911,255 911,255 - -
Trade and
other payables 1,015,900 1,015,900 901,689 114,211 -
---------- ------------ ---------- -------- -------
1,927,155 1,927,155 1,812,944 114,211 -
========== ============ ========== ======== =======
(d) Currency risk
The Group's exposure to foreign currency risk is as follows.
This is based on the carrying amount for monetary financial
instruments except derivatives when it is based on notional
amounts.
2011 2010
GBP GBP
Cash and cash equivalents - GBP 47,535 23,408
Trade and other payables - $ - (235,329)
Trade and other payables - US$ (53,312) -
--------- ----------
(5,777) (211,921)
========= ==========
The following significant exchange rates applied during the
year:
Average rate Reporting date spot rate Average rate Reporting date spot rate
2011 2011 2010 2010
GBP:A$ 1.6107 1.51149 1.7986 1.7588
GBP:INR 72.2835 72.6155 N/A N/A
Sensitivity analysis
A strengthening of the GBP, as indicated below, against the
Australian dollar and Indian Rupee at 30 June 2011 would have
decreased equity by the amount shown below. This analysis is on
foreign currency exchange rate variances that the Group considered
to be reasonably possible at the end of the reporting period. The
analysis assumes that all other variables, in particular interest
rates, remain constant.
Equity Profit or loss
GBP GBP
30 June 2011
A$ (10 percent strengthening) 4,754
US$ (10 percent strengthening) (5,331) -
========= ===============
30 June 2010
A$(10 percent strengthening) (21,192) -
========= ===============
A weakening of the GBP against the Australian dollar and Indian
Rupee at 30 June would have had the equal but opposite effect on
the amounts shown above, on the basis that all other variables
remain constant.
(e) Interest rate risk
Profile
At the reporting date the interest rate profile of
interest-bearing financial instruments was:
Carrying amount
2011 2010
GBP GBP
Variable rate instruments
Cash and cash equivalents 11,544,630 739,410
Convertible notes - (911,255)
----------- ----------
11,544,630 (171,845)
=========== ==========
Cash flow sensitivity analysis for variable rate instruments
The Group's interest bearing assets at balance date comprised
solely bank accounts. A change in interest rates would have
increased/(decreased) profit or loss by the amounts shown below.
This analysis assumes that all other variables, in particular
foreign currency rates, remain constant. This analysis is performed
on the same basis for 2010.
2011 2010
Profit or loss Profit or loss
100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
Variable rate instruments 115,446 (115,446) 7,394 (7,394)
================ ================ ================ ================
20. Operating leases
2011 2010
Non-cancellable operating lease rentals are payable as follows: GBP GBP
Less than one year 30,963 26,129
Between one and five years 9,180 23,855
------- -------
40,143 49,984
======= =======
21. Contingencies and commitments
The Group has entered into a contract to purchase outstanding
options over, and undertake exploration activity in relation to
certain mining tenements in the Kolar Gold Fields region in India.
The Group is entitled to purchase these options once all
governmental and regulatory approvals have been obtained. The Group
expects to complete the acquisition of all of these tenements by
June 2013.
The total cost of acquiring the options is GBP4.4 million. In
addition, the Company expects to spend GBP3.3 million on
exploration activities between July 2011 and December 2012.
22. Group entities
Country of Ownership interest
incorporation 2011 2010
Kolar Gold Resources (i) Mauritius 100 -
Limited
Kolar Gold Resources (ii) India 100 -
(India) Private Limited
Kolar Gold Pty Ltd Australia 100 100
Kolar Gold plc (iii) England 100 -
Kolar Gold (Australia) Pty
Ltd (iv) Australia - 100
(i) Incorporated on 3 March 2011
(ii) Incorporated on 24 March 2011
(iii) Kolar Gold plc was the parent of the Group until the restructure of the Group on 8
April 2011
as set out in Note 1.1. Following the restructure Kolar Gold plc is a wholly owned
group entity.
(iv) Wound up and deregistered on 22 April 2011.
23. Related parties
Key management personnel
2011 2010
Key management personnel remuneration GBP GBP
Cash-settled transactions 701,594 239,141
Share-based payments 669,216 54,810
---------- --------
1,370,810 293,951
========== ========
In addition to their salaries and fees, key management personnel
participate in the Group's share option programme (see Note
16).
The above remuneration amounts have been prepared on a
consolidated basis and include directors of Kolar Gold Limited and
Kolar Gold plc. The remuneration amounts disclosed below and in the
Directors' Report is the remuneration of Kolar Gold Limited
directors only.
Directors' remuneration and interests
Remuneration Interests
Director Cash-settled
transactions Share-based payments Totals Shares Options
GBP GBP GBP No. No.
Harvinder Hungin
(Chairman) 15,000 110,475 125,475 1,700,000 (1) 650,000 (1)
Nicholas Spencer (Chief
Executive Officer) 318,152 206,276 524,428 1,732,053 1,350,000
Richard Johnson (Chief
Operating Officer) 129,447 110,120 239,567 725,000 675,000
Stephen Coe (2) 14,583 85,925 100,508 Nil 350,000
Stephen Oke 13,333 85,925 99,258 Nil 350,000
Shiv Khemka 10,000 -- 10,000 Nil Nil
--------------------- ---------- -------------- ------------
TOTALS 500,515 598,721 1,099,236 4,157,053 3,375,000
========================= ===================== ========== ============== ============
1. SG Hambros Trust Company (Channel Islands) Limited hold
1,700,000 Ordinary Shares and 200,000 options, as trustee of the
Carlyle Settlement, in which Harvinder Hungin and his family have
an interest.
2. 50% to be paid by the issue of shares
Amounts owing to directors at 30 June 2011 were GBP479,354
(2010: GBP127,006).
SUN Mining is a related party, as Shiv Khemka is a director of
the company and Vice Chairman of SUN Group.
SUN Group holds 5,833,119 shares in the Company.
The amounts paid to SUN Group are disclosed in the Consolidated
Statement of Comprehensive Income and also in Note 16. The balance
outstanding at the year end was nil.
24. Subsequent events
There have been no significant events subsequent to the balance
sheet date to report that would alter the financial statements as
at 30 June 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
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