Certain
information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU)
No 596/2014 until the release of this announcement.
25 June 2019
TRI-STAR RESOURCES
PLC
RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2018 AND
NOTICE OF AGM
Tri-Star Resources plc (“Tri-Star”, “TSTR” or the “Company” and
together with its subsidiaries, the “Group”) the independent metal
processing and technology company, is pleased to announce its
financial results for the year ended 31 December 2018. The
Company’s principal interest is an antimony and gold production
facility (the “SPMP Project” or the “Project”) being developed in
Sohar, Sultanate of Oman by
Strategic & Precious Metals Processing LLC (“SPMP”), an Omani
company in which Tri-Star has a 40% equity interest.
Highlights for TSTR from the year
include:
· In January
2018, the Company completed an Open Offer with £4.4m of
funds raised through the issue of 44,204,755,697 ordinary shares of
0.005p each at 0.01 pence per
share. This offer was oversubscribed and showed strong
shareholder support for not only Tri-Star but also the SPMP
Project. Strong shareholder support was further illustrated in
June 2018 by a second successful fund
raising of £13.0m which was achieved through a placing of
30,232,558 ordinary shares of 5 pence
each at 43 pence per share.
· Using the proceeds from the fund
raisings, TSTR was able to provide additional mezzanine loans of
$16.7m (£12.7m) to SPMP to assist in
further development of the Project. These loans were issued with
identical terms to the existing mezzanine loan Tri-Star invested in
SPMP in November 2017 at a compound
interest rate of 15% per annum. At the same time, Tri-Star was able
to reduce its own debt levels from $6m (£4.3m) to $1.5m (£1.1m).
· In March
2018, Karen O’Mahony, non-executive director at the time,
was appointed Acting CEO and CFO of Tri-Star to oversee the
restructure and transition of the Company. In parallel, the Board
of Tri-Star was streamlined to make it more cost effective and
efficient. Lavinia Jessup was
appointed as Company Secretary for Tri-Star in October 2018.
· In March
2018, the Board of Tri-Star helped SPMP negotiate a senior
debt facility with Alizz Islamic Bank for the amount of Omani
Rials 10m (approx. USD $26m) to be used for a combination of project and
trade finance.
· In August
2018, Steven Din joined SPMP
as CEO to lead the plant through hot commissioning and into
commercial production.
· In November
2018, Tri-Star negotiated changes to SPMP’s shareholders
agreement which reduced Tri-Star’s potential liability for capex
over-run.
· In December
2018, Tri-Star negotiated the successful sale of the
non-core asset Göynük mine in Turkey for a total cash consideration of USD
$0.5m (of which $0.1m is due on first product sales), and this
deal completed in early 2019. The sales agreement neutralised
any of Tri-Star’s liabilities associated with the mine whilst also
allowing room for SPMP to negotiate an offtake agreement on any
future production from the mine. These offtake arrangements are
currently being negotiated.
Highlights post year end include:
· In March
2019, Tri-Star aided SPMP in securing a shareholder loan of
$35m with no dilution to Tri-Star
shareholders. As part of this agreement, the shareholders of
SPMP have agreed to explore a full range of liquidity and funding
options, and to convert the majority of the existing mezzanine loan
to equity or interest free equity debt.
· In April
2019, Karen O'Mahony resigned
and was replaced by David Facey as
CEO and CFO of the Company. In addition, Mark Wellesley-Wood resigned as a Director and
Non-Executive Chairman, and Adrian
Collins replaced him as Non-Executive Chairman of the
Company.
David
Facey, Chief Executive Officer & Chief Financial
Officer, said:
“We are pleased that the remedial works to resolve the technical
issues announced on 18 February 2019
largely completed, in particular, the installation of a new gas
cooling solution and the modifications to the electric furnace
successfully have been tested with a variety of calcine inputs. We
look forward to SPMP moving to the production phase of processing
antimony and gold doré. Financially, we have achieved a healthy
reduction in our ongoing running costs, reduced our debt levels and
provided financial support to the SPMP Project.”
Notice of Annual General Meeting
The Company also announces that the Annual General Meeting
(“AGM”) will be held at the offices of Fladgate LLP, 16 Great Queen
Street, London WC2B on
24 July 2019 at 11.00am.
The Notice of AGM will be despatched to shareholders later today
and will be available on the Company’s website at
www.tri-starresources.com.
The Company’s Annual Report and Consolidated Financial
Statements for the year ended 31 December
2018 will also be available on the website.
CHAIRMAN’S STATEMENT
We are pleased to report and reflect on another year of
restructuring and progress for Tri-Star Resources Plc.
Tri-Star holds a 40% interest in SPMP, which has constructed the
world’s first antimony and gold processing plant, designed to the
highest European Union environmental standards. With the plant
completed and ongoing remedial work largely finished, following
some first metal false starts in January and February 2019, a more sustainable ramp up is now
underway.
The infrastructure for the SPMP roasting facility in
Oman to process mixed antimony and
gold ores is now in place. In early 2019, the plant produced
unrefined antimony metal from intermediate products (crude antimony
trioxide and impure antimony trioxide), proving the process
chemistry. The chemical composition had a 97.3% purity in its
unrefined form, which was a key milestone for both Tri-Star and
SPMP. Gold doré and antimony production is expected in the near
future.
Whilst there are a number of challenges ahead, we believe that
SPMP’s long term prospects remain good with SPMP management
identifying a number of opportunities to drive performance once
commercial production has been achieved, now targeted for the end
of this year.
Financial Summary
The Group has substantially strengthened its financial position,
reducing debt from £4.3m as of year-end 2017 to £1.1m as of
year-end 2018, whilst at the same time investing $16.7m (£13.9m) in the form of a mezzanine loan
in SPMP.
Regarding the overall result for the year, I am pleased to
report that the Group’s current year total comprehensive loss of
£2.0m (2017: £6.6m) was much improved, due to the absence of the
prior year £3.6m charge on conversion of the convertible secured
loan notes which was a major factor in the Group’s prior year total
comprehensive loss. Administrative expenses rose to £0.8m (2017:
£0.7m), primarily due to termination expenses in order to reduce
ongoing Board costs. The Group’s share of losses in SPMP was £0.3m
(2017: £0.0m). A dividend payment is not being recommended at this
time.
Outlook and Summary
With the Project in Sohar completed, we now look forward to the
finalisation of hot commissioning and ramp up of commercial
production. We are encouraged by the progress to date, and are
optimistic that commercial operation of the SPMP Project in
Oman is now within reach.
We are pleased to welcome David
Facey to the Board, and I would like to thank Karen O’Mahony
for all her hard work over the last 16 months in getting the Group
to the position it now is. As previously announced, Mark Wellesley-Wood stood down as Chairman of
the Company in April 2019, and it was
with enormous regret that I had to report his untimely death a few
weeks later. Mark was a great man and his wisdom and support over
the years was of huge help to us all. He will be missed, and our
thoughts are with his wife and family.
Partnership and sustainability remain our important priorities.
We continue to strengthen our partnership with Oman, and our Omani associates. I would like
to thank our partners, the management team, our employees and our
shareholders for their dedication, commitment and efforts during
the year. The Board and I are looking forward to the coming year
with confidence.
Adrian Collins
Non-Executive Chairman
strategic report
Introduction
The Company’s principal activities are in the SPMP Project, an
antimony and gold production facility. The SPMP Project is based in
Sohar, Sultanate of Oman, and is
being developed by SPMP, an Omani company in which Tri-Star has a
40% equity interest. The Project is due to become commercially
operational in the second half of 2019.
Tri-Star also has antimony exploration licenses in Canada which are held for their potential
contribution of feedstock to the SPMP Project.
SPMP Project
Background
The SPMP Project is a commercial facility which will produce
high grade antimony ingots, powdered antimony trioxides (“ATO”),
gypsum and gold ore bars. Feedstock is sourced internationally and
treated by an environmentally friendly roasting process.
The Project remains an attractive prospect for
Tri-Star:
• Scale: The Project is the
largest antimony roaster outside of China and the world’s first clean plant,
designed to EU environmental standards. It is designed to have the
capacity to produce more than 50,000 oz. of gold per annum and
20,000 tonnes in combined antimony metal and ATO products which
represents 12%-15% of average annual world antimony production and
will thus establish Oman as a
major global producer of antimony.
• Earnings: The Project is
forecast to generate significant revenues, divided approximately
60:40 between antimony and gold. In terms of developing end
products, antimony derivatives offer the potential for further
margin growth over and above the normal conversion
margin.
• Technology: The Project applies
a proprietary antimony and gold roasting technology that is
flexible and sophisticated enough to be able to process many types
of grade and impurities.
• Logistics: The Project will
supply value added antimony products to customers across the globe.
The location of the Project in the Gulf region provides an
excellent centralised logistics route, and access to relatively
inexpensive energy and modern infrastructure.
• Demand for product:
Antimony is a rare metal with a range of industrial applications.
Amongst other things it is used as an additive to flame retardant
compounds, utilised in printed circuit boards, computers and other
electronic products. Antimony has consistently ranked highly in
European and US risk lists for supply of chemical elements or
element groups required to maintain the current economy and
lifestyle.
• Board: SPMP has an experienced
and internationally focused Board of Directors who have helped
manage the project from inception through to near completion.
Oman
joint venture
SPMP was formed in June 2014 to
develop and build the Project. Tri-Star has a 40% equity interest
in SPMP, with the other joint venture partners being The Oman
Investment Fund (“OIF”) (40% equity holder) and DNR Industries
Limited, part of Dutco Group in Dubai (20% equity holder).
Project status
In early 2019, the Plant produced unrefined antimony metal from
intermediate products (crude antimony trioxide and impure antimony
trioxide), proving the process chemistry. The chemical composition
had a 97.3% purity in its unrefined form, this was a key milestone
for both Tri-Star and SPMP. Gold doré and antimony production is
expected in the near future.
Antimony
Currently, the principal use of antimony is in flame retardants
as antimony trioxide (“ATO”). ATO is most commonly used as a
synergist to improve the performance of other flame retardants such
as aluminium hydroxide, magnesium hydroxide and halogenated
compounds. ATO is used in this way in many products including
plastics, textiles, rubber, adhesives and plastic covers for
aircrafts and cars. The largest applications for metallic antimony
(metal ingots) are as alloying material for lead and tin and for
lead antimony plates in lead-acid batteries. Alloying lead and tin
with antimony improves the properties of the alloys which are used
in solders, bullets and plain bearings. This use is in decline as
the antimony content of typical automotive battery alloys has
declined by weight as calcium, aluminium and tin alloys are
expected to replace it over time.
An emerging application is the use of antimony in
microelectronics.
Refractory Gold
Refractory gold is gold ‘ore’, where the metal is trapped in
sulphide lattice structures that conventional processes are unable
to extract. The clean antimony roasting technology developed by
Tri-Star and sold to SPMP in 2015 has unlocked the potential of
these gold resources, estimated to be 30% – 50% of remaining gold
in the ground globally.
Other Tri-Star projects
Canada
The Company owns 100% of Tri-Star Antimony Canada. Through this
Canadian subsidiary, the Company owns a license to explore the land
of a large undeveloped antimony project in Canada (“Bald Hill deposit”). The Bald Hill
deposit could become a potential future supplier of feedstock for
the SPMP Project.
Turkey
The Company disposed of its non-core asset Göynük mine in
Turkey for a total cash
consideration of USD $0.5m (of which
$0.1m is due on first product sales),
which was completed in March
2019.
Financing
Tri-Star announced an Open Offer on 21
December 2017 to raise up to approximately £4.4 million
before expenses through the issue of new ordinary shares in the
Company at an issue price of 0.01
pence per share. The Open Offer successfully closed on
10 January 2018 having been
oversubscribed.
In June 2018 Tri-Star completed a
consolidation of its shares whereby every one thousand ordinary
shares of 0.005 pence were
consolidated into one share of 5
pence each.
In July 2018 Tri-Star completed a
placing of 30,232,558 ordinary shares at 43
pence per share raising £13.0m to repay $4.7m (£3.6m) of the $6.0m (£4.6m) loans from the Odey funds plus
interest of $0.65m (£0.5m), and to
provide further loans of $16.7m
(£12.7m) to SPMP, as well as for general working capital.
Result for the year
The results for 2018 reflect the impact of the extinguishment of
the Odey Asset Management (“OAM”) convertible loan liability that
took place in June 2017.
Administration costs rose by 12% in 2018 to £787,000 from £704,000
in 2017.
|
2018 |
2017 |
Summary Profit and Loss
Account |
£’000 |
£’000 |
Share based payments |
(580) |
(135) |
Administrative
expenses |
(787) |
(704) |
Loss from
operations |
(1,367) |
(839) |
Share of loss in
associate |
(306) |
(41) |
Movement in the fair
value of financial asset |
293 |
(705) |
Finance expense
net |
(624) |
(1,364) |
Loss before
extinguishment of debt |
(2,004) |
(2,949) |
Loss on extinguishment
of debt |
- |
(3,637) |
Loss before
taxation |
(2,004) |
(6,586) |
Share of loss in associate represents Tri-Star’s share of SPMP’s
post-tax result for the year. SPMP has not been profitable to date
as the SPMP Project is only due to commence commercial operations
in H2 2019, with full production forecast for 2020.
In accordance with IFRS 9, the fair value of the mezzanine loan
from TSTR to SPMP (the “SPMP Mezzanine Loan”) has been derived
using a net present value calculation in which an effective
discount rate of 20% has been applied. The discount rate,
being the assumed market rate, has been derived by reference to
Tri-Star’s estimated cost of the funding required in order to
provide the SPMP Mezzanine Loan. The Mezzanine Loan is assumed to
be repaid on the due date (December
2022). It is assumed that there will be no default on these
loans and that the conversion discount has no value.
Financial position
At 31 December 2018 the Group had
£312,000 (2017: £485,000) in cash, total assets of £18,303,000
(2017: £5,803,000), and total liabilities of £1,336,000 (2017:
£4,555,000). As at 30 April 2019, the
Group had £220,000 in cash.
Key Performance Indicators
(“KPIs”)
At this stage in the Group’s development, the key performance
indicator is the loss after tax, given the nature of the Group’s
assets and the current development of its operations. This will be
reviewed in the forthcoming year.
Safety, health and environmental
policies
Tri-Star is committed to meeting international best industrial
practice in each jurisdiction in which it operates with respect to
human rights, safety, health and environmental (“SHE”) policies.
Management, employees and contractors are governed by, and required
to comply with, Tri-Star’s SHE policies as well as all applicable
international, national federal, provincial and municipal
legislations and regulations. It is the primary responsibility of
the supervisors and other senior field staff of Tri-Star and its
subsidiaries to oversee safe work practices and ensure that rules,
regulations, policies and procedures are being followed.
Principal risks and uncertainties
The Board continually reviews the risks facing the Group and
Company. The Group is not yet revenue generating. The principal
risks and uncertainties facing the Group and Company involve delays
to the commissioning and ramp up of the SPMP Project which may lead
to higher funding requirements from the SPMP shareholders. Delays
can be caused by construction issues, design failures or
technological problems. At the same time, as a processing plant,
SPMP requires successful partnerships with suppliers of metal ores
and with Offtake providers or distributors to buy the plant’s
output. The availability of such partners and the terms of
engagement may impact plant operations and profitability. The SPMP
Project has had recent setbacks and the timing and progress is not
under the direct control of the Tri-Star Group. In terms of other
more significant but lower probability risks, there is the matter
of political risk within Oman, and
internationally.
Financial risk management objectives
and policies
The Group’s principal financial instruments comprise of cash,
loan notes and other financial liabilities. The Group has various
other financial instruments such as loans and trade payables, which
arise directly from its operations.
It is, and has been throughout the year under review, the
Group’s policy that no trading in financial instruments shall be
undertaken. The main risks arising from the Group’s financial
instruments are liquidity risk, price risk and foreign exchange
risk.
Going concern
The Group and Company are not yet revenue generating and are
reliant upon funds raised from issuing loans and shares. The
holders of the secured loan notes have agreed to extend the term of
the notes to 30 June 2020. However,
an additional cash requirement of approximately £350,000 in
unavoidable running costs was identified based on cash flow
forecasts for the period ending 30 June
2020, as prepared by the Directors. The Directors consider
that there are a number of options to cover this deficit:
1) SPMP makes the $2
million (approximately £1.5 million) payment in respect of
its acquisition from Tri-Star of the intellectual property (“IP”)
of the Project, due on successful commissioning of the plant.
2) Tri-Star raises further funds by way of an equity
or debt placing or a further loan from the OAM Funds.
3) Tri-Star is due to receive the deferred payment
of USD $100,000 from the sale of its
Turkish subsidiary on sale of first product, which would reduce the
amount required to be raised by a placing or loan.
The Directors are confident that the Group and Company will
secure the funds required from one of the above sources, or from a
combination of the above sources. Accordingly, the Directors
believe that it is appropriate to prepare the financial statements
on a going concern basis. However, there is no certainty that they
will be able to do so. These matters along with the matter set
forth above mean that there is a material uncertainty which
may cast significant doubt on the Group’s and the Company’s ability
to continue as a going concern and, therefore, that the Group and
Company may not be able to realise its assets or discharge its
liabilities as they fall due.
Future prospects
We expect the remainder of 2019 to be positive, and Tri-Star
will remain focussed on the active management of its 40% interest
in SPMP as the Project moves forward into production. We will also
remain focused on cutting costs at the Group level in order to
maintain a lean operation.
Approval by and signature on behalf of the board
David Facey
Chief Executive Officer & Chief Financial Officer
Enquiries:
Tri-Star Resources plc
David Facey, Chief Executive
Officer
ceo@tri-starresources.com
Tavistock
Tel: +44 (0) 20 7920 3150
(Financial PR)
Charles
Vivian
Mobile: +44 (0) 7977 297 903
Gareth
Tredway
Mobile: +44 (0) 7785 974 264
SP Angel Corporate Finance
(Nomad and Broker)
Robert Wooldridge / Jeff Keating / Caroline
Rowe
Tel: +44 (0) 20 3470 0470
finnCap
(Broker)
Christopher Raggett/Scott Mathieson/Camille
Gochez
Tel: +44 (0)20 7220 0500
Tri-Star Resources plc
Consolidated Statement of
Comprehensive Income
For the year ended
31 December 2018 |
Notes |
2018 |
|
2017
(restated) |
|
|
£’000 |
|
£’000 |
|
|
|
|
|
Share based
payments |
|
(580) |
|
(135) |
Exploration
expenditure and other administrative expenses |
|
(787) |
|
(704) |
Total
administrative expenses |
|
(1,367) |
|
(839) |
|
|
|
|
|
Loss from
operations |
|
(1,367) |
|
(839) |
|
|
|
|
|
Share of loss in
associate company |
|
(306) |
|
(41) |
Movement in the fair
value of financial asset |
|
293 |
|
(705) |
Finance income |
2 |
43 |
|
- |
Loss on extinguishment
of debt |
|
- |
|
(3,637) |
Finance cost |
2 |
(667) |
|
(1,364) |
|
|
|
|
|
Loss before
taxation |
|
(2,004) |
|
(6,586) |
|
|
|
|
|
Taxation |
3 |
48 |
|
80 |
Loss after
taxation, and loss attributable to the equity holders of the
Company from continuing operations |
|
(1,956) |
|
(6,506) |
|
|
|
|
|
Loss from discontinued
operations |
|
(70) |
|
(104) |
|
|
|
|
|
Loss after
taxation, and loss attributable to the equity holders of the
Company |
|
(2,026) |
|
(6,610) |
Loss after taxation
attributable to: |
|
|
|
|
Non-controlling
interest |
|
- |
|
(1) |
Equity holders of the
parent |
|
(2,026) |
|
(6,609) |
Other comprehensive
expenditure |
|
|
|
|
Items that will be
reclassified subsequently to profit and loss |
|
|
|
|
Exchange loss on
translating foreign operations |
|
(14) |
|
(19) |
|
|
|
|
|
Other comprehensive
income for the period, net of tax |
|
(14) |
|
(19) |
Total comprehensive
loss for the year, attributable to owners of the company |
|
(2,040) |
|
(6,629) |
Total comprehensive
loss attributable to: |
|
|
|
|
Non-controlling
interest |
|
- |
|
(1) |
Equity holders of the
parent |
|
(2,040) |
|
(6,628) |
|
|
|
|
|
Loss per
share |
|
|
|
|
Basic and diluted loss
per share (pence) |
4 |
(2.64) |
|
(45.97) |
The 2017 Statement of Comprehensive Income has been restated for
the impact of IFRS 9.
Tri-Star Resources plc
Consolidated Statement of Financial
Position
At 31 December
2018 |
|
2018 |
|
2017
(restated) |
ASSETS |
Notes |
£'000 |
|
£'000 |
|
|
|
|
|
Non-current |
|
|
|
|
Intangible assets |
|
- |
|
12 |
Investment in
associates |
|
1,136 |
|
1,442 |
Loan to associate held
at fair value through profit or loss |
5 |
16,727 |
|
3,737 |
Property, plant and
equipment |
|
- |
|
21 |
|
|
17,863 |
|
5,212 |
Current |
|
|
|
|
Trade and other
receivables |
|
105 |
|
106 |
Cash and cash
equivalents |
|
312 |
|
485 |
Asset classified as
held for sale |
|
23 |
|
- |
Total current
assets |
|
440 |
|
591 |
Total
assets |
|
18,303 |
|
5,803 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Trade and other
payables |
|
94 |
|
77 |
Short term loans |
|
1,129 |
|
4,348 |
Liabilities classified
as held for sale |
|
2 |
|
- |
Total current
liabilities |
|
1,225 |
|
4,425 |
|
|
|
|
|
Non-current |
|
|
|
|
Deferred tax
liability |
|
111 |
|
130 |
Total
liabilities |
|
1,336 |
|
4,555 |
|
|
|
|
|
EQUITY |
|
|
|
|
Issued share
capital |
|
6,884 |
|
3,160 |
Share premium |
|
44,816 |
|
31,347 |
Share based payment
reserve |
|
1,671 |
|
1,105 |
Other reserves |
|
(6,967) |
|
(6,953) |
Retained earnings |
|
(29,433) |
|
(27,407) |
|
|
|
|
|
|
|
|
|
|
|
|
16,971 |
|
1,252 |
Non-controlling
interest |
|
(4) |
|
(4) |
Total
equity |
|
16,967 |
|
1,248 |
|
|
|
|
|
Total equity and
liabilities |
|
18,303 |
|
5,803 |
The 2017 Statement of Financial Position has been restated for
the impact of IFRS 9.
Tri-Star Resources plc
Consolidated Statement of Changes in
Equity
|
|
Share
capital |
Share
premium |
Other
reserves |
Share
based payment reserves |
Trans-lation reserve |
Retained earnings |
Total
attributable to owners of parent |
Non-control-ling interest |
Total
equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
Balance at 1
January 2017 (restated) |
|
2,601 |
14,525 |
(6,156) |
1,130 |
(778) |
(20,823) |
(9,501) |
(3) |
(9,504) |
Issue of share
capital |
|
559 |
13,062 |
- |
- |
- |
- |
13,621 |
- |
13,621 |
Share issue costs |
|
- |
(54) |
- |
- |
- |
- |
(54) |
- |
(54) |
Transfer on lapse of
options |
|
- |
- |
- |
(25) |
- |
25 |
- |
- |
- |
Fair value on
extinguishment of loan |
|
- |
3,814 |
- |
- |
- |
- |
3,814 |
- |
3,814 |
Transactions with
owners |
|
559 |
16,822 |
- |
(25) |
- |
25 |
17,381 |
- |
17,381 |
Exchange difference on
translating foreign operations |
|
- |
- |
- |
- |
(19) |
- |
(19) |
- |
(19) |
Loss for the year |
|
- |
- |
- |
- |
- |
(6,609) |
(6,609) |
(1) |
(6,610) |
Total comprehensive
loss for the period |
|
- |
- |
- |
- |
(19) |
(6,609) |
(6,628) |
(1) |
(6,629) |
Balance at 31
December 2017 (restated) |
|
3,160 |
31,347 |
(6,156) |
1,105 |
(797) |
(27,407) |
1,252 |
(4) |
1,248 |
Issue of share
capital |
|
3,724 |
13,711 |
- |
- |
- |
- |
17,435 |
- |
17,435 |
Share issue costs |
|
- |
(242) |
- |
- |
- |
- |
(242) |
- |
(242) |
Share based
payments |
|
- |
- |
- |
566 |
- |
- |
566 |
- |
566 |
Transactions with
owners |
|
3,724 |
13,469 |
- |
566 |
- |
- |
17,759 |
- |
17,759 |
Exchange difference on
translating foreign operations |
|
- |
- |
- |
- |
(14) |
- |
(14) |
- |
(14) |
Loss for the
period |
|
- |
- |
- |
- |
- |
(2,026) |
(2,026) |
- |
(2,026) |
Total comprehensive
loss for the period |
|
- |
- |
- |
- |
(14) |
(2,026) |
(2,040) |
- |
(2,040) |
Balance at 31
December 2018 |
|
6,884 |
44,816 |
(6,156) |
1,671 |
(811) |
(29,433) |
16,971 |
(4) |
16,967 |
|
|
|
|
|
|
|
|
|
|
|
The 2016 and 2017 Statement of Changes in Equity have been
restated for the impact of IFRS 9.
Tri-Star Resources plc
Consolidated Statement of
Cashflows
For the year ended
31 December 2018 |
2018 |
|
2017
(restated) |
|
£'000 |
|
£'000 |
Cash flow from
operating activities |
|
|
|
Loss after
taxation |
(2,026) |
|
(6,610) |
Amortisation |
- |
|
2 |
Depreciation |
12 |
|
20 |
Finance income |
(43) |
|
- |
Finance cost |
667 |
|
1,312 |
Loss from
associates |
306 |
|
41 |
Movement in the fair
value of financial asset |
(293) |
|
705 |
Fees paid by
shares |
15 |
|
135 |
Loss on extinguishment
of loans |
- |
|
3,637 |
Share based
payments |
565 |
|
- |
Movement on fair value
of derivatives |
- |
|
52 |
Increase in trade and
other receivables |
(14) |
|
(10) |
Decrease in trade and
other payables |
(1) |
|
(15) |
Net cash outflow
from operating activities |
(812) |
|
(731) |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Finance income |
43 |
|
- |
Loans made to
associate |
(12,698) |
|
(4,511) |
Net receipts on sale
of financial asset held at fair value through profit or loss |
- |
|
96 |
Net cash outflow
from investing activities |
(12,655) |
|
(4,415) |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Proceeds from issue of
share capital |
17,420 |
|
1,300 |
Share issue costs |
(242) |
|
(54) |
Finance costs |
(491) |
|
(498) |
Loans repaid |
(3,560) |
|
- |
New loans |
- |
|
4,511 |
Net cash inflow
from financing activities |
13,127 |
|
5,259 |
|
|
|
|
Net change in cash
and cash equivalents |
(340) |
|
113 |
Cash and cash
equivalents at beginning of period |
485 |
|
447 |
Exchange differences
on cash and cash equivalents |
167 |
|
(75) |
Cash and cash
equivalents at end of period |
312 |
|
485 |
The 2017 Statement of Cash Flows has been restated for the
impact of IFRS 9.
BASIS OF PREPARATION
The Group financial statements have been prepared under the
historical cost convention except for the loan to associate and
derivative financial instrument which is at fair value and in
accordance with International Financial Reporting Standards as
adopted by the European Union (“IFRS”).
The Company’s ordinary shares are quoted on AIM, a market
operated by the London Stock Exchange. The Company applies the
Companies Act 2006 when preparing its annual financial
statements.
The Group financial statements have been prepared under IFRS and
the principal accounting policies adopted remain unchanged from
those adopted by the Group in preparing its financial statements
for the prior year, other than financial assets measured in
accordance with IFRS 9. The impact of adopting IFRS 9 has resulted
in the loan to associate being measured at fair value through
P&L.
In accordance with IFRS 9, the fair value of the mezzanine loan
from TSTR to SPMP (the “SPMP Mezzanine Loan”) has been derived
using a net present value calculation in which an effective
discount rate of 20% has been applied. The discount rate,
being the assumed market rate, has been derived by reference to
Tri-Star’s estimated cost of the funding required in order to
provide the SPMP Mezzanine Loan. The Mezzanine Loan is
assumed to be repaid on the due date. It is assumed that there will
be no default on these loans and that the conversion discount has
no value. The adjustment recognised at 1
January 2018 resulted in a total comprehensive loss of
£681,000, an increase in investment of associates of £21,000 and a
decrease in the carrying value of the loan to associate of
£702,000. Additionally, the asset previously held as
available-for-sale, which was disposed of in 2017, has been
reclassified as a financial asset measured at fair value through
profit and loss. The impact of this at 1
January 2017 is a credit to retained earnings of £47,000 and
a debit to other reserves of £47,000. The impact in 2017 was a
reduction in the profit on the sale of £47,000, and an increase in
other comprehensive income of £47,000.
GOING CONCERN
The Group and Company are not yet revenue generating and are
reliant upon funds raised from issuing loans and shares. The
holders of the secured loan notes have agreed to extend the term of
the notes to 30 June 2020. However,
an additional cash requirement of approximately £350,000 in
unavoidable running costs was identified based on cash flow
forecasts for the period ending 30 June
2020, as prepared by the Directors. The Directors consider
that there are a number of options to cover this deficit:
1) SPMP makes the $2
million (approximately £1.5 million) payment in respect of
its acquisition from Tri-Star of the intellectual property (“IP”)
of the Project due on successful commissioning of the plant.
2) Tri-Star raises further funds by way of an equity
or debt placing or a further loan from the OAM Funds.
3) Tri-Star is due to receive the deferred payment
of USD $100,000 from the sale of its
Turkish subsidiary on sale of first product, which would reduce the
amount required to be raised by a placing or loan.
The Directors are confident that the Group and Company will
secure the funds required from one of the above sources, or from a
combination of the above sources. Accordingly, the Directors
believe that it is appropriate to prepare the financial statements
on a going concern basis. However, there is no certainty that they
will be able to do so. These matters along with the matter set
forth above mean that there is a material uncertainty which
may cast significant doubt on the Group’s and the Company’s ability
to continue as a going concern and, therefore, that the Group and
Company may not be able to realise its assets or discharge its
liabilities as they fall due.
BASIS OF CONSOLIDATION
The Group financial statements consolidate those of the Company
and all of its subsidiary undertakings drawn up to the statement of
financial position date. Subsidiaries are entities which are
controlled by the Group. Control is achieved when the Group has
power over the investee, has the right to variable returns from the
investee and has the power to affect its returns. The Group obtains
and exercises control through voting rights and control is
reassessed if there are indications that the status of any of the
three elements have changed.
Unrealised gains on transactions between the Company and its
subsidiaries are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
asset transferred. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
The Group's investment in associated undertakings is accounted
for using the equity method. The consolidated income statement
includes the Group's share of the associated profits and losses
while the Group's share of net assets of associates is shown in the
consolidated statement of financial position.
NOTES TO THE FINANCIAL STATEMENTS
1
SEGMENTAL REPORTING
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group’s chief operating decision maker to make decisions
about the allocation of resources and an assessment of performance
and about which discrete financial information is available.
The Board considers that the Group comprises only one operating
segment, that of mining, development and operations.
In respect of the non-current assets, £Nil (2017: £12,000) arise
in the UK, and £17,863,000 (2017: £5,200,000) arise in the rest of
the world.
2
FINANCE INCOME AND COSTS
|
2018 |
|
2017 |
|
£'000 |
|
£'000 |
Finance
income |
|
|
|
Bank interest |
43 |
|
- |
|
43 |
|
- |
|
2018 |
|
2017 |
|
£'000 |
|
£'000 |
Finance
costs |
|
|
|
Interest and fees
payable on short term loans |
667 |
|
136 |
Movement in
derivative |
- |
|
52 |
Interest payable on
convertible loan |
- |
|
1,176 |
|
667 |
|
1,364 |
3
TAXATION
Unrelieved tax losses of approximately £6.04 million (2017
restated: £5.74 million) are available to offset against future
taxable trading profits. The related deferred tax asset arising at
31 December 2018 is £1,147,000 (2017:
£1,105,000) and has not been provided on the grounds that it is
uncertain when taxable profits will be generated by the Group to
utilise those losses.
The tax credit for the Group for the year comprises:
|
2018 |
|
2017 |
|
£'000 |
|
£'000 |
Research and
development taxation relief |
29 |
|
62 |
Deferred tax relief in
respect of transition to IFRS |
19 |
|
18 |
|
48 |
|
80 |
The tax assessed for the period differs from the standard rate
of corporation tax in the UK as follows:
|
2018 |
|
2017
(restated) |
|
£'000 |
|
£'000 |
|
|
|
|
Loss before
taxation |
(2,004) |
|
(6,586) |
|
|
|
|
Loss multiplied by
standard rate |
(381) |
|
(1,268) |
of corporation tax in
the UK of 19% (2017: 19.25%) |
|
|
|
|
|
|
|
Effect of: |
|
|
|
Expenses not
deductible for tax purposes |
117 |
|
31 |
Overseas loss not
recognised |
60 |
|
34 |
R&D tax
rebate |
(29) |
|
(62) |
Interest
disallowed |
127 |
|
952 |
Unrelieved tax
losses |
58 |
|
233 |
Total tax credit for
year |
(48) |
|
(80) |
4
LOSS PER SHARE
The calculation of the basic loss per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of ordinary shares in issue during the period.
|
2018 |
|
2017
(restated) |
|
£’000 |
|
£’000 |
Loss attributable to
owners of the Company after tax |
(2,026) |
|
(6,610) |
|
|
|
|
|
2018 |
|
2017 |
|
|
|
(restated) |
|
Number |
|
Number |
Weighted average
number of ordinary shares for calculating basic loss per share |
76,820,518 |
|
14,378,619 |
|
|
|
|
|
2018 |
|
2017
(restated) |
|
Pence |
|
Pence |
Basic and diluted loss
per share |
(2.64) |
|
(45.97) |
Dilutive earnings per share is the same as basic loss per share
in each year because the potential shares arising under the share
option scheme and share warrants are anti-dilutive. The weighted
average number of ordinary shares excludes deferred shares which
have no voting rights and no entitlement to a dividend. The prior
year number of shares and loss per share have been restated for the
share consolidation in line with IAS 33.
5 LOANS
RECEIVABLE HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Loans receivable represent the USD $6 (£4.4) million mezzanine loan which the
Company advanced to SPMP as announced on 29
November 2017 and the further amounts of USD $16,700,000 (£12,700,000) advanced during 2018.
The principal terms of the loan are as follows:
• An
interest rate of 15% per annum compounded, payable in full on
redemption of the loan;
•
Ranks pari passu with the existing mezzanine loans already in place
at SPMP;
•
Loan term of five years from December
2017, with SPMP having the option to redeem (with accrued
interest to date) from the third anniversary of drawdown.
•
There is an option to convert the loan into shares if it remains
outstanding for 12 months after the due date at 80% of the fair
value of the shares.
The loan has been measured at fair value. In accordance with
IFRS 9, the fair value of the mezzanine loan from TSTR to SPMP (the
“SPMP Mezzanine Loan”) has been derived using a net present value
calculation in which an effective discount rate of 20% has been
applied. The discount rate, being the assumed market rate,
has been derived by reference to Tri-Star’s estimated cost of the
funding required in order to provide the SPMP Mezzanine
Loan. The Mezzanine Loan is assumed to be repaid on the due
date. It is assumed that there will be no default on these loans
and that the conversion discount has no value.
6 ANNUAL REPORT AND
ACCOUNTS
The financial information set out in this announcement does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006.
The Consolidated Statement of Financial position at 31 December 2018, the Consolidated Statement of
Comprehensive Income, Consolidated Statement of Changes in Equity,
Consolidated Statement of Cash Flows and associated notes for the
year then ended have been extracted from the Group's 2018 financial
statements upon which the auditor's opinion is unqualified and does
not include any statement under Section 498(2) or (3) of the
Companies Act 2006. Whilst the auditor’s opinion is unqualified,
their report does contain a material uncertainty relating to going
concern, as set out in the going concern paragraph in this
announcement.
The accounts for the year ended 31
December 2018 will be posted to shareholders shortly and
laid before the Company at the Annual General Meeting. Following
publication, a copy of the accounts will also be available on the
Company's website (www.tri-starresources.com) in accordance with
AIM Rule 26, and will be delivered to the Registrar of Companies in
due course.