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Horizonte Minerals Quarterly Statement for the Three Months Ended 30 September 2018

LONDON, Nov. 12, 2018 (GLOBE NEWSWIRE) -- Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (‘Horizonte’ or ‘the Company’), the nickel development company focused in Brazil, is pleased to announce its unaudited financial results for the three month period to 30 September 2018. These results, as well as a Management Discussion & Analysis, have been posted on the Company’s website www.horizonteminerals.com and are also available on SEDAR at www.sedar.com.

For further information visit www.horizonteminerals.com or contact:

   
Horizonte Minerals plc 
Jeremy Martin (CEO) +44 (0) 203 356 2901
   
Numis Securities Ltd (NOMAD & Broker) 
John Prior
Paul Gillam
+44 (0) 207 260 1000
   
Shard Capital (Joint Broker)
Damon Heath
Erik Woolgar
+44 (0) 20 186 9952
   
Tavistock (Financial PR) 
Emily Fenton
Gareth Tredway
+44 (0) 207 920 3150

About Horizonte Minerals:

Horizonte Minerals plc is an AIM and TSX-listed nickel development company focused in Brazil. The Company is developing the Araguaia project, as the next major ferronickel mine in Brazil, and the Vermelho nickel-cobalt project, with the aim of being able to supply nickel and cobalt to the EV battery market. Both projects are 100% owned.

Horizonte Minerals plc
Condensed Consolidated Interim Financial Statements for the nine months ended 30 September 2018

Condensed consolidated statement of comprehensive income

       
    9 months ended
30 September
3 months ended
30 September
    2018 2017 2018 2017
    Unaudited Unaudited Unaudited Unaudited
  Notes £ £ £ £
Continuing operations          
Revenue   - - - -
Cost of sales   - - - -
           
Gross profit   - - - -
           
Administrative expenses   (1,138,978) (959,250) (353,630) (304,702)
Charge for share options granted   (633,222) (101,931) (338,516) (23,121)
Change in value of contingent consideration   (265,378) 255,342 (70,904) 102,248
Gain/(Loss) on foreign exchange   117,313 (271,947) 24,515 (26,395)
           
           
Loss from operations   (1,920,265) (1,077,786) (738,535) (251,970)
           
Finance income   31,803 9,961 9,928 2,513
Finance costs   (215,283) (175,304) (74,961) (58,360)
           
Loss before taxation   (2,103,745) (1,243,129) (803,568) (307,817)
           
Taxation   - - - -
           
Loss for the year from continuing operations   (2,103,745) (1,243,129) (803,568) (307,817)
           
Other comprehensive income          
Items that may be reclassified subsequently to profit or loss
Change in value of available for sale financial assets
  - - - -
Currency translation differences on translating foreign operations   (4,935,406) (1,796,142) (880,193) 400,455
 

Other comprehensive income for the period, net of tax
  (4,935,406) (1,796,142) (880,193) 400,455
Total comprehensive income for the period          
attributable to equity holders of the Company   (7,039,151) (3,039,271) (1,683,762) 92,638
           
Earnings per share from continuing operations attributable to the equity holders of the Company          
           
Basic and diluted (pence per share) 9 (0.147) (0.106) (0.056) (0.026)
           
           
           

Condensed consolidated statement of financial position

       
    30 September
2018
31 December
2017
    Unaudited Audited
  Notes £ £
Assets      
Non-current assets      
Intangible assets 6 32,567,204 34,308,278
Property, plant & equipment   1,271 2,051
    32,568,475 34,310,329
Current assets      
Trade and other receivables   127,948 153,105
Cash and cash equivalents   7,938,804 9,403,825
    8,066,752 9,556,930
Total assets   40,635,227 43,867,259
Equity and liabilities      
Equity attributable to owners of the parent      
Issued capital 7 14,325,218 13,719,343
Share premium 7 41,664,018 40,422,258
Other reserves   (3,947,391) 988,015
Accumulated losses   (17,358,324) (15,887,801)
Total equity   34,683,521 39,241,815
Liabilities      
Non-current liabilities      
Contingent consideration   5,261,237 3,635,955
Deferred tax liabilities   214,874 253,205
    5,476,111 3,889,160
Current liabilities      
Trade and other payables   475,595 736,284
       
Total liabilities   5,951,706 4,625,444
Total equity and liabilities   40,635,227 43,867,259
       
       
       

Condensed statement of changes in shareholders’ equity

   
  Attributable to the owners of the parent
  Share
capital
£
Share
premium
£
Accumulated
losses
£
Other
reserves
£
 Total
£
           
As at 1 January 2017 11,719,343 35,767,344 (14,899,297) 4,467,064 37,054,454
Comprehensive income          
Loss for the period - - (1,243,129) - (1,243,129)
Other comprehensive income          
Impairment of available for sale assets - - - - -
Currency translation differences - - - (1,796,142) (1,796,142)
Total comprehensive income - - (1,243,129) (1,796,142) (3,039,271)
Transactions with owners          
Share based payments - (19,432) 101,931 - 82,499
Issue of shares - - - - -
Share issue costs - - - - -
Total transactions with owners - (19,432) 101,931 - 82,499
As at 30 September 2017 (unaudited) 11,719,343 35,747,912 (16,040,495) 2,670,922 34,097,682
           
  Attributable to the owners of the parent
  Share
capital
£
Share
premium
£
Accumulated
losses
£
Other
reserves
£
 

Total
£
           
As at 1 January 2018 13,719,343 40,422,258 (15,887,801) 988,015 39,241,815
Comprehensive income          
Loss for the period - - (2,103,745) - (2,103,745)
Other comprehensive income          
Impairment of available for sale assets - - -   -
Currency translation differences - - - (4,935,406 -
Total comprehensive income - - (2,103,745) (4,935,406) (7,039,151)
Transactions with owners          
Share based payments - - 633,222 - 633,222
Issue of shares 605,875 1,451,724 - - 2,057,599
Share issue costs - (209,964) - - (209,964)
Total transactions with owners 605,875 1,241,760 633,222   2,480,857
As at 30 September 2018 (unaudited) 14,325,218 41,664,018 (17,358,324) (3,947,391) 34,683,521
           
           
           

Condensed Consolidated Statement of Cash Flows

       
    9 months ended
30 September
3 months ended
30 September
    2018 2017 2018 2017
    Unaudited Unaudited Unaudited Unaudited
    £ £ £ £
Cash flows from operating activities          
Loss before taxation   (2,103,745) (1,243,129) (803,568) (307,817)
Interest income   (31,803) (9,961) (9,928) (2,513)
Finance costs   215,283 175,304 74,961 58,360
Exchange differences   (117,313) 271,947 (24,515) 26,395
Employee share options charge   633,222 101,931 338,516 23,121
Change in fair value of contingent consideration   265,378 (255,342) 70,904 (102,248)
Depreciation   - 283 - 50
Operating loss before changes in working capital   (1,138,978) (958,967) (353,630) (304,652)
Decrease/(increase) in trade and other receivables   7,546 (38,274) 50,345 (37,481)
(Decrease)/increase in trade and other payables   (298,911) (233,445) (1,841) 18,704
Net cash outflow from operating activities   (1,430,343) (1,230,686) (305,126) (323,429)
Cash flows from investing activities          
Purchase of intangible assets   (2,049,038) (3,780,932) (763,698) (1,283,008)
Proceeds from sale of property, plant and equipment   - - - -
Interest received   31,803 9,961 9,928 2,513
Net cash used in investing activities   (2,017,235) (3,770,971) (753,770) (1,280,495)
Cash flows from financing activities          
Issue of shares   2,057,599 - - -
Share issue costs   (209,965) (19,432) - -
Net cash used in financing activities   1,847,634 (19,432) - -
Net decrease in cash and cash equivalents   (1,599,944) (5,021,089) (1,058,896) (1,603,924)
Cash and cash equivalents at beginning of period   9,403,825 9,317,781 8,969,672 5,655,064
Exchange gain/(loss) on cash and cash equivalents   134,923 (271,947) 28,027 (26,395)
Cash and cash equivalents at end of the period   7,938,804 4,024,745 7,938,804 4,024,745
           
           

Notes to the Financial Statements

1.  General information

The principal activity of the Company and its subsidiaries (together ‘the Group’) is the exploration and development of precious and base metals. There is no seasonality or cyclicality of the Group’s operations.

The Company’s shares are listed on the Alternative Investment Market of the London Stock Exchange (AIM) and on the Toronto Stock Exchange (TSX). The Company is incorporated and domiciled in the United Kingdom. The address of its registered office is Rex House, 4-12 Regent Street, London SW1Y 4RG.

2.  Basis of preparation

The condensed consolidated interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards and in accordance with International Accounting Standard 34 Interim Financial Reporting. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRS).

The condensed consolidated interim financial statements set out above do not constitute statutory accounts within the meaning of the Companies Act 2006. They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS). Statutory financial statements for the year ended 31 December 2017 were approved by the Board of Directors on 26 March 2018 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified.

The condensed  consolidated interim financial statements of the Company have not been audited or reviewed by the Company’s auditor, BDO LLP.

Going concern

The Directors, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed consolidated interim financial statements for the period ended 30 September 2018.

Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group’s medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group’s 2017 Annual Report and Financial Statements, a copy of which is available on the Group’s website: www.horizonteminerals.com and on Sedar: www.sedar.com The key financial risks are liquidity risk, foreign exchange risk, credit risk, price risk and interest rate risk.

Critical accounting estimates

The preparation of condensed consolidated interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in note 4 of the Group’s 2017 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.

3Significant accounting policies

The condensed consolidated interim financial statements have been prepared under the historical cost convention as modified by the revaluation of certain of the subsidiaries’ assets and liabilities to fair value for consolidation purposes.

The same accounting policies, presentation and methods of computation have been followed in these condensed consolidated interim financial statements as were applied in the preparation of the Group’s Financial Statements for the year ended 31 December 2017.

4  Segmental reporting

The Group operates principally in the UK and Brazil, with operations managed on a project by project basis within each geographical area. Activities in the UK are mainly administrative in nature whilst the activities in Brazil relate to exploration and evaluation work. The reports used by the chief operating decision maker are based on these geographical segments.

       
 

2018
UK Brazil Total
  9 months ended
30 September 2018
£
9 months ended
30 September 2018
£
9 months ended
30 September 2018
£
Revenue - - -
Administrative expenses (855,593) (283,385) (1,138,978)
Profit  on foreign exchange 172,926 (55,613) 117,313
(Loss) from operations per reportable segment (682,667) (338,998) (1,021,665)
Inter segment revenues - - -
Depreciation charges - - -
Additions and foreign exchange movements to non-current assets - (1,703,069) (1,703,069)
Reportable segment assets 7,132,617 33,502,609 40,635,227
Reportable segment liabilities 5,346,237 605,469 5,951,706
       
 

2017
UK Brazil Total
  9 months ended
30 September 2017
£
9 months ended
30 September 2017
£
9 months ended
30 September 2017
£
Revenue - - -
Administrative expenses (601,315) (357,935) (959,250)
 (Loss) on foreign exchange (249,816) (22,131) (271,947)
 (Loss) from operations per reportable segment (851,132) (380,066) (1,231,197)
Inter segment revenues      
Depreciation charges (283) - (283)
Additions and foreign exchange movements to non-current assets - 2,045,281 2,045,281
Reportable segment assets 4,021,401 34,124,786 38,146,187
Reportable segment liabilities 3,643,226 405,279 4,048,505
       


       
 

2018
UK Brazil Total
  3 months ended
30 September 2018
3 months ended
30 September 2018
3 months ended
30 September 2018
  £ £ £
Revenue - - -
Administrative expenses (260,493) (93,137) (353,630)
Profit on foreign exchange 38,856 (14,341) 24,515
(Loss) from operations per (221,637) (107,478) (329,115)
reportable segment      
Inter segment revenues - - -
Depreciation charges - - -
Additions and foreign exchange movements to non-current assets - (74,209) (74,209)
       


       
 

2017
UK Brazil Total
  3 months ended
30 September 2017
3 months ended
30 September 2017
3 months ended
30 September 2017
  £ £ £
Revenue - - -
Administrative expenses (176,401) (128,300) (304,702)
(Loss) on foreign exchange (25,176) (1,219) (26,395)
(Loss) from operations per (201,577) (129,520) (331,097)
reportable segment      
Inter segment revenues - - -
Depreciation charges (50) - (50)
Additions and foreign exchange movements to non-current assets - 1,526,005 1,526,005
       
       

A reconciliation of adjusted loss from operations per reportable segment to loss before tax is provided as follows:

             
      9 months ended
30 September 2018
9 months ended
30 September 2017
3 months ended
30 September 2018
3 months ended
30 September 2017
      £ £ £ £
Loss from operations per reportable segment     (1,021,665) (1,231,197) (329,115) (331,097)
– Change in fair value of contingent consideration     (265,378) 255,342 (70,904) 102,248
– Charge for share options granted     (633,222) (101,931) (338,516) (23,121)
– Impairment of available for sale asset     - - - -
– Finance income     31,803 9,961 9,928 2,513
– Finance costs     (215,283) (175,304) (74,961) (58,360)
Loss for the period from continuing operations     (2,103,745) (1,243,129) (803,568) (307,817)
             
             

5  Change in Fair Value of Contingent Consideration

Contingent Consideration payable to Xstrata Brasil Mineração Ltda.

The contingent consideration payable to Xstrata Brasil Mineração Ltda has a carrying value of £3,950,609 at 30 September 2018 (2017: £3,423,333). It comprises two elements: US$1,000,000 due after the date of issuance of a joint feasibility study for the combined Enlarged Project areas and to be satisfied by shares or cash, together with US$5,000,000 consideration in cash as at the date of first commercial production from any of the resource areas within the Enlarged Project area. The key assumptions underlying the treatment of the contingent consideration the US$5,000,000 are as per those applied to the contingent consideration payable to the former owners of Teck Cominco Brasil S.A.

As at 30 September 2018, there was a finance expense of £150,967 (2017: £167,729) recognised in finance costs within the Statement of Comprehensive Income in respect of this contingent consideration arrangement, as the discount applied to the contingent consideration at the date of acquisition was unwound.

The change in the fair value of contingent consideration payable to Xstrata Brasil Mineração Ltda generated a charge to profit or loss of £166,203 for the nine months ended 30 September 2017 (2017: £239,914 credit) due to changes in the functional currency in which the liability is payable.

6  Intangible assets

Intangible assets comprise exploration and evaluation costs and goodwill. Exploration and evaluation costs comprise internally generated and acquired assets.

         
Group     Exploration and  
  Goodwill Exploration licences evaluation costs Total
  £ £ £ £
Cost        
At 1 January 2018 251,063 5,165,529 28,891,686 34,308,278
Additions - 1,144,621 2,087,756 3,232,377
Exchange rate movements (38,006) (533,098) (4,402,347) (4,973,451)
Net book amount at 30 September 2018 213,057 5,777,052 26,577,095 32,567,204
         

7  Share Capital and Share Premium

         
Issued and fully paid Number of shares Ordinary shares
£
Share premium
£
Total
£
At 1 January 2018 1,371,934,300 13,719,343 40,422,258 54,141,601
Issued during period 60,587,500 605,875 1,241,760 1,847,635
At 30 September 2018 1,432,521,800 14,325,218 41,664,018 55,989,236
         

8  Dividends

No dividend has been declared or paid by the Company during the nine months ended 30 September 2018 (2017: nil).

9  Earnings per share

The calculation of the basic loss per share of 0.147 pence for the 9 months ended 30 September 2018 (30 September 2017 loss per share: 0.106 pence) is based on the loss attributable to the equity holders of the Company of £ (2,103,745) for the nine month period ended 30 September 2018 (30 September 2017: £(1,243,129)) divided by the weighted average number of shares in issue during the period of 1,430,524,410 (weighted average number of shares for the 9 months ended 30 Sept 2017: 1,171,934,300).

The calculation of the basic loss per share of 0.056 pence for the 3 months ended 30 September 2018 (30 September 2017 loss per share: 0.026 pence) is based on the loss attributable to the equity holders of the Company of £ (803,568) for the three month period ended 30 September 2018 (3 months ended 30 September 2017: £ 307,817) divided by the weighted average number of shares in issue during the period of 1,432,521,800 (weighted average number of shares for the 3 months ended 30 September 2017: 1,171,934,300).

The basic and diluted loss per share is the same, as the effect of the exercise of share options would be to decrease the loss per share.

Details of share options that could potentially dilute earnings per share in future periods are disclosed in the notes to the Group’s Annual Report and Financial Statements for the year ended 31 December 2017 and in note 10 below.

10  Issue of Share Options

On 30 May 2018, the Company awarded 38,150,000 share options to Directors and senior management. All of these share options have an exercise price of 4.80 pence. One third of the options are exercisable from 30 November 2018, one third from 31 May 2018 and one third from 30 November 2019.

On 30 May 2018, the Company awarded 1,500,000 share options to a consultant to the Company under the terms of the prior year’s scheme. These options are exercisable immediately.

On 31 March 2017, the Company awarded 41,000,000 share options to Directors and senior management. All of the share options have an exercise price of 3.20 pence. One third of the options are exercisable from 30 September 2017, one third from 31 March 2018 and one third from 30 September 2018.

11  Ultimate controlling party

The Directors believe there to be no ultimate controlling party.

12  Related party transactions

The nature of related party transactions of the Group has not changed from those described in the Group’s Annual Report and Financial Statements for the year ended 31 December 2017.

13  Events after the reporting period

There are no events which have occurred after the reporting period which would be material to the financial statements.

Approval of interim financial statements

These Condensed Consolidated Interim Financial Statements were approved by the Board of Directors on 7 November 2018.

 

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