EQUATORIAL MINING AND EXPLORATION PLC

 

CONSOLIDATED INCOME STATEMENT

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

 

			2017	2016
	Note		£'000	£'000
Sales	4		1	-
Cost of sales			(1)	-
Gross profit			-	-
Administrative expenses			(271)	(181)
Share based payments			-	(1,242)
Provision against loan advanced to Related party	15		(36)	(82)
Project origination costs			(14)	-
OPERATING LOSS FROM OPERATIONS	5		(321)	(1,505)
Investment income			-	-
Interest payable on loans			27	(47)
Loss before taxation			(294)	(1,552)
Taxation	7		-	-
LOSS FROM CONTINUING OPERATIONS	19		(294)	(1,552)
Loss per share
-  basic (pence)  -  diluted (pence)	8		(0.005) (0.005)	(0.029) (0.029)

 

 

                    

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

 

 

			2017	2016
			£'000	£'000
Loss for the period			(294)	(1,552)
Total comprehensive income			(294)	(1,552)

 

 

 

EQUATORIAL MINING AND EXPLORATION PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31 DECEMBER 2017

	Share capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January 2016	476	1,204	72	(79)	(2,246)	(573)
Total comprehensive loss for the year	-	-	-	-	(1,552)	(1,552)
Share based compensation	-		1,241	-		1,241
Exercise of share options	2	-	-	-	-	2
Exercise of warrants	24	-	-	-	-	24
Conversion of unsecured loan note	36	324	-	-	-	360
Issue of new shares	54	-	-	(54)	-	-
Balance at 31 December 2016	592	1,528	1,313	(133)	(3,798)	(498)
Total comprehensive loss for the year	-	-	-	-	(294)	(294)
Share based compensation - Adjustment	-	-	36	-	-	36
Exercise of share options	-	-	-	-	-	-
Exercise of warrants	-	-	-	-	-	-
Conversion of unsecured loan note	-	-	-	-	-	-
Issue of new shares	101	8	-	-	-	109
Balance at 31 December 2017	693	1,536	1,349	(133)	(4,092)	(647)
	═════	══════	══════	══════	══════	════

 

Reserves

 

Reserve	Description and purpose
Share capital	Amount of the contributions made by shareholders in return for the issue of shares.
Share premium	Amount subscribed for share capital in excess of nominal value.
Share-based compensation reserve	Cumulative fair value of share options granted and recognised as an expense in the Income Statement.
Interest in shares in Employees Benefit Trust (EBT)	The Company set up an Employees Benefit Trust on 6 March 2015 (the Equatorial EBT) for the benefit of its employees which is intended to constitute an employee's share scheme within the meaning of section 1166 of the Companies Act 2006. Advances made towards the scheme by the company have been subsequently used to subscribe for shares in the Company to be acquired by the Beneficiaries. The shares have been allocated under option agreements to the beneficiaries as detailed in note 14 of the financial statements under the instructions of the Company. Under IFRS own shares held under an Employee Share ownership plan are recorded as a deduction in arriving at shareholders funds rather than as an asset.

EQUATORIAL MINING AND EXPLORATION PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

	Share capital	Share premium	Share-based compensation reserve	Interest in shares in EBT	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January 2016	476	1,204	72	(79)	(2,246)	(573)
Total comprehensive loss for the year	-	-	-	-	(1,552)	(1,552)
Share based compensation	-		1,241	-		1,241
Exercise of share options	2	-	-	-	-	2
Exercise of warrants	24	-	-	-	-	24
Conversion of unsecured loan note	36	324	-	-	-	360
Issue of new shares	54	-	-	(54)	-	-
Balance at 31 December 2016	592	1,528	1,313	(133)	(3,798)	(498)
Total comprehensive loss for the year	-	-	-	-	(282)	(282)
Share based compensation	-	-	36	-	-	36
Exercise of share options	-	-	-	-	-	-
Exercise of warrants	-	-	-	-	-	-
Conversion of unsecured loan note	-	-	-	-	-	-
Issue of new shares	101	8	-	-	-	109
Balance at 31 December 2017	693	1,536	1,349	(133)	(4,080)	(635)
	══════	══════	══════	═════	══════	════

Reserves

 

Reserve	Description and purpose
Share capital	Amount of the contributions made by shareholders in return for the issue of shares.
Share premium	Amount subscribed for share capital in excess of nominal value.
Share-based compensation reserve	Cumulative fair value of share options granted and recognised as an expense in the Income Statement.
Interest in shares in Employees Benefit Trust (EBT)	The Company set up an Employees Benefit Trust on 6 March 2015 (the Equatorial EBT) for the benefit of its employees which is intended to constitute an employee's share scheme within the meaning of section 1166 of the Companies Act 2006. Advances made towards the scheme by the company have been subsequently used to subscribe for shares in the Company to be acquired by the Beneficiaries. The shares have been allocated under option agreements to the beneficiaries as detailed in note 14 of the financial statements under the instructions of the Company. Under IFRS own shares held under an Employee Share ownership plan are recorded as a deduction in arriving at shareholders funds rather than as an asset.

 

 

 

 

EQUATORIAL MINING AND EXPLORATION PLC

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

			2017	2016
			£'000	£'000
	Note
ASSETS
NON-CURRENT ASSETS				2
Goodwill	9		2
CURRENT ASSETS
Trade and other receivables	11		6	8
Cash and cash equivalents			16	16
			22	24
TOTAL ASSETS			24	26
EQUITY AND LIABILITIES
Share capital	16		693	592
Share premium account	17		1,536	1,528
Interest in shares in EBT	18		(133)	(133)
Share-based compensation reserve	18		1,349	1,313
Retained earnings	19		(4,092)	(3,798)
TOTAL EQUITY			(647)	(498)
CURRENT LIABILITIES
Trade and other payables	12		671	524
TOTAL EQUITY AND LIABILITIES			24	26

 

These financial statements were approved for issue by the Board of Directors on 8 October 2018 and were signed on its behalf by:

 

 

 

 

 

N C P Nelson

Director

 

 

 

COMPANY REGISTRATION NUMBER 07496976

(England and Wales)

 

 

 

EQUATORIAL MINING AND EXPLORATION PLC

 

COMPANY STATEMENT OF FINANCIAL POSITION

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

			2017	2016
			£'000	£'000
	Note
ASSETS
NON-CURRENT ASSETS				2
Investments	10		2
CURRENT ASSETS
Trade and other receivables	11		23	8
Cash and cash equivalents			-	16
			23	24
TOTAL ASSETS			25	26
EQUITY AND LIABILITIES
Share capital	16		693	592
Share premium account	17		1,536	1,528
Interest in shares in EBT	18		(133)	(133)
Share-based compensation reserve	18		1,349	1,313
Retained earnings	19		(4,080)	(3,798)
TOTAL EQUITY			(635)	(498)
CURRENT LIABILITIES
Trade and other payables	12		660	524
TOTAL EQUITY AND LIABILITIES			25	26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUATORIAL MINING AND EXPLORATION PLC

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

			2017	2016
			£'000	£'000
Loss before income tax			(321)	(1,552)
Share-based compensation			-	1,242
Finance cost			-	9
Finance income			-	-
Operating cash flows before movement in working capital and provisions			(321)	(301)
(Increase)/decrease in trade and other receivables			2	13
Increase/(decrease) in trade and other payables			183	(95)
NET CASH USED IN OPERATING ACTIVITIES			(136)	(383)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received			-	-
Interest paid			27	(9)
Investment in own issued share capital			-	-
NET CASH GENERATED FROM INVESTING ACTIVITIES			27	(9)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issue of shares			109	384
NET CASH GENERATED FROM FINANCING ACTIVITIES			109	384
Net (decrease)/increase in cash and cash equivalents			-	(8)
Net cash and cash equivalents at beginning of period			16	24
NET CASH AND CASH EQUIVALENTS AT END OF PERIOD			16	16

 

EQUATORIAL MINING AND EXPLORATION PLC

 

COMPANY STATEMENT OF CASH FLOWS

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

			2017	2016
			£'000	£'000
Loss before income tax			(309)	(1,552)
Share-based compensation			-	1,242
Finance cost			-	9
Finance income			-	-
Operating cash flows before movement in working capital and provisions			(309)	(301)
(Increase)/decrease in trade and other receivables			(15)	13
Increase/(decrease) in trade and other payables			172	(95)
NET CASH USED IN OPERATING ACTIVITIES			(152)	(383)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received			-	-
Interest paid			27	(9)
Investment in own issued share capital			-	-
NET CASH GENERATED FROM INVESTING ACTIVITIES			27	(9)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of convertible loan notes			61	-
Conversion of convertible loan note			(61)	-
Net proceeds from issue of shares			109	384
NET CASH GENERATED FROM FINANCING ACTIVITIES			109	384
Net (decrease)/increase in cash and cash equivalents			(16)	(8)
Net cash and cash equivalents at beginning of period			16	24
NET CASH AND CASH EQUIVALENTS AT END OF PERIOD			-	16

 

 

 

EQUATORIAL MINING AND EXPLORATION PLC

 

NOTES TO THE FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2017

 

1.   General information

 

      Equatorial Mining and Exploration plc ("the Company") is an investment vehicle, established to invest in or acquire businesses or assets in the mining sector.

 

      The Company is a public limited company which is quoted on NEX Exchange growth Markets and is incorporated and domiciled in the UK.  The address of its registered office is Finsgate, 5-7 Cranwood Street, London EC1V 9EE.

 

      The registered number of the company is 07496976.

 

      The group consists of Equatorial Mining and Exploration Plc and its subsidiaries, Ememine Nigeria Limited (Incorporated in Nigeria) and Equatorial Mine & Exp Limited (Incorporated in the UK).

 

2.   Basis of preparation

 

      Consolidation

 

These financial statements have been prepared in accordance with International Financial Reporting standards ("IFRS") as adopted by the European Union, International Financial Reporting Interpretations Committee ("IFRIC") interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The functional and presentational currency for the financial statements is Sterling.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies.

 

      Accounting for interest in own shares held though an Employees Benefit Trust

 

      The funds advanced to acquire the shares have been accounted for under IFRS as a deduction in arriving at shareholders' funds rather than as an asset.          

 

      Issued International Financial Reporting Standards (IFRS's) and interpretations (IFRICS) relevant to company operations

 

      There are no IFRS or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have a material impact on the Company.

 

      Standards, interpretations and amendments to published standards that are not yet effective

 

      There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

 

3.   Accounting Policies

 

      Basis of accounting

 

      The financial statements have been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value.

 

      Basis of Consolidation

 

      In the parent company financial statements, the cost of business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination.  The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.  The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.  Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.  Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

      The consolidated financial statements incorporate those Equatorial Mining and Exploration Plc (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).  Subsidiaries acquired during the year are consolidated using the purchase method.  Their results are incorporated from the date that control passes.

 

      All the financial statements are made up to 31 December 2017.  Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

      All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.  Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

 

      Ememine Nigeria Limited and Equatorial Mining & Exp Limited have been included in the group financial statements using the purchase method of accounting.  Accordingly, the group profit and loss account and statement of cash flows include the results and cash flows of Ememine Nigeria Limited from the date it commenced trading.  Equatorial Mining & Exp Limited was dormantised when it was acquired on 9 May 2017 at cost, and continues to remain dormant.  The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition.

 

      Going concern

     

Having reviewed the future plans and projections for the business, the Company is actively seeking to obtain additional funding from its shareholders and outside lenders in order to continue as a going concern. On 11 July 2018, a Deed of Agreement was concluded with ARQ Minerals (Pty) Limited, a South African company, to acquire a beneficial interest of up to a maximum of 75% of Ememine Nigeria Limited (the Company's Nigerian subsidiary) in order to obtain working capital, expertise and operational management necessary for the continuation of business and productivity at the Eastern Nigerian Mine, owned by EMEmine. As part of the Deed of agreement, ARQ Minerals made a direct investment in Equatorial Mining and Exploration. ARQ Minerals' initial 51% interest is being acquired by financial transfers of £50,000 totalling £100,000 half of which was paid at the time of the completion of the Deed of Agreement and the other half in monthly instalments of which £30,000 has been paid. As at the date of this report the Company has approximately £5,000 of cash in the bank and has outstanding creditors of £155,000 including the balance of a loan of £55,000 with Darwin Strategic Limited which matured in April 2017 and has been demanded but not called in; the loan, on the same terms, was novated from Darwin to their former Director, Mr M Staten. The Company obtained additional convertible loans of £61,000 through a placing to investors which has been converted into new ordinary shares in December 2017. In March 2018, further convertible loan notes totalling £40,000 were issued. The Company has enough to cover the most immediate payments and the remaining existing creditors including the Directors continue to show patience as does Darwin/Mr Staten who appear to be determined that the Company continues trading. In the absence of further funding there is therefore a material uncertainty over the Company's ability to continue as going concern. The Directors continue to adopt the going concern basis in preparing the financial statements as they are actively pursuing funding from different sources and it reasonable to conclude they will be successful.

 

Turnover

 

Turnover arises from net sales by the Nigerian subsidiary; sales receipts arise on delivery of product. 

 

       Share options

 

      When shares, share options and warrants are granted to employees and investors, a charge is made to the profit and loss account and a reserve created in capital and reserves to record the fair value of the awards at the date of grant in accordance with IFRS 2 (share based payments).  This charge is spread over the vesting period.  When shares and share options are granted to employees of subsidiary companies, the fair value of the awards is treated as a capital contribution and spread over the period of performance relating to the grant.  The corresponding entry is made in reserves.

      

      Segment reporting

 

      A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.  A geographic segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments

 

      Segment reporting (continued)

 

      The results of the only trading subsidiary within the Group which commenced mining operations in Nigeria in December 2017, have not been reported separately. Sales and cost of sales as reported in the consolidated income statement wholly relate to this subsidiary and the net loss amounts to £11,863 which forms part of the total reported loss of £294,426 for the Group. In the opinion of the Directors, during the year ended 31 December 2017, the Group does not have any other separate business or geographical segments and the results of the subsidiary do not need to be reported separately as they fall below the quantitative thresholds required for disclosure under IFRS 8.

 

Fixed Asset investments

 

      Interests in subsidiaries, associates and jointly controlled entities are initially measures at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

 

      Cash and cash equivalents

 

      Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

 

      Trade payables

 

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

                                   

      Share capital

 

      Ordinary shares are classified as equity.  Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

      Income taxes

 

      Current income tax assets and liabilities are measured at the amount expected to be recovered or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the balance sheet date.

 

      Deferred income tax is recognised using the balance sheet liability method, providing for temporary differences between the tax bases and the accounting bases of assets and liabilities.  Deferred income tax is calculated on an undiscounted basis at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

 

      Deferred income tax liabilities are recognised for all temporary differences, except where the deferred income tax liability from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

 

      Deferred income tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.  Deferred income tax assets and liabilities are offset against each other only when the Company has a legally enforceable right to do so.

 

      Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised.

 

      Use of assumptions and estimates

 

      The Company makes judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.  The resulting accounting estimates calculated using these judgements and assumptions will, by definition, seldom equal the related actual results but are based on historical experience and expectations of future events.  The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision effects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

 

      The estimates and assumptions that had a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below.

 

      Share based payments

 

      The fair value of share-based payments recognised in the income statement is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience, future expectations and benchmarked against peer companies in the industry.

 

4.   Turnover

	2017	2016
	£'000	£'000
Turnover arises from sales of coal in Nigeria	1	-

 

 

5.   Operating loss

 

Operating loss is stated after charging:		2017	2016
		£'000	£'000
Directors' remuneration:
-     Salaries		-	25
-     Directors' fees and benefits		205	172
Auditor's remuneration
-    Audit		11	12
-    Non-audit services		1	1
		═════	═════

                                                                                   

6.   Employees

 

      The company has no employees other than the directors.

 

7.   Tax on profit on ordinary activities

	2017	2016
	£'000	£'000
Current tax expense	-	-
Deferred tax expense	-	-
	─────	─────
	-	-
	═════	═════
Reconciliation of effective tax rates	£	£
(Loss) before tax (excluding Nigerian operations)	(282)	(1,552)
	═════	═════

 

Tax using domestic rates of corporation tax of 19.25% (2016: 20.00%)	(54)	(310)
Effect of:
Expenses not deductible for tax purposes	-	248
Losses carried forward	54	62
	─────	─────
	-	-
	═════	═════

      

        The company has estimated losses of £695,020 (2016 - £448,175) available to carry forward against future trading profits.

 

      The Company has not recognised a potential deferred tax asset of £132,054 (2016: £89,635) in respect of these losses due to uncertainty over whether they will be utilised in future periods.

 

8.   Loss per share

 

The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The company had three classes of dilutive potential shares, being those share warrants and share options detailed within note 18.

 

The diluted loss per share is the same as the basic loss per share as the loss for the year has an antidilutive effect.

 

The calculation of basic and diluted earnings per share is based on the following figures:

 

	2017	2016
	£'000	£'000
Total loss for the period	(294)	(1,552)
	──────────	──────────
Weighted average number of shares - basic	6,062,772,493	5,341,116,533
Diluting effect of warrants in issue	-	-
	──────────	──────────
Weighted average number of shares - diluted	6,062,772,493	5,341,116,533
Basic loss per share	(0.005)p	(0.029)p
Diluted loss per share	(0.005)p	(0.029)p

 

9.   Goodwill

	2017	2016
	£'000	£'000
At 1 January 2017	2	-
Acquired	-	3
Amortised	-	(1)
At 31 December 2017	2	2

     

      Goodwill represents the cost of setting up the Nigerian subsidiary.  The directors consider the value to be fairly stated.

 

 

 

		2017	2016
		£'000	£'000
I   Investment in subsidiary (valued at cost)
At 1 January 2017		2	-
Additions		-	3
Amortised		-	(1)
At 31 December 2017		2	2
Carrying amount
At 31 December 2017		2	2
At 31 December 2016		2	2

 

Details of the company's subsidiaries at 31 December 2017 are as follows
Name of undertaking	Nature of	Class of	%
	business	Shares held	Held
Ememine Nigeria Limited (incorporated in Nigeria)	Mining exploration	Ordinary shares	99
Dormant subsidiaries
Equatorial Mine & Exp Limited (incorporated in the UK)	Non trading	Ordinary shares	100

 

11.  Trade and other receivables

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Due by Group Company	-	-	17	-
Other debtors	1	6	1	6
Prepayments	5	2	5	2
	──────	──────	───────	──────
	6	8	23	8
	══════	══════	══════	══════

 

 

12.  Trade and other payables

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Trade payables	358	264	433	264
Short term loans	215	166	140	166
Other creditors	24	66	13	66
Accruals	74	28	74	28
	──────	──────	──────	──────
	671	524	660	524
	══════	══════	══════	══════

 

Short term loans consist of the first tranche of Bridge Loan notes of £110,000 issued to Darwin Strategic Limited ("Darwin") now novated to a former director of Darwin, Mr M Staten. These are unsecured but have been issued with warrants as detailed in note 18 to the financial statements.

 

Additional novated loans of £75,000 are fully described in Note 15(a) - Related Party Transactions.

 

A loan of £30,000, interest free has been advanced by a shareholder; no repayment date has been agreed.

 

13.  Creditors - greater than one year

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
At 1 January 2017	-	-	-	-
Issued	61	360	61	360
Converted	(61)	(360)	(61)	(360)
	──────	──────	───────	──────
At 31 December 2017	-	-	-	-
	══════	══════	═══════	══════

 

      The loan notes carried a coupon of 0%, there was no fixed date for conversion and were convertible at the rate of 1,000 new ordinary shares for each £1.00 of loan note.

 

14.  Financial instruments

 

      The Company's financial instruments comprise cash and various items, such as trade payables that arise directly from its operations. The main risks arising from, and impacted by, the financial assets and liabilities of the Company are interest rate risk and liquidity risk. The Board reviews and agrees policies for managing these risks and they are summarised below.

 

      The Company does not hold any derivative financial instruments. The market value of the Company's financial assets and liabilities does not differ materially from the carrying value.

 

 

      Financial Assets

 

      The only significant asset of the Company is cash at bank and on deposit. Cash is held in Sterling only.

 

      Cash at bank attracts interest at floating rates that vary with UK bank base rates. Cash on short-term deposits attracts fixed rates which are agreed at the commencement of the term of the deposit.

 

      Financial Liabilities

 

      The Company does not have any financial liabilities other than the trade and other payables arising from its operations. No interest is payable in respect of any of these liabilities.

 

      The Company does not have any undrawn borrowing facilities.

 

      Cash flow interest rate risk

 

      The Company is cash positive and places its balances on short-term deposits with Natwest. Due to the short-term nature of these deposits, the interest receivable by the Company will be affected by changes in the UK bank base rate. No interest is received on any of the Company's other assets or receivables. The Company does not have any loans, bank borrowings or other interest bearing payables.

                       

      Liquidity Risk

     

      It is the Company's policy to maintain sufficient cash resources to meet its short-term liabilities.

 

15.  Related Parties

     

a.   During the accounting period £119,700 was charged to the company by Nicholas Nelson, a director, for fees (2016 - £127,834), and £54,943 in allowances (2016 - £ £34,711).  The total indebtedness to him is £338,816 (2016 - £244,688); during the period he sold £75,000 of his debt to company supporters for a total consideration of £5.00, as a gesture of goodwill  to retain their support;

 

b.   During the accounting period £38,000 was charged by Simon Retter, a director, for fees (2016 - £Nil).

 

c.   During the year, Nicholas Nelson bought an additional 1,000,000 ordinary shares of £0.0001).  In April 2018, he bought an additional 150,000,000 ordinary shares of £0.0001, and a further 2,439,024 in August 2018;

 

 

d.   During the accounting period the Company advanced loans of £35,718 (2016 - £82,395) to Desert Rock and Exploration (Nigeria) Limited, a company which was controlled by Nicholas Nelson and as of June 2018 a wholly owned subsidiary of Ememine Nigeria Limited.  This loan is unsecured and was made at an interest rate of 3% per annum over the UK base lending rate. The Directors have agreed to defer interest charges on the loan and have decided to provide for the whole of the amount loaned, as they do not expect to recover this amount in the foreseeable future; and

 

e.   In August 2018 Nicholas Nelson sold £415,688 of his debt owed to him by the Company to  various creditors and loan providers for a nominal amount, in a transaction similar to that as in (a) above.

 

f.    The company paid £824 (2016 - £1,297) on behalf of Anwen Limited, a company registered in the Seychelles, of which Nicholas Nelson is a director; and

 

g.   During the year, the company acquired for £1.00 Equatorial Mining & Exp Limited, a company formerly owned and used by Nicholas Nelson, as a shell company with no assets or liabilities, but banking facilities only.

 

16.  Share Capital

 

	2017	2016
	£'000	£'000
Allotted, called up and fully paid: 6,932,191,670 (2016 - 5,918,941,670 Ordinary Shares of £0.0001 each	693	592
	════	═══

 

(a)  On 3 February 2017, warrants for 140,000,000 new ordinary shares of £0.0001 each were exercised at par;

 

(b)  On 11 December 2017, the following share issues took place;

 

(i)   213,250,000 warrants were exercised at par for 213,250,000 new ordinary shares of £0.0001 each;

(ii)   A share placing of 50,000,000 new ordinary shares of £0,0001 each was made at par;

(iii)  Convertible loan motes of £59,000 were converted at par for 590,000,000 new ordinary shares of £0.0001 each; and

(iv)  20,000,000 new ordinary shares of £0.0001 each were issued at £0.0005 per share for cash;

 

(c)  On 20 April 2018 the following shares issues took place;

 

(v)   640,000,00 warrants were exercised at par for 640,000,000 new ordinary shares of £0,0001 each; and

(vi)  50,000,000 new ordinary shares of £0,0001 were issued to a creditor of £5,000, at par.

 

(d)  On 3 August 2018, 2,786,331,837 new ordinary shares of £0.00001 were issued;

 

(e)  On 15th August 2018, a further 251,326,000 new ordinary shares of £0.0001 were issued.

 

17.  Share Premium

 

	2017	2016
	£'000	£'000
Balance brought forward	1,528	1,204
Premium on issued shares during the year	8	324
	───────	───────
Balance carried forward	1,536	1,528
	═══════	═══════

 

18.  Share Based Payments

 

(a)  Equity settled share-option plan

 

            No further share options were granted during the accounting period.

 

            At 31 December 2017, 1,332,400,000 options remained in issue (2016 - 1,332,400,000).

 

            The fair values of the options granted have been calculated using Black-Scholes model assuming the inputs shown below:

 

            Share price                                                                                            £0.0045

            Exercise price                                                                                        £0.0001

            Time to maturity                                                                     10 years on CSOP

            Time to maturity                                                    9 years, 8 ½ and 7 ½ years EBT

            Risk free rate                                                                                             1.3%

            Volatility                                                                                                  30.0%

 

            An expense of £Nil has been recognised in the year (2016: £1,241,763) in respect of a share-based payment charge for the share options issued during the accounting period under the Employee Benefit Trust and CSOP.

 

 

(b)  Share Warrants

 

            On 3 February 2017 as part of the issue of a convertible loan note for £33,000, 330,000,00 warrants were granted as follows:  S. Retter - 30,000,000; C.A. Potts 140,000,000; N. Nelson - 50,000,000; Thames Investment Club - 100,000,000; N.C. Goncalves - 10,000,000.

 

            On 2 May 2017, 140,000,000 warrants were exercised by C A Potts, at par, on the conversion or £14,000 convertible loan notes. An additional 210,000,000 unallocated warrants were created, which subsequently lapsed.

 

            On 11 December 2017, 100,000,000 warrants were issued to S. Bamford, who exercised those immediately and also 113,250,000 warrants owned by Jarvis Investment Management both for new shares of £0.0001 each at par.

 

            The details of the warrants are as follows

 

		2017	2016
Outstanding at beginning of period		940,000,000	1,240,000,000
Exercised during the period		(353,250,000)	(300,000,000)
Granted in the period		640,000,000	-
Lapsed in the period		(260,000,000)
		─────────	─────────
Outstanding at end of the period		966,750,000	940,000,000
		═════════	═════════

     

      On 20 April 2018, 640,000,000 warrants were exercised for 640,000,000 new ordinary shares of £0.0001 at par, and the remaining 326,750,000 warrants lapsed.  Thus at that date no warrants remained outstanding.

 

 

 

 

 

19.  Retained Earnings

 

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Opening balance	(3,798)	(2,246)	(3,798)	(2,246)
Profit/(Loss) for the period	(294)	(1,552)	(282)	(1,552)
Transfer from Share based compensation reserve	-	-	-	-
	───────	──────	──────	───────
Closing balance	(4,092)	(3,798)	(4,080)	(3,798)
	══════	══════	══════	══════

 

20.  Capital Commitments

 

      The Company has no capital commitments at the year end.

 

 

21.  Future Operating Lease Commitments

 

      There are no material operating lease commitments at the statement of financial position date.

 

22.  Control

 

      In the opinion of the directors, there is no one controlling party.

 

22.  Post balance sheet events

 

      These are referred to in the Strategic Report and the Directors Report.

 

(a)  On 13 March 2018, the company raised £40,000 through the issue of 5% unsecured  irredeemable convertible loan notes 2018; the conversion price is £0.0041 per ordinary share;

 

(b)  On 20 April 2018:

 

(i)   640,000,000 new ordinary shares were issued at par, as a result of 640,000,000 warrants of £0.0001 being exercised;

(ii)   All warrants at this date have been exercised or lapsed and thus none remain outstanding; and

(iii)  50,000,000 new ordinary shares of £0.0001 were issued in satisfaction of £5,000 due to an existing creditor of the company;

 

(c)  On 4 May 2018, the debt of £137,500 due to Darwin Strategic Limited ("Darwin") was novated to two former employees of that company on their cessation of employment with Darwin, as Darwin deemed it detrimental to their business; the intentions of the two ex-employees is uncertain at present.  A prior surcharge of £27,500 has been written off by Darwin and thus the amount novated is £110,000;

 

(d)  On 1 June 2018, the company announced that it has signed a 'Heads of Terms' agreement with a South African Mining company, ARQ Minerals (Pty) Limited ("ARQ") in order to obtain both working capital and expertise to operate the mine currently being excavated by Ememine Nigeria Limited.  ARQ has subscribed initially £50,000 for 500,000,000 ordinary shares of £0.0001 which are held through Reba Global Pty Limited as noted on page 6 of the Directors report.  ARQ will acquire a further 500,000,000 ordinary shares of £0.0001 of the company on the same terms.  To date £80,000 has been received on account; the remaining shares and warrants remain to be issued; and

 

(e)  In August 2018 further 8,000,000 ordinary shares of NGN1 were issued in the company's subsidiary Ememine Nigeria Limited increasing the total number of ordinary shares in issue to 10,000,000. As part of the agreement referred to above 5,100,000 of the additional ordinary shares have been issued to ARQ Minerals Limited giving it a controlling interest of 51%. As a result Ememine Nigeria Limited has ceased to be a subsidiary of Equatorial Mining and Exploration Plc as at August 2018 although its remains an associate.

 

 

(f)   In 7 June 2018 Ememine Nigeria Limited acquired a controlling interest in Dessert Rock Nigeria Limited, a related party as detailed in note 15(d).

 

 

(g)  On 3^rd and 15 August 2018, a further 3,037,657,837 ordinary shares were issued to satisfy outstanding creditors and fees owed by the company; and

 

(h)  As a result of these transactions, the resultant issued number of shares was 10,695,849,507 ordinary shares of £0.0001 each.

 

 

Independent auditor's report to the members of Equatorial Mining and Exploration Plc

Opinion

 

We have audited the financial statements of Equatorial Mining and Exploration Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2017 which comprise the  consolidated income statement, the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of cash flows, the consolidated and company statements of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

In our opinion:

 

•     the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2017 and of the group's loss for the year then ended;

•     the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union

•     the parent company financial statements have been properly prepared in accordance with  IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

•     the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Material uncertainty related to going concern

 

We draw attention to Note 3 to the financial statements concerning the Group's ability to continue as a going concern. The Group incurred a net loss of £294,426 during the year ended 31 December 2018 and, as at that date, it had net liabilities of £648,855. The parent company continues to rely on the continuing support and investment of its existing shareholders including ARQ Minerals Pty Limited to settle immediate creditors and provide the necessary working capital for the Group until its newly commenced mining operations are fully established and provide adequate income for this purpose. These matters along with other matters explained in note 3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THIS DOCUMENT IS IMPORTANT. PLEASE READ IT IMMEDIATELY. If you are in any doubt about the action you should take, you are recommended to consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000.

If you have sold or otherwise transferred all of your shares in Equatorial Mining & Exploration Plc, please send this Document together with the accompanying Form of Proxy at once to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission to the person who now holds the shares.

 

EQUATORIAL MINING AND EXPLORATION PLC

Notice of Annual General Meeting

Authority to Allot Ordinary Shares

 

Notice of the Annual General Meeting ("AGM") of Equatorial Mining and Exploration Plc ("Company") to be held at 9.30am on Friday 2^nd November at the Victory Services Club, Seymour Street, London, W2 2HF.

A Form of Proxy for use at the Annual General Meeting is enclosed and to be valid the Form of Proxy must be completed in accordance with the instructions set out within it and returned to the Company's registrars, Share Registrars Limited, The Courtyard, 17 West St, Farnham GU9 7DR as soon as possible, but in any event not later than 6.00pm on TBA 2018. The completion and depositing of a Form of Proxy will not preclude you from attending and voting in person at the AGM should you wish to do so. Your attention is drawn to the notes to the Form of Proxy.

 

Your attention is also drawn to the letter from the Chairman of the Company which is set out on page 3 of this Document and recommends that you vote in favour of the resolutions to be proposed at the AGM.