Month: June 2018

Chesterfield Resources plc is pleased to announce that, further to the announcement of 2 November 2017, it has today entered into a conditional share purchase agreement (“Acquisition Agreement”) pursuant to which it has agreed to acquire the entire issued share capital of HKP Exploration Ltd (“HKP”) (“Acquisition”).

 

The Company has today also entered into a conditional placing agreement (“Placing Agreement”) in relation to a placing of 10,766,667 new ordinary shares of 0.1p each in the capital of the Company (“Ordinary Shares”) (“Placing Shares”) at 7.5p per share to raise £807,500 (before expenses) (“Placing”) and has conditional subscription agreements (“Subscription Agreements”) in relation to a subscription of 15,900,000 new Ordinary Shares (“Subscription Shares”) at 7.5p per share to raise £1,192,500 (before expenses) (“Subscription”). In addition, one Ordinary Share subscription warrant (“Series C Warrant”), exercisable for two years at a subscription price of 15p per Ordinary Share, will be issued to participants in the Placing (“Placees”) and the Subscription (“Subscribers”) for every two Placing Shares or Subscription Shares subscribed.

 

The Acquisition, the Placing and the Subscription are all conditional upon admission of the entire issued and to be issued Ordinary Shares to the Standard Listed segment of the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange (“Admission”). It is expected that Admission will become effective and dealings in the enlarged issued ordinary share capital of the Company will commence at 8:00am on 3 July 2018.

 

HKP and the HKP Portfolio

 

HKP was incorporated in the Republic of Cyprus under the Cyprus Companies Law Cap.113, as amended, on 1 July 2014 with company number HE 333726. The founder of HKP is Michael Green and the majority shareholders of HKP are Michael Green, David Hall and Jeremy Martin (“Principal HKP Sellers”). Conditional on Admission, David Hall (“Proposed Director”) will join the Board as a Non-Executive Director and Michael Green will be engaged as Country Manager and Head of Exploration, Cyprus.

 

The principal activity of HKP is the exploration for natural resources in Cyprus. Cyprus is a member of the European Union and has a rich heritage in mining for copper and gold.

 

Between February and April 2017, HKP made applications to the Mines Service of the Ministry of Agriculture, Rural Development and Environment of the Republic of Cyprus (“Mines Service”) for seven prospecting permits to search for minerals over the area of land specified in and on the terms and conditions of such prospecting permit (“Prospecting Permit”). Those seven Prospecting Permits (“HKP’s Granted Prospecting Permits”) were approved by the Mines Service between 10 January 2018 and 7 March 2018. Between January and March 2018, HKP made applications to the Mines Service for a further six Prospecting Permits. The applications for those six Prospecting Permits (“HKP’s Prospecting Permit Applications”) had not yet been approved by the Mines Service at the date of this announcement.

 

HKP’s Granted Prospecting Permits and HKP’s Prospecting Permit Applications (“HKP Portfolio”) consists of three project areas as follows:

 

• HKP’s Granted Prospecting Permits comprise a near contiguous block of seven Prospecting Permits on the western side of the Troodos Mountains forming the Troodos West Project, covering an area of 3,211 hectares (32.11 km²);

 

• five of HKP’s Prospecting Permit Applications, covering an area of 2,299 hectares (22.99 km²), form the Troodos North Project on the northern side of the Troodos Mountains; and

 

• the remaining one of HKP’s Prospecting Permit Applications, covering an area of 480 hectares (4.8 km²), forms the Troodos East Project on the eastern side of the Troodos Mountains.

 

HKP has a 100 per cent. interest in each of HKP’s Granted Prospecting Permits and HKP’s Prospecting Permit Applications, with no encumbrances or dilutive interests.

 

Each of HKP’s Granted Prospecting Permits are valid for a period of five years from grant, subject to annual renewal upon the payment of annual fees, and may be extended for a further period of five years. If the holder of a Prospecting Permit fails to comply with the conditions attached to such Prospecting Permit, the Prospecting Permit will be withdrawn.

 

All of the project areas within the HKP Portfolio are considered by the directors of the Company (“Directors”) and the Proposed Director to be highly prospective for copper and/or gold.

 

Terms of the Acquisition

 

The Company and the Principal HKP Sellers have today entered into the Acquisition Agreement, pursuant to which the Company has agreed, subject to certain conditions, to purchase the entire issued share capital of HKP, comprising 1,000 ordinary shares of €1.00 each, for £500,000, to be satisfied by the issue of 6,666,667 new Ordinary Shares to the HKP sellers at a price of 7.5p per Ordinary Share.

 

The Acquisition Agreement is conditional on, among other things, the Placing Agreement and the Subscription Agreements becoming or being declared unconditional in all respects, save for Admission, and Admission.

 

Under the Acquisition Agreement, the Principal HKP Sellers have given certain limited warranties to the Company in relation to the business and assets of HKP.

 

The Opportunity and the Objectives and Strategy of the New Group

 

The Directors believe that the Acquisition represents an attractive opportunity for the Company which meets the principal acquisition search criteria of the Company:

 

• the HKP Portfolio is considered by the Directors to be highly prospective, primarily for copper and gold, two of the most actively traded Exchange Traded Non-Ferrous Metals;

 

• HKP’s Granted Prospecting Permits include previously operating copper + pyrite mines at Limni, Kinousa, Uncle Charles, and Evloimeni. HKP’s Prospecting Permit Applications include previously operating copper + pyrite mines at Memi and Agrokipia. Exploitation at the mines was mainly by way of open-pit operations;

 

• the HKP Portfolio is located in the Republic of Cyprus, which is a member of the European Union;

 

• the Company will acquire the entire issued share capital of HKP which, in turn, has a 100% interest in the HKP Portfolio;

 

• the early stage of development of HKP provides the scope, through a focussed exploration work programme, to generate value for the Company’s shareholders; and

 

• the Principal HKP Sellers are highly experienced in the mineral exploration sector and will all contribute to the management of the Company and HKP (“New Group”) following completion of the Acquisition.

 

The market in which the New Group operates is global with participants in the market ranging from multi-national giants through to small private exploration businesses. The Directors and the Proposed Director believe that the New Group should be well placed to compete against other market participants on the basis of the following competitive advantages:

 

• Cyprus has a rich heritage in mining dating back to the earliest Bronze Age, in particular of mining copper from which the name of the island is derived, and the style of mineralisation is relatively well understood;

 

• HKP has a 100 per cent. interest in the HKP Portfolio;

 

• Cyprus is an EU member with close ties to the UK and, despite the ongoing partition of the island following the Turkish invasion in 1974, is well-ranked both in terms of ease of doing business and corruption perception, representing relatively low country risk;

 

• the climate in Cyprus allows for year-round exploration and mining operations;

 

• Cyprus has good infrastructure, such as road networks, mobile phone coverage, electricity and water supply, international airports and sea ports;

 

• copper and gold are both widely traded by participants in the metals markets, with the price of copper often seen as a barometer of global economic growth, representing relatively low commodity risk; and

 

• the Directors and the Proposed Director have wide-ranging experience working for and/or advising businesses operating within the natural resources sector and Michael Green provides local knowledge and community engagement in Cyprus.

 

The primary objective of the Company is to generate value for Shareholders, which the Company will seek to achieve through the definition of a Mineral Resource estimate from multiple prospects within the HKP Portfolio and, potentially, through further acquisitions.

 

The Proposed Work Programme

 

The New Group proposes a phased exploration work programme for the HKP Portfolio (“Proposed Work Programme”), the exploration target of which is a Mineral Resource of 1,000,000 to 5,000,000 tonnes from multiple prospects, at two per cent. copper plus more than one gram per tonne gold and silver/zinc credits. The Proposed Work Programme comprises three phases:

 

Phase 1 – Data collection and analysis

The aim of Phase 1 is to identify the most prospective areas within the HKP Portfolio and prioritise field work. This will be achieved by acquiring and collating into digital form all relevant available existing data from the Cyprus Geological Survey, academic studies and historical commercial activity. Spatial data will be captured into a GIS. All datasets will then be interrogated to identify areas and prospects where exploration will be prioritised.

 

Phase 2 – Confirmatory field studies 

The aim of Phase 2 is to rank prospects and to define drill targets. Field studies will include geological and structural mapping, rock chip and trench sampling and ground geophysics and will start at areas and prospects prioritised during Phase 1. All new data will be integrated into an evolving exploration model.

 

Phase 3 – Drilling

The aim of Phase 3 is to drill targets defined in Phase 2 and define Mineral Resources. The style and quantum of drilling will be constrained by local conditions.

 

Each project area and each prospect within each project area, will move through the proposed exploration phases at different rates. For example, data collection and analysis are already quite advanced for the Troodos West Project and a number of prospects within it, whereas data are still being gathered for the Troodos North and Troodos East Projects. The primary focus of the Proposed Work Programme is the Troodos West Project, comprising HKP’s Granted Prospecting Permits. Less than 10 per cent. of the budget of the Proposed Work Programme is projected to be spent on the Troodos North and Troodos East Projects, comprising HKP’s Prospecting Permit Applications. The Troodos North and Troodos East Projects are expected to provide a pipeline of further exploration prospects for the New Group beyond the Proposed Work Programme, subject to the approval of HKP’s Prospecting Permit Applications.

 

The Directors and the Proposed Director expect the Proposed Work Programme to be completed within 12 months at a cost of approximately £1,100,000.

 

In addition to pursuing the exploration of the HKP Portfolio, the Company will continue to seek acquisition opportunities in the sector. Particularly attractive acquisition opportunities will continue to include companies, businesses or assets where an identified mineral resource can be optimised or increased or where value can be unlocked.

 

The Placing and the Subscription and Use of Proceeds

 

The Company has raised gross proceeds of £2,000,000 through the Placing and the Subscription, conditional on Admission.

 

Under the Placing and the Subscription, the 10,766,667 Placing Shares and the 15,900,000 Subscription Shares have been conditionally subscribed for by the Placees and the Subscribers, respectively, at 7.5p per Ordinary Share. A total of 13,333,322 Series C Warrants will be issued to the Placees and the Subscribers.

 

In accordance with Listing Rule 14.3, on Admission at least 25 per cent. of the Ordinary Shares will be in public hands (as defined in the Listing Rules).

 

The Placing and the Subscription are conditional on, inter alia, Admission. If Admission does not occur, neither the Placing nor the Subscription will proceed and all monies paid will be refunded to the applicants.

 

Completion of the Placing and the Subscription will be announced via a regulatory news service on Admission, which is expected to take place at 8.00 a.m. on 3 July 2018.

 

At the issue price of 7.5p per Ordinary Share, the enlarged issued ordinary share capital of the Company will have a market capitalisation of £4,645,000 on Admission.

 

The Placing is subject to the satisfaction of conditions contained in the Placing Agreement, including Admission occurring on or before 3 July 2018 or such later date as may be agreed by the Company and Shard Capital Partners LLP (being not later than 15 July 2018).

 

The Subscription is subject to the satisfaction of conditions contained in the Subscription Agreements, including Admission occurring on or before 3 July 2018 or such later date as may be determined by the Company (being not later than 15 July 2018).

 

Admission is expected to take place and dealings in the enlarged issued ordinary share capital of the Company are expected to commence on the London Stock Exchange at 8.00 a.m. on 3 July 2018.

 

After deduction of the estimated expenses of the Acquisition, the Placing, the Subscription and Admission, amounting to approximately £500,000, the net proceeds of the Placing and the Subscription (“Net Proceeds”) are estimated to be approximately £1,500,000.

 

The Company’s intention is to use the Net Proceeds as follows:

 

• the Proposed Work Programme for the HKP Portfolio – approximately £1,100,000, which is expected to be broken down as follows:

 

o   Phase 1 – data collection and analysis – approximately £90,000;

o   Phase 2 – confirmatory field studies – approximately £130,000; and

o   Phase 3 – drilling – approximately £880,000; and

 

• additional general working capital to be applied towards ongoing corporate costs and expenses (including directors’ and key personnel’s remuneration and consultancy fees and other internal costs of sourcing, reviewing and pursuing any further acquisitions) – approximately £400,000.

 

The Board and key personnel

 

The Directors and the Proposed Director

 

The Directors have been the only directors of the Company since its incorporation and have led the Company through its development to date. The Directors are:

 

Christopher Hall, Non-Executive Chairman, aged 68

Christopher is an experienced mining finance and investment specialist and corporate manager with a career spanning more than 40 years and encompassing exploration and mine geology, mining share analysis, specialist fund management, M&A, general management and wide-ranging consultancy. Between 1998 and 2003, Christopher was with international mining consultants, Behre Dolbear International Limited, initially as a consultant and then from 2000 as President, managing the UK office covering Europe, the Middle East, Russia, the Former Soviet Union, India and parts of Asia. He acted as an in-house mining adviser/resources specialist for international accountant and AIM Nominated Adviser Grant Thornton LLP, UK from 2005 until 2015, advising capital markets and audit functions. Christopher is a Director of Rift Resources Limited, a private exploration company operating in East Africa and the Middle East, and, until 2016, was Non-Executive Chairman of AIM-traded companies Stratex International plc, a gold producer and explorer active in Turkey and Senegal with strategic interests in East Africa and Ghana, and Goldstone Resources plc, an exploration company operating principally in Ghana. Christopher holds a BSc degree in Geology from the University of Reading, an MSc degree in Exploration and Mining Geology from the University of Leicester and is a Chartered Engineer, Member of the Institute of Materials, Minerals and Mining.

 

David Cliff, Non-Executive Director, aged 72

David is an experienced geologist who spent 26 years working in a management capacity for the Rio Tinto Exploration group until 2006, including the last five years as Exploration Manager Europe. During his time with Rio Tinto Exploration, he headed exploration teams in the wider European area, including the discovery and evaluation of the Çöpler gold mine in Turkey, now owned and operated by Alacer Gold Corporation. David commenced his career in 1968 with the Union Corporation group, spending seven years in South Africa (including work on the discovery and evaluation of the Beatrix Gold Mine complex, as well as the development of the Unisel mine and production-related geology at St Helena Gold Mine). Prior to that he spent four years in the United Kingdom, mainly involved in development and production at two Cornish tin mines. More recently, he was a Director and Chief Executive Officer of Columbus Copper Corporation (formerly Empire Mining Corp.), a Toronto Venture Exchange listed exploration company exploring copper and gold assets in western Turkey and chromite in Albania, until its merger with Energulf Resources Inc. in 2015. David holds a BSc honours degree in Geology from University College London and is a Chartered Engineer, Member of the Institute of Materials, Minerals and Mining.

 

Derek Crowhurst, Non-Executive Director, aged 56

Derek has spent more than 30 years working in the City of London, having commenced his career with R. Nivison & Co. (ultimately absorbed into Smith & Williamson Investments) as a fixed-interest analyst before progressing to the eurobond sales/trading desk, where he became involved in the issuance of eurodollar convertible bonds. He became increasingly focused on providing corporate financial advice, culminating in him joining Keith, Bayley Rogers & Co. in 1993, where he worked on numerous IPOs (on both the Official List and AIM), secondary fund raisings and M&A transactions. After spending more than 15 years with Keith, Bayley, Rogers & Co., the last two years of which as Managing Director of the business, Derek left to join Religare Capital Markets Limited in 2009 and moved to natural resources specialists VSA Capital Limited in 2012. Since January 2014, he has been a Director – Corporate Finance with corporate financial advisory boutique, Argento Capital Markets Limited. Derek holds a BSocSc honours degree in Mathematics, Economics and Statistics from the University of Birmingham and is a Fellow of the Chartered Institute for Securities and Investment and an FCA Approved Person.

 

Peter Damouni, Non-Executive Director, aged 40

Peter has over 17 years of experience in investment banking and capital markets, with expertise in mining and oil and gas. During his career, Peter has worked on and led equity and debt financings valued at more than $5 billion. He has comprehensive experience in equity financing, restructuring, corporate valuations and advisory assignments. Peter is a Non-Executive Director of Georgian Mining Corporation, an AIM traded copper and gold development and exploration company and of Kerr Mines, Inc., a Toronto Stock Exchange listed North American gold development and exploration company based in Toronto, Canada. He holds a double major BA honours degree in Economics, Finance and Political Science from McGill University, Montreal, Canada.

 

With effect from Admission, the Proposed Director will join the Company as a Non-Executive Director. The Proposed Director is:

 

David Hall, Proposed Non-Executive Director, aged 59

David has nearly 30 years of experience in the exploration sector and has worked on and assessed exploration projects and mines in more than 50 countries and is one of the Principal HKP Sellers. From 1992, he was Chief Geologist for Minorco SA, responsible for Central and Eastern Europe, Central Asia and the Middle East. He moved to South America in 1997 as a consultant geologist for Minorco South America and subsequently became exploration manager for AngloGold South America in 1999, where he was responsible for exploration around the Cerro Vanguardia gold mine in Argentina, around the Morro Velho and Crixas mines in Brazil and establishing the exploration programme that resulted in the discovery of the La Rescantada gold deposit in Peru as well as certain joint ventures in Ecuador and Colombia. David was a founder and executive director of Stratex International Plc, an AIM traded company with exploration assets in Turkey, and was also a founder of Erris Resources plc, an AIM traded company with exploration assets in Ireland and Sweden, where he remains a technical adviser. He is also currently CEO of Thani-Stratex Resources Ltd, a private gold exploration and development company focused on North and East Africa and the Middle East, and Non-Executive Chairman of Horizonte Minerals Plc, an AIM traded and Toronto Stock Exchange listed company with development stage nickel assets in Brazil. David holds a BA honours degree in geology from Trinity College Dublin and an MSc in Mineral Exploration from Queens University, Kingston, Ontario and is a Fellow of the Society of Economic Geologists, a Member of the Institute of Geologists of Ireland, a EuroGeol and P. Geo.

 

Key personnel

 

The management team of the New Group will comprise the Directors and the Proposed Director and the following key personnel.

 

Dr Michael Green, Proposed Country Manager and Head of Exploration, Cyprus, aged 48

Michael is a geologist with more than 20 years of mineral exploration experience, including managing all aspects of exploration programmes targeting a broad range of commodities but particularly gold, copper and nickel. He is the founder, a director and company secretary of HKP and one of the Principal HKP Sellers and has built the HKP Portfolio. Michael has operated as an independent geological consultant and has worked with numerous publicly traded and private companies. He was Chief Operating Officer of BMG Resources Limited, an Australian Stock Exchange listed company, where he managed its exploration portfolio in Cyprus. Michael holds a BSc honours degree in geology from the University of Western Australia and gained his PhD in geology from the University of Sydney, Australia. He is a Member of the Australian Institute of Geoscientists.

 

Christopher Hall, Non-Executive Chairman, said “I am delighted we are able to announce today the acquisition of HKP, which holds an exciting package of exploration licences and applications in Cyprus. Your board believes they are highly prospective for the discovery and development of copper-gold resources. The fund raising, together with our existing cash balances, provides the funding for our highly focussed programme of evaluation and exploration.

 

This transaction has achieved the initial objective of the company when it was listed in August last year. We look forward to working with David Hall, who will be joining the board, and Michael Green, who will be our country manager in Cyprus, and to updating shareholders on the progress of our exploration programme in the coming months.”

 

For further information please visit http://www.chesterfieldresourcesplc.com or contact:

 

Chesterfield Resources plc:
Christopher Hall, Non-Executive Chairman	Tel: +44(0)7773 427726
Peter Damouni, Non-Executive Director	Tel: +44(0)7771 787788
Shard Capital (Broker):
Damon Heath	Tel: +44(0)20 7186 9952
Erik Woolgar	Tel: +44(0)20 7186 9964

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

PRELIMINARY SETTLEMENT AGREEMENT IN RELATION TO SHAREHOLDER LITIGATION, INCLUDING CONDITIONAL AGREEMENT TO MAKE CASH OFFER FOR CHAGALA GROUP LIMITED

 

Chagala Group Limited (the “Company“) announces that a preliminary settlement agreement (the “Heads of Terms“) has been reached between TIPP Investments PCC (“TIPP“) and  the Company and the other defendants in relation to the litigation in the British Virgin Islands which was initiated by TIPP (the “Proceedings“) and the direction notices dated 10 June 2016 which were issued by the directors of the Company (the “Directors“). Pursuant to the Heads of Terms, the parties have agreed, among other things, that:

• Subject to the satisfaction of certain conditions and the carrying out of certain confirmatory due diligence, TIPP will procure that a special purpose vehicle which will be incorporated for the purpose of making such offer (the “SPV”) will make a voluntary unconditional offer (the “Offer”) to acquire all of the shares of the Company for cash at a price of US$2.15 per share (the “Offer Price”), with such Offer to be made in substantially the form of the offer made by AIMS on 19 June 2018 (the “AIMS Offer”). For the avoidance of doubt, TIPP has not agreed to make the Offer itself but instead has agreed to procure that the SPV will make the Offer.
• The completion of the transactions contemplated by the Heads of Terms shall constitute full and final settlement of any and all claims arising out of or connected to the facts in issue in the Proceedings which might exist as between TIPP, the Company and the other defendants.

The parties are in the process of negotiating a more extensive agreement and taking steps to satisfy the conditions and perform the other tasks which must be met pursuant to the Heads of Terms before any offer can be made.

Given the existence of the Heads of Terms and the fact that the proposed Offer Price is significantly higher than the price offered by AIMS under the AIMS Offer, the Directors recommend that, notwithstanding that the Offer will not be made unless the conditions and other requirements set out in the Heads of Terms are satisfied, the Company’s shareholders do not accept the AIMS Offer and instead await the making of the Offer.

 

For more information:

Francisco Parrilla, Chief Executive

Chagala Group Limited  + 7 (727) 355 04 84

 

Chagala Group

 

Chagala invests in service companies focused on providing long and short-term accommodation solutions to domestic and international oil and gas companies developing Kazakhstan’s largest hydrocarbon discoveries.  With investments in hotels, guest houses, serviced apartments, remote site facilities, restaurants and offices, Chagala is well positioned to capitalize on the oil and gas contribution being made in Kazakhstan.

 

Important Notice

 

SHAREHOLDERS SHOULD NOTE THAT NO OFFER HAS BEEN MADE BY THE SPV AS AT THE DATE OF THIS ANNOUNCEMENT AND THERE CAN BE NO CERTAINTY THAT ANY SUCH OFFER WILL BE MADE (OR, IF AN OFFER IS MADE, AS TO THE TERMS OF ANY SUCH OFFER).  IF AN OFFER IS MADE, SHAREHOLDERS ARE ADVISED TO READ THE DOCUMENTATION PURSUANT TO WHICH THE OFFER IS MADE (THE “OFFER LETTER“) CAREFULLY. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED TO, AND DOES NOT, CONSTITUTE OR FORM ANY PART OF AN OFFER TO SELL OR AN INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OR THE SOLICITATION OF ANY VOTE OR APPROVAL IN ANY JURISDICTION. THE OFFER (IF MADE) WILL BE MADE SOLELY BY MEANS OF AN OFFER LETTER, WHICH WILL CONTAIN THE FULL TERMS OF THE OFFER. ANY ACCEPTANCE IN RELATION TO THE OFFER SHOULD BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN SUCH OFFER LETTER.

 

The availability of any Offer and the release, publication and distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons who are not resident in the United Kingdom into whose possession this announcement comes should inform themselves about and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the Company disclaims any responsibility or liability for the violation of such restrictions by any person. Copies of this announcement must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where it would be unlawful to do so.

 

The Company is incorporated in the British Virgin Islands, and accordingly offers for the Company’s securities are not subject to the City Code on Takeovers and Mergers of the United Kingdom.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

At the General Meeting of the Company on 8 June 2018, shareholders approved the necessary authorities to raise additional funds, should demand from investors arise, to invest in opportunities that may become available to the Company, given its arrangement with RiverFort Global Capital Limited (“RiverFort”), the specialist arranger of funding solutions, primarily to the natural resources sector.  Furthermore, it was anticipated that if any such new funds were raised this would be done at or around the prevailing market share price and that an appropriate opportunity would also be made available to existing shareholders to enable them to subscribe for new shares in the Company on similar terms.

 

Paternoster is therefore very pleased to announce that the Company has now placed (subject to admission to trading on AIM) 4,500,000,000 new ordinary shares of 0.1 pence each (the “Placing Shares”) at a price of 0.1 pence per share with institutional and other investors to raise gross proceeds of £4,500,000 (the”Placing”).  The fundraising was oversubscribed and allocations were therefore scaled back.

 

Going forward, the Company will now be working closely with RiverFort, to invest the funds raised in attractive opportunities in the natural resources sector.

 

As part of the Placing, up to £180,000 has been allocated to the Teathers App, which is owned by Teathers Financial plc.  This app will enable qualified retail investors, in particular, qualifying existing Paternoster shareholders to participate in the Placing on the same terms as other investors directly involved in the Placing.  In the event that there is an oversubscription through the Teathers App, preference will be given to applications from existing shareholders in Paternoster.

 

The Teathers App is a mobile application designed to give qualified private investors access to placements and initial public offerings (“IPOs”), predominantly on the London Stock Exchange AIM market. To become an onboarded user of the Teathers App, visit the App Store or Google Play, download the App for free and complete the account application process.  Only onboarded users of the Teathers App may participate in deals offered through it. Shard Capital Partners LLP (“Shard Capital”) is the broker supporting the Teathers App and provides the necessary regulatory environment, including compliance oversight and client identification. Shard Capital is regulated by the FCA.

 

 

Nicholas Lee, Chairman said:

 

“I am delighted that our strategy to work with RiverFort has been so well supported by both new and existing investors and we look forward to working closely with RiverFort going forward to deploy the funds raised. This is a very significant development for Paternoster and provides a very clear strategy for the Company for the future.”

 

Application will be made for the Placing Shares to be admitted to trading on AIM (“Admission”) and it is expected that Admission will become effective on or around 4 July 2018. The Placing Shares will rank pari passu with the existing ordinary shares of 0.1 pence par value each (“Ordinary Shares”).

 

Following the issue of the Placing Shares, the Company will have 6,289,335,226 Ordinary Shares in issue, each share carrying the right to one vote. The Company does not hold any Ordinary Shares in treasury.  The above figure of 6,289,335,226 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

 

For more information please contact:

Paternoster Resources plc:	+44 20 7580 7576
Nicholas Lee, Chairman

 

RiverFort Global Capital:
Graham Stirling	+44 20 3411 2781
Nominated Advisor:
Beaumont Cornish	+44 20 7628 3396
Roland Cornish

 

Joint Broker:
Shard Capital Partners LLP	+44 20 7186 9950
Damon Heath
Erik Woolgar

 

Joint Broker to the Placing:
WH Ireland	+44 207 220 1666
Harry Ansell
Katy Mitchell
James Sinclair-Ford

 

Joint Broker:
Peterhouse Corporate Finance	+44 20 7562 3351
Lucy Williams

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

The Company is pleased to announce that the financial statements for the year ended 31 December 2017 – extracts from which are set out below – will shortly be posted to shareholders, and made available on the website www.paternosterresources.com

 

For more information, please contact:

Paternoster Resources plc:                                                                               +44 (0) 20 7580 7576

Nicholas Lee, Chairman

Nominated Adviser:                                                                                            +44 (0) 20 7628 3396

Beaumont Cornish

Roland Cornish/Rosalind Hill Abrahams/Felicity Geidt

Joint Broker:                                                                                                         +44 (0) 20 7186 0050

Shard Capital Partners LLP

Damon Heath

Erik Woolgar

Joint Broker:

Peterhouse Capital Limited                                                                               +44 (0) 20 7562 3351

Lucy Williams

 

INTRODUCTION

During the year ended 31 December 2017, the Company has continued to trade as an investment company focused on investing in the natural resources sector.

 

FINANCIAL

During 2017, the Company made a loss from continuing operations of £1,135,685 (2016: profit of £486,048). The net asset value of the Company as at 31 December 2017 was £2,448,769 (2016: £3,584,454).

The Company’s investment portfolio at 31 December 2017 is divided into the following categories:

Category	Principal investments	Cost or valuation (£)
Listed investments	Metal Tiger plc, MX Oil plc, Plutus Powergen plc, Arc Minerals plc, Pires Investments plc, I3 Energy plc, Cora Gold plc and Shumba Energy Limited	1,811,625
Cash resources		211,795
Listed investments and cash		2,023,420
Unlisted investments		440,748
Total		2,464,168

 

At 31 December 2017, the Company had cash balances amounting to £211,795 (2016: £648,165).

 

Since the year end, the company has raised new funds and on 1 May 2018, the Company released its First Quarter Update 2018 which showed that it had net assets, on an unaudited basis, of £3.1 million, the majority of which comprised listed investments of £1.8 million and cash of £1.1 million.

 

REVIEW OF THE YEAR

During the year, the share price of Plutus PowerGen plc (“Plutus”), one of the Company’s principal investments reduced significantly, contributing to a reduction in the value of the investment portfolio.  This is compared against a very strong performance of the Plutus share price during 2016 when it increased by some 110%.  Furthermore, whilst Cradle Arc Investments plc (formerly Alecto Minerals plc) and Polemos plc which were both suspended during the year have come back to the market post year end, this has been at lower prices than was originally expected and so, prudently, these reduced valuations have been reflected in the 2017 year end portfolio valuation.

During 2017, the Company’s investment in Glenwick translated into holdings in I3 Energy plc and Cora Gold plc and the share prices of both of these companies struggled towards the end of 2017.  However, since the year end, the I3 Energy plc share price has increased by around 300%.  Paternoster has realised some significant profits from this investment whilst still retaining a meaningful shareholding.

More details of the development of investments during the year and significant developments since the year end are set out in the Strategic Report.

OUTLOOK AND STRATEGY

On 18 January 2018, the Board of Paternoster Resources plc announced that it had entered into an arrangement with RiverFort Global Capital Ltd (“RiverFort”), the specialist provider of capital to junior companies whereby Paternoster would have the opportunity to invest in transactions arranged by RiverFort alongside other co-investors. At the same time, the Company raised £850,000 from both private and institutional investors.

RiverFort is a highly-respected provider of specialist financing, primarily to the natural resources sector, providing equity, convertible debt and senior project finance solutions. RiverFort is the investment director of Cuart Investments PCC Limited, a Gibraltar Experienced Investor Fund. Since its formation, RiverFort has been able to arrange attractive returns for its investors. In 2016, its first year of operation, Cuart Investments PCC Limited – Cuart Growth Capital Fund I achieved an increase in its audited NAV of over 15% between July and December 2016. The increase in NAV for 2017, on an unaudited basis, is expected to be over 20%. From the date of its formation to 31 March 2018, RiverFort, on behalf of Cuart Growth Capital Fund I, its co-investors and other investment partners, has arranged over US$76 million of investments. The RiverFort team has an international footprint and a range of financial, entrepreneurial and industrial expertise. Riverfort is authorised and regulated by the Financial Conduct Authority.

 

On 21 February 2018, Andrew Nesbitt joined the board of Paternoster. Andrew is a qualified mining engineer and is a consultant to RiverFort.  He holds a BSc (Eng) Mining and an MBA and has over 20 years of experience in the natural resources sector.  He has held various production and technical roles with both De Beers and Goldfields and has carried out a number of feasibility studies across the world with the leading technical consulting group SRK.  In addition, Andrew is also an experienced investor, having previously worked as a partner and portfolio manager for Craton Capital Pty Limited, a global precious metals fund with over US$400 million of assets under management.

 

On 20 April 2018, the Board announced that, as a first step in the development of its arrangement with RiverFort, it had agreed to invest around £250,000 in a portfolio of income-yielding investments arranged by RiverFort which comprise investments in the form of both senior and convertible debt. This portfolio represented, on average, around 2.8% of the total investment amounts originally arranged by RiverFort and therefore demonstrates the scope for Paternoster to scale-up the size of its investments as it develops its relationship with RiverFort. This should enable the Company to quickly grow its portfolio with investments that can generate both attractive cash returns whilst providing downside protection.

On 8 June 2018, Paternoster held a general meeting both to increase its share allotment authorities and to approve the entering into of an investment adviser agreement with RiverFort.  All resolutions were passed with significant majorities.  Going forward, the Company is now well placed to build its portfolio significantly and rapidly through making investments that can generate income and capital growth whilst offering downside protection.

 

 

Nicholas Lee

Chairman

25 June 2018

 

 

REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS

LISTED INVESTMENTS

PLUTUS POWERGEN PLC

Plutus PowerGen plc (“Plutus”), which is listed on AIM, is a power company focused on the development, construction and operation of flexible electricity and gas power generation in the UK.

In Q1 2017, the company’s share price fell significantly as a result of the uncertainty surrounding the OFGEM statement regarding TRIAD payments to local embedded power generators.  Given that Plutus benefits from multiple earnings streams, it believes that its business model going forward continues to be attractive.  It also has a number of projects in the pipeline that are expected to deliver additional fees and revenues. The company is continuing to broaden its exposure to the UK energy sector which includes looking to develop battery energy storage projects. It has also received planning for two further renewable green diesel power generation sites and has recently signed a joint venture with a leading UK supplier of gas and diesel generators.

Plutus has commissioned two new 20MW flexible energy generation sites in Stowmarket, Suffolk and has energised two sites in Ipswich.  The company now has 120MW of flexible energy generation sites in operation with a further three 20MW sites expected to come into operation in 2018.  More generally, the company is focused on moving into gas powered energy generation, energy storage and hybrid generation sites during 2018.  Gas powered sites offer significantly more attractive returns compared to diesel powered sites and hybrid sites allow power generation sites of various types to partner with storage technologies giving the company access to additional revenue streams.

 

MX OIL PLC

MX Oil plc (“MX Oil”) holds an indirect investment in a Nigerian oil and gas licence, OML 113, which includes the Aje Field. During the year, the two wells in the Aje Field within block OML 113 have continued to produce notwithstanding an interruption in production at Aje 5 whilst some subsurface intervention was carried out.

As part of the oil production process, a significant quantity of new data about the underlying reservoir and related geology has been collected.  Consequently, the partners in the licence commissioned the preparation of an updated Competent Persons Report (“CPR”) in order to take into account this new data and to provide a more accurate update of the future potential of the field.

The revised CPR has now been completed which is an update to the CPR prepared previously in July 2014 and incorporates all the developments and new data generated by the project since that date. The level of reserves reported in this latest CPR represents a significant increase compared to the previous report and highlights the future potential of the Aje Field.

Now that the company has received the updated CPR, work is currently underway on modelling the potential for new oil wells in both the Turonian and Cenomanian.  Subject to the outcome of this work, it expects to see further development drilling in 2019, with a view to progressing to a full scale oil and gas integrated project thereafter.

Also, during the year, shareholders approved the adoption of a revised investing policy by the company to include interesting opportunities in adjacent areas of oil services, energy, power and related technologies.

METAL TIGER PLC

Metal Tiger plc (“Metal Tiger”) which is listed on AIM, is focused on investing in mineral projects with a precious metals and strategic metals focus.  During the year, the company has continued to invest in MOD Resources Limited (“MOD”) which is continuing to make good progress on its high-grade copper and silver deposit (“T3”) in Botswana.  The company is looking forward to the results of the next resource upgrade on this asset, the finalisation of the definitive feasibility study and further exploration work in this licence area.

The company has also progressed the IPO of its joint venture in Thailand, however, the timing of this has been postponed pending greater clarity of the Thailand Government’s Mineral Management Master Plan.

The company also raised £4.85 million by way of a private placement and further funds through the exercise of warrants.

 

 

 

SHUMBA ENERGY LIMITED

During the year Shumba Energy Limited has continued to develop its coal and energy interests in Botswana.  It currently has three advanced stage projects and one earlier stage alternative energy project.

ARC MINERALS PLC (formerly ORTAC RESOURCES LIMITED)

The company has made significant progress during the year.  It is now focused on its two high potential African mining assets namely: Casa Mining Limited (“CASA”) a private company that holds prospective gold mining and exploration licences in the Democratic Republic of Congo; and Zamsort Limited (“Zamsort”), a company based in Zambia with interests in copper and cobalt. The company now owns some 90% of CASA having, during the year, made an offer to acquire the shares that it did not already own.  It has also increased its ownership in Zamsort to 55%.  During the period, the board of the company has also been restructured.

POLEMOS PLC

Polemos plc is an investment company listed on AIM with a specific focus on the natural resources sector. During the year, Polemos plc invested in Oyster Oil and Gas Limited (“Oyster”), a company already listed on the TSX-V.  Oyster currently operates four blocks in the Republic of Djibouti (100% interest) of which three blocks are located onshore and one block offshore.  It also operates a 100% working interest in a large onshore block in the Republic of Madagascar.   In July 2017, Polemos raised around £500,000 for working capital purposes and to fund the seeking of investment opportunities.

In September 2017, Polemos announced the potential acquisition of a cyber security business SecurLinx Corporation, a US based cyber security company.  As this would constitute a reverse takeover, its shares weresuspended pending the publication of an admission document. This transaction, however, could not be completed and so the company came back to the market on 9 March 2018 as an AIM Rule 15 cash shell which effectively means that it needs to secure an alternative reverse takeover transaction within six months of this date.

PIRES INVESTMENTS PLC

Pires Investments plc is an investment company listed on AIM with a specific focus on the natural resources sector. It is currently seeking interesting investment opportunities.  The company’s principal assets comprise cash and an investment in Eco (Atlantic) Oil and Gas Limited which, since the year end, has increased in value significantly. As a result, the company is now well placed to pursue exciting investment opportunities.

CORA GOLD LIMITED

Cora Gold Limited is a West African focused gold exploration company.  The company’s principal project is the Sanankoro gold discovery in southern Mali. The company listed on AIM in October 2017.  Since then it has commenced drilling at Sanankoro which has yield some positive results.  It has also commenced drilling at its Tekeledougou project in southern Mali which has also produced some good results. Consequently, the company’s share price has increased by some 40% since the year end.

I3 ENERGY PLC

I3 Energy Limited (“I3 Energy”) owns a 100% operated interest in the Liberator field, an oil discovery situated within Block 13/23d of the North Sea, immediately adjacent to the Blake field and situated 2 kilometres from Blake’s producing drill centre.  The company was introduced to AIM in July 2017.During Q1 2018, the companyraised additional funds and also announced that it was in advanced discussions with various possible partners regarding a potential joint venture relating to its 100% owned Liberator Oil Field and its 30^th Offshore Licencing Round application.  In May 2018, it announced that it had been awarded its sole 30^th Offshore Licensing Round application target, Block 13/23c 123 km², on a 100% Interest basis.

Since the year end, I3 Energy’s share price has increased by around 300%.  Paternoster has realised some significant gains on this investment.

 

 

 

UNLISTED INVESTMENTS

CRADLE ARC MINERALS PLC (formerly ALECTO MINERALS PLC)

In December 2016, the company announced the proposed acquisition of the Mowana Copper Mine in Botswana (“Mowana”). This acquisition constituted a reverse takeover under the AIM Rules for Companies and, as a result, the company’s shares were suspended. Mowana is a former producing copper mine that has already been brought back into production. Unfortunately, the company was not able to complete the acquisition of Mowana prior to the company being delisted.  However, since then, the company has worked hard to complete the acquisition and raise the appropriate level of funding such that it was able to come back to AIM in early 2018, albeit at a lower price than originally envisaged.  Since then, it has announced a maiden JORC resource for Mowana and an increase in production at the mine.

GLENWICK PLC

In February 2017, Paternoster subscribed for new ordinary shares in Glenwick plc (“Glenwick”), principally to gain exposure to its pre-IPO investment in I3 Energy plc. During the year, I3 Energy plc (“I3 Energy”) was introduced to AIM and Paternoster received shares in I3 Energy. At the same time, Glenwick was progressing the acquisition of 100% of the share capital of Cora Gold Limited (“Cora Gold”).  This transaction ultimately did not take place as Cora Gold completed its own IPO instead.  However, in order to compensate Glenwick for costs incurred, it received a number of Cora Gold shares which were then distributed to Glenwick shareholders.  Post period end, Glenwick is now in the process of being wound up and, whilst the share prices of I3 Energy and Cora Gold did not perform very well during 2017, post period end they have both improved, with I3 Energy increasing very significantly.  As a result, Paternoster has made a very attractive return from its investment in Glenwick.

ERIDGE CAPITAL LIMITED (formerly NEW WORLD OIL AND GAS PLC)

Eridge Capital Limited is an investment company with net assets comprising cash and a convertible loan in Big Sofa Technologies plc (“Big Sofa”), a company listed on AIM. During the year, the company changed its name and has migrated to the British Virgin Islands as this was believed to be a more appropriate jurisdiction for an unlisted investment company compared to remaining in Jersey.  The company is actively working on a revised strategy in order to deliver a return to shareholders. Post period end, the Company’s loan in Big Sofa has been repaid and part of the loan has been converted into shares.

ELEPHANT OIL LIMITED

Elephant Oil Limited, is an oil and gas exploration company focused on West Africa, which holds a 100% interest in Block B, onshore Benin, on the prolific West Africa Transform Margin. The company continues to look at options to develop its asset and presence in the region.

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

		2017	2016
	Note	£	£
CONTINUING OPERATIONS:
Net (loss)/gain on investments	4	(811,467)	770,086
Investment income	5	11,934	15,090
TOTAL INCOME		(799,533)	785,176
Administrative expenses		(336,152)	(299,128)
(LOSS)/PROFIT BEFORE TAXATION		(1,135,685)	486,048
Taxation	10	–	–
(LOSS)/PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME		(1,135,685)	486,048
EARNINGS PER SHARE	11
Basic and fully diluted (loss)/earnings per share		(0.112p)	0.051p

 

 

 

STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2017

		2017	2016
	Note	£	£
NON-CURRENT ASSETS
Investments held for trading	12	2,252,373	2,949,517
		2,252,373	2,949,517
CURRENT ASSETS
Trade and other receivables	13	37,863	29,142
Cash and cash equivalents	14	211,795	648,165
		249,658	677,307
TOTAL ASSETS		2,502,031	3,626,824
CURRENT LIABILITIES
Trade and other payables	15	53,262	42,370
		53,262	42,370
NET ASSETS		2,448,769	3,584,454
EQUITY
Share capital	16	4,269,546	4,269,546
Share premium account	16	3,191,257	3,191,257
Capital redemption reserve	17	27,000	27,000
Share option reserve	17	73,150	73,150
Retained losses		(5,112,184)	(3,976,499)
TOTAL EQUITY		2,448,769	3,584,454

 

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

 

	Share capital	Share premium	Other reserves (Note 18)	Retained losses	Total equity
	£	£	£	£	£
BALANCE AT 1 JANUARY 2016	4,175,796	3,135,007	119,407	(4,481,804)	2,948,406
Profit for the year and total comprehensive income	–	–	–	486,048	486,048
Share issue	93,750	56,250	–	–	150,000
Transfer on cancellation of options	–	–	(19,257)	19,257	–
Transactions with owners	93,750	56,250	(19,257)	19,257	150,000
BALANCE AT 31 DECEMBER 2016	4,269,546	3,191,257	100,150	(3,976,499)	3,584,454
Loss for the year and total comprehensive expense	–	–	–	(1,135,685)	(1,135,685)
BALANCE AT 31 DECEMBER 2017	4,269,546	3,191,257	100,150	(5,112,184)	2,448,769

 

STATEMENT OF CASHFLOWS

FOR THE YEAR ENDED 31 DECEMBER 2017

		2017	2016
	Note	£	£
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit before tax – continuing operations		(1,135,685)	486,048
Share based payment expense		–	–
Investment income		(11,934)	(15,090)
Net losses/(gains) on investments		811,467	(770,086)
OPERATING CASH FLOWS BEFORE MOVEMENTS IN WORKING CAPITAL		(336,152)	(299,128)
(Increase) in trade and other receivables		(8,721)	(16,296)
Increase/(decrease) in trade and other payables		10,892	(44,299)
NET CASH USED BY OPERATING ACTIVITIES		(333,981)	(359,723)
INVESTING ACTIVITIES
Purchase of investments		(321,167)	(527,351)
Disposal of investments		206,844	1,055,579
Investment income received		11,934	15,090
NET CASH USED IN INVESTING ACTIVITIES		(102,389)	543,318
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(436,370)	183,595
Cash and cash equivalents at the beginning of the year		648,165	464,570
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	14	211,795	648,165

 

 

 

1	NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 GENERAL INFORMATION
	Paternoster Resources plc is a public limited company incorporated in the United Kingdom.  The shares of the Company are listed on the AIM stock exchange. The address of its registered office is 30 Percy Street, London W1T 2DB.  The Company’s principal activities are described in the Directors’ Report.
2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements. As in prior periods, the Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.  The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. The financial statements are presented in pounds sterling (£) which is the functional currency of the Company.  The comparative figures are for the year ended 31 December 2016. An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and which have not been adopted early by the Company are presented below under ‘Statement of Compliance’.
	GOING CONCERN The directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in existence for the foreseeable future.  Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management’s knowledge and experience of the amounts, events or actions.  Actual results may differ from such estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In certain circumstances, where fair value cannot be readily established, the Company is required to make judgements over carrying value impairment, and evaluate the size of any impairment required. SHARE BASED PAYMENTS The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of comprehensive income requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company’s share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards.

 

 

	FAIR VALUE OF FINANCIAL INSTRUMENTS The Company holds investments that have been designated as held for trading on initial recognition. Where practicable the Company determines the fair value of these financial instruments that are not quoted (Level 3), using the most recent bid price at which a transaction has been carried out. These techniques are significantly affected by certain key assumptions, such as market liquidity.  Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.
	STATEMENT OF COMPLIANCE The financial statements comply with IFRS as adopted by the European Union.  The following new and revised Standards and Interpretations have been adopted in the current period by the Company for the first time and do not have a material impact on the group.
	IFRS 12   –	Disclosures of interests in other entities
	A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and not early adopted. None of these are expected to have a significant effect on the financial statements of the Company.
	REVENUE RECOGNITION INVESTMENT INCOME Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income on an ex-dividend basis. Interest on fixed interest debt securities is recognised using the effective interest rate method.  Bank deposit interest is recognised on an accruals basis.
	CURRENT TAX Current taxation is the taxation currently payable on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporary differences.  Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases.  However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.  Temporary differences include those associated with shares in subsidiaries and joint ventures and are only not recognised if the Company controls the reversal of the difference and it is not expected for the foreseeable future.  In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.

 

 

	DEFERRED TAX Deferred tax liabilities are provided in full, with no discounting.  Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income.  Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the statement of financial position date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited to equity in which case the related deferred tax is also charged or credited directly to equity.
	SEGMENTAL REPORTING The accounting policy for identifying segments is now based on internal management reporting information that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors. In identifying its operating segments, management generally follows the Company’s service lines which represent the main products and services provided by the Company. The Directors believe that the Company’s continuing investment operations comprise one segment.
	FINANCIAL ASSETS The Company’s financial assets comprise investments held for trading, associated undertakings, cash and cash equivalents and loans and receivables, and are recognised in the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument.
	INVESTMENTS HELD FOR TRADING All investments determined upon initial recognition as held at fair value through profit or loss were designated as investments held for trading.  Investment transactions are accounted for on a trade date basis.  Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction cost. The fair value of the financial instruments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. Unquoted investments are valued by the directors using primary valuation techniques such as recent transactions, last price and net asset value. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the consolidated statement of comprehensive income as “Net gains on investments”. Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.
	ASSOCIATED UNDERTAKINGS Associated undertakings are those entities in which the Company has significant influence, but not control, over the financial and operating policies.  Investments that are held as part of the Company’s investment portfolio are carried in the statement of financial position at fair value even though the Company may have significant influence over those companies. This treatment is permitted by IAS 28 “Investment in Associates”, which requires investments held by a company as a venture capital provider to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the statement of comprehensive income in the period of the change.  The Company has no interests in associates through which it carries on its business.

 

 

 

	CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
	LOANS AND RECEIVABLES Loans and receivables from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
	IMPAIRMENT OF FINANCIAL ASSETS Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. A provision for impairment is made when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. Impaired debts are derecognised when they are assessed as uncollectible.
	FINANCIAL LIABILITIES The Company’s financial liabilities comprise trade payables.  Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company becomes a party to the contractual provisions of the instruments.
	TRADE PAYABLES Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.
	SHARE-BASED PAYMENTS All share based payments are accounted for in accordance with IFRS 2 – “Share-based payments”. The Company issues equity-settled share based payments in the form of share options to certain directors and employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. Fair value is estimated using the Black-Scholes valuation model. The expected life used in the model has been adjusted, on the basis of management’s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.  At each balance sheet date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions.  The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.
	DIVIDENDS Dividend distributions payable to equity shareholders are included in “current financial liabilities” when the dividends are approved in general meeting prior to the statement of financial position date.

 

 

EQUITY Equity comprises the following: ·        “Share capital” represents the nominal value of equity shares. ·        “Share premium” represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. ·        “Capital redemption reserve” represents the nominal value of shares repurchased or redeemed by the Company. ·        “Option reserve” represents the cumulative cost of share based payments. ·      “Retained losses” represents retained losses.

 

3	SEGMENTAL INFORMATION
	The Company is organised around business class and the results are reported to the Chief Operating Decision Maker according to this class. There is one continuing class of business, being the investment in the natural resources sector. Given that there is only one continuing class of business, operating within the UK no further segmental information has been provided.

 

4	NET GAIN/(LOSS) ON INVESTMENTS
		2017	2016
		£	£
	Net realised gains/(losses) on disposal of investments	92,473	468,239
	Movement in fair value of investments	(903,940)	301,847
	Net (loss)/gain on investments	(811,467)	770,086

 

5	INVESTMENT INCOME
		2017	2016
		£	£
	Dividends from investments	–	412
	Deposit interest receivable	1,871	–
	Other interest receivable	10,063	14,678
		11,934	15,090

 

 

 

6	PROFIT/(LOSS) FOR THE YEAR
		2017	2016
		£	£
	Profit for the year has been arrived at after charging:
	Wages and salaries	131,329	141,227
	AUDITOR’S REMUNERATION
	During the year the Company obtained the following services from the Company’s auditor:
		2017	2016
		£	£
	Fees payable to the Company’s auditor for the audit of the parent company and the Company financial statements	12,000	12,000
	Fees payable to the Company’s auditor and its associates for other services:
	Other services relating to taxation	2,100	600
		14,100	12,600

 

 

7	DIRECTORS’ EMOLUMENTS
				2017	2016
				£	£
	Aggregate emoluments			120,000	141,749
	Social security costs			11,329	8,478
				131,329	150,227
	Name of director	Fees	Benefits	Total 2017	Total 2016
		£	£	£	£
	N Lee	84,000	–	84,000	72,000
	A van Dyke	36,000	–	36,000	20,333
	G Haselden	–	–	–	8,500
	M Lofgran	–	–	–	40,916
		120,00	–	120,00	141,749

 

 

 

 

 

8	EMPLOYEE INFORMATION
		2017	2016
		£	£
	Wages and salaries	120,000	141,749
	Social security costs	11,329	8,478
		131,329	150,227
	Average number of persons employed:
		2017	2016
		Number	Number
	Office and management	2	2

 

	COMPENSATION OF KEY MANAGEMENT PERSONNEL
	There are no key management personnel other than the Directors of the Company.

 

9	SHARE BASED PAYMENTS
	EQUITY-SETTLED SHARE OPTION SCHEME
	The Company operates share-based payment arrangements to remunerate directors and key employees in the form of a share option scheme. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. On 26 October 2011, Nicholas Lee was granted options to subscribe for 28,000,000 new ordinary shares in the Company at an exercise price of 0.32p per share.  The options are exercisable for a period of ten years from the date of grant, with one third becoming exercisable on the first, second and third anniversaries of the date of grant respectively. On 13 March 2012, Nicholas Lee was granted options to subscribe for 14,000,000 new ordinary shares in the Company at an exercise price of 0.48p per share.  The options are exercisable for a period of ten years from the date of grant, with one third becoming exercisable on the first, second and third anniversaries of the date of grant respectively.  The fair value of these options was determined using the Black-Scholes option pricing model and was £0.22p per option. On 17 September 2014, Matt Lofgran was granted options to subscribe for 20,000,000 new ordinary shares in the Company at an exercise price of 0.26p per share.  These options were cancelled in 2016. All remaining options were cancelled subsequent to the year end.

 

 

 

 

EQUITY-SETTLED SHARE OPTION SCHEME

The significant inputs to the model in respect of the options granted in 2014, 2012 and 2011 were as follows:

2014

2012

2011

Grant date share price

0.26p

0.48p

0.32p

Exercise share price

0.26p

0.48p

0.32p

No. of share options

20,000,000

14,000,000

28,000,000

Risk free rate

2.5%

3%

3%

Expected volatility

50%

40%

40%

Option life

10 years

10 years

10 years

Calculated fair value per share

0.14p

0.22p

0.15p

The total share-based payment expense recognised in the income statement for the year ended 31 December 2017 in respect of the share options granted was £Nil (2016:  £Nil).

Number of options at 1 Jan 2017

Granted in the year

Exercised in the year

Cancelled in the year

Number of options at 31 Dec 2017

Exercise price

Vesting Date

Expiry date

9,333,334

–

–

–

9,333,334

0.32p

26.10.2012

26.10.2021

4,666,667

–

–

–

4,666,667

0.48p

13.03.2013

13.03.2022

9,333,333

–

–

–

9,333,333

0.32p

26.10.2013

26.10.2021

4,666,667

–

–

–

4,666,667

0.48p

13.03.2014

13.03.2022

9,333,333

–

–

–

9,333,333

0.32p

26.10.2014

26.10.2021

4,666,667

–

–

–

4,666,666

0.48p

13.03.2015

13.03.2022

42,000,000

–

–

–

42,000,000

0.37p

 

10	INCOME TAX EXPENSE
		2017	2016
		£	£
	Current tax – continuing operations	–	–
	The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to profits of the Consolidated entities as follows:
		2017	2016
		£	£
	Profit/(loss) before tax from continuing operations	(1,135,685)	486,048
	Profit/(loss) before tax multiplied by rate of corporation tax in the UK of 19.25% (2016: 20%)	(218,619)	97,210
	Expenses not deductible for tax purposes	2,728	3,034
	Offset against tax losses brought forward	–	(100,244)
	Unrelieved tax losses carried forward	215,891	–
	Total tax	–	–
	Unrelieved tax losses of £4,485,000 (2016: £3,366,000) remain available to offset against future taxable trading profits. No deferred tax asset has been recognised in respect of the losses as recoverability is uncertain.

 

11	EARNINGS PER SHARE
	The basic earnings per share is based on the loss for the year divided by the weighted average number of shares in issue during the year. The weighted average number of ordinary shares for the year assumes that all shares have been included in the computation based on the weighted average number of days since issue.
		2017	2016
		£	£
	Profit/(loss) attributable to equity holders of the Company:
	Profit/(loss) from continuing operations	(1,135,685)	486,048
	Profit/(loss) for the year attributable to equity holders of the Company	(1,135,685)	486,048
	Weighted average number of ordinary shares in issue for basic and fully diluted earnings*	1,016,607,956	959,230,907
	EARNINGS/(LOSS) PER SHARE
	BASIC AND FULLY DILUTED:
	– Basic (loss)/earnings per share from continuing and total operations	(0.112p)	0.051p
	– Fully diluted (loss)/earnings per share from continuing and total operations	(0.112p)	0.051p
	*No adjustment to earnings per share for fully diluted earnings has been made as the exercise of options would be anti-dilutive.

 

 

12	INVESTMENTS HELD FOR TRADING
		2017	2016
		£	£
	At 1 January – fair value	2,949,517	2,557,659
	Acquisitions	321,167	677,351
	Disposal proceeds	(206,844)	(1,055,579)
	Net gain/(loss) on disposal of investments	92,473	468,239
	Movement in fair value of investments	(903,940)	301,847
	.At 31 December – fair value	2,252,373	2,949,517
	Categorised as:
	Level 1 – Quoted investments	1,811,625	2,557,368
	Level 2 – Unquoted investments	263,513	–
	Level 3 – Unquoted investments	177,235	392,149
		2,252,373	2,949,517

 

 

 

	The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy.  Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows: Level 1 – valued using quoted prices in active markets for identical assets. Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data. The valuation techniques used by the company are explained in the accounting policy note, “Investments held for trading”.
	LEVEL 2 FINANCIAL ASSETS Level 2 financial assets comprise a convertible loan note valued by reference to its nominal value, and two equity investments whose shares were suspended at the year-end which have been valued at the bid price of the shares on lifting of the suspension subsequent to the year-end.
	LEVEL 3 FINANCIAL ASSETS Reconciliation of Level 3 fair value measurement of financial assets
		2017	2016
		£	£
	Brought forward	392,149	947,221
	Reclassified from Level 1	–	293,295
	Reclassified to Level 1	–	(390,320)
	Disposal proceeds	–	(170,698)
	Loss on disposals	–	(154,095)
	Movement in fair value	(214,914)	(133,254)
	Carried forward	177,235	392,149
	Level 3 valuation techniques used by the Company are explained on page 22 (Fair value of financial instruments)
	In line with the investment strategy adopted by the Company, Nicholas Lee is on the boards of the following investee companies:
		%age holding
		2017	2016
	Pires Investments plc	24.8%	24.8%
	MX Oil plc	0.9%	0.9%
	Eridge Capital Limited	7.7%	7.7%

 

 

 

 

13	TRADE AND OTHER RECEIVABLES
		2017	2016
		£	£
	Other receivables	20,816	20,894
	Prepayments and accrued income	17,047	8,248
		37,863	29,142

The Directors consider that the carrying amount of other receivables is approximately equal to their fair value.

 

 

14	CASH AND CASH EQUIVALENTS
		2017	2016
		£	£
	Cash and cash equivalents	211,795	648,165

The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.

 

 

15	TRADE AND OTHER PAYABLES
		2017	2016
		£	£
	Trade payables	22,067	16,920
	Accrued expenses	31,195	25,450
		53,262	42,370

The Directors consider that the carrying amount of trade payables approximates to their fair value.

 

 

16	SHARE CAPITAL
		Number of shares		Share capital		Share
		Deferred	Ordinary	Deferred	Ordinary	premium
				£	£	£
	ISSUED AND FULLY PAID:
	At 1 January 2016:
	Deferred shares of 9.9p each	32,857,956		3,252,938
	Ordinary shares of 0.1p each		922,857,956		922,858	3,135,007
	At 1 January 2016	32,857,956	922,857,956	3,252,938	922,858	3,135,007
	Issue of shares		93,750,000		93,750	56,250
	At 31 December 2016 and 2017	32,857,956	1,016,607,956	3,252,938	1,016,608	3,191,257

 

 

 

 

17	OTHER RESERVES
		Capital redemption reserve	Share option reserve	Total Other reserves
		£	£	£
	Balance at 1 January 2016	27,000	92,407	119,407
	Transfer to Profit and loss on cancellation of options	–	(19,257)	(19,257)
	Balance at 31 December 2016 and 2017	27,000	73,150	100,150

 

 

18	RISK MANAGEMENT OBJECTIVES AND POLICIES
	The Company is exposed to a variety of financial risks which result from both its operating and investing activities.  The Company’s risk management is coordinated by the Board of Directors and focuses on actively securing the Company’s short to medium term cash flows by minimising the exposure to financial markets. The main risks the Company is exposed to through its financial instruments are credit risk, foreign currency risk, liquidity risk and market price risk. CAPITAL RISK MANAGEMENT The Company’s objectives when managing capital are: ·      to safeguard the Company’s ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders; ·      to support the Company’s growth; and ·      to provide capital for the purpose of strengthening the Company’s risk management capability. The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.  Management regards total equity as capital and reserves, for capital management purposes. The Company is not subject to externally imposed capital requirements. CREDIT RISK The Company’s financial instruments that are subject to credit risk are cash and cash equivalents and loans and receivables.  The credit risk for cash and cash equivalents is considered negligible since the counterparties are reputable financial institutions.  The credit risk for loans and receivables is mainly in respect of short term loans, made on market terms, which are monitored regularly by the Board. The Company’s maximum exposure to credit risk is £232,611 (2016: £728,165) comprising cash and cash equivalents and loans and receivables. The ageing profile of trade and other receivables was:
		2017	2016
		Total book value	Total book value
		£	£
	Current	20,816	20,894
	Overdue for less than one year	–	–
		20,816	20,894

 

 

 

 

18	RISK MANAGEMENT OBJECTIVES AND POLICIES continued
	LIQUIDITY RISK Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Company manages this risk through maintaining a positive cash balance and controlling expenses and commitments.  The Directors are confident that adequate resources exist to finance current operations.
	FOREIGN CURRENCY RISK The Directors do not consider the Company has significant exposure to movements in foreign currency in respect of its monetary assets.
	MARKET PRICE RISK The Company’s exposure to market price risk mainly arises from potential movements in the fair value of its investments.  The Company manages this price risk within its long-term investment strategy to manage a diversified exposure to the market.  If each of the Company’s equity investments were to experience a rise or fall of 10% in their fair value, this would result in the Company’s net asset value and statement of comprehensive income increasing or decreasing by £225,000 (2016:  £295,000).

 

 

19	FINANCIAL INSTRUMENTS
	The Company uses financial instruments, other than derivatives, comprising cash to provide funding for the Company’s operations.
	CATEGORIES OF FINANCIAL INSTRUMENTS
	The IAS 39 categories of financial asset included in the statement of financial position and the headings in which they are included are as follows:
		2017	2016
		£	£
	FINANCIAL ASSETS:
	Cash and cash equivalents	211,795	648,165
	Loans and receivables	20,816	20,894
	Investments held for trading	2,252,373	2,949,517
	FINANCIAL LIABILITIES AT AMORTISED COST:
	The IAS 39 categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:
		2017	2016
		£	£
	Trade and other payables	22,067	16,920

 

 

20	RELATED PARTY TRANSACTIONS
	The compensation payable to Key Management personnel comprised £120,000 (2016: £141,749) paid by the Company to the Directors in respect of services to the Company.  Full details of the compensation for each Director are provided in Note 7. Nicholas Lee’s directorships of companies in which Paternoster has an investment are detailed in Note 12.

 

 

21	CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS There were no contingent liabilities or capital commitments at 31 December 2017 or 31 December 2016.

 

 

22

POST YEAR END EVENTS

On 18 January 2018, the Company announced that it had entered into an arrangement with RiverFort Global Capital Ltd (“RiverFort”), the specialist provider of capital to junior companies whereby Paternoster would have the opportunity to invest in transactions arranged by RiverFort alongside other co-investors. At the same time, the Company raised £850,000 from both private and institutional investors as a result of a placing of 772,727,270 new ordinary shares at 0.11p per share. On 20 April 2018, the Board announced that it had agreed to invest around £250,000 in a portfolio of income-yielding investments arranged by RiverFort which comprise investments in the form of both senior and convertible debt. On 8 June 2018, Paternoster held a general meeting both to increase its share allotment authorities and to approve the entering into of an investment adviser agreement with RiverFort.  All resolutions were passed.

 

 

23	ULTIMATE CONTROLLING PARTY
	The Directors do not consider there to be a single ultimate controlling party.

 

 

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