LONDON, ENGLAND and BAIE VERTE, NEWFOUNDLAND and LABRADOR--(Marketwire -12/19/11)- Rambler Metals and Mining PLC (TSX-V: RAB.V - News)(LSE: RMM.L - News) ("Rambler" or the "Company") today is pleased to report its financial results and operational highlights for the three months ended October 31, 2011. The quarter saw a transition from construction and development to production with the first gold dore poured post-reporting period at the Company's 100% owned Ming Copper-Gold Mine in Newfoundland and Labrador's Baie Verte Peninsula, Canada.
Operational Achievements
-- Post quarter: the first gold pour completed, marking the Company's move
into production.
-- 621 ounces of gold processed from the Tilt Cove East Mine satellite
deposit during the quarter generating revenue of $1,095,000.
-- Pre-production development to the various Ming Mine ore bodies
continuing, particularly in the near surface 1806 zone.
-- Initial phase of commissioning of the copper concentrator began on
October 17, 2011, with "live" commissioning planned for calendar Q1
2012. This first phase includes the pressurizing of pipelines and
hydrostatic testing of tanks to ensure they are functioning properly.
-- Development completed and planned to date has allowed access to
78,599 tonnes of material grading 4.10 g/t Au (10,360 Au oz
contained) and 34.50 g/t Ag (87,182 Ag oz contained).
-- Continued to work towards finalizing the long term off-take agreement
with a well-known international trading company for the sale/purchase of
the full production from the Ming Mine ore body and the current capacity
of the Nugget Pond facility.
-- Completed a 9,500 wet metric tonne concentrate storage facility at the
Goodyear's Cove Port, with only building services and hook up remaining.
The first shipment of copper concentrate will be in calendar Q2 2012
leaving this project well ahead of both schedule and budget.
-- Drew down its first installment of CAD$5.0 million from the $10.0
million credit facility agreed to during the quarter, with the final
tranche of $5.0 million now available at the Group's discretion upon the
delivery of the executed off-take agreement.
-- Initiated a NI43-101 preliminary economic assessment to evaluate the
profitability of mining the Lower Footwall Zone ("LFZ"). This study will
assess the Ming Mine's transition from the current high grade low
tonnage start-up operation into a bulk tonnage mining scenario utilizing
all available resources from the LFZ.
Financial Highlights (All expressed in CAD$)
-- Quarterly gross profit of $545,000 from the sale of 621 ounces of gold
from its Tilt Cove East Mine satellite deposit and 74 ounces of gold
from the further refining of Nugget Pond Crown Pillar slag materials
(Q1/11: $374,000).
-- The net loss for the quarter ended October 31, 2011 was $845,000
including an exchange loss of $721,000 or $0.007 per share which
compares to a net profit of $577,000 for Q4/11 and a net loss of
$268,000 for Q1/11.
-- Cash flows generated from operating activities were $1,284,000 in Q1/12
(Q4/11: $573,000) and cash flows utilized of $366,000 in Q1/11. The
increase in the cash generated is due to changes in working capital.
-- Cash resources (including short-term investments) as at October 31, 2011
were $8.2 million and as of December 19, 2011 had decreased to $3.2
million. A further $5.0 million is available under the Group's Credit
Facility Agreement with Sprott Resource Lending Partnership upon
delivery of an executed off-take agreement.
George Ogilvie, President and CEO, Rambler Metals & Mining commented:
"This has been a transformational quarter for Rambler. Following the end of the quarter the Company has made the first gold pour a reality on 12 December 2011. We owe this success to the dedication of each employee, their hard work and their commitment to rehabilitating this once profitable mine.
Rambler is now in a strong position to continue the momentum achieved in this quarter in order to increase gold and copper production. We look forward to continued successes as ore is moved initially from the high-grade zones and then increasingly from the LFZ in creating additional value as a bulk tonnage operation."
ABOUT RAMBLER
Rambler Metals and Mining is Junior Mining Company that has 100% ownership of the Ming Copper-Gold Mine in Baie Verte, Newfoundland and Labrador, Canada. As a producing gold-copper miner, our objective is to become a mid-tier mining company by continuing the development of the Ming Mine, discovering new deposits and through M&A. Following the acquisition of the Ming Mine, Rambler, listed on the London AIM in 2005 and Toronto TSX-V in 2007.
In October 2009, Rambler purchased an operational gold hydrometallurgical mill, Nugget Pond, which is situated approximately 40km from the Ming Mine. Rambler has since upgraded the mill for both copper concentrate and gold and silver production.
Forward Looking Statement:
Some of the statements contained herein may be forward-looking statement, which involve known and unknown risks and uncertainties. Without limitation, statements regarding future plans and objectives of the Company are forward looking statements that involve various degrees of risk. It is important to note that the Company's actual results could differ materially from those in such forward-looking statements.
Management's Discussion & Analysis ('MD&A')
For the Quarter Ended October 31, 2011
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This MD&A, including appendices, is intended to help the reader understand
Rambler Metals and Mining plc ('the parent company') and its subsidiaries
(the 'Group' or 'Rambler'), our operations and our present business
environment. It has been prepared as of December 19, 2011 and covers the
results of operations for the quarter ended October 31, 2011. This
discussion should be read in conjunction with the audited Financial
Statements for the year ended July 31, 2011 and notes thereto. These
consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and their
interpretations adopted by the International Accounting Standards Board
("IASB"), as adopted by the European Union and with IFRS and their
interpretations adopted by the IASB. The presentation currency is Canadian
dollars. These statements together with the following MD&A are intended to
provide investors with a reasonable basis for assessing the potential future
performance.
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Rambler Metals and Mining plc
Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
CONTENTS
GROUP OVERVIEW 2
HIGHLIGHTS OF THE FIRST QUARTER 3
FINANCIAL RESULTS 5
HEALTH AND SAFETY 6
OUTLOOK 6
CAPITAL PROJECTS UPDATE 7
FINANCIAL REVIEW 10
SUMMARY OF QUARTERLY RESULTS 11
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION 12
COMMITMENTS AND LOANS 14
SUBSEQUENT EVENTS 14
APPENDIX 1 - LOCATION MAP 15
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL
PERFORMANCE 16
APPENDIX 3 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES 17
CHANGES IN ACCOUNTING POLICIES 19
APPENDIX 4 - OTHER MATTERS 20
Outstanding Share & Option Data 20
Forward Looking Information 20
Forward Looking Information (continued) 21
Further information 21
GROUP OVERVIEW
The principal activity of the Group is the development, mining and exploration of the Ming Copper-Gold Mine ('Ming Mine') located on Newfoundland and Labrador's Baie Verte Peninsula. Shortly after quarter end the Group was successful in bringing the mine into production with the first gold Dore being poured on December 12, 2011. See Appendix 1.
The parent Company's Ordinary Shares trade on the London AIM market under the symbol "RMM" and the TSX Venture Exchange under the symbol "RAB".
The Group has established the following three strategic goals:
1. Become a profitable copper and gold producer.
2. Increase existing Ming Mine resources and reserves through further
exploration.
3. Selectively pursue growth opportunities within Atlantic Canada including
joint ventures and acquisitions.
The Group's directors and management believe that focussing on these priorities will provide the best opportunity to build a successful and long term mining operation.
HIGHLIGHTS OF THE FIRST QUARTER
Management has been successful in their efforts to bring the historic Ming Mine back into production. Shortly after quarter end the Group began trucking gold ore from the mine to the Group's processing facilities at Nugget Pond and on December 12, 2011, the first gold Dore was poured and shipped for further refining and payment. While milling to date has been through the gold hydrometallurgical facility, subsequent to quarter end final construction on the new copper concentrator was completed which is now ready for 'live' commissioning. This period marks a significant milestone for the business with first revenues being produced from its 100% owned Ming Copper-Gold Mine meaning that Rambler Metals and Mining plc is now a production story.
Highlights of the first quarter of the 2012 fiscal year included:
Capital Development and Production
-- Pre-production development to the various ore bodies is continuing with
development into the upper levels of 1806 Zone being the current focus
for the underground crews, given its proximity to surface. Development
completed and planned to date has allowed access to 78,599 tonnes of
material grading 4.10 g/t Au (10,360 Au oz contained) and 31.50 g/t Ag
(87,182 Ag oz contained). This ore will be the first to be mined from
the main ore body in 30 years and will represent a major milestone for
the Company. The circa 80,000 tonnes of material will provide early
revenues to the Company while the high grade 1807 copper zone is made
available early in the New Year.
-- Initial phase of commissioning of the copper concentrator began on
October 17, 2011. This first phase includes the pressurizing of
pipelines and hydrostatic testing of tanks to ensure they are
functioning properly. To date the concentrator commissioning has been
going well and Management anticipates "live" commissioning with Lower
Footwall material in calendar Q1 2012.
-- The 9,500 wet metric tonne concentrate storage facility at the
Goodyear's Cove Port has been completed, with only building services and
hook up remaining. A ship loading 850 tonnes per hour conveyor system
with a 170 foot stack has also been ordered and is due for delivery in
January 2012. The first shipment of copper concentrate will be in
calendar Q2 2012 leaving this project ahead of both schedule and budget.
Financing & Off-take Agreement
-- The Group drew down its first installment of CAD$5.0 million from the
$10.0 million credit facility agreed to during the quarter. Interest
will be payable at a fixed rate of 9.25% per annum, is repayable by
March 29, 2013 and secured by a fixed and floating charge over the
assets of the Group. Following the completion of a second visit from
Sprott Resource Lending Partnership subsequent to quarter end, the final
tranche of $5.0 million is now available at the Group's discretion upon
the delivery of the executed off-take agreement.
-- A preferred off-taker has been chosen for the sale and marketing of the
Ming Mine Concentrates; the Group continue to work towards finalizing
the long term off-take agreement with a well-known international trading
company for the sale/purchase of the full production from the Ming Mine
ore body and the current capacity of the Nugget Pond processing
facility. The agreement provides for an upfront provisional payment for
the material as it is stored at the Goodyear's Cove Port facility. This
provisional payment will provide the Company with steady cash flow prior
to the first shipment of concentrate targeted for calendar Q2 2012.
See also 'Financial Results' section.
Exploration and evaluation
-- Initiated a NI43-101 preliminary economic assessment to evaluate the
profitability of mining the Group's Lower Footwall Zone. This study will
assess the Ming Mine's transition from the current high grade low
tonnage start-up operation into a bulk tonnage mining scenario utilizing
all available resources from the LFZ.
Staffing
-- Continued to strengthen the management team, recently appointing a Mill
Operations Foreman with 16 years of flotation experience and a Mill
Metallurgist as it prepares to run "live" feed through the copper
concentrator.
-- At quarter end a total of 98 full time employees were employed at the
Ming Mine.
FINANCIAL RESULTS
- Revenue
- A total of 621 ounces of gold were processed from the Tilt Cove East
Mine satellite deposit during the quarter generating revenue of
$1,095,000. The Group suspended the ore processing in early August due
to sodium cyanide supply issues and further postponed processing to make
way for first production from Ming Mine ores.
- The Group generated further revenue of $124,000 through further refining
of slag materials from the Nugget Pond Crown Pillar satellite deposit
recovering an additional 74 ounces of gold.
- Gross profit
- During the quarter the Group generated gross profit of $545,000 from the
sale of 621 ounces of gold from its Tilt Cove East Mine satellite
deposit and 74 ounces of gold from the further refining of Nugget Pond
Crown Pillar slag materials. This compared with a gross profit of
$374,000 in Q1/11 resulting from a toll processing agreement at the
Nugget Pond Mill.
- Loss
- The net loss for the quarter ended October 31, 2011 was $845,000
including an exchange loss of $721,000 or $0.007 per share which
compares to a net profit of $577,000 for Q4/11 and a net loss of
$268,000 for Q1/11.
- Cash flow and cash resources
- Cash flows generated from operating activities were $1,284,000 in Q1/12
compared to $573,000 in Q4/11 and cash flows utilized of $366,000 in
Q1/11. The increase in the cash generated is due to changes in working
capital.
- Cash resources (including short-term investments) as at October 31, 2011
were $8.2 million and as of December 19, 2011 had decreased to $3.2
million. A further $5.0 million is available under the Group's Credit
Facility Agreement.
HEALTH AND SAFETY
-- The Group completed the quarter with 1 lost time accidents and 2 medical
aid injuries. The lost time accident was the first one ever recorded on
the project's 6.3 year life and resulted while an employee was driving
an underground haulage truck.
-- The Health and Safety of the Group's employees continues to be a high
priority.
-- There were no environmental incidents.
OUTLOOK
Management continue to pursue the following objectives:
-- Bring the Ming Mine back into commercial production before the end of
fiscal year 2012.
-- Continue mining and milling the exposed 1806 workplaces for the
generation of first revenues from the Ming Mine. Additional development
focus will be put into preparing the high grade 1807 for processing
during calendar Q1 2012. This new development will permit further
exploration both up-dip and down-dip for inclusion in future resource
estimates.
-- Continue to evaluate the Ming Mine's expansion into the Lower Footwall
Zone.
-- Become a strategic long term low-cost producer on the Baie Verte
Peninsula, and throughout Atlantic Canada, by selectively pursuing
growth opportunities including joint ventures and acquisitions.
See 'Forward Looking Information' for a description of the factors that may cause actual results to differ from forecast.
CAPITAL PROJECTS UPDATE
During the quarter the Group incurred $4,834,000 on Mineral Property, $4,833,000 on property, plant and equipment and $38,000 on exploration and evaluation of the Ming Mine.
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Mineral Property (capital development) Q1/12 Q4/11 Q1/11
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$,000 $,000 $,000
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Labour costs 1,789 1,842 243
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Contractors' and consultancy expenses 143 187 767
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General materials and other costs 271 248 144
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Surface development 64 185 48
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Underground development 1,121 1,310 293
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Sub-total 3,388 3,772 1,495
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Finance costs 630 917 119
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Depreciation 914 907 187
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Reclamation and closure provision (98) 224 811
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Total 4,834 5,820 2,612
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Mineral property costs reduced in Q1/12 compared to Q4/11 in line with a reduction of mine site surface construction and reduced underground consumable costs. Increased costs in Q1/12 and Q4/11 compared to Q1/11 relate to the ramp up in development following the decision to bring the Ming Mine back into production in Q1/11. Finance costs decreased in Q1/12 when compared to Q4/11 due to the timing of planned production reducing the interest charges on the Gold Loan liability, off-set by a reduction in reclamation and closure provision relating to the release of the financial assurance following completion of the Nugget Pond Crown Pillar. Included in the Q1/12 Mineral property cost is an estimated $390,000 in 1806 stockpile ores. Prior to the mine being considered substantially complete and ready for its intended use, all direct operating costs, including costs associated with stockpile ores, are capitalized within mineral property cost.
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Mineral Property (capital development of bay
area, before finance cost, depreciation and
reclamation) Q1/12 Q4/11 Q1/11
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$,000 $,000 $,000
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Surface 623 802 127
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1806 ore zone 695 388 -
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1807 ore zone 15 506 -
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Lower Footwall ore zone 168 - -
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Ramp improvements 1,403 1597 210
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Shaft manway rehab 20 76 946
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Administrative 452 390 212
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Port site 12 12 -
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Total 3,388 3,772 1,495
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Surface related costs decreased in Q1/12 compared to Q4/11 mainly due to construction timing of mine site works. Increased costs experienced on the 1806 ore zone in line with preparing the zone for the Group's first production mining. Ramp improvements decreased in Q1/12 compared to Q4/11 with increased focus on further development of the 1806 ore zone. 1807 ore zone expenditures decreased in Q1/12 compared to Q4/11 as a consequence of the increased focus previously noted. Lower Footwall ore zone expenditures in Q1/12 relate to development aimed at accessing ores for the commissioning of the Group's copper concentrator.
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Property, plant and equipment Q1/12 Q4/11 Q1/11
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$,000 $,000 $,000
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Mill purchase and construction 4,160 2,139 439
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Plant and equipment 72 521 166
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Buildings 510 617 2
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Other assets 91 104 69
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Total 4,833 3,381 676
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Property, plant and equipment increased during Q1/12 compared to Q4/11 reflecting the significant increase in mill purchase and construction due to timing of contractor related activity at the copper concentrator.
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Exploration and evaluation costs (Ming Mine) Q1/12 Q4/11 Q1/11
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$,000 $,000 $,000
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Labour costs - - 126
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Consultancy expenses 38 - 112
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Operating costs - (31) 77
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Finance costs - - 50
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Depreciation - - 96
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Total 38 (31) 461
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Following the completion of the Ming Mine feasibility study, the Ming Mine project moved from pure Exploration & Evaluation into the Mine Development stage. Exploration expenditures incurred during Q1/12 related to the ongoing preliminary economic assessment of the Lower Footwall Zone of the Ming Mine.
FINANCIAL REVIEW
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Q1/12
Results
($000's) Commentary Comparatives
B/ B/
Q4/11 (W)(i) Q1/11 (W)
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1,219 Revenue was generated through gold 2,088 (42)% 985 24%
sales from the Group's Tilt Cove
East Mine and the further refining
of slag materials from the Nugget
Pond Crown Pillar satellite
deposits. Revenue in Q1/11 was
from toll processing agreements.
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674 Operating Costs related to the 770 12% 611 (10)%
processing, mining, royalty and
general and administrative costs
associated with the Group's
satellite deposits decreased
compared to Q4/11 due to the
completion of the Tilt Cove East
Mine deposit early in Q1/12. Q1/11
costs were incurred from a toll
processing agreement.
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694 General and administrative 755 8% 683 (2%)
expenses were lower than the
previous quarter by $61,000.
Employment costs reduced by
$15,000 including a reduction of
$31,000 in share based payment
charges, investor relations costs
reduced by $25,000 and travel and
entertaining costs by $25,000 as a
result of the focus on bringing
the Ming mine into production. In
comparison to Q1/11 administrative
expenses increased by $11,000.
Employment costs reduced by
$17,000, travel and entertaining
costs by $25,000 offset by an
increase in security and general
office expense of $47,000 due to
the addition of security personnel
at the mine site and the move to
the new office and dry facility
and further offset by increased
depreciation charges of $11,000.
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(721) Foreign exchange (losses)/gains (84) (758)% 64 (1,226)%
arising on the Gold Loan increased
in Q1/12 as a result of the
weakening of the Canadian dollar
against the US dollar during the
quarter.
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6 5 (20)% 28 79%
Exploration costs decreased
compared to the previous quarters
as a result of reduced activity
relating to the various
opportunities in the Ming Mine
area.
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4,834 Mineral Properties. The group 5,820 24% 2,612 (70)%
incurred costs of $4.8 million in
the quarter including labour costs
of $1.8 million, contractor and
material costs of $0.4 million,
underground development costs of
$1.1 million depreciation of $0.9
million and finance costs of $0.6
million. Q1/12 mineral properties
decreased compared to Q4/11 due to
construction timing of mine site
works and were higher when
compared to Q1/11 due to the
initiate ramp up commencing part
way through Q1/11.
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4,833 Capital spending on property, 3,342 (45)% 676 (615)%
plant and equipment increased
during the quarter compared to the
previous quarter reflecting the
continued spending on equipment
and equipment installation for the
Copper Concentrator at the Nugget
Pond processing facility,
construction of the port storage
facility and other purchases
related to the preparation of the
Ming Mine for production.
The increase from Q1/11 is due to
the reasons outlined above.
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38 Capital spending on exploration (31) (222)% 461 92%
and evaluation costs remained at a
low level during the quarter
following the commencement of mine
development on September 1, 2010.
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(i)B / (W) = Better / (Worse)
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the Group for the last eight fiscal quarters are set out in the following table.
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Quarterly Results
(All amounts in 000s of Canadian
Dollars, except Loss per share 4th 3rd 2nd 1st
figures) Quarter Quarter Quarter Quarter
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Fiscal 2012
Revenue 1,219
Net Income/ (loss) (845)
Loss per Share (Basic & Diluted) (0.007)
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Fiscal 2011
Revenue 2,089 183 266 985
Net Income/ (loss) 577 193 (555) (268)
Earnings/(loss) per Share (Basic &
Diluted) 0.008 0.002 (0.006) (0.003)
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Fiscal 2010
Revenue - - -
Net Income/ (loss) (676) (644) (591)
Loss per Share (Basic & Diluted) (0.008) (0.008) (0.007)
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Losses for the second quarter of 2010 increased as a result of increased legal and professional charges in connection with financing options and the AGM. The continued weakening of the GB Pound against the Canadian Dollar resulted in a further increase in losses in the third quarter of 2010. Losses in the fourth quarter of 2010 increased as a result of an unrealised exchange loss offset by reductions in legal and professional charges and staff costs. Losses in the first quarter of 2011 reduced as a result of revenue from toll processing and rose again in the second quarter of 2011 following the completion of a toll processing agreement in November 2010. The profit arising in Q3 2011 included an exchange gain of $0.8 million arising on the retranslation of the Gold Loan following the weakening of the US Dollar against the Canadian Dollar during the quarter. The profit arising in Q4 2011 arose from the profits realised on the sale of gold from the Group's satellite deposits. Losses increased in Q1/12 as a result of an exchange loss of $0.7 million and reduced sales activity due to the completed processing of the Group's satellite deposits.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
To date the Group has relied on private placement financings of equity securities, a Gold Loan facility, capital leases and a credit facility (see 'Commitments and Loans' section) to finance its development requirements. Positive cash flows are expected to continue after production at the Ming Mine commences; however, there is no guarantee that expenses will not exceed income particularly during the start-up phase. If this is the case, the liquidity risk could be material, even with current cash resources.
The Group's holding of cash balances is kept under constant review. Given the current climate, the Group has taken a very risk averse approach to management of cash resources and Management and Directors monitor events and associated risks on a continuous basis. Cash and short-term investment resources (cash, cash equivalents and short-term investments) were as follows:
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October 31, 2011 July 31, 2011
Resource $'000 $'000
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Cash $CDN 7,488 8,661
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Cash $US 54 770
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Cash GBP 163 47
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Short-term Investments $CDN 25 25
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Short-term Investments GBP 527 667
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Total 8,257 10,170
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Sales of gold and copper are likely to be made in US dollars and the majority of the Group's expenses are incurred in Canadian dollars. The Group's principal exchange rate risk relates to movements between the Canadian and US dollar. The Gold Loan is repayable in US dollars from future sales of gold mitigating the exchange risk. Management will closely monitor exchange fluctuation and consider the use of forward exchange contracts as required.
Interest rates on the capital leases and short term borrowings are fixed eliminating interest rate risk. Interest of 0.95% was received on Canadian dollar deposits during the quarter.
Net proceeds from financing activities during the quarter amounted to $4.2 million from receipts from a credit facility of $4.5 million net of financing fees offset by finance lease repayments of $0.3 million.
Cash flows used in investing activities amounted to $7.4 million for the quarter. Investments included $3.4 million in mine development, $3.2 million on the Nugget Pond Mill and $0.8 million on property, plant and equipment. The group is required to hold a Letter of Credit in favour of the Government of Newfoundland and Labrador in respect of the reclamation and closure liability at the existing Nugget Pond Mill and Ming Mine. At quarter end the Group holds bearer deposit notes totalling $3.26 million.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on copper and gold prices, its ability to fund its development and exploration programs, and to manage and generate positive cash flows from operations in the future. In line with the extended terms of the Gold Loan, if by December 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a CAD$10 million credit facility, of which CAD$5 million has been drawn, and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate, and these adjustments could be material.
At December 19, 2011 the Group has $3.2 million in cash and cash equivalents.
Financial Instruments
The Group's financial instruments as at October 31, 2011 comprised of financial assets of cash and cash equivalents and trade and other receivables and financial liabilities comprised of trade payables; other payables; accrued expenses and interest bearing loans and borrowings.
All of the Group's financial liabilities are measured at amortised cost.
The board of directors determines, as required, the degree to which it is appropriate to use financial instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are foreign currency risk, liquidity risk, credit risk, interest rate risk and commodity price risk each of which is discussed in note 11 of the consolidated financial information for the nine months ended October 31, 2011. There were no derivative instruments outstanding at October 31, 2011.
COMMITMENTS AND LOANS
At October 31, 2011, capital commitments made to third parties included:
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Capital Commitments $000
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Property, Plant and Equipment 1,952
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TOTAL 1,952
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These commitments together with the ongoing evaluation and development of the mine will be partially financed from existing cash reserves and from funds drawn down under the Group's credit facility agreement disclosed above.
The Group agreed a Credit Facility of up to CAD$10 million with Sprott Resource Lending Partnership ('Sprott') for use as additional funding for the development of the Ming Mine. The facility is available in two instalments; the first instalment of $5 million was drawn on October 29, 2011 and the final instalment for the balance up to $10 million is available until August 31, 2012 subject to the delivery of the Group's executed off-take agreement. Interest will be payable at a fixed rate of 9.25% per annum, is repayable by March 29, 2013 and secured by a fixed and floating charge over the assets of the Group. In connection with the Credit Facility, a Structuring Fee of CAD$100,000 and a 3% Commitment Fee of CAD$300,000 were paid to Sprott in cash. Pursuant to the terms of the Credit Facility, the Company issued CAD$300,000 of ordinary shares of 1p each in the capital of the Company to Sprott in exchange for the repayment of the previously paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts drawn under the Credit Facility is to be satisfied by the issue of ordinary shares by the Company.
At October 31, 2011, interest bearing loans and borrowings comprised a Gold Loan of $21,187,000, finance lease commitments of $6,622,000, a credit facility of $4,024,000 and a bank loan of $28,000.
SUBSEQUENT EVENTS
On November 28, 2011, in line with plans to maximize revenue and profits, the Group began processing the first ore from the 1806 high-grade gold zone through the hydrometallurgical facility at Nugget Pond. After two weeks of processing the Group was successful in producing gold dore marking a significant milestone for the business with first revenues being produced from its 100% owned Ming Copper-Gold Mine. Also, subsequent to quarter end construction of the new copper concentrator was completed along with pre-rock commissioning. The new plant is now ready to process base metal material from the Ming Mine once the first workplaces in the 1806 zone are mined and all gold has been recovered.
APPENDIX 1 - LOCATION MAP
To view the map, please visit the following link: http://media3.marketwire.com/docs/appendix1.jpg
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
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Financial Highlights
(All amounts in 000s of Canadian Dollars,
except shares and per share figures) Three months ended,
------------------------------
October July 31, October
31, 2011 2011 31, 2010
----------------------------------------------------------------------------
Gold sales (Ounces) 695 1,399 -
Average price (per ounce) 1,700 1,492 -
----------------------------------------------------------------------------
Revenue 1,219 2,088 985
Operating Expenses (674) (770) (611)
Exploration Expenditure (6) (5) (28)
Administrative expenses (694) (755) (683)
Net (loss) Income (845) 577 (268)
Cash Flow generated by/used in operating
activities 1,284 573 (366)
Cash Flow used in investing activities (7,438) (7,590) (1,941)
Cash Flow from financing activities 4,194 14,726 1,924
Net (decrease)/increase in cash (1,960) 7,693 (383)
Cash and cash equivalents at end of period 8,257 10,170 7,493
----------------------------------------------------------------------------
Total Assets 102,449 96,473 58,219
Total Liabilities (40,769) (34,496) (11,555)
Working Capital 4,664 7,804 7,115
----------------------------------------------------------------------------
Weighted average number of shares outstanding 123,361 102,282 95,485
(Loss)/Earnings per share (0.007) 0.008 (0.003)
----------------------------------------------------------------------------
APPENDIX 3 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The details of the Group's accounting policies are presented in accordance with International Financial Reporting Standards as set out in Note 2 to the financial statements. The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for investors to understand some of the processes and reasoning that go into the preparation of the Group's financial statements, providing some insight also to uncertainties that could impact the Group's financial results.
Going Concern
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on the copper and gold prices, its ability to fund its development and exploration programs, and to manage and generate positive cash flows from operations in the future. These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate, and these adjustments could be material.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on copper and gold prices, its ability to fund its development and exploration programs, and to manage and generate positive cash flows from operations in the future. In line with the extended terms of the Gold Loan, if by December 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a CAD$10 million credit facility (see note 7), of which CAD$5 million has been drawn, and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate, and these adjustments could be material.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in respect of the expected option life and the volatility are subject to management estimate and any changes to these estimates may have a significant effect on the cost. The assumptions used in calculating the cost of share based payments are explained in note 10 of the financial statements for the period ended October 31, 2011.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows arising from the sale of payable gold (see note 7 to the Unaudited Consolidated Financial Information for the three months ended October 31, 2011).The cash flows will be dependent on the production of gold and its selling price at the time of delivery which have been estimated in line with the mine plan, future prices of gold and reserve estimates. Management's estimates of these factors are subject to risk and uncertainties affecting the amount of the interest charge. Any changes to these estimates may result in a significantly different interest charge which would affect the carrying value of the exploration and evaluation costs and the corresponding Gold Loan liability.
The financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary were the going concern assumption inappropriate, and these adjustments could be material.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property and exploration and evaluation costs. In making this assessment they have considered the Group's business plan which includes resource estimates, future processing capacity, the forward market and longer term price outlook for copper and gold. Resource estimates have been based on the most recently filed NI43-101 report and its opportunities economic model which includes resource estimates and conversion of its inferred resources. Management's estimates of these factors are subject to risk and uncertainties affecting the recoverability of the Group's mineral property and exploration and evaluation costs. Any changes to these estimates may result in the recognition of an impairment charge with a corresponding reduction in the carrying value of such assets. After consideration of the above factors, the directors do not consider that there are any indicators that mineral property and exploration and evaluation costs are impaired at the quarter end.
Closure Costs
The Group has an obligation to reclaim its properties after the minerals have been mined from the site, and has estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves to be inaccurate, the Group could be required to increase the provision for site closure and reclamation costs, which would increase the amount of future reclamation expense, resulting in a reduction in the Group's earnings and net assets.
CHANGES IN ACCOUNTING POLICIES
In the current quarter, new and revised standards which have been adopted have not affected the disclosures presented in these financial statements.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or amended but are not yet effective have not been adopted for the annual reporting period ended July 31, 2012:
Nature of
change to Application
IFRS accounting date of Application
/Amendment Title policy standard date for Group
----------------------------------------------------------------------------
Various No change to
accounting
Annual policy,
Improvements to therefore, no
IFRSs impact Various August 1, 2012
------------ --------------- --------------- --------------- ---------------
IFRS 9 No change to
Financial accounting
instruments: policy,
Classification therefore, no
and Measurement impact January 1, 2013 August 1, 2013
------------ --------------- --------------- --------------- ---------------
IFRS 10 No change to
accounting
Consolidated policy,
Financial therefore, no
Statements impact January 1, 2013 January 1, 2013
------------ --------------- --------------- --------------- ---------------
IFRS 11 No change to
accounting
policy,
Joint therefore, no
Arrangements impact January 1, 2013 January 1, 2013
------------ --------------- --------------- --------------- ---------------
IFRS 12 No change to
accounting
Disclosure of policy,
Interests in therefore, no
Other Entities impact January 1, 2013 January 1, 2013
------------ --------------- --------------- --------------- ---------------
IFRS 13 No change to
accounting
policy,
Fair Value therefore, no
Measurement impact January 1, 2013 January 1, 2013
------------ --------------- --------------- --------------- ---------------
Management have reviewed the impact of the above standards and interpretations and have concluded that they will not result in any material changes to reported results.
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the year ended July 31, 2011.
APPENDIX 4 - OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
----------------------------------------------------------------------------
Weighted Average Exercise
Security Shares issued or Issuable Price
----------------------------------------------------------------------------
Common Shares 124,461,006 --
----------------------------------------------------------------------------
Options 4,053,000(i) $0.45
----------------------------------------------------------------------------
(i) if all options have fully vested
Mr. Peter Mercer assumed the role of Corporate Secretary on January 1, 2011. For future assistance Mr. Mercer can be reached directly at +1-709-800-1929 ext.500 or pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains "forward-looking information" which may include, but is not limited to, statements with respect to the Group's objectives and strategy, future financial or operating performance of the Group and its projects, exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining exploration and development, environmental risks, title disputes or claims and limitations of insurance coverage. All statements, other than statements of historical fact, are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonably by the Company, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; conclusions of economic evaluations; availability and cost of credit; fluctuations in Canadian dollar interest rates; fluctuations in the relative value of United States dollars, Canadian dollars and British Pounds; changes in planned parameters as plans continue to be refined; fluctuations in the market and forward prices of copper, gold, silver or certain other commodities; possible variations of ore grade or recovery rates; failure of equipment; accidents and other risks of the mining exploration industry; political instability, insurrection or war; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in the Report of Directors. Although the Group has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Unless stated otherwise, forward-looking statements contained herein are made as of the date of this MD&A. Other than as required by applicable securities law, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. All of the forward-looking statements made in this MD&A are qualified by these cautionary statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on the Group's web site at www.ramblermines.com.
Unaudited Consolidated Financial Information
For the Quarter Ended 31 October 2011
The accompanying financial information for the quarter ended 31 October 2011 and 31 October 2010 has not been reviewed or audited by the Group's auditor and has an effective date of 19 December 2011.
Rambler Metals and Mining Plc
Unaudited Consolidated income statement
For the Quarter Ended 31 October 2011
(EXPRESSED IN CANADIAN DOLLARS)
Quarter ended 31 Quarter ended 31
October 2011 October 2010
$,000 $,000
Revenue 1,219 985
Cost of sales (674) (611)
------------------------------------
Gross profit 545 374
Administrative expenses (694) (683)
Exploration expenses (6) (28)
------------------------------------
Operating loss (155) (337)
------------------------------------
Bank interest receivable 33 18
Finance costs (2) (13)
Foreign exchange differences (721) 64
------------------------------------
Net financing (expense) income (690) 69
------------------------------------
Loss before tax (845) (268)
Income tax credit - -
------------------------------------
Loss for the period and attributable to
owners of the parent (845) (268)
------------------------------------
------------------------------------
Loss per share
Quarter ended 31 Quarter ended 31
October 2011 October 2010
$ $
Basic and diluted loss per share (0.007) (0.003)
------------------------------------
Rambler Metals and Mining Plc
Unaudited Consolidated statement of comprehensive income
For the Quarter Ended 31 October 2011
(EXPRESSED IN CANADIAN DOLLARS)
Quarter ended 31 Quarter ended 31
October 2011 October 2010
$,000 $,000
Loss for the period (845) (268)
------------------------------------
Exchange differences on translation of
foreign operations (net of tax) 12 4
------------------------------------
Other comprehensive income for the
period 12 4
------------------------------------
------------------------------------
Total comprehensive loss for the period
and attributable to the owners of the
parent (833) (264)
------------------------------------
------------------------------------
Rambler Metals and Mining Plc
Consolidated balance sheet
As at 31 October 2011
(EXPRESSED IN CANADIAN DOLLARS)
Note Unaudited Audited
31 October 31 July
2011 2011
$,000 $,000
Assets
Intangible assets 3 16,665 16,627
Mineral properties 4 43,302 38,468
Property, plant and equipment 5 29,201 25,332
------------------------------
Total non-current assets 89,168 80,427
------------------------------
Inventory 6 632 934
Trade and other receivables 987 1,565
Cash and cash equivalents 8,257 10,170
Restricted cash 3,405 3,377
------------------------------
Total current assets 13,281 16,046
------------------------------
Total assets 102,449 96,473
------------------------------
------------------------------
Equity
Issued capital 2,317 2,299
Share premium 66,420 65,934
Merger reserve 214 214
Translation reserve 147 135
Accumulated losses (7,418) (6,604)
------------------------------
Total equity 61,680 61,978
------------------------------
Liabilities
Interest-bearing loans and borrowings 7 29,473 24,606
Provision 8 1,549 1,647
------------------------------
Total non-current liabilities 31,022 26,253
------------------------------
Interest-bearing loans and borrowings 7 2,388 2,282
Trade and other payables 7,359 5,960
------------------------------
Total current liabilities 9,747 8,242
------------------------------
Total liabilities 40,769 34,495
------------------------------
Total equity and liabilities 102,449 96,473
------------------------------
------------------------------
Rambler Metals and Mining Plc
Consolidated Statement of Changes in Equity
Share Share Merger
(EXPRESSED IN CANADIAN DOLLARS) capital premium reserve
Group $,000 $,000 $,000
Audited
Balance at 1 August 2010 1,863 51,532 214
-------------------------------------------
Comprehensive loss
Loss for the year - - -
-------------------------------------------
Foreign exchange translation
differences - - -
-------------------------------------------
Other comprehensive loss - - -
-------------------------------------------
Total comprehensive loss for the
year - - -
-------------------------------------------
Transactions with owners
Issue of share capital 436 15,252 -
Share issue expenses - (850) -
Share-based payments - - -
-------------------------------------------
Transactions with owners 436 14,402 -
-------------------------------------------
Balance at 31 July 2011 2,299 65,934 214
-------------------------------------------
-------------------------------------------
Unaudited
Balance at 1 August 2011 2,299 65,934 214
-------------------------------------------
Comprehensive loss
Loss for the period - - -
-------------------------------------------
Foreign exchange translation
differences - - -
-------------------------------------------
Other comprehensive loss - - -
-------------------------------------------
Total comprehensive income for
the period - - -
-------------------------------------------
Transactions with owners
Issue of share capital 18 486 -
Share-based payments - - -
-------------------------------------------
Transactions with owners 18 486 -
-------------------------------------------
Balance at 31 October 2011 2,317 66,420 214
-------------------------------------------
-------------------------------------------
Translation Accumulated
(EXPRESSED IN CANADIAN DOLLARS) reserve Losses Total
Group $,000 $,000 $,000
Audited
Balance at 1 August 2010 25 (6,811) 46,823
--------------------------------------------
Comprehensive loss
Loss for the year - (53) (53)
--------------------------------------------
Foreign exchange translation
differences 110 - 110
--------------------------------------------
Other comprehensive loss 110 - 110
--------------------------------------------
Total comprehensive loss for the
year 110 (53) 57
--------------------------------------------
Transactions with owners
Issue of share capital - - 15,688
Share issue expenses - - (850)
Share-based payments - 260 260
--------------------------------------------
Transactions with owners - 260 15,098
--------------------------------------------
Balance at 31 July 2011 135 (6,604) 61,978
--------------------------------------------
--------------------------------------------
Unaudited
Balance at 1 August 2011 135 (6,604) 61,978
--------------------------------------------
Comprehensive loss
Loss for the period - (845) (845)
--------------------------------------------
Foreign exchange translation
differences 12 - 12
--------------------------------------------
Other comprehensive loss 12 - 12
--------------------------------------------
Total comprehensive income for
the period 12 (845) (833)
--------------------------------------------
Transactions with owners
Issue of share capital - - 504
Share-based payments - 31 31
--------------------------------------------
Transactions with owners - 31 535
--------------------------------------------
Balance at 31 October 2011 147 (7,418) 61,680
--------------------------------------------
--------------------------------------------
Rambler Metals and Mining Plc
Unaudited statements of cash flows
For the Quarter Ended 31 October 2011
(EXPRESSED IN CANADIAN DOLLARS)
Quarter ended 31 Quarter ended 31
October 2011 October 2010
$,000 $,000
Cash flows from operating activities
Operating loss (155) (273)
Depreciation 49 39
Share based payments 31 98
Exchange differences
Decrease/(increase) in inventory 302 (83)
Decrease/(increase) in receivables 579 (561)
Increase/(decrease) in payables 480 427
------------------------------------
Cash generated from/(utilised in)
operations 1,286 (353)
Interest paid (2) (13)
------------------------------------
Net cash generated from/(utilised for)
operating activities 1,284 (366)
------------------------------------
Cash flows from investing activities
Interest received 33 18
Acquisition of bearer deposit note (28) (512)
Acquisition of evaluation and
exploration assets (27) (234)
Acquisition of mineral properties (3,358) (701)
Acquisition of property, plant and
equipment (4,058) (512)
------------------------------------
Net cash utilised in investing
activities (7,438) (1,941)
------------------------------------
Cash flows from financing activities
Proceeds from issue of share capital - -
Proceeds from issue of share options 4 6
Proceeds from Loans (note 7) 4,524 2,012
Capital element of finance lease
payments (334) (94)
------------------------------------
Net cash from financing activities 4,194 1,924
------------------------------------
Net decrease in cash and cash
equivalents (1,960) (383)
Cash and cash equivalents at beginning
of period 10,170 8,000
Effect of exchange rate fluctuations on
cash held 47 (124)
------------------------------------
Cash and cash equivalents at end of
period 8,257 7,493
------------------------------------
------------------------------------
Rambler Metals and Mining Plc
Unaudited Notes to the financial statements
1. Nature of operations and going concern
The principal activity of the Group is the development and exploration programme of the Ming Copper-Gold Mine in Baie Verte, Newfoundland and Labrador, Canada.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on copper and gold prices, its ability to fund its development and exploration programs, and to manage and generate positive cash flows from operations in the future. In line with the extended terms of the Gold Loan, if by December 31, 2011 the Ming Mine has not reached production, then amounts advanced will become repayable on demand, however management consider that if there were delays in the commencement of production an extension of the deadline could be secured. To ensure sufficient working capital management has secured a CAD$10 million credit facility (see note 7), of which CAD$5 million has been drawn, and is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation such that the plant may not be commissioned within the timescales envisaged, giving rise to the possibility that additional working capital may be required to fund delays in start-up and/or additional capital expenditure not originally envisaged which may require other sources of finance to be considered in order to satisfy short term working capital requirements as production commences. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale. On this basis, the Directors have concluded that the Group is a going concern. However there is no certainty that these funds will be forthcoming or that the extension to the Gold Loan will be granted. These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate, and these adjustments could be material.
2. Accounting policies
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the year ended 31 July 2011.
3. Intangible assets
Exploration and
evaluation
Costs
$,000
Cost
Balance at 1 August 2010 37,051
Acquisitions 478
Transfer to mineral properties (20,902)
----------------
Balance at 31 July 2011 16,627
----------------
----------------
Balance at 1 August 2011 16,627
Acquisitions 38
----------------
Balance at 31 October 2011 16,665
----------------
----------------
Carrying amounts
At 31 July 2011 16,627
----------------
----------------
At 31 October 2011 16,665
----------------
----------------
4. Mineral Properties
Mineral Property
$,000
Cost
Balance at 1 August 2010 -
Transfer from exploration and evaluation costs 20,902
Acquisitions 17,566
----------------
Balance at 31 July 2011 38,468
----------------
----------------
Balance at 1 August 2011 38,468
Acquisitions 4,834
----------------
Balance at 31 October 2011 43,302
----------------
----------------
Carrying amounts
At 31 July 2011 38,468
----------------
----------------
At 31 October 2011 43,302
----------------
----------------
5. Property, plant and equipment
Land and Assets under
buildings construction Motor vehicles
$,000 $,000 $,000
Cost
Balance at 1 August 2010 1,096 5,200 118
Acquisitions 1,845 10,110 74
Disposals - - (39)
-------------------------------------------------
Balance at 31 July 2011 2,941 15,310 153
-------------------------------------------------
-------------------------------------------------
Balance at 1 August 2011 2,941 15,310 153
Additions 510 4,160 18
Disposals - - -
-------------------------------------------------
Balance at 31 October 2011 3,451 19,470 171
-------------------------------------------------
-------------------------------------------------
Depreciation and impairment
losses
Balance at 1 August 2010 775 - 51
Depreciation charge 151 - 40
Eliminated on disposals - - (20)
-------------------------------------------------
Balance at 31 July 2011 926 - 71
-------------------------------------------------
-------------------------------------------------
Balance at 1 August 2011 926 - 71
Depreciation charge 75 - 13
On disposals - - -
-------------------------------------------------
Balance at 31 October 2011 1,001 - 84
-------------------------------------------------
-------------------------------------------------
Carrying amounts
At 31 July 2011 2,015 15,310 82
-------------------------------------------------
-------------------------------------------------
At 31 October 2011 2,450 19,470 87
-------------------------------------------------
-------------------------------------------------
Fixtures,
Plant and fittings and Computer
equipment equipment equipment Total
$,000 $,000 $,000 $,000
Cost
Balance at 1 August 2010 6,038 56 540 13,048
Acquisitions 8,127 34 130 20,320
Disposals - - - (39)
-------------------------------------------------
Balance at 31 July 2011 14,165 90 670 33,329
-------------------------------------------------
-------------------------------------------------
Balance at 1 August 2011 14,165 90 670 33,329
Additions 72 3 70 4,833
Disposals - - (7) (7)
-------------------------------------------------
Balance at 31 October 2011 14,237 93 733 38,155
-------------------------------------------------
-------------------------------------------------
Depreciation and impairment
losses
Balance at 1 August 2010 4,382 44 335 5,587
Depreciation charge 2,070 13 156 2,430
Eliminated on disposals - - - (20)
-------------------------------------------------
Balance at 31 July 2011 6,452 57 491 7,997
-------------------------------------------------
-------------------------------------------------
Balance at 1 August 2011 6,452 57 491 7,997
Depreciation charge 823 4 48 963
On disposals - - (6) (6)
-------------------------------------------------
Balance at 31 October 2011 7,275 61 533 8,954
-------------------------------------------------
-------------------------------------------------
Carrying amounts
At 31 July 2011 7,713 33 179 25,332
-------------------------------------------------
-------------------------------------------------
At 31 October 2011 6,962 32 200 29,201
-------------------------------------------------
-------------------------------------------------
6. Inventories
31 October 31 July
2011 2011
$,000 $,000
Metals in process - 540
Operating supplies 632 394
------------------------
632 934
------------------------
------------------------
7. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate and foreign currency risk, see note 11.
31 October 31 July
2011 2011
$,000 $,000
Non-current liabilities
Bank loan 25 26
Finance lease liabilities 4,977 5,326
Gold Loan 20,447 19,254
Credit Facility 4,024 -
------------------------
29,473 24,606
------------------------
------------------------
Current liabilities
Current portion of bank loan 3 3
Current portion of finance lease
liabilities 1,645 1,630
Current portion of Gold Loan 740 649
------------------------
2,388 2,282
------------------------
------------------------
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
Payments Interest Principal Payments Interest Principal
31 October 31 October 31 October 31 July 31 July 31 July
2011 2011 2011 2011 2011 2011
$,000 $,000 $,000 $,000 $,000 $,000
Less than one
year 1,866 221 1,645 1,965 335 1,630
Between one
and five
years 5,579 602 4,977 5,918 592 5,326
---------------------------------------------------------------
7,445 823 6,622 7,883 927 6,956
---------------------------------------------------------------
---------------------------------------------------------------
Under the terms of the equipment lease agreements, no contingent rents are payable.
The bank loan is secured by way of a fixed charge over a property and is repayable in monthly instalments of $384 over 12 years.
Gold Loan
In March 2010, the Group entered into an agreement ("Gold Loan") with Sandstorm to sell a portion of the life-of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm made staged upfront cash payments for the gold to the Group totalling US$20 million.
For this, the Group has agreed to sell 32% of the payable gold in the first year of production. In each production year following the first year of production, until 175,000oz of payable gold has been produced, the Group has agreed to sell a percentage equal to 25% x (85% divided by the actual percentage of metallurgical recovery of gold realized in the immediately preceding production year) provided that, if the payable gold production in any production year after the third production year is less than 15,000 ounces, then in each such production year, Sandstorm payable gold shall not be less than 25% of the payable gold. In each production year following the first year of production, after 175,000oz of payable gold has been produced, the Group has agreed to sell a percentage equal to 12% x (85% divided by the actual percentage of metallurgical recovery of gold realized in the immediately preceding production year) provided that, if the payable gold production in any production year after the third production year is less than 15,000 ounces, then in each such production year, Sandstorm payable gold shall not be less than 12% of the payable gold for the remainder of the period ending 40 years after the date of the agreement. After the expiry of the 40 year term, the agreement is renewable in 10 year terms at the option of Sandstorm.
A 4.5% cash commission is payable with each payment received under the agreement.
There are certain circumstances in which the Gold Loan may be repaid earlier than by the delivery of payable gold as follows:
(i) If within 18 months of 4 March 2010 (the date of the agreement) the
Ming Mine has not started producing gold any amounts advanced will
become repayable on demand together with interest at a rate of 8% per
annum. This date has been extended to December 31, 2011.
(ii) If within 24 months of the date that gold is first produced, the Ming
Mine has not produced and sold a minimum of 24,000oz of payable gold
then a portion of the US$20 million will be repayable based on the
shortfall of payable gold.
(iii) Within the first 36 months of Commercial production of gold any
shortfall in the value of payable gold below the following amounts
will be required to be paid in cash:
- within the first 12 months - US$3.6 million
- within the second 12 months - US $3.6 million
- within the third 12 months - US$3.1 million
The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective interest rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end based on management's best estimates of the time of delivery of payable gold, the total amount of gold expected to be produced over the mine life and the timing of that production.
Total interest of $527,034 was accrued during the period. $nil (2011: $49,906) was included in exploration and evaluation expenditure and $527,034 (2011: $1,451,371) charged to mineral properties.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
Credit Facility
On September 29, 2011 the Group agreed a Credit Facility of up to CAD$10 million with Sprott Resource Lending Partnership ("Sprott") for use as additional funding for the development of the Ming Mine. The facility is available in two instalments; the first instalment of $5 million was drawn on October 29, 2011 and the final instalment for the balance up to $10 million is available until August 31, 2012 subject to the delivery of the Group's executed off-take agreement. Interest will be payable at a fixed rate of 9.25% per annum, is repayable by March 29, 2013 and secured by a fixed and floating charge over the assets of the Group. In connection with the Credit Facility, a Structuring Fee of CAD$100,000 and a 3% Commitment Fee of CAD$300,000 were paid to Sprott in cash. Pursuant to the terms of the Credit Facility, the Company issued CAD$300,000 of ordinary shares of 1p each in the capital of the Company to Sprott in exchange for the repayment of the previously paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts drawn under the Credit Facility is to be satisfied by the issue of ordinary shares by the Company.
8. Provisions
31 October 2011 31 July 2011
$,000 $,000
Reclamation and closure provision
At 1 July 2011 1,647 559
(Released)/provided during the period (121) 1,007
Unwinding of discount 23 81
-----------------------------------
At 31 October 2011 1,549 1,647
-----------------------------------
-----------------------------------
The reclamation and closure provision has been made in respect of costs of land restoration and rehabilitation expected to be incurred at the end of the Ming Mine's useful life. The provision has been calculated based on the present value of the expected future cash flows associated with reclamation and closure activities as required by the Government of Newfoundland and Labrador. The provision relates to restoration of all three sites associated with the Ming Mine project: mill, mine and port sites. The liability is secured by Letters of Credit for $3,255,155.
9. Related parties
Transactions with key management personnel
Total key management personnel compensations were as follows:
Quarter ended 31 Quarter ended 31
October 2011 October 2010
$,000 $,000
Salaries 158 103
Share based payments 13 25
----------------------------------
171 128
----------------------------------
----------------------------------
10. Share-based payments
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average Number average Number
exercise price of options exercise price of options
31 October 31 October 31 July 31 July
2011 2011 2011 2011
$ No. 000 $ No. 000
Outstanding at
the beginning
of the period 0.484 4,167 0.467 3,952
Granted during
the period 0.493 202 0.506 647
Exercised 0.180 (22) 0.186 (52)
Cancelled
during the
period 0.597 (315) 0.379 (380)
---------------- ----------------
Outstanding at
the end of
the period 0.448 4,032 0.484 4,167
---------------- ----------------
---------------- ----------------
Exercisable at
the end of
the period 3,022 3,077
---------------- ----------------
---------------- ----------------
The options outstanding at 31 October 2011 have an exercise price in the range of $0.19 to $1.10 and a weighted average remaining contractual life of 7.3 years (31 July 2011: 8 years).
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes model. The contractual life of the option (10 years) is used as an input into this model. Expectations of early exercise are incorporated into the Black-Scholes model.
Fair value of share options and Quarter ended 31 Quarter ended 31
assumptions October 2011 October 2010
$,000 $,000
Fair value at measurement date of
options granted in the period 59 100
------------------------------------
Weighted average fair value per option
granted in period
Share price (weighted average) 0.493 0.436
Exercise price (weighted average) 0.493 0.436
Expected volatility (expressed as
weighted average volatility used
in the modelling under Black-Scholes
model) 70.0% 75.0%
Expected option life 5 5
Expected dividends 0 0
Risk-free interest rate (based on
national government bonds) 2.13% 2.50%
------------------------------------
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information.
There is no performance or market conditions associated with the share option grants.
Quarter ended 31 Quarter ended 31
October 2011 October 2010
$,000 $,000
Total expense recognised as employee costs 31 98
----------------------------------
----------------------------------
11. Financial risk management
The Group's principal financial assets comprise: cash and cash equivalents and other receivables. The Group financial liabilities comprise: trade payables; other payables; and accrued expenses. The Group's financial liabilities also include interest bearing loans and borrowings.
All of the Group's financial liabilities are measured at amortised cost and their financial assets are classified as loans and receivables and measured at amortised cost.
The board of directors determines, as required, the degree to which it is appropriate to use financial instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are foreign exchange risk, interest rate risk, credit risk and liquidity risk each of which is discussed below. There were no derivative instruments outstanding at 31 October 2011.
Foreign currency risk
The Group's cash resources are held in GB pounds and Canadian Dollars and the Gold Loan is repayable in US dollars. The Group has a downside exposure to any strengthening of the GB pound as this would increase expenses in Canadian dollar terms. This risk is mitigated by reviewing the holding of cash balances in GB pounds. Any weakening of the GB pound would however result in the reduction of the expenses in Canadian dollar terms and preserve the Group's cash resources. In addition, any such movements would affect the Consolidated Balance Sheet when the net assets of the Parent Company are translated into Canadian dollars. The Group has a downside exposure to any strengthening of the US dollar as this would increase the amount repayable on the Gold Loan in Canadian dollar terms. This risk, however, is relevant only should the Gold Loan be repaid in cash under terms set out in note 7. Repayment is envisaged in payable gold which is denominated in US dollars. Once the Mine is in production, this will mitigate this foreign currency risk.
The Group does not hedge its exposure of foreign investments held in foreign currencies. There is no significant impact on profit or loss from foreign currency movements associated with the Parent company's assets and liabilities as the foreign currency gains or losses are recorded in the translation reserve.
Exchange rate fluctuations may adversely affect the Group`s financial position and results. The following table details the Group`s sensitivity to a 10% strengthening and weakening in the GB pound against the Canadian/US Dollar. 10% represents management's assessment of the reasonable possible exposure.
Equity
31 October 31 July
2011 2011
$,000 $,000
10% strengthening of GB pound 70 64
10% weakening of GB pound (63) (57)
10% strengthening of US dollar (2,118) (1,920)
10% weakening of US dollar 1.926 1,746
------------------------------
------------------------------
Liquidity risk
Prior to Q3 2010 the Group had relied on shareholder funding to finance its operations. During Q3, 2010 the Group entered into a financing arrangement in US dollars and a Credit Facility arrangement (see note 7). With finite cash resources and no material income, the liquidity risk is significant. This risk is managed by controls over expenditure and concentrating on achieving the payment milestones under the financing arrangement. Success will depend largely upon the outcome of ongoing and future exploration and development programmes. Given the nature of the Group's current activities the entity will remain dependent on a mixture of debt and equity funding in the short to medium term until such time as the Group becomes self-financing from the commercial production of mineral resources.
The Group's trade payables, other payables and accrued expenses are generally due between one and three months and the Group's financial liabilities are due as follows:
31 October 31 July
Financial liabilities 2011 2011
$,000 $,000
Due within one year 2,388 2,282
Due within one to two years 7,800 3,608
Due within two to three years 4,978 4,814
Due within three to four years 2,369 2,272
Due within four to five years 1,749 2,030
Due after five years 12,577 11,882
----------------------------
31,861 26,888
----------------------------
----------------------------
Fixed rate financial liabilities
At the period end the analysis of finance leases, hire purchase contracts and loans which were all due in Canadian Dollars and are at fixed interest rates was as follows:
31 October 31 July
Fixed rate liabilities 2011 2011
$,000 $,000
Due within one year 1,648 1,633
Due within one to two years 5,510 1,465
Due within two to three years 1,490 1,508
Due within three to four years 1,498 1,478
Due within four to five years 516 888
Due after five years 12 13
----------------------------
10,674 6,985
----------------------------
----------------------------
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at 31 October 2011 was 6.01%.
Credit risk
The Group holds the majority of its cash resources in Canadian Dollars given that the majority of the Group's outgoings are denominated in this currency. Given the current climate, the Group has taken a very risk averse approach to management of cash resources and management and Directors monitor events and associated risks on a continuous basis. There is little perceived credit risk in respect of trade and other receivables. The Group and Company's maximum exposure to credit risk at 31 October 2011 was represented by receivables and cash resources.
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to twelve month's maximum duration. Details of the Group's borrowings are described in note 7. If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group's and Company's reported results.
Commodity price risk
Commodity price risk is the risk that the Group's future earnings will be adversely impacted by changes in the market prices of commodities. The Group is exposed to commodity price risk as its future revenues will be derived based on contracts with customers at prices that will be determined by reference to market prices of copper and gold at the delivery date.
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows arising from the sale of payable gold. In estimating the cash flows the following table details the Group's sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages represent management's assessment of the reasonable possible exposure.
Gross assets
31 October 31 July
2011 2011
$,000 $,000
10% increase in the price of gold (392) (292)
25% decrease in the price of gold 1,056 783
------------------------------
------------------------------
Financial assets
The floating rate financial assets comprise interest earning bank deposits at rates set by reference to the prevailing LIBOR or equivalent to the relevant country. Fixed rate financial assets are cash held on fixed term deposit.
At the period end the cash and short term deposits were as follows:
Fixed Floating Average period for Average interest
At 31 October rate rate which rates are rates for fixed
2011 assets Assets Total fixed rate assets
$,000 $,000 $,000 Months %
GB Pounds 527 163 690 1 0.25
US $ - 54 54 - -
Canadian $ 25 7,488 7,513 0.5 0.95
-------------------------
552 7,705 8,257
-------------------------
-------------------------
At 31 July 2011
$,000 $,000 $,000 Months %
GB Pounds 667 47 714 1 0.25
Canadian $ 25 9,431 9,456 1.3 0.95
-------------------------
692 9,478 10,170
-------------------------
-------------------------
Fair values
In the directors' opinion there is no material difference between the book value and fair value of any of the group's financial instruments.
12. Subsequent Events
On November 28, 2011, in line with plans to maximize revenue and profits, the Group began processing the first ore from the 1806 high-grade gold zone through the hydrometallurgical facility at Nugget Pond. After two weeks of processing the Group was successful in producing gold Dore marking a significant milestone for the business with first revenues being produced from its 100% owned Ming Copper-Gold Mine. Also, subsequent to quarter end construction of the new copper concentrator was completed along with pre-rock commissioning. The new plant is now ready to process base metal material from the Ming Mine once the first workplaces in the 1806 zone are mined and all gold has been recovered.
Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Rambler Metals and Mining
George Ogilvie, P.Eng.
President and CEO
709-800-1929
709-800-1921
Rambler Metals & Mining Plc.
Corporate Office
+44 (0) 20 8652-2700
+44 (0) 20 8652-2719 (FAX)
www.ramblermines.com
Seymour Pierce Limited
Nandita Sahgal / Jeremy Stephenson
+44 (0) 20-7107-8000
Pelham Bell Pottinger
Philippe Polman
+44 (0) 20 7861 3921
Ocean Equities Limited
Guy Wilkes
+44 (0) 20-7786-4370
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