TORONTO , Feb. 22, 2012 /CNW/ – Horizonte Minerals plc, (TSX: HZM.TO – News ) (AIM: HZM.TO – News ) (“Horizonte” or “the Company”) the scrutiny and growth firm focused in Brazil , is gratified to inform its Management’s Discussion and Analysis is to 12 months finished 31 st of December, 2011.
Backgro und
This Management’s Discussion and Analysis of the financial location and results of operations is ready as at 21 February 2012 and should be read in conjunction with the audited Financial Statements of Horizonte Minerals plc (‘Horizonte’ or the ‘ Company ‘) as at 31December 2011 that have been ready using the International Financial Reporting Standards of the International Accounting Standards Board as adopted by the European Union.
Horizonte is a publicly listed firm on the Alternative Investment Market (‘AIM’) of the LondonStockExchange and on the Toronto Stock Exchange (the ‘TSX’), in both instances trade beneath the pitch ”HZM”.
Company Ove rview
The Company is actively intent in the scrutiny and growth of nickel and bullion projects predominantly in Brazil .
The Company has two committed leading mining partners: Teck Resources Limited (‘Teck’), a leading vital shareholder in the Company , and AngloGold Ashanti Limited (‘AngloGold’), a J.V. associate on choosen projects.
The principal nickel item of the Company is its wholly-owned Araguaia nickel plan (‘Araguaia Project’ or ‘Araguaia’), located in ParState in Brazil .
In Mar 2011 the Company voiced an Inferred Mineral Resource at Araguaia of 76.6 million tonnes at a nickel rank of 1.35% and a cobalt rank of 0.06%. An
The Company has 2 joint ventures with AngloGold:
The Company’s nearby tenure concentration is to:
complete the primary metallurgical estimate analysis at Araguaia, formed on testwork commenced in Q3 2011. These consist of pyrometallurgical testwork inclusive lot smelting tests, and bottle hurl tests to evaluate pile leachability;
complete a Preliminary Economic Assessment (‘PEA’) on Araguaia in Q2 2012;
evaluate the results of the final 5 holes of the solid training promotion at Falcao completed in late 2011 to be able to plan the follow-up second state infill cavalcade programme in partnership with AngloGold;
advance with Q1 fieldwork at Falcao, inclusive a belligerent Induced Polarisation geophysical consult of the element mineralised zone, together with an enlargement of the dirt geochemical sampling with the target to spread the target to the east; and
continue to pierce forward with the Environmental Impact Assessment (‘EIA’) at Araguaia, to be completed in late 2012.
The Company’s longer tenure concentration waste to:
following the results of the PEA, beginner a Prefeasibility Study is to Araguaia Project after that in 2012 using a elite metallurgical estimate highway outset from the continuing testwork formerly referred to, together with the Preliminary Economic Assessment;
conduct serve geological assessment at Araguaia in order, where applicable, to upgrade expertise on aloft rank zones, enlarge on the whole resource tonnage and upgrade vegetable resource estimates from Inferred Mineral Resources to the Indicated Mineral Resources;
continue with the solid cavalcade programme at Falcao, theme to certain results from the geophysics and dirt evaluation.
Highlights is to Fourth Quarter of 2011
Preliminary cavalcade results were voiced is to Falcao Project on 16 November 2011 .
Further cavalcade results were voiced is to Araguaia Project on 21 November 2011 .
An scrutiny refurbish was voiced by the Company on 21 December 2011 .
Material Post-Balance Sheet Events
On 12 January 2012 , the Company voiced a NI 43-101 agreeable vegetable resource refurbish is to Araguaia Project.
On 17 January 2012 , the Company voiced the leaving from the Board of Mr. Nicholas Winer and the appointment of Dr. Owen Bavinton as non-executive Director.
On 7 February 2012 , the Company voiced the give of the Floresta and Vila Oito licences from affiliates of Lara Exploration Ltd (‘Lara’), and the situation of 8.5 million new shares in the Company to Lara as consideration.
On 16 February 2012 , the Company voiced the appointment of Dr Philip Mackey as Senior Metallurgical Advisor.
Review of Operations
Araguaia Pr oject
Project background
The Company owns 100 per cent of the modernized Araguaia Project located in southern Par State to the south of the Carajs vegetable neighborhood of northern Brazil . Several poignant nickel laterite deposits happen inside of this zone of Brazil , inclusive Xstrata’s Serra do Tapa/Vale dos Sonhos deposits that are moreover located inside of the Araguaia Fold Belt 80km to the north of the projectarea.
The Araguaia Project area comprises 17 Exploration Licences.
The landholdings that consist of the Araguaia Project do not form segment of any local or environmental reserves.
Recent and stream activity
Following the merger of the Araguaia Project in Aug 2010 , a plan group with nickel experience was determined and a solid training programme instituted in October 2010 .
The Company has a group on site and in September 2011 completed its first state resource training campaign, training a complete of 13,204metres in 539 holes.
In Mar 2011 the Company voiced a NI 43-101 agreeable Inferred Mineral Resource of 76. 6Mt at a grading of 1.35% nickel and 0.06% cobalt at Araguaia at a 1.0% nickel cut-off grade.
An
The recently-completed training programme builds on previous scrutiny at the site, conducted since 2006 by both the Company and previous owners and that includes to date a complete of a few 24,800 metres of solid drilling. This was preceded by stream deposit sampling, airborne geophysical surveys, dirt sampling, belligerent magnetometry, auger training and RC drilling. The principal targets were drilled on 200m x 200m grids, enabling the finishing of the NI 43-101 agreeable resource estimation. Infill training on 100m x 100m grids has been completed on the Pequizeiro and Baio targets.
Some of the targets sojourn open, and a few extensions and auxiliary targets at Araguaia are as nonetheless untested.
Direct expenses of the Araguaia Project since Aug 2010 have amounted to 4.9 million up to 31 December 2011 .
In add-on to the above, the Company has instituted the subsequent to at Araguaia that is now in progress:
Environmental Impact Assessment (‘EIA’) commenced in October 2011
Pyrometallurgical assessment work inclusive Thermal Characterisation and Batch Smelting Tests are being undertaken at Xstrata’s Process Support in Sudbury, Canada
Hydrometallurgical assessment work inclusive Bottle Roll Leaching and Atmospheric Tank Leaching tests are being undertaken at the Wardell-Armstrong laboratory in the UK
The amalgamated cost is to foregoing is approaching to be roughly 430,000 , with finishing due in the first or second entertain of 2012, with the difference of the EIA and the second state of hydrometallurgical assessment work, due for finishing in the second half of 2012.
In July 2011 the Company entered in to a decisive consent to acquire 100% of the Vila Oito and Floresta nickel laterite projects (‘ Vila Oito and Floresta’) from Lara. On 7 February 2012 the give of the Vila Oito and Floresta licences from affiliates of Lara to an affiliate of the Company was completed. In conformity with the July 2011 agreement, the care paid comprised 8.5 million common shares of the Company, representing 2.95% of the released share funds of the Company. Vila Oito and Floresta are adjoining to the Company’s Araguaia Project and serve to enlarge the on the whole home location at Araguaia.
In September 2011 a 130 tonne dehydrated bulk representation was composed from the Pequizeiro target using far-reaching hole auger drilling. This sampling was written to gather mineralised limonite, transitory and saprolite material in the same proportions that they happen in the Baio and Pequizeiro targets and with identical containing alkali parameters as determined in the Mar 2011 vegetable resource estimate of the Company. The samples will be used in the next state of metallurgical testwork.
Planned Activity
Moving forwards, the results from the continuing metallurgical studies to establish the most appropriate estimate choice is to Araguaia Project will be fed in to the PEA, the results of that are anticipated in the second entertain of 2012. Thereafter, the Company’s intends to move forward with the Prefeasibility Study at Araguaia. This will engage serve metallurgical studies directed at improved bargain the technical and mercantile dynamics of metallurgical processing, together with serve solid drilling.
Additional solid training is compulsory to be able to upgrade the high quality of geological expertise at Araguaia, where possible: stepping up on the whole resource tonnage, upgrading existing vegetable resource estimates from Inferred Mineral Resources to Indicated Mineral Resources and focussing on stepping up the resource tonnage of aloft rank material, this latter reason being critical for plan economics.
The rough estimate is to on the whole cost of the Prefeasibility Study, with co-ordinate training and metallurgical analysis is now costed at 4.5 million to 6.0 million . However the range of the investigate and related expenses will be determined by the result of the stream metallurgical contrast programme and the persisting PEA and for these reasons, this estimate is demonstrative at this stage.
Falcao Pr oject
The Falcao Project is a J.V. between the Company and AngloGold that was sealed in Aug 2010 . It gives AngloGold the correct to consequence in to 51% of the plan by investing US$4.5 million over 3 years. AngloGold has the choice of obtaining a serve 19%, receiving it to 70%, by appropriation a Prefeasibility Study inside of 3 years of the vesting date. Under the conditions of the agreement, AngloGold was compulsory to invest a minimum of US$900,000 inside of the first year, a miracle that was completed in the second entertain of 2011. Cash output to end-December 2011 amounted to US$2.3 million.
Falcao is located in southern Par State, north middle Brazil , that hosts the Carajs Mineral District and lies roughly 110 km to the north of the Company’s Araguaia Project.
The plan was a BHP grassroots breakthrough that was identified by informal stream deposit sampling that tangible several representation locations running supernatural gold, copper and china values, casing a 50 sq km home area. The stream deposit programme was followed-up by a informal dirt grid and far-reaching spaced, shoal auger cavalcade programme that tangible the principal area of fascination as an open 6 km long supernatural bullion direction and adjoining zinc/silver/gold zone.
BHP undertook a paltry far-reaching spaced retreat flow around (‘RC’) training promotion in September 1998 . The final RC cavalcade holes were located on a far-reaching (2,400m by 400m) spacing along the 6 km supernatural trend. Despite the far-reaching cavalcade hole spacing a number of rarely supernatural intersections were drilled.
Since initiating margin work in the third entertain of 2010, the Company carried out the subsequent to analysis at Falcao:
Soil Sampling Survey
The consult was carried out during October and the early segment of November 2010 over a 3,000m by 1,500m zone on 100m line spacing. The grid covers the middle segment of the principal target zone. Samples were composed every 25m along lines and every second representation analysed by Acme Laboratories.
The results fixed a 300 to 600m far-reaching zone at larger than 50ppb, with the direction open to both the easterly and west and the consequent information gathered with the informal dirt geochemistry database and interpreted together with the newly acquired geophysical database to conclude the cavalcade targets and extra zones for follow-up.
Geologic Mapping
Geologic mapping was carried out over an area of roughly 20 sq km and has been used is to amalgamated understand of the geochemical and geophysical data. Given the bad bearing in the target zone, this amalgamated understand has played a critical purpose in enhancing the bargain of the geologic surroundings and the clarification of cavalcade targets.
Aeromagnetic Survey
A 3,200 line km aeromagnetic and radiometric consult was flown over the Falcao Project in November 2010 . The consult was carried out on 100m line spacing over the middle segment of the area and lines at 200m spacings fluctuating to the easterly and west to assist in the constructional understand of the data.
All high quality manage information was monitored and granted by AngloGold’s geophysical dilettante group in Bogot.
Drilling
Following analysis of the above, in July 2011 the Company commenced a 2,587m solid training programme at Falcao, with a perspective to contrast the bullion dirt curiosity that is now 4km long and is open to the easterly and that varies from 200m to 800m in width. 10 drillholes were spaced out over a 4,700 m set upon and went to a height of between 200 and 300 metres.
Potential high quality and rank is unpractical in nature. There has been deficient scrutiny to conclude a vegetable resource on the Falcao Project to date, and it is undetermined if serve scrutiny will result in the target being delineated as a vegetable resource. Of the first 10 holes, 6 intersected zones of bullion mineralisation and as a result, a serve 5 holes totalling 1,076 m were drilled in late 2011. Results from these holes are anticipated in Q1 2012.
Future skeleton and expenditures
Budgeted output for 2012 as concluded with AngloGold is US$1.6 million and will concentration primarily on a prompted polarisation geophysical consult of the principal mineralised zone, amalgamated with an enlargement of the dirt geochemical sampling with the target to spread the target zone to the east. These studies will be followed by an extra solid cavalcade programme in Q2 2012, theme to certain results from the geophysics and dirt results. The Company is the user until vesting is completed.
Expenditure at Falcao is saved by AngloGold, the J.V. partner, and thus future output beneath the J.V. consent will rely on decisions taken by AngloGold. These decisions will be formed upon the results of the continuing and programmed actions summarized above.
Anglogold Exploration Alliance (‘S antana’)
On 4 September 2009 an scrutiny grouping with AngloGold was voiced and supposing is to Company to spread its areas of operation to greenfields exploration. This represents an area of future growth is to Company, completed without the need for serve equity financing. During the first 12 months AngloGold invested US$900,000 in scrutiny output on two informal greenfield scrutiny programmes. These programmes have now been lengthened and a serve US$500,000 was committed for 2011 and will build-up as segment of the AngloGold earn-in expenditure. All work is conducted and managed by the Company.
Under the conditions of the Strategic JV, AngloGold may, in its full discretion, outlay US$5.3M over 3 years to consequence a 51% fascination in any plan created by the programme. On finishing of the 3 year scrutiny programme any skill or properties comprising a target area will be theme to a well-defined J.V. (each a ‘Target Area JV’), with ownership interests in any Target Area JV apportioned 51% to AngloGold and 49% to the Company. AngloGold may elect, in its full discretion, to consequence up to an extra 19% (70% total) in a Target Area JV by appropriation continuing scrutiny output to complete a Prefeasibility Study in that Target Area inside of 3 years from that vesting date. AngloGold may back out at any time without completing its output obligations for a particularyear.
To date a complete of roughly 700,000 ha (7,000 sq km) has been sampled, comprising a complete of 1,266 stream deposit samples and 1,447 stone geochemical samples. Integration of structure, well known geology and occurrences, with an open perspective on geological models and the future styles of mineralisation, is a key component to success in this programme.
Geochemical targets are ranked and prioritised formed on the subsequent to criteria:
Single indicate vs multi-part constant drainages with towering Au;
Addition of trailblazer elements;
Favourable horde geology;
Structure; and
Open ground.
Highlights are:
A +7,000m direction related with a 1.8 to 2.05Ga, mid-Proterozoic sedimentary package of the same age as the bullion abounding conglomerates of the Tarkwa Belt in West Africa ; and
A 4,000m direction of low bullion and trailblazer elements (Te, Sb, Bi, As +/- W) contemplative of penetration related systems, located on a make up bounding a zoned slab intrusion.
These two formerly different targets are examples of the variety of anomalies being defined.
Future Planned Work
Follow-up work has nonetheless to conclude bullion mineralisation representing an AngloGold sized target. The Company, with AngloGold, is entirely reviewing this programme and the endless home location built up and will look at ways adding worth to the portfolio going forwards.
Tangara Gold Project (JV with Troy Resources)
The Company sealed a grave Option Agreement with Troy Resources (ASX: TRY.AX – News ) (‘Troy’) in December 2007 to run and rise the Tangara Gold Project (‘Tangara Project’) and swift follow its growth entitling Troy to 100% fascination in the Tangara Project. To sustain the choice Troy has done money payments totalling US$400,000 to the Company and invested US$2 million in scrutiny on the project. Upon exercise of the choice Troy will be compulsory to make a prolongation kingship remuneration to the Company of US$30 for every unit of bullion constructed from the Tangara Project area up to a limit of 500,000oz. In the eventuality of more than 500,000oz being produced, a 1% Net Smelter Royalty (‘NSR’) shall apply. This kingship will enlarge to 2% NSR in the eventuality of prolongation surpassing 1 million oz.
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In the northern segment of the J.V. area the concentration was on the credentials of the final scrutiny inform as a preface to a Mining Licence Application on segment of the 100 sq km scrutiny permit casing the Malvinas Trend, the middle segment of that is characterised by a 2.5km long zone formed by two leading trends. Potential amount and rank is unpractical in nature. There has been deficient scrutiny to conclude a vegetable resource on the Tangara Project to date, and it is undetermined if serve scrutiny will result in the target being delineated as a vegetable resource. The first direction is over 1,600m long and is 100m to 300m far-reaching whilst the second direction is 600m long and 300m wide. Both trends are related with countless multi-gram stone representation bullion results, the most appropriate of that in geological terms, are related to a large pyrite, sericite, quartz gossan that has returned assays of up to 14.8g/t bullion in rockchips.
During 2011, Troy one after another to try the northern segment of the plan area. Low repercussions margin work, inclusive mapping and dirt sampling, one after another on the Horizonte JV with work focussed on the northern portion of the Rio Maria West area (‘RMW’) and serve north along the horse opera portion of the Malvinas Trend.
The northern segment of the RMW is located about 8km west of the Rio Maria locale site. The area has been the site of progressing garimpeiro stream formed alluvial workings and at least 4 ancestral garimpeiro pits fluctuating in to in primary mineralisation. These workings are hosted in mafic metavolcanics rocks with quartz veins inside of shears zones happen in a identical surroundings and have a identical type of mineralisation as remarkable right away to the south at the Manoel and Anastcio workings inside of the southern portion of the RMW block.
At RMW the dirt programme along the Bezerro – Serrinha Trend yielded poignant results with a limit of 1,989ppb bullion and 6 zones on top of 110ppb gold. The results tangible a 3km long east-northeast charming supernatural direction up to 300m wide. South of the principal direction another supernatural zone was tangible over 1.6km inclusive 4 zones on top of 100ppb bullion with limit of 811ppb bullion and stone chips yielding up to 2.20g/t gold.
On the northern segment of the Company joint venture, an infill dirt programme at Malvinas consequent in the gathering of 440 samples serve tangible several well known supernatural gold-in-soil trends and identified a number of RAB Drill targets.
Future Planned Work
A mining looseness application has been lodged with the Brazilian Department of Mines to cover the Malvinas target. Future wake up by Troy at the Tangara Project is fortuitous on this application being successful.
El Ag uila
The El Aguila silver-lead-zinc plan is located in the Cerro de Pasco mining neighborhood in middle Peru . The plan consists of two claims that distortion a few 18km north of the city of Cerro de Pasco and is surrounded by active mines. The Company has undertaken no wake up on the plan in the final 24 months.
Future Planned Work
The plan is being maintained and Horizonte is actively looking a growth partner.
Technical Disclo sure
All systematic and technical information contained in this Management’s Discussion and Analysis has been ready by or beneath the organisation of David Hall , Chairman of the Company, a “qualified person” inside of the meaning of NI 43-101. For serve sum on the Araguaia Project, greatfully impute to “Geology and Mineral Resources of the Araguaia nickel project, Brazil NI 43-101 Technical Report”, antiquated 15 June 2011 , existing on SEDAR at www.sedar.com .
Summary of Financial and Ope rating Performance
Summary of Overall Financial Performance
The Company reports in Pounds Sterling.
The 2,434,491 disastrous swing in profit/(loss) before taxation is driven by the subsequent to principal factors:
The results for 2010 benefitted from a net gain of 1,747,927 comprising a gain of 440,079 on remeasuring the Company’s existing fascination in Lontra Empreendimentos e Participaes Ltda (‘Lontra’) at the date of merger to satisfactory value, together with a gain of 1,798,251 from the merger of Araguaia due to the satisfactory worth of net properties acquired surpassing the complete buy care at that date. These were cancel out by merger expenses expensed in 2010 of 490,403 . These things did not recover in 2011.
An extra non-cash assign of 235,756 was incurred in 2011 on stock options, with the full year’s assign being taken on those options released in November 2010 , together with charges related with serve options released in September 2011 .
Costs were incurred in 2011 of 216,140 were incurred in 2011 in inventory the shares of the Company on the TSX.
Other working income improved in the year by 184,009 , on the contrary the one off gain in 2010 of 440,079 on the Lontra buy enclosed above. This was due predominantly to choice and plan administration fees.
Net finance income declined in the year by 27,651 . This enlarge arose primarily from fascination on the Company’s increased money change that has predominately been hold on short-term fixed rate deposits, cancel out by the finance cost of unwinding the reduced fortuitous consideration.
Other working expenses expensed increased in 2011 by 615,008 . The enlarge on 2010 levels reflects the significantly aloft levels of corporate and other wake up levels since the merger of the Araguaia plan in the third entertain of 2010, as the Company has acted to swell the ranks of its administration make up and corporate wake up has enlarge with the growth of the Araguaia project. The enlarge is moreover contemplative of the increased difficulty of operations in 2011 as the Company modernized its assorted projects.
Summary of Cash flows
The net money flows used in working actions is to 12 months finished 31 December 2011 are driven by actions in the administration of the Araguaia and Falcao Projects and the AngloGold Ashanti grouping and are larger than the homogeneous time in 2010 due to the increased wake up levels in these areas.
Cash used in investing actions has risen to 4,213,834 in the 12 months finished 31 December 2011 when compared to 958,970 is to 12 months finished 31 December 2010 due to a full year of capitalisation of expenses related with the Araguaia Project, that commenced in September 2010 .
Net money flow from financing actions to 31 December 2011 of 7,819,437 was driven by the funds elevate in February 2011 of 8.25 million before expenses, by the fixation of 32,999,500 new shares in the Company at 25 pence per share. The net money flow from financing actions of 4,757,707 is to 12 months finished 31 December 2010 was linked to the fixation in Aug 2010 of 51,261,144 new common shares at 9.25 pence per share.
Analysis of Selected Financial Information
The drivers at the back the change in Profit/(Loss) from continuing operations in 2011 from 630,438 to (1,804,053) is set out in the division ”Summary of Overall Financial Performance”. The loss from continuing operations in 2009 of 890,536 was comprised of persisting staff expenses and scrutiny and other expenditure.
Total thorough income/(loss) attributable to equity holders in the Company in is to year finished 31 December 2011 of (4,204,061) was net of swap differences outset on translation of unfamiliar operations of (2,400,008) – this is due to the Brazilian Real weakening against the bruise as at 31 December 2011 as compared to 31 December 2010 . The unsubstantial properties of the Company are predominantly hold in Brazil and are denominated in the banking of that country. In the year finished 31 December 2010 , the thorough income/(loss) attributable to equity holders in the Company of 1,723,070 was net of swap differences outset on translation of unfamiliar operations of 1,092,632 – as the Brazilian Real strengthened against the bruise as at 31 December 2010 as compared to the swap rate that existed when the Araguaia properties were purchased in Aug 2010 .
The enlarge in complete properties from 2009 to 2010 of 25,259,008 reflected the merger in Aug 2010 of 100% of the share funds of Teck Cominco Brasil S.A., a Brazilian firm owning the scrutiny rights to the Araguaia nickel plan in Par State, northern Brazil (‘Teck Brasil’). The enlarge in complete properties from 2010 to 2011 of 3,683,243 reflects send scrutiny output of 4,327,200 , cancel out by unfamiliar swap movements on those intangibles of 1,841,572 . The residue of the enlarge in complete properties of 1,197,615 is due to movements in money and money equivalents and unfamiliar swap movements on other properties and liabilities.
Total long-term liabilities as at 31 December 2011 ( 5,863,550 ) and 31 December 2010 ( 6,187,840 ) – Nil as at 31 December 2009 consist of paid in instalments taxation and fortuitous care outset from the buy of Teck Brasil in Aug 2010 . The fortuitous care has a carrying worth of 2,715,365 at 31 December 2011 (2010: 2,676,502 ). The fortuitous care arrangement requires the Company to pay the one-time owners of Teck Brasil 50% of the taxation effect on utilization of the taxation losses existing in Teck Brasil at the date of acquisition. Under the conditions of the merger agreement, taxation losses that existed at the date of merger and that are subsequently utilized in a time larger than 10 years from that date are not theme to the fortuitous care arrangement.
Deferred taxation liabilities ( 3,148,185 as at 31 December 2011 ; 3,511,338 as at 31 December 2010 ; Nil as at 31 December 2009 ) have been recognized on the satisfactory worth gains in scrutiny properties outset on the acquisitions of Araguaia Niquel Minerao Ltda (formerly Teck Brasil) and Lontra. The buy of Teck Brasil resulted in a gain on bargain buy of 1,798,251 in the year finished 31 December 2010 .
Quarterly Financial Information
Other working income of 327,110 in the first entertain of 2011 enclosed 312,500 outset from a remuneration by the Anglo Pacific Group plc (‘Anglo Pacific’) in lapse for an choice to acquire a net smelter kingship on nickel prolongation at Araguaia. The residue of other working income in 2011 comprises administration fees outset on the AngloGold joint ventures.
Other working income in the third entertain of 2010 of 440,079 comprised a gain on revaluation of the Company’s existing 50% keeping in Lontra.
The loss from continuing operations of 577,731 in the fourth entertain of 2011 is conform to with that of the third entertain of 2011 of 549,869 , when scrutiny and corporate actions were at identical levels. The losses is to second half of 2011 are aloft than is to first half of the year, predominantly since the 327,110 of other income recognized in the first entertain of 2011 as remarkable above.
Total thorough income attributable to equity holders of the firm in the third entertain of 2011 of (3,293,201) was after swap differences outset on translating unfamiliar operations of (2,743,512), as the Brazilian Real had enervated against Sterling. The properties and liabilities of Araguaia are accounted for in Brazilian Reais, their organic currency.
As the Company done a net loss in any entertain of 2011, the widely separated gain per share is the same as the simple gain per share. The complete simple and widely separated gain per share for 2011 amounted to a loss of 0.653 per share. The complete basic/diluted gain per share in 2010 amounted to gain of 0.489 /0.487 pence per share respectively.
Results from Operations
Cash output on scrutiny actions have risen from 777,690 in the year finished 31 December 2010 to 4,257,608 in the year finished 31 December 2011 . The output comprises outlay on the Araguaia Project, acquired in Aug 2010 and includes the cost of the 13,204 m training promotion that ran from October 2010 to September 2011 . Direct scrutiny output in 2011 moreover includes output at Araguaia on metallurgical studies and the Environmental Impact Assessment. 2011 thus comprised a full year of scrutiny output at Araguaia, whereas 2010 usually enclosed the first 4 months post merger of the Araguaia Project.
The Net Movement in Intangible Assets in the year finished 31 December 2010 of 14,419,791 was driven by the merger in Aug 2010 of 100% of the share funds of Teck Brasil, a wholly-owned auxiliary of Teck. Total care amounted to 14,011,889 and comprised equity instruments valued at 11,403,422 (128,280,240 shares at 9.25 pence per share) and fortuitous care of 2,608,467 . The fortuitous care arrangement requires the Company to pay the one-time owners of Teck Brasil 50% of the taxation effect on utilization of the taxation losses existing in Teck Brasil at the date of acquisition. Under the conditions of the merger agreement, taxation losses that existed at the date of merger and that are subsequently utilized in a time larger than 10 years from that date are not theme to the fortuitous care arrangement.
General and Administration expenses have risen in the 12 months finished 31 December 2011 to 1,820,428 as compared to 1,205,420 is to same time in 2010 due to the increased wake up levels inside of the firm that have arisen as a result of the merger of Teck Brasil in Aug 2010 . The enlarge is moreover contemplative of the increased difficulty of operations in the Company as it advances with the assorted projects.
Within General and Administration costs:
Compensation has increased from (325,056) in the 12 months to 31 December 2010 to (448,884) in the 12 months finished 31December 2011 due to converging of the administration make up and increased pay levels co-ordinate with increased wake up levels and responsibilities.
The indemnification for loss of office of 96,519 that arose in the 12 months to 31 December 2011 was in connection to the leaving of MrNicholas Winer from the Company.
Travel expenses have risen from (82,583) in the 12 months to 31 December 2010 to (124,781) in the 12 months finished 31 December 2011 due to increased general corporate activity, in specific related to the inventory the shares of the Company on the TSX in June2011.
Exploration expenses expensed have risen from (547,423) in the 12 months to 31 December 2010 to (567,051) in the 12 months finished 31 December 2011 and consist of corporate expenses inclusive local administration salaries incurred in Brazil in encouragement of the Araguaia and joint ventures with AngloGold.
Professional fees have risen from (127,809) in the 12 months to 31 December 2010 to (364,380) in the 12 months finished 31December 2011 as with the difference of the merger of Araguaia in Aug 2010 (the expenses for that are not together disclosed in the on top of table), corporate wake up in 2010 was comparatively limited. The veteran fees in 2011 are predominantly driven by corporate finance and authorised fees related with the funds elevate in February 2011 , authorised fees related with the signing of the Option Royalty Agreement with Anglo Pacific in January 2011 (and entirely accounted for in 2011) together with extra accounting, review and meantime review expenses in 2011 as compared to 2010.
Investor family expenses expensed have risen from (66,240) in the 12 months to 31 December 2010 to (165,096) in the 12 months finished 31 December 2011 . The enlarge is due to a full year of increased financier family wake up in 2011 subsequent to the merger of Teck Brasil in Aug 2010 , together with expenses incurred in Canada subsequent to the inventory of the shares of the firm on the TSX in June 2011 .
The assign for stock options has risen from 52,534 during the year finished 31 December 2011 to 288,290 as 2011 enclosed the full years assign for those options released in November 2010 , together with an extra assign for serve options released in September2011.
There have moreover been a number of one-off expenses that have arisen in 2010 and 2011 as follows:
Acquisition expenses expensed in 2010 of 490,403 , that were in connection to the merger in Aug 2010 of 100% of the share funds of Teck Brasil from Teck.
Costs totalling 216,140 in 2011, incurred in connection with the inventory of the shares of the Company on the TSX, that occurred in June 2011 .
A gain arose in 2011 of 147,222 due to the change in the satisfactory worth of the fortuitous care as the money flow model has been practiced to take in to account the timing of money flows and improved expertise of vegetable grades at Araguaia.
The (loss)/gain on unfamiliar swap is related with movements outset on money deposits hold by the firm in currencies other than Sterling.
Other working income is to year finished 31 December 2010 of 694,540 predominantly comprised a gain of 440,079 on remeasuring the Company’s existing fascination in Lontra, together with 202,372 of other choice fees relating to non-refundable payments done by a J.V. associate is to correct to first warding off on the buy of the Tangara scrutiny assets. Other working income is to year finished 31 December 2011 of 438,470 enclosed 115,094 of plan administration fees and fees of 312,500 in connection with an choice remuneration received from the Anglo Pacific in January 2011 whereby an choice was granted to acquire a Net Smelter Royalty on future nickel revenues outset from the Araguaia Project.
Analysis of Intangible Assets
Impairment reviews for scrutiny and analysis properties are carried out possibly on a plan by plan basement or by geographical area. The Group’s scrutiny and analysis projects are at assorted stages of scrutiny and growth and are thus theme to a variety of gratefulness techniques. No spoil was compulsory in 2011.
The unsubstantial properties are denominated in the organic banking of the nation in that the item is located. The Araguaia Project together with the other unsubstantial properties hold in Brazil are thus denominated in Brazilian Reais whilst the El Aguila item is denominated in Peruvian Soles.
Other Infor mation
Outstanding Share Data
On 4 February 2011 , 32,999,500 common shares of 1p any were released entirely paid for money care at 25 pence per share to elevate 8.25 million before expenses.
In addition, on 7 February 2012 , 8,500,000 shares were released to Lara Exploration Ltd in care is to Acquisition of the Vila Oito and Floresta licences, both located in the vicinity of Araguaia. The complete number of released common shares as at the date of this inform is288,059,980.
Stock Options in th e Company
Details of stock options excellent and exercisable during the year are as follows:
The options excellent at 31 December 2011 had a weighted median remaining contractual life of 9.21 years.
In September 2011 14,380,000 options were released at an exercise cost of 15.5 pence, representing a 10% reward to the share cost on the day that the options were issued.
The 1,150,000 Options dispossessed in 2011 were hold by employees who left the Company. The satisfactory worth of the share options was determined using the Black Scholes gratefulness model.
The parameters used are minute below.
Liquidity, Capital Reserves and Financing Activities
The Company is not in commercial prolongation on any of its resource properties and consequently it does not produce money from operations and finances its actions by raising funds by equity issues.
As at 31 December 2011 the Company had 5,856,949 in money at bank and on deposit. As at 31 December 2010 money at bank and on deposit amounted to 3,847,031 . A funds elevate of 8.25 million before expenses was completed on 4 February 2011 . The Santana and Falcao Joint Ventures are saved by AngloGold in allege on a quarterly basis.
The Group’s money at bank and short-term deposits are hold with institutions with the subsequent to credit ratings (Fitch):
All of the Company’s money and money equivalents as at 31 December 2011 are hold in fascination bearing accounts. The Company has not invested in any short-term commercial paper, item corroborated bonds or other financial instruments.
Of the complete money and money equivalents of 5,856,592 as at 31 December 2011 , 3,785,450 was hold in Sterling, the homogeneous of 1,806,836 in United States Dollars and the homogeneous of 264,306 in Brazilian Reais.
In management’s perspective the Company has ample financial resources to account now programmed scrutiny programmes and continuing working expenditures over the next 12 months. The Company will go on to be dependent on raising equity funds as compulsory until and unless it reaches the prolongation theatre and generates money flow from operations.
Contractual Obligations
Operating leases describe to office space. Other contracts describe to continuing consultancy arrangements in connection with metallurgical and other evaluations at Araguaia.
Capital Commitments and Resou rces
As formerly described, funds and working franchise commitments of the Company complete 341,714 as at end-December 2011.
In order to evaluate the expenditures not nonetheless committed, but compulsory to sustain the growth of the Company’s properties by 2012, a bill has been ready and granted by management.
Cash output by the Company in 2012 is approaching to add the following
The money and money equivalents hold by the Company as at end-2011 of 5,856,949 are thus ample to account the on top of expenditure.
Off-Balance Sheet Arra ngements
The Company does not have any off-balance piece arrangements in place and has no skeleton to exercise any such.
Transacti ons with Related Parties
With the difference of charges levied inside of the Company in care for administration services and in conformity with sealed agreements, there are no related celebration transactions.
The charges levied during the 12 months finished 31 December 2011 and the analogous time in 2010 are as follows and cancel out upon consolidation:
Amounts totalling 6,025,165 (2010: 1,386,040 ) were lent to HM Brazil (IOM)Ltd, HM do Brasil Ltda, Araguaia Niquel Minerao Ltda, Minera El Aguila SAC and Minera El Cotahuasi SAC to finance scrutiny work during 2011. Interest is charged at an annual rate of 4% on balances excellent during the year.
Balances with subsidiaries at the year-end were:
All Group transactions were eliminated on consolidation.
Changes in Accounting Policies
There have been no changes in accounting policies from previous stating periods.
Financial Instrument s
The Company does not use Financial Instruments.
Critical Accounting Policies and Estima tes
The financial information disclosed inside of this document was ready on a going regard basement using accounting policies conform to with International Financial Reporting Standards (IFRS) as adopted by the European Union.
The credentials of financial statements requires administration to make estimates and assumptions that start the reported amounts of properties and liabilities and avowal of fortuitous properties and liabilities at the finish of any stating period.
Significant things theme to such estimates include:
Valuation of Intangible Assets
In conformity with IFRS 6, the Company capitalises as Intangible Assets all scrutiny and analysis costs, inclusive merger costs, margin scrutiny and analysis expenses relating to specific properties until those properties are brought in to production, at that time they will be amortised on a unit-of-production basement or until the properties are abandoned, sole or deliberate to be marred in value, at that time an appropriate assign is made.
Intangible Assets are reviewed for spoil to establish if a write down of their carrying amount is required. Each scrutiny plan is theme to an annual review by possibly a expert or comparison firm geologist to establish if the scrutiny results returned to date aver serve scrutiny output and have the future to result in an mercantile discovery. This review takes in to care long-term steel prices, anticipated resource volumes and grades, needing and infrastructure. In the eventuality that a plan does not act for an mercantile scrutiny target and results indicate there is no extra upside, a preference will be done to stop exploration. The Directors have reviewed the estimated worth of any plan ready by administration and ponder no spoil assign necessary is to year finished 31 December 2011 (2010: 59,945 ).
Estimated spoil of goodwill
Goodwill has a carrying worth at 31 December 2011 of 387,378 (2010: 435,751 ). The Group tests annually whether organization to help the poor has suffered any impairment, as per unsubstantial assets.
Management have concluded that there is no spoil assign necessary to the carrying worth of goodwill.
Fair worth of scrutiny properties acquired in business combinations
Management has done assorted estimations concerning the satisfactory worth of scrutiny properties acquired in the no show of NI 43-101 agreeable resource information existing at acquisition. The satisfactory worth of scrutiny properties acquired has been estimated formed on a number of gratefulness techniques.
Where acquisitions act for transactions between associating and peaceful parties on an arms length basement the scrutiny properties acquired have been valued on the basement of the care transferred. Where acquisitions do not act for arms length transactions administration have compared them to identical transactions that are on an arms length basement receiving in to account key factors such as faith over the turn of tangible resource, estimate technology and location infrastructure.
Management has moreover undertaken an exercise to compare their estimated satisfactory values formed on the turn of work completed and geological upside future with identical scrutiny companies in the form of a benchmarking exercise.
Contingent consideration
Contingent care has a carrying worth of 2,715,365 as at 31 December 2011 ( 2,676,502 at 31 December 2010). The fortuitous care arrangement requires the Company to pay the one-time owners of Teck Brasil 50% of the taxation effect on utilization of the taxation losses existing in Teck Brasil at the date of acquisition. Under the conditions of the merger agreement, taxation losses that existed at the date of merger and that are subsequently utilized in a time larger than 10 years from that date are not theme to the fortuitous care arrangement.
The satisfactory worth of this future care has been determined using a suppositious reduced money flow analysis. Management has done assumptions concerning the future working parameters of the Araguaia Project, amalgamated with local and universal working parameters taken from other comparable nickel projects, to be able to compute the aptitude to utilize the acquired taxation losses, together with the timing of their utilisation. The Company has used reduced money flow analysis to establish when it is anticipated that the taxation losses will be utilized and any future fortuitous care paid. Cash flow projections surpassing a time of 5 years have been estimated to be able to soak up the anticipated time time to substantiating a NI 43-101 agreeable resource, completing a feasibility investigate and then exploiting the estimated resource. These money flows could be affected by ceiling or downward movements in several factors to add commodity prices, working costs, funds expenditure, prolongation levels, grades, recoveries and fascination rates.
Current and paid in instalments taxation
The Company is theme to income taxes in countless jurisdictions. Judgment is compulsory in determining the worldwide provision for such taxes. The Company recognises liabilities for anticipated taxation problems formed on estimates of whether extra taxes will be due. Where the final taxation result of these counts is different from the amounts that were primarily recorded, such differences will start the stream and paid in instalments income taxation properties and liabilities in the time in that such integrity is made.
Deferred taxation liabilities have been recognized on the satisfactory worth gains in scrutiny properties outset on the acquisitions of Teck Brasil and Lontra. A paid in instalments taxation item has been recognized on merger of Teck Cominco Brasil S.A is to utilization of the existing taxation losses acquired. Should the real final result concerning the utilization of these losses be different from management’s estimations, the Company may must be revise the carrying worth of this asset.
Forward Looking Statemen ts
Except for statements of chronological fact relating to the Company, certain information contained in this management’s deliberation and analysis constitutes ”forward-looking information” beneath Canadian bonds legislation. Forward-looking information includes, but is not paltry to, statements with apply oneself to the future of the Company’s properties; the future cost of minerals; success of scrutiny activities; cost and timing of future scrutiny and development; the estimation of vegetable resources; mandate for extra funds and other statements relating to the financial and business prospects of the Company. Generally, forward-looking information may be identified by the use of forward-looking vernacular such as ”plans”, ”expects” or ”does not expect”, ”is expected”, ”budget”, ”scheduled”, ”estimates”, ”forecasts”, ”intends”, ”anticipates” or ”does not anticipate”, or ”believes”, or variations of such words and phrases or statements that certain actions, events or results ”may”, ”could”, ”would”, ”might” or ”will be taken”, ”occur” or ”be achieved”. Forward-looking information is innately theme to well known and different risks, uncertainties and other factors that may result in the real results, turn of activity, opening or achievements of the Company to be materially different from those expressed or pragmatic by such forward-looking information, inclusive but not paltry to risks related to:
the Company’s objective of developing shareholder worth by concentrating on the merger and growth of properties that have the future to enclose mercantile vegetable deposits;
future skeleton is to Araguaia and Falcao Projects and other skill interests hold by the Company or that may be acquired on a going forward basis, if at all;
management’s standpoint concerning future trends;
the Company’s aptitude to encounter its working funds needs at the stream turn in the short-term; and
governmental law and environmental liability.
Forward-looking information is formed on the in accord with assumptions, estimates, analysis and opinions of administration done in light of its experience and its notice of trends, stream conditions and approaching developments, together with other factors that administration believes to be applicable and in accord with in the environment at the date that such statements are made, and are innately theme to well known and different risks, uncertainties and other factors that may result in the real results, turn of activity, opening or achievements of the Company to be materially different from those expressed or pragmatic by such forward-looking information, inclusive but not paltry to risks related to: astonishing events and delays during permitting; the probability that future scrutiny results will not be conform to with the Company’s expectations; timing and accessibility of outmost financing on acceptable conditions and in light of the stream reject in universal liquidity and credit availability; doubt of vegetable resources; future prices of minerals; banking swap rates; government law of mining operations; disaster of apparatus or processes to run as anticipated; risks fundamental in vegetable scrutiny and growth inclusive environmental hazards, industrial accidents, out of the ordinary or astonishing geological formations; and undetermined diplomatic and mercantile environments. Although administration of the Company has attempted to pick out critical factors that could result in real results to deviate materially from those contained in forward-looking information, there may be other factors that result in results not to be as anticipated, estimated or intended. There may be no self-confidence that such statements will infer to be accurate, as real results and future events could deviate materially from those anticipated in such statements. Accordingly, readers should not place unjustified dependence on forward-looking information. The Company does not commence to refurbish any forward-looking information, solely in conformity with applicable bonds laws.
Risks and Uncerta inties
An investment in the Company entails certain chance factors, that should be deliberate carefully, inclusive but not paltry to those setout below:
Primary Risk Fac tors:
Exploration risks
Ability to Raise External Finance
Mineral scrutiny and growth requires the continuous injection of funds and other sources of financing to account activities. In the past, the Company has financed its operations by: entering in to J.V. agreements with allies and raising finance by the sale of equity capital. Although the Company has been successful in the past in obtaining financing, there is no self-confidence that it will be able to get hold of competent financing in the future or that such financing will be existing on conditions acceptable to the Company.
Mineral Resource Estimates
The Group’s reported resources are usually estimates. No self-confidence may be given that the estimated resources will be recovered or that they will be recovered at the rates estimated. Mineral haven and resource estimates are formed on paltry sampling and as a result are undetermined because the samples may not be entirely deputy of the full resource. Mineral resource estimates may require second edition (either up or down) in future durations formed on serve training or real prolongation experience.
Any future resource figures will be estimates and there may be no self-confidence that the minerals are present, will be recovered or that they may be brought in to essential production. Furthermore, a reject in the marketplace cost for innate resources, quite nickel, could render pot containing comparatively descend grades of these resources uneconomic to recover.
Country risk
The Group’s licences and operations are located in unfamiliar jurisdictions. As a result, the Group is theme to political, mercantile and other uncertainties, inclusive but not paltry to, changes in policies or the crew administering them, appropriation of skill without satisfactory compensation, termination or alteration of stipulate rights, kingship and taxation increases and other risks outset out of unfamiliar bureaucratic government over the area in that these operations are conducted.
Brazil , the stream concentration of the Company’s activity, offer stable diplomatic frameworks and actively encouragement unfamiliar investment. Brazil has a precocious scrutiny and mining ethics with active encouragement for unfamiliar companies and in conditions of mercantile growth is now running at circa 4.5% that compares well to its universal counterpart group.
Volatility of commodity prices
Historically, commodity prices (including in specific the cost of nickel) have fluctuated and are affected by countless factors over the Group’s control. The aggregate effect of these factors is unfit to predict. Fluctuations in commodity prices in the long-term may adversely start the returns of the Group’s scrutiny projects.
A poignant shrinking in the universal urge for nickel, leading to a drop in nickel prices could lead to a poignant drop in the money flow of the group in future durations and/or check in scrutiny and production, that may have a material inauspicious repercussions on the working results and financial condition of the Group.
Secondary Risk Factors
Risks that the results of scoping studies, Prefeasibility and feasibility studies and the probability that future exploration, growth or mining results will not be conform to with the Company’s expectations.
Risks related to probable variations in reserves, rank and changes in plan parameters as skeleton go on to be refined.
Exploration and future growth risks, inclusive risks related to the grant of access rights to the properties, accidents, apparatus breakdowns, labour disputes or other not anticipated difficulties with or interruptions in scrutiny and development.
Risks related to liquidity, unfamiliar exchange, credit, fascination rates and marketplace sentiment.
Risks related to environmental law and liability
Risks related to residents relations
Risks related to the loss of the services of key executives, inclusive the Directors of the Company and a tiny number of rarely skilled and gifted management team and personnel.
Disclosure Con trols
Disclosure controls and processes have been written to make sure that information compulsory to be disclosed by the Company is gathered and reported to Company administration as appropriate to enable timely decisions concerning compulsory disclosure. The Company’s Chief Executive executive and Chief Financial Officer have concluded, formed on their analysis as of 31 December 2011 , that the Company’s avowal controls and procedures are efficient to supply in accord with self-confidence that material information related to the Company is done well known to them by employees and third celebration consultants working is to Company. There have been no poignant changes in theCompany’s avowal controls and processes since the year finished 31 December 2011 . It should be remarkable that whilst the Company’s ChiefExecutive Officer and Chief Financial Officer think that its avowal controls and processes will supply a in accord with turn of self-confidence and that they are effective, they do not design that the avowal controls and processes will head off all errors and frauds. Acontrol system, no matter how well conceived or operated, can supply usually reasonable, not absolute, self-confidence that its objectives aremet.
ICF R
Management is accountable for certifying the design of the Company’s inner manage over financial stating (‘ICFR’) as compulsory by National Instrument 52-109F1 – “Certification of Disclosure in Issuers’ Annual and Interim Filings”. ICFR is intended to supply in accord with self-confidence concerning the trustworthiness of financial stating and the credentials of consolidated financial statements for outmost purposes in conformity with applicable IFRS.
ICFR should add those policies and procedures that establish the following:
maintenance of archives in in accord with detail that fairly and fairly simulate the transactions and dispositions of assets;
reasonable self-confidence that transactions are recorded as necessary to permit credentials of financial statements in conformity with applicable IFRS;
receipts and expenditures are usually being done in conformity with authorizations of administration and the Board of Directors; and
reasonable self-confidence concerning avoidance or timely showing of without official authorization acquisition, use or disposition of properties that could have a material effect on the consolidated financial statements.
Because of its fundamental limitations, ICFR may not head off or discover misstatements. Also, projections of any analysis of efficacy in future durations are theme to the chance that controls may become unsound since changes in conditions, or that the degree of correspondence with the policies or procedures may deteriorate.
Management, inclusive the Chief Executive Officer and Chief Financial Officer, has evaluated the design of the Company’s ICFR as of 31December 2011, pursuant to the mandate of National Instrument 52-109F1. The Company has written appropriate ICFR is to inlet and size of the Company’s business, to supply in accord with self-confidence concerning the trustworthiness of financial stating and the credentials of consolidated financial statements for outmost purposes in conformity with IFRS solely as remarkable herein.
Management has determined that the inner controls of the Company are written and working effectively is to twelve month time finished 31 December 2011 . There have been no changes in ICFR during the twelve month time finished 31 December 2011 , that has materially affected, or is pretty likely to materially affect, the Company’s ICFR.
Additional Inform ation
Additional information relating to the Company, inclusive its annual information form for its most not long ago completed fiscal year, is existing on SEDAR at www.sedar.com .
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